Evergreen Presbyterian Ministries Inc. v. Hood

REVISED, JANUARY 5, 2001

IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

_____________________

No. 00-30498

_____________________

EVERGREEN PRESBYTERIAN MINISTRIES INC; HEALTH SERVICE

DISTRICT 1 POINTE COUPEE, doing business as Pointe Coupee

General Hospital; HOSPITAL SERVICE DISTRICT NO 1 AVOYELLES

PARISH, doing business as Bunkie General Hospital; FARLEY

WAYNE LUTTRELL; ROBERT FORD; ET AL; IBERIA COMPREHENSIVE

COMMUNITY HEALTH CENTER INC; NEW ORLEANS PRIMARY HEALTH CARE

HEALTH DEPARTMENT/HEALTH CARE FOR THE HOMELESS INC; DESOTO

COMPREHENSIVE HEALTH CENTER INC; ST HELENA COMMUNITY HEALTH

CENTER INC; DAVID RAINES COMMUNITY HEALTH CENTER INC; BAYOU

COMPREHENSIVE HEALTH FOUNDATION INC; CATAHOULA PARISH

HOSPITAL DISTRICT NO 2 INC; CAPITOL CITY FAMILY HEALTH

CENTER INC; SOUTHWEST LOUISIANA PRIMARY HEALTH CARE CENTER

INC; DELTA RURAL HEALTH SERVICES INC; LEESVILLE RURAL HEALTH

SERVICES INC; NATCHITOCHES OUTPATIENT MEDICAL CENTER INC; ST

GABRIEL HEALTH CLINIC INC; TECHE ACTION BOARD INC, doing business

as Tech Action Clinic; EXCEL INC

Plaintiffs - Appellees

v.

DAVID W HOOD, Secretary Louisiana Department of Health &

Hospitals

Defendant - Appellant

--------------------------------------------------

LOUISIANA NURSING HOME ASSOCIATION; I H S LULING; I H S

SHREVEPORT; I H S GONZALES; I H S LAFAYETTE; ET AL

Plaintiffs - Appellees

v.

DAVID W HOOD, Individually and in his official capacity

as Secretary of the Department of Health & Hospitals

for the State of Louisiana

Defendant - Appellant

--------------------------------------------------

CALCASIEU ASSOCIATION OF RETARDED CITIZENS INC; EVANGELINE

ASSOCIATION OF RETARDED CITIZENS INC; SOUTHERN COMFORT

COMMUNITY HOMES; PREFERRED LIVING INC; IBERIA ASSOCIATION OF

RETARDED CITIZENS INC; MULTI CARE INC; IBERIA COMPREHENSIVE

COMMUNITY HEALTH CENTER INC; NEW ORLEANS PRIMARY HEALTH CARE

HEALTH DEPARTMENT/HEALTH CARE FOR THE HOMELESS INC; DESOTO

COMPREHENSIVE HEALTH CENTER INC; ST HELENA COMMUNITY HEALTH

CENTER INC; DAVID RAINES COMMUNITY HEALTH CENTER INC; BAYOU

COMPREHENSIVE HEALTH FOUNDATION INC; CATAHOULA PARISH

HOSPITAL DISTRICT NO 2 INC; CAPITOL CITY FAMILY HEALTH

CENTER INC; SOUTHWEST LOUISIANA PRIMARY HEALTH CARE CENTER

INC; DELTA RURAL HEALTH SERVICES INC; LEESVILLE RURAL HEALTH

SERVICES INC; NATCHITOCHES OUTPATIENT MEDICAL CENTER INC; ST

GABRIEL HEALTH CLINIC INC; TECHE ACTION BOARD INC, doing

business as Tech Action Clinic; EXCEL INC

Plaintiffs - Appellees

v.

DAVID W HOOD, Secretary of Louisiana Department of Health

& Hospitals

Defendant - Appellant

--------------------------------------------------

DOCTORS HOSPITAL OF OPELOUSAS LIMITED PARTNERSHIP, doing

business as Doctors Hospital of Opelousas; UNIVERSITY

REHABILITATION HOSPITAL INC, doing business as Physicians

Hospital of New Orleans; DIXON MEDICAL CENTER INC; WEST

CARROLL HOSPITAL INC; HOSPITAL SERVICE DISTRICT MOREHOUSE

PARISH, doing business as Morehouse General Hospital; ET AL

Plaintiffs - Appellees

v.

DAVID W HOOD, Secretary of the Louisiana Department of

Health & Hospitals

Defendant - Appellant

________________________________________________________________

Appeal from the United States District Court

2

for the Western District of Louisiana

_________________________________________________________________

December 11, 2000

Before KING, Chief Judge, and REYNALDO G. GARZA and PARKER,

Circuit Judges.

KING, Chief Judge:

Defendant-Appellant David W. Hood, Secretary of the

Louisiana Department of Health and Hospitals, appeals from the

district court’s grant of a preliminary injunction in favor of

Plaintiffs-Appellees Evergreen Presbyterian Ministries, Inc., et

al. For the following reasons, we VACATE the preliminary

injunction and REMAND to the district court for further

proceedings.

I. FACTUAL AND PROCEDURAL BACKGROUND

The Secretary of the Louisiana Department of Health and

Hospitals is before this court seeking relief from the district

court’s preliminary injunction. Due to a budgetary shortfall in

Louisiana’s Medicaid program and an Executive Order by

Louisiana’s Governor to achieve a savings in the state’s general

fund, the Louisiana Department of Health and Hospitals (“LDHH”)

proposed a seven-percent (7%) across-the-board reduction of

Medicaid reimbursement rates paid to private health care

providers and certain targeted cuts1 in Louisiana’s Medicaid

1

Certain pleadings challenge the “payment reductions”

without distinguishing between the 7% reimbursement rate

reduction and the targeted cuts. However, because no evidence or

arguments were offered on the targeted cuts, and because the

3

program. This proposal precipitated a series of suits against

the Secretary of LDHH, brought by intermediate care facilities

for the mentally retarded, rural hospitals, nursing homes, home

health agencies, community homes, hospitals, and Medicaid

recipients, in which the plaintiffs are seeking to prevent the

reimbursement rate reduction from becoming effective.

The focus of these lawsuits is two sections of the Social

Security Act, 42 U.S.C. §§ 1396a(a)(13)(A) and 1396a(a)(30)(A),

which the plaintiffs claim were violated when LDHH attempted to

implement the reimbursement rate reduction. In order for us to

provide the proper background for the resolution of these issues,

we must first undertake a review of the Medicaid program as it

exists in Louisiana.

A. The Medicaid Program

In the Social Security Amendments of 1965, Congress

established Title XIX, commonly referred to as the “Medicaid

Act.” See Pub. L. No. 89-97, 79 Stat. 286 (1965) (codified as

amended at 42 U.S.C. §§ 1396-1396u). The Medicaid Act

established a program that supplies federal funds to states that

agree to maintain a medical assistance program for the benefit of

aged, blind, or permanently disabled individuals and for the

benefit of families with dependent children. See 42 U.S.C.

district court focused on the 7% rate reduction, our sole concern

in this opinion is with the rate reduction.

4

§ 1396 (1992). The Medicaid program is a cooperative program

that is financed jointly by the federal and state governments.

See 42 C.F.R. § 430.0 (1999). Once a state enters the program,

it is charged with the program’s administration within its

borders. See id.

The program is voluntary; however, once a state chooses to

join, it must follow the requirements set forth in the Medicaid

Act and in its implementing regulations. See Wilder v. Va. Hosp.

Ass’n, 496 U.S. 498, 502 (1990). One of these requirements is

that in order for a state to qualify for federal funding, also

known as federal financial participation (“FFP”), it must submit

a state plan2 to the Health Care Financing Administration

(“HCFA”) for approval.3 See 42 C.F.R. § 430.10.

2

A state plan is a “comprehensive written statement”

submitted by the state describing the nature and scope of the

state’s Medicaid program. See 42 C.F.R. § 430.10. The state

plan “contains all information necessary for [the Health Care

Financing Administration] to determine whether the plan can be

approved to serve as a basis for Federal Financial Participation

(FFP) in the State program.” Id. The Medicaid Act sets out a

laundry list of sixty-five items that must be contained within a

valid state plan. See 42 U.S.C. § 1396a(a) (2000). Two of these

items, the “public process provision” and the “equal access

provision,” see id. §§ 1396a(a)(13)(A), (a)(30)(A), are the

primary focus of this case and will be explained in greater

detail infra.

3

HCFA, an arm of the Department of Health and Human

Services (“DHHS”), has been delegated the authority by the

Secretary of DHHS to administer the Medicaid program at the

federal level and to implement the underlying regulations. See

42 U.S.C. § 1302; 49 FED. REG. 35,247, 35,249 (1984).

5

The state of Louisiana has chosen to participate in the

Medicaid program. Under the joint federal-state funding

arrangement for Louisiana’s Medicaid program, Louisiana is

required to pay, or “front,” thirty percent of the funds

necessary to reimburse Medicaid providers. The remaining seventy

percent is provided by the federal government. In implementing

the state program, Louisiana designated LDHH to administer the

plan within the state. David Hood, the Defendant-Appellant, is

the Secretary of LDHH.

As the Secretary of LDHH, Hood is charged with the

responsibility of submitting the state plan and any amendments to

HCFA. See 42 C.F.R. § 430.12. An amendment must be submitted to

HCFA whenever there is a “[m]aterial change[] in State law,

organization, or policy, or in the State’s operation of the

Medicaid program.” Id. § 430.12(c). A proposed amendment to

Louisiana’s state plan is the subject of this suit.

B. The Amendment

In November 1999, Hood was informed of a $153 million

projected budget deficit within LDHH’s Medicaid program for the

1999-2000 fiscal year. On December 3, 1999, Hood reported this

projected shortfall to the state’s Joint Legislative Committee on

the Budget. On December 7, this impending budgetary shortfall

was compounded by an Executive Order from Louisiana’s Governor

6

directing all executive branches of the state government to

achieve a savings of approximately $50 million in the state’s

general fund.4

Hood responded first to the Executive Order by devising an

“Executive Order Reduction,” which was designed to produce

various savings within LDHH while attempting to minimize the

impact on private providers. However, to respond to the $153

million shortfall5 within the Medicaid program, LDHH proposed,

along with the targeted cuts, a 7% across-the-board reduction of

the reimbursements to private providers of services to Medicaid

recipients.

To implement the 7% reimbursement reduction, Hood and

Charles Castille, LDHH’s Undersecretary, devised a Spending

Reduction Plan, the contents of which make up the proposed

amendment to Louisiana’s state plan. The Spending Reduction

4

Specifically, the Executive Order required Hood to

reduce LDHH’s budget requirements by roughly $22.5 million. Of

that $22.5 million, approximately $16 million was to be withheld

from LDHH’s Medicaid program.

5

Deposition testimony from Charles Castille, the

Undersecretary for LDHH, shows that at some time during the

implementation of the reimbursement reduction, the projected

budget deficit was reduced to approximately $126 million. Once

the reductions were applied to the shortfall, a $67 million

deficit remained. LDHH proposed covering the remaining shortfall

by eliminating the optional component of LDHH’s pharmacy program.

Considering this cut to be “devastating,” LDHH and the Joint

Legislative Committee on the Budget used roughly $20 million of

the state’s general funds, which, combined with federal funds,

bridged the remaining budget gap.

7

Plan, if implemented, would reduce funding for the Medicaid

program in Louisiana by a total of $180 million.6

On January 24, 2000, Hood presented the Spending Reduction

Plan in a memorandum to the Joint Legislative Committee on the

Budget. Hood decided that the proposed plan would be implemented

by an assortment of emergency rules pursuant to the procedures in

the then-approved state plan.7 On January 25, to inform the

6

This total includes FFP and comprises approximately five

percent of the entire Louisiana Medicaid budget, which was then

$3.365 billion.

7

The procedures contained in the state plan were a

product of section 4711 of the Balanced Budget Act of 1997, in

which Congress repealed the so-called “Boren Amendment” to the

Medicaid Act and replaced it with the current section 13(A). See

Pub. L. No. 105-33, § 4711, 111 Stat. 251, 507-08 (1997); see

also Wilder v. Va. Hosp. Ass’n, 496 U.S. 498 (1990). As a

result, on December 10, 1997, HCFA informed LDHH (and all state

Medicaid directors) by letter that it must amend its state plan

to comply with the new “public process” procedures of section

13(A) and included a list of public process options. In response

to this letter, LDHH submitted a state plan amendment on December

29, 1997, which HCFA approved on February 5, 1998.

Although it had already approved the amendment to the state

plan, on April 9, 1998, HCFA further requested by letter that all

state agencies describe the specific public process procedures

that each state chose to implement. LDHH responded to this

letter on June 26, 1998, and informed HCFA that it used three

methods to conform to the public process requirements: the

Louisiana Administrative Procedures Act (APA), the legislative

appropriations process, and a modified emergency rule process.

More specifically, LDHH informed HCFA that the Louisiana APA

constituted part of the public process procedures that it would

follow in implementing a state plan or amendment. Furthermore,

in the case of an emergency rule, LDHH would use a “modified

emergency rule process,” which is codified at LA. REV. STAT. ANN.

§ 49:953(B) (West 2000), and allows for a comment period of

thirty days.

Section 49:953(B) provides in relevant part:

(1) If an agency finds that an imminent peril to the

8

public about the proposed amendment to the state plan, Hood began

publishing a series of public notices in eight newspapers

circulated within Louisiana. Separate notices were published for

each category of provider, including private nursing facilities,

long-term hospitals, and intermediate care facilities for the

mentally retarded (“ICF/MRs”). In addition to other information,

the notices indicated that LDHH was making a 7% reduction in

private provider reimbursement rates due to the budgetary

shortfall. The emergency rules implementing the reductions were

published in the February 20, 2000 edition of the Louisiana

Register. The effective date for the cuts in certain optional

public health, safety, or welfare requires adoption of

a rule upon shorter notice than that provided in

Subsection A of this Section [governing “regular” rule

making procedures] and within five days of adoption

states in writing to the governor of the state of

Louisiana, the attorney general of Louisiana, the

speaker of the House of Representatives, the president

of the Senate, and the Department of the State

Register, its reasons for that finding, it may proceed

without prior notice or hearing or upon any abbreviated

notice and hearing that it finds practicable, to adopt

an emergency rule. The provisions of this Paragraph

also shall apply to the extent necessary to avoid

sanctions or penalties from the United States, or to

avoid a budget deficit in the case of medical

assistance programs or to secure new or enhanced

federal funding in medical assistance programs. The

agency statement of its reason for finding it necessary

to adopt an emergency rule shall include specific

reasons why the failure to adopt the rule on an

emergency basis would result in imminent peril to the

public health, safety, or welfare, or specific reasons

why the emergency rule meets other criteria provided in

this Paragraph for adoption of an emergency rule.

LA. REV. STAT. ANN. § 49:953(B)(1).

9

programs was February 1, and the effective date for the across-

the-board reduction was March 1, over thirty days after the

publication of the notices in the newspapers.

In response to the proposed amendment to the state plan, the

plaintiffs brought suit to enjoin Hood from implementing the 7%

reimbursement rate reduction and to have the proposed state plan

amendment declared invalid.8

C. The Preliminary Injunction9

8

The plaintiffs have alleged various violations of the

Medicaid Act and federal and state constitutions. However,

because our review is limited to whether the district court

abused its discretion and because the district court focused

solely on two particular sections of the Medicaid Act, 42 U.S.C.

§§ 1396a(a)(13)(A) and 1396a(a)(30)(A), our inquiry begins and

ends with these sections.

9

We note that during the time of these proceedings in the

district court and on appeal, an administrative process has been

progressing, which is independent of these judicial proceedings.

Hood filed LDHH’s proposed amendment with HCFA on March 27, 2000.

10

In March 2000, the district court granted temporary

restraining orders in favor of the plaintiffs, enjoining Hood

from implementing the proposed reimbursement rate cuts. On May

4, the district court granted the plaintiffs’ motion for a

preliminary injunction. The next day, this court granted Hood’s

motion for a stay pending appeal and, on May 12, clarified that

our May 5 order applied to all restraining orders and injunctions

issued by the district court.10

Normally, HCFA has ninety days to approve or disapprove the

proposed amendment, see 42 C.F.R. § 430.16(a)(1); however, as

authorized under the regulations, HCFA mailed to LDHH several

“stop-the-clock” letters. A stop-the-clock letter is a request

by HCFA for additional information, which tolls the ninety-day

deadline by which HCFA must approve the amendment. See 42 C.F.R.

§ 430.16(a)(2). Once HCFA receives the requested information,

the ninety-day approval period begins anew. See id.

Supplemental filings with this court reflect that the status as

of September 2000 was that HCFA had tolled the ninety-day period

by advising Hood that additional information is necessary and the

requested information had not yet been furnished. Should HCFA

ultimately disapprove the amendment, however, LDHH would be

considered in noncompliance, and FFP would be at risk. See id.

§ 430.35.

10

The plaintiffs have asserted that when the district

court entered the preliminary injunction on May 4, 2000, the

temporary restraining orders previously entered became moot. The

plaintiffs also argue that the preliminary injunction is not

properly before this court because Hood did not timely appeal its

issuance. For these reasons, the plaintiffs contend that the

appeal should be dismissed because without the temporary

restraining orders, there is nothing to appeal.

We find, however, that Hood timely appealed the issuance of

the preliminary injunction and that the preliminary injunction is

part of this appeal. As this court clarified on May 12, our May

5 order granting Hood’s motion to stay the preliminary injunction

and his motion to expedite the appeal applied “to all restraining

orders and injunctions granted by the District Court in this case

through the date of our said order.” Because we conclude the

preliminary injunction is part of this appeal, the question of

11

II. STANDARD OF REVIEW

A preliminary injunction is considered “an extraordinary and

drastic remedy, not to be granted routinely, but only when the

movant, by a clear showing, carries the burden of persuasion.”

White v. Carlucci, 862 F.2d 1209, 1211 (5th Cir. 1989) (internal

quotations omitted) (quoting Holland Am. Ins. Co. v. Succession

of Roy, 777 F.2d 992, 997 (5th Cir. 1985)); see also Harris

County, Tex. v. CarMax Auto Superstores, Inc., 177 F.3d 306, 312

(5th Cir. 1999). In order for a district court to grant a

preliminary injunction, four requirements must be met:

First, the movant must establish a substantial

likelihood of success on the merits. Second, there

must be a substantial threat of irreparable injury if

the injunction is not granted. Third, the threatened

injury to the plaintiff must outweigh the threatened

injury to the defendant. Fourth, the granting of the

preliminary injunction must not disserve the public

interest.

CarMax Auto Superstores, 177 F.3d at 312 (internal quotations

omitted) (quoting Cherokee Pump & Equip., Inc. v. Aurora Pump, 38

F.3d 246, 249 (5th Cir. 1994)). “The ultimate issue . . . is

whether the district court abused its discretion in granting the

preliminary injunction.” Id. Additionally, questions of

statutory interpretation are reviewed de novo. See Lara v.

Cinemark USA, Inc., 207 F.3d 783, 786 (5th Cir. 2000); Whitehead

v. Food Max, Inc., 163 F.3d 265, 279 (5th Cir. 1998).

the appealibility of the temporary restraining orders is

essentially moot as they are subsumed in the district court’s

preliminary injunction.

12

III. THE PROPRIETY OF THE PRELIMINARY INJUNCTION

The district court granted the plaintiffs’ requested

preliminary injunction, finding that they had satisfied their

burden on each of the four preliminary injunction factors. The

district court focused its analysis on two sections of the

Medicaid Act, 42 U.S.C. § 1396a(a)(13)(A) (“section 13(A)”) and

42 U.S.C. § 1396a(a)(30)(A) (“section 30(A)”), and concluded that

the plaintiffs provided sufficient evidence to “support a

substantial likelihood of a violation” of each section.

Evergreen Presbyterian Ministries, Inc. v. Hood, 116 F. Supp. 2d

745, 751, 754 (W.D. La. 2000). We address these sections in turn

to determine whether the plaintiffs did in fact prove they had a

substantial likelihood of success on the merits.11

A. Substantial Likelihood of Success on the Merits

Under Section 13(A)

1. Availability of a Right of Action Under § 1983 to Redress

Violations of Section 13(A)

11

Because we find that the plaintiffs failed in their

burden of proving a substantial likelihood of success on the

merits, we need not address the remaining preliminary injunction

factors.

13

In order to find that the plaintiffs have a substantial

likelihood of success in proving violations of section 13(A), the

plaintiffs must first demonstrate that they have a right of

action under 42 U.S.C. § 1983. The district court found that the

plaintiffs do have such a right of action under § 1983 to enforce

procedural violations of section 13(A).

On appeal, Hood makes no argument in his briefs to this

court regarding whether a right of action exists under § 1983 to

enforce the procedural requirements of this section; he argues

only that the plaintiffs are precluded from challenging the

reasonableness of the resulting reimbursement rates through

section 13(A), a contention that the plaintiffs do not challenge.

Therefore, Hood has abandoned any argument regarding whether a

right of action exists under § 1983 to enforce the public process

procedures of section 13(A). See Johnson v. Sawyer, 120 F.3d

1307, 1315-16 (5th Cir. 1997) (“We have held repeatedly that we

will not consider issues not briefed by the parties.”); McKethan

v. Tex. Farm Bureau, 996 F.2d 734, 739 n.9 (5th Cir. 1993)

(failure to sufficiently brief issue constitutes waiver of that

issue). Accordingly, we assume without deciding that the

plaintiffs have a right of action to enforce a violation of

section 13(A) under § 1983, and we turn to the merits.

2. Hood’s Compliance with the Requirements of Section 13(A)

14

In order to satisfy their burden for a preliminary

injunction, the plaintiffs must show that they have a substantial

likelihood of success in demonstrating that Hood did not comply

with the mandates of section 13(A). See Doe v. Duncanville

Indep. Sch. Dist., 994 F.2d 160, 163 (5th Cir. 1993) (“To obtain

a preliminary injunction, a movant has the burden of proving

. . . a substantial likelihood of success on the merits[.]”).

Section 13(A) provides in relevant part:

A State plan for medical assistance must . . . provide

. . . for a public process for determination of rates

of payment under the plan for hospital services,

nursing facility services, and services of intermediate

care facilities for the mentally retarded under which —

(i) proposed rates, the methodologies underlying the

establishment of such rates, and justifications for the

proposed rates are published,

(ii) providers, beneficiaries and their representatives, and

other concerned State residents are given a reasonable

opportunity for review and comment on the proposed

rates, methodologies, and justifications,

(iii)final rates, the methodologies underlying the

establishment of such rates, and justifications

for such final rates are published, and

(iv) in the case of hospitals, such rates take into

account (in a manner consistent with section 1923)

the situation of hospitals which serve a

disproportionate number of low-income patients

with special needs[.]

42 U.S.C. § 1396a(a)(13)(A) (2000). In essence, section 13(A)

provides a public process mechanism with which the state must

comply before it can modify reimbursement rates to institutional

providers.12

12

The present section 13(A) is the product of a 1997

amendment to the Medicaid Act, which repealed the Boren

Amendment. See Pub. L. No. 105-33, § 4711, 11 Stat. 251, 507-08

15

(1997). The Boren Amendment provided in relevant part:

A State plan for medical assistance must . . . provide

. . . for payment . . . of the hospital services,

nursing facility services, and services in an

intermediate care facility for the mentally retarded

. . . through the use of rates . . . which the State

finds, and makes assurances satisfactory to the

Secretary, are reasonable and adequate to meet the

costs which must be incurred by efficiently and

economically operated facilities . . . to assure that

individuals eligible for medical assistance have

reasonable access . . . to inpatient hospital services

of adequate quality[.]

42 U.S.C. § 1396a(a)(13)(A) (1992).

One of the primary purposes for passing the Boren Amendment

was to provide states with flexibility in setting reimbursement

rates and thereby reduce Medicaid costs. See Wilder, 496 U.S. at

505-06. However, because of the litigation that was generated

after the Boren Amendment’s enactment, Congress recognized that

the Amendment had the opposite effect on Medicaid costs than it

had intended. See 141 CONG. REC. S18693 (1995) (statement of Sen.

Roth) (“The Boren amendment . . . has been used to actually bid

the price of nursing home care up higher.”). Accordingly, with

the continued rise in Medicaid costs, Congress repealed the Boren

Amendment in the Balanced Budget Act of 1997. See H.R. REP. NO.

105-149, at 1230 (1997). According to the legislative history,

Congress’s intent in repealing the Boren Amendment was “to

provide States with greater flexibility in setting provider

reimbursement rates under the Medicaid Program.” 143 CONG. REC.

S4000 (1997) (statement of Sen. Hutchison).

Congress replaced the Boren Amendment with the more limited

requirement that states provide for a public notice-and-comment

process in their reimbursement ratemaking decisions. See 42

U.S.C. § 1396a(a)(13)(A) (2000). Again according to the

legislative history, Congress intended to free the states from

federal regulation and increased rates and to eliminate a basis

for causes of action by providers to challenge reimbursement

rates. See H.R. REP. NO. 105-149, at 1230 (1997) (“A number of

Federal courts have ruled that State systems failed to meet the

test of ‘reasonableness’ and some States have had to increase

payments to these providers as a result of these judicial

interpretations.”); see also id. (“It is the Committee’s

intention that, following the enactment of [the Balanced Budget

Act of 1997], neither this nor any other provision of [§ 1396a]

will be interpreted as establishing a cause of action for

16

a. The Notice Requirements

The district court observed that section 13(A) required Hood

to publish “the proposed and final rates, along with the

methodologies underlying such and the justification for such.”

Evergreen, 116 F. Supp. 2d at 753. The district court concluded

that the notices placed in the newspapers did not satisfy these

requirements. In support of this conclusion, the district court

relied on deposition testimony to the effect that the newspaper

notices, as interpreted by the court, did not contain the

proposed rates required by section 13(A).

On appeal, Hood argues that the notices did comply with the

requirements of section 13(A). Specifically, Hood contends that

LDHH placed notices in eight Louisiana newspapers with the

largest statewide circulations. Hood maintains that these

notices announced: (1) the 7% reimbursement rate reduction, (2)

the location of the existing methodology in the Louisiana

Register,13 and (3) the justification of avoiding a budget

deficit in Louisiana’s medical assistance program. Hood argues

hospitals and nursing facilities relative to the adequacy of the

rates they receive.”).

13

The Louisiana Register contains the published

reimbursement framework or methodology, consisting of rules and

formulas, for each category of provider. The newspaper notices

referenced this methodology, citing to the specific volume and

number of the Louisiana Register, for each provider category that

was affected by the reimbursement rate reduction.

17

that the plaintiffs’ sole argument is that because Hood published

the proposed rate as a percentage and not as a dollar figure, he

violated the mandates of the section. Hood contends that such an

argument “flies in the face” of the section’s goal of “maximum

possible flexibility” and that the “7%” language was “best

calculated to inform interested persons of what action [LDHH]

intended to take.”

The plaintiffs respond by arguing that they provided “ample

evidence” demonstrating that Hood violated section 13(A). First,

the plaintiffs point to the deposition of Sandra Victor, Chief of

the Policy Development and Implementation Section in the Bureau

of Health Services Financing, in which she stated that the

notices did not contain the proposed rates. The plaintiffs also

refer to Castille’s deposition, in which he testified that the

notices did not contain the proposed rates or the methodology

behind those rates.

The plaintiffs also argue that the methodology referenced in

the notices was that of the state’s approved methodology adopted

June 20, 1994, and not the methodology underlying the proposed

rates. Because the 2000 reimbursement rate reduction was made

without regard to a new methodology, the plaintiffs argue that

the state failed to comply with section 13(A)’s requirement that

the methodology underlying the proposed rates be published. The

plaintiffs find support for this assertion in the deposition

testimony of Jerry Barnard, a Rate Determination Specialist for

18

LDHH. Barnard testified that the 7% reduction was independent of

the state’s approved methodology14 and did not “fit into that

methodology at all.”

With this information, the district court determined that

“it is virtually impossible to conclude at this time that a

reasonable opportunity for review or comment on the new rates was

given to the interested parties.” Evergreen, 116 F. Supp. 2d at

753. We disagree.

As quoted above, section 13(A) requires a state, when

proposing an amendment to its state plan, to publish (1) the

proposed rates, (2) the methodology behind those rates, and (3)

the justification for such, in order to afford “providers,

beneficiaries and their representatives, and other concerned

State residents” a “reasonable opportunity for review and comment

on the proposed rates, methodologies, and justifications.” 42

U.S.C. § 1396a(a)(13)(A). We conclude that Hood’s notices

“outlined the substance of the plan in sufficient detail to allow

interested parties to decide how and whether to seek more

information on the plan’s particular aspects.” Miss. Hosp. Ass’n

v. Heckler, 701 F.2d 511, 520 (5th Cir. 1983) (discussing the

public process procedures of 42 C.F.R. § 447.205).

Addressing the rate, methodology, and justification

requirements of section 13(A) in order, we find that the 7%

14

See supra note 13.

19

reduction language was sufficient to satisfy the first

requirement of providing interested persons with a “reasonable

opportunity to review” the proposed rates. As Castille stated in

his deposition, indicating the new rate by a percentage was

intended “to be the most understandable way in as plain English

as possible [to demonstrate] what the impact of the changes would

be.” We agree with Hood that the use of a percentage, rather

than a dollar figure, in the notice was an acceptable way to

inform interested persons of what action LDHH intended to take.

Moreover, LDHH sent rate letters to all ICF/MRs and nursing

facilities, in which these providers were informed of their

respective new rates.

The district court relied on the testimony of Sandra Victor

in finding that the notices did not contain the required “rate”

language. However, Victor’s deposition testimony also revealed

that the notices described the proposed change in reimbursement

rates and that it would have been “unusual” to publish the

proposed rates in the notices. As Castille acknowledged, LDHH

could have published notices that were several pages in length in

which LDHH described each provider’s new rate. We conclude,

however, that such a notice may not have as readily furnished

recipients or providers with the proper tools to understand the

impact of the rate reduction. By stating that there would be a

7% reduction, recipients and providers could understand the

import of the changes, making them better equipped to comment on

20

the proposed change. We find this notice of the proposed rates

to be satisfactory. See Indep. Acceptance Co. v. State of Cal.,

204 F.3d 1247, 1253 (9th Cir. 2000) (“Notice provisions are

designed to outline[] the substance of the plan in sufficient

detail to allow interested parties to decide how and whether to

seek more information on the plan’s particular aspects.”

(internal quotations omitted) (alteration in original) (quoting

Visiting Nurse Ass’n v. Bullen, 93 F.3d 997, 1010 (1st Cir.

1996)); Visiting Nurse Ass’n v. Bullen, 93 F.3d 997, 1010 (1st

Cir. 1996) (“As their name suggests, . . . ‘notice’ provisions

are neither invariably nor primarily designed to afford

exhaustive disclosure[.]”).

Regarding the publication of the methodology underlying the

proposed rates, Hood argues that it was referenced in the

notices. The plaintiffs contend that the 7% reduction was simply

an across-the-board cut that was made “without regard to the

approved methodology.” The plaintiffs argue further that because

there is deposition testimony demonstrating that the methodology

underlying the proposed rates was “independent” of the existing

methodology, the methodology underlying these particular proposed

rates was not actually published. Aside from its blanket

statement that “[t]he notices in question did not provide the

required information,” the district court did not specifically

address this issue; however, we find that the combination of the

reference to the existing methodology in the published notices

21

plus the announcement that the current rates would be reduced by

7% was sufficient to provide those interested with reasonable

notice of the methodology underlying the proposed rates. See

Heckler, 701 F.2d at 520; see also Indep. Acceptance Co., 204

F.3d at 1253; Bullen, 93 F.3d at 1010.

The district court also did not speak specifically to the

requirement of publication of the justification for the proposed

rates. Hood argues that LDHH did supply the justification for

the rate change, namely that the “action [was] being taken in

order to avoid a budget deficit in the medical assistance

program.” We find this justification sufficient to satisfy this

specific mandate of section 13(A).

We also disagree with the district court that the notices

did not provide an opportunity for review and comment. The

district court determined that because the notices did not

provide the required information, it was “virtually impossible to

conclude . . . that a reasonable opportunity for review or

comment on the new rates was given to the interested parties.”

Evergreen, 116 F. Supp. 2d at 753. From a full review of the

record, however, we conclude that the plaintiffs were provided

with more than adequate notice and opportunity for review and

comment. Specifically, on January 25, 2000, Hood published a

series of notices in the newspapers of widest circulation. These

notices appeared more than thirty days before the effective date

of the reimbursement rate reduction, which was March 1, 2000. As

22

we have just clarified, the notices adequately satisfied the

guidelines regarding their content: the notices informed the

public that a 7% reduction in payment to certain private

providers would occur; they referenced the methodology behind the

existing rates with an indication that those rates would be

reduced by 7%; and they explained that the reimbursement rate

reduction was occurring due to a budget deficit. Moreover, the

record reveals that, along with sending rate letters to various

health care providers, Hood and Castille met with several

interested provider groups, including the Rural Hospital

Coalition, Louisiana Nursing Home Association, community service

providers, the medical society, and the medical association. On

February 10, 2000, the Medical Care Advisory Committee convened

to discuss the reimbursement rate reduction, and several

interested groups were in attendance.15 Finally, the published

notices invited written comment by interested parties and

provided the name of a person to whom those parties could send

their concerns or comments, along with that person’s contact

information.

Therefore, we find that the district court abused its

discretion in determining that Hood failed to comply with these

procedures of section 13(A). The current section 13(A) was

enacted to provide states with flexibility in setting its

15

At that meeting, the Medical Care Advisory Committee

adopted a motion approving the reimbursement rate reduction.

23

reimbursement rates.16 Moreover, the overall purpose of section

13(A)’s criteria is to provide interested parties notice and an

opportunity for review and comment. See Heckler, 701 F.2d at 520

(discussing the requirements of 42 C.F.R. § 447.205 and finding

that “[t]he agency was not required to publish every minute

detail of the plan”); accord Bullen, 93 F.3d at 1010 (“As their

name suggests, . . . ‘notice’ provisions are . . . to alert

interested parties that their substantive rights may be affected

in a forthcoming public proceeding.”). We find Hood’s notices

satisfied this purpose and conclude that interested parties were

“given a reasonable opportunity for review and comment on the

16

See supra note 12.

24

proposed rates, methodologies, and justifications.”17 42 U.S.C.

§ 1396a(a)(13)(A)(ii).18

17

We recognize that HCFA sent LDHH certain stop-the-clock

letters after LDHH submitted its proposed amendment to HCFA on

March 27, 2000. LDHH received these letters on June 21, 2000.

The letters requested additional information and clarification on

various issues. One letter provides:

The language [in the proposed amendment] states

“private hospitals are reimbursed at ninety three

percent (93%) of the per diem rates in effect as of

March 7, 2000”. Is this intended to eliminate the

current payment methodology and set a fixed payment

rate for services or to set the payment rate at 93% of

[the] payment rate as determined by the methodology set

forth in the State plan? Will rates continue to be

adjusted annually for inflation and then apply the 93%

calculation? Please revise the plan language to

clearly indicate how the rates will be determined.

This request suggests that there may be an ambiguity or a

structural defect in the state plan amendment. Any such problem

is not before us. A challenge under section 13(A) to the

adequacy of the notice of the proposed rates and of the

methodologies underlying the establishment of such rates is not

an appropriate vehicle for raising substantive defects in the

rates or the methodologies for establishing them.

18

The district court also based its holding upon the fact

that “perhaps ‘emergency rules’ would not have been necessary had

the issue of the predicted budget shortfall been addressed

earlier.” Evergreen, 116 F. Supp. 2d at 753. However, we find

that this is not an appropriate inquiry. As we explained in note

12, supra, with the repeal of the Boren Amendment in 1997 and the

establishment of the present section 13(A), HCFA informed LDHH by

letter that it must amend its state plan in order to provide for

a public process in compliance with the new section. The letter

contained “Public Process Options” that HCFA found “acceptable”

and that would still “allow[] states the flexibility to design

their public process.” LDHH adopted one of those options for its

state plan and employed that option during the process now in

dispute. Therefore, because Hood complied with one of the public

process options approved by HCFA, which provided a thirty-day

comment period, we conclude that Hood was within his authority to

propose the new rates using the modified rulemaking process.

25

b. The Situation of Disproportionate Share Hospitals

In addition to finding that the notices did not contain the

required information to provide interested parties with notice

and an opportunity for review and comment, the district court

concluded that deposition testimony existed which demonstrated

that Hood did not consider the situation of hospitals that serve

a disproportionate number of low-income patients with special

needs (“DSHs”) when he formulated the reimbursement rate

reduction.19 The court points to the deposition of Tom Collins,

Louisiana’s Medicaid Director, in which he testified that he did

not “recall considering” the needs of these hospitals.

Hood argues that the situation of DSHs was considered by

LDHH and that LDHH “decided to make no reductions to the separate

budget that Louisiana has for DSH hospital payments.” Therefore,

Hood contends that no changes were made in the amount of, or the

methodology for, DSH payments.20 The plaintiffs reply that Hood

19

The final subsection of section 13(A) provides that

“[i]n the case of hospitals, such rates take into account . . .

the situation of hospitals which serve a disproportionate number

of low-income patients with special needs.” 42 U.S.C.

§ 1396a(a)(13)(A)(iv).

20

During oral argument in this court, there was a

discussion over the distinction between “rates” and “payments.”

Hood argued that because the uncompensated cost “payment”

percentage of seventy percent remained the same, LDHH need not

have been concerned about the situation of these hospitals when

their “rates” were reduced by 7%. Hood’s counsel revealed that

while the “reimbursements” to DSHs were included in the cut, the

other “payments” to DSHs were not. In the March 2, 2000 hearing

on the temporary restraining order, LDHH’s general counsel

explained this concept:

26

“admitted” that in adopting the rate reduction, he failed to

consider the situation of DSHs.

To ascertain whether Hood complied with the last subsection

of section 13(A), we must pay special attention to the language

of that subsection. Under a plain reading of section 13(A), the

“rates” are required to take into account the situation of DSHs.

Therefore, if the rates, as amended, take into account the

situation of DSHs, then the question whether Hood himself, or

LDHH, “considered” the situation of the hospitals before

implementing the rate reduction need not be addressed.

DSHs receive a separate payment as a reimbursement for

uncompensated costs, equal to seventy percent of those

uncompensated costs. The separate DSH payment of seventy percent

of uncompensated costs was not altered with the rate reduction.

We conclude that because the DSH payments were not altered, the

reduced rates necessarily take into account the situation of

DSHs. This is because the 7% rate reduction will be considered

an uncompensated cost, and therefore, DSHs would still recover

seventy percent of that 7% rate reduction as a “payment” due to

[O]ne of the points here was made that we had not

considered the disproportionate share hospitals’

impact, rural hospitals. They will get 70 percent of

the cuts back to them because they are — they get an

in-kind match — the rural hospitals are set up in such

a way in [the] statute to where they can get an in-kind

return of 70 percent uncompensated costs. And this

rate cut for them would be an uncompensated cost so

they would get 70 percent of that back.

27

their special status. Therefore, inasmuch as the 7% reduction

qualifies as an uncompensated cost, the reduced rates would

continue to account for the special situation of DSHs. The

district court’s conclusion to the contrary was error.

In summary, we conclude that the district court abused its

discretion in finding that, due to Hood’s presumed failure to

publish the proposed rates, methodology, and justifications

behind the rate reduction, the plaintiffs have a substantial

likelihood of success in demonstrating that Hood failed to give

interested individuals “a reasonable opportunity for review and

comment.” Furthermore, we conclude that the district court

misinterpreted section 13(A)’s requirement that the rates take

into account the situation of DSHs and, therefore, abused its

discretion in finding that the plaintiffs have a substantial

likelihood of success in proving a violation of section 13(A)’s

final subsection.

B. Substantial Likelihood of Success on the Merits

Under Section 30(A)

1. Availability of a Right of Action Under § 1983 to Redress

Violations of Section 30(A)

As with our analysis of section 13(A), to determine if the

plaintiffs have a substantial likelihood of success on the

28

merits, we must begin by addressing whether the plaintiffs may

maintain a right of action under 42 U.S.C. § 1983 to remedy

violations of section 30(A). The district court concluded that

both the provider plaintiffs and the recipient plaintiffs have a

right of action under § 1983 to redress violations of section

30(A).

We agree that under the controlling test fashioned by the

Supreme Court, which we will discuss infra, recipients have that

right of action. However, we find that the district court erred

as a matter of law in finding that providers also have a right to

bring suit under § 1983 to remedy violations of section 30(A).

We begin our analysis by examining the test that the Supreme

Court has created to guide courts in determining whether Congress

intended a federal statute to provide plaintiffs with a right of

action under § 1983. Next, we consider whether section 30(A), in

fact, provides such a right to the individual plaintiffs in this

particular suit. Finally, once we have decided which plaintiffs

have a right of action under § 1983, we must evaluate whether

those plaintiffs have satisfied the evidentiary burden necessary

to demonstrate a substantial likelihood of success in proving

violations of section 30(A).

a. The Wilder/Blessing Test for Rights of Action Under

§ 1983 to Remedy Violations of a Federal Statute

29

Section 1983 affords a cause of action to a plaintiff

against anyone who, under color of state law, deprives a person

“of any rights, privileges, or immunities secured by the

Constitution and laws” of the United States. 42 U.S.C. § 1983;

see also Blessing v. Freestone, 520 U.S. 329, 340 (1997); Wilder

v. Va. Hosp. Ass’n, 496 U.S. 498, 508 (1990). Section 1983

provides redress for violations of federal statutes, as long as

the plaintiff is asserting a “violation of a federal right, not

merely a violation of federal law.” Blessing, 520 U.S. at 340.

Two leading Supreme Court decisions, Wilder v. Virginia

Hospital Ass’n, 496 U.S. 498 (1990), and Blessing v. Freestone,

520 U.S. 329 (1997), have recognized the “traditional” three-part

test employed to determine whether a plaintiff is advancing a

violation of a “federal right,” and not merely one of federal

law:

First, Congress must have intended that the provision

in question benefit the plaintiff. Second, the

plaintiff must demonstrate that the right assertedly

protected by the statute is not so “vague and

amorphous” that its enforcement would strain judicial

competence. Third, the statute must unambiguously

impose a binding obligation on the States. In other

words, the provision giving rise to the asserted right

must be couched in mandatory, rather than precatory,

terms.

Blessing, 520 U.S. at 340-41 (citations omitted); see also

Wilder, 496 U.S. at 509. However, under this test, even if a

plaintiff establishes that the federal statute at issue creates a

federal right, “there is only a rebuttable presumption that the

30

right is enforceable under § 1983,” Blessing, 520 U.S. at 341;

Congress may have expressly or impliedly foreclosed such a

remedy. See id.

Our analysis of the Wilder/Blessing test is facilitated by

Wilder itself, in which the Supreme Court addressed whether a

particular provision of the Medicaid Act created a “federal

right” for the plaintiffs in that case. In Wilder, the Supreme

Court considered whether the Boren Amendment — the precursor to

the current section 13(A)21 — was enforceable in an action

brought pursuant to § 1983. See 496 U.S. at 501-02. The Boren

Amendment required that payments to providers be “reasonable and

adequate to meet the costs which must be incurred by efficiently

and economically operated facilities[.]” 42 U.S.C.

§ 1396a(a)(13)(A) (1992).

The Wilder Court addressed whether health care providers

could bring suit to challenge the method by which a state

reimbursed those providers under the Medicaid Act. See Wilder,

496 U.S. at 501. In finding that health care providers could

bring such a suit, the Court employed the three-part test set out

above.

First, the Court concluded that there was “little doubt”

that the providers were the intended beneficiaries of the Boren

Amendment because it “establishe[d] a system for reimbursement of

21

For a discussion on the Boren Amendment, see note 12

supra.

31

providers and [was] phrased in terms benefiting health care

providers,” in that it required a state plan to provide for their

payment. Id. at 510. Next, the Court determined that the Boren

Amendment imposed a “binding obligation” on the states because

the provision was “cast in mandatory rather than precatory

terms.” Id. at 512. Persuasive to the Wilder Court in analyzing

this factor was that the section was prefaced with the language

that a “State plan must” provide for payment to health care

providers. See id. (emphasis and internal quotations omitted).

Moreover, the Court noted that receipt of FFP was “expressly

conditioned on compliance with the amendment and the Secretary is

authorized to withhold funds for non-compliance with this

provision.” Id. (citing 42 U.S.C. § 1396c and 42 C.F.R.

§ 430.35). Finally, the Court found that even though “the Boren

Amendment [gave] a State flexibility” in adopting rates, “the

obligation imposed by the amendment [was not] too ‘vague and

amorphous’ to be judicially enforceable.” Id. at 519. The Court

was persuaded by the fact that the section and its implementing

regulations provided factors that a state must consider in

adopting rates and by the fact that the provision afforded states

an “objective benchmark” of an “efficiently and economically

operated facilit[y]” against which states may measure the

reasonableness of their rates. See id. (alteration in original).

After establishing that the health care providers were

asserting a violation of a federal right, the Court concluded its

32

analysis by finding that Congress had neither expressly nor

impliedly “foreclosed enforcement of the Medicaid Act under

§ 1983.” Id. at 520-23. Recognizing that the state had conceded

that Congress had not expressly foreclosed resort to § 1983, the

Court determined that the administrative scheme underlying the

Medicaid Act “cannot be considered sufficiently comprehensive to

demonstrate a congressional intent to withdraw the private remedy

of § 1983.” Id. at 522.

In their analyses regarding whether the plaintiffs may bring

suit under § 1983 to remedy a violation of section 30(A), neither

Hood nor the district court reference Wilder. We recognize that

later cases have affected the Wilder analysis. See Suter v.

Artist M., 503 U.S. 347 (1992)22; see also Blessing, 520 U.S.

329.23 However, because these decisions did not overturn Wilder,

22

In Suter, the Court answered the question whether

certain children who were wards of the state had the right to

enforce a provision of the Adoption Assistance and Child Welfare

Act of 1980 (the “Adoption Act”) pursuant to a suit brought under

§ 1983. The Adoption Act required a state plan to contain a

provision that the state make “reasonable efforts” to “eliminate

the need for removal” of a child from his or her home and to

reunite the child with his or her family. See Suter, 503 U.S. at

350-51. The Suter Court held that the provision did not create a

cause of action for the children to enforce under § 1983 because

“the ‘reasonable efforts’ language d[id] not unambiguously confer

an enforceable right upon the Act’s beneficiaries.” Id. at 363

(emphasis added). Suter teaches us, then, that Congress must

unambiguously confer a benefit upon a plaintiff in order for that

plaintiff to enforce a federal statutory right under § 1983.

23

In Blessing, the Court confirmed the requirement that

in order for a plaintiff to state a claim under § 1983 for

violation of a federal statute, Congress must unambiguously

confer in that statute an “individual entitlement” upon the

33

plaintiff. The procedural protections of Title IV-D of the

Social Security Act came before the Court in Blessing, where the

Court faced a challenge by five mothers in Arizona, whose

children were eligible to receive child support services from the

state. See 520 U.S. at 332. The mothers sued pursuant to Title

IV-D of the Social Security Act to enforce a statutory provision

requiring “substantial compliance” with Title IV-D’s procedures.

See id. The Blessing Court, overturning the Court of Appeals for

the Ninth Circuit’s decision, held that this provision did not

create an enforceable right under § 1983. See id. at 342.

After setting out the “traditional” test for determining

whether a statutory provision creates an enforceable federal

right, the Court turned to whether the plaintiffs established

that Title IV-D provided them with such a right. The Blessing

Court found that the Ninth Circuit erred in broadly holding that

Title IV-D created a federal right of “substantial compliance”

with the Act. See id. at 342. The Court concluded that the

plaintiffs had not pled their case with enough specificity and

then went on to determine whether specific rights existed under

the statute. The Court distinguished among provisions of Title

IV-D that were “designed only to guide the State in structuring

its systemwide efforts at enforcing support obligations” and

those that were intended to benefit the plaintiffs. See id. at

344. First, the Court found that

the requirement that a State operate its child support

program in “substantial compliance” with Title IV-D was

not intended to benefit individual children and

custodial parents, and therefore it does not constitute

a federal right. Far from creating an individual

entitlement to services, the standard is simply a

yardstick for the Secretary to measure the systemwide

performance of a State’s Title IV-D program.

Id. at 343 (emphasis omitted). Accordingly, the requirement of

“substantial compliance” did not “fit [the] traditional three

criteria for identifying statutory rights” and, therefore, did

not create an enforceable federal right under § 1983. Id. at

344.

The Court pointed out that other similar provisions within

the Act also did not “fit” the criteria because they were

“designed only to guide the State in structuring its systemwide

efforts at enforcing support obligations.” Id. For example, the

Court explained that Title IV-D’s requirements for a data

processing system did not give rise to individualized rights to

computer services. See id. at 344-45. The Court acknowledged

that such provisions did “ultimately” benefit the recipients of

34

we conclude that Wilder is alive and well, albeit narrowed by the

commands of Suter and Blessing that Congress must unambiguously

confer through section 30(A) an “individual entitlement” upon

each of the plaintiffs in this case. See Blessing, 520 U.S. at

343-45 (providing examples of statutory provisions in Title IV-D

of the Social Security Act that “do not give rise to

individualized rights”); Suter, 503 U.S. at 357 (concluding that

Congress must “unambiguously confer” a right upon the particular

plaintiffs in that case). As a consequence of this conclusion,

we look first to whether the statute confers a federal right on

each of the plaintiffs in this case.

b. Section 30(A) Creates a “Federal Right” in Favor of the

Recipient Plaintiffs Enforceable Under § 1983

Section 30(A) provides in relevant part:

A State plan for medical assistance must . . . provide

such methods and procedures relating to the utilization

of, and the payment for, care and services available

under the plan . . . as may be necessary to safeguard

against unnecessary utilization of such care and

services and to assure that payments are consistent

with efficiency, economy, and quality of care and are

sufficient to enlist enough providers so that care and

services are available under the plan at least to the

extent that such care and services are available to the

general population in the geographic area[.]

the services, “but only indirectly,” and thus did not give rise

to enforceable individual rights. See id.

35

42 U.S.C. § 1396a(a)(30)(A) (2000).24 With the Wilder/Blessing

framework in mind, we now analyze whether section 30(A) conveys a

federal right on the plaintiffs, distinguishing between the

interests of the recipient plaintiffs and those of the provider

plaintiffs.

(1) Intended Beneficiaries

(i) The Recipient Plaintiffs

The district court found that section 30(A) protected the

recipient plaintiffs and “their access to medicaid care.”

Evergreen, 116 F. Supp. 2d at 750. Hood asserts that because the

provision focuses on cost containment and furnishes goals and

general guidelines for states in setting their reimbursement

rates, section 30(A) was “never intended to create an individual

entitlement to specific reimbursement rates or services for

particular providers or beneficiaries.” The plaintiffs respond

that due to “the overwhelming case law” in other circuits, which

has found a right of action in favor of both recipients and

providers, “the district court was certainly correct in finding

that Congress intended the equal access mandate of [section]

30(A) to benefit Medicaid beneficiaries and providers.”

24

Because the district court’s injunction did not rest on

the provision of section 30(A) relating to quality of care, we do

not address the enforceability of that provision here.

36

We agree with our sister circuits which have held that

recipients are the intended beneficiaries of section 30(A). See

Ark. Med. Soc’y, Inc. v. Reynolds, 6 F.3d 519, 526 (8th Cir.

1993) (“The equal access provision is indisputably intended to

benefit the recipients by allowing them equivalent access to

health care services.”); accord Visiting Nurse Ass’n v. Bullen,

93 F.3d 997, 1004 n.7 (1st Cir. 1996) (acknowledging that

Medicaid recipients “are intended beneficiaries under the ‘equal

access’ requirement as it affects the availability of their

medical care”).

Under the rationale of Wilder, we conclude that recipients

are intended beneficiaries of section 30(A) because the provision

is “phrased in terms” benefitting recipients in that it directly

focuses on their access to medical care. See Wilder, 496 U.S. at

510. Indeed, section 30(A) speaks clearly in terms of the

recipients because “care and services are [to be] available under

the [state] plan at least to the extent that such care and

services are available to the general population in the

geographic area.” 42 U.S.C. § 1396a(a)(30)(A). As such, we

agree with the district court that section 30(A) “protects

beneficiaries and their access to medicaid care,” Evergreen, 116

F. Supp. 2d at 750, and find that the recipient plaintiffs have

an “individual entitlement” to the equal access guarantee of

section 30(A). See Blessing, 520 U.S. at 343.

37

(ii) The Provider Plaintiffs

The more difficult question here is whether the health care

providers are also intended beneficiaries of section 30(A). The

district court agreed “with those decisions which have found

providers to be ‘beneficiaries’ under the equal access portion of

the statute,” Evergreen, 116 F. Supp. 2d at 750, and thus

concluded that Congress intended section 30(A) to benefit the

provider plaintiffs in this case.

We recognize that other circuits have answered this question

affirmatively, finding that Congress intended section 30(A) to

benefit health care providers. See Ark. Med. Soc’y, Inc., 6 F.3d

at 526 (“The providers here are beneficiaries for the same reason

that the providers in Wilder were beneficiaries.”); accord

Bullen, 93 F.3d at 1004 (finding that “providers are

appropriately considered intended beneficiaries” of section

30(A)); Methodist Hosps., Inc. v. Sullivan, 91 F.3d 1026, 1029

(7th Cir. 1996) (“We therefore follow Arkansas Medical Society

and hold that providers of medical care have a private right of

action, derived through § 1983, to enforce [section 30(A)].”);

Moody Emergency Med. Serv., Inc. v. City of Millbrook, 967 F.

Supp. 488, 494 (M.D. Ala. 1997) (finding the provider plaintiff

to be an intended beneficiary of section 30(A)). However, these

courts have compared section 30(A) to the Boren Amendment and

have reasoned that a right of action exists in favor of health

38

care providers simply because section 30(A) speaks in terms of

payment to these providers. See Ark. Med. Soc’y, Inc., 6 F.3d at

526 (concluding that providers are intended beneficiaries of

section 30(A) because it “addresses payment for ‘care and

services’ provided by noninstitutional providers”); see also

Bullen, 93 F.3d at 1004 (“As long as [the Boren Amendment and

section 30(A)] evince a congressional concern for preserving

financial incentives to providers[,] . . . providers are

appropriately considered intended beneficiaries.”); Moody

Emergency Med. Serv., Inc., 967 F. Supp. at 494 (citing Bullen

for the proposition that providers are intended beneficiaries of

section 30(A) because the provision “evince[s] a congressional

concern for preserving financial incentives to encourage health

care providers to provide services to Medicaid recipients”).

We think reliance on the Boren Amendment is insufficient to

resolve this issue. Blessing and Suter demand that we focus our

inquiry on whether Congress intended to create an “individual

entitlement” for each plaintiff. As we illustrate below, in

contrast to the Boren Amendment, section 30(A) does not create an

“individual entitlement” for individual providers to a particular

level of payment because it does not directly address those

providers. Instead, section 30(A) speaks directly to individual

recipients, conferring upon them an “individual entitlement” to

equal access to medical care.

39

The Wilder Court held that the Boren Amendment

“establishe[d] a system for reimbursement of providers,” 496 U.S.

at 510, in that it was directly keyed to their financial

interests by requiring “reasonable and adequate” payments to

those providers. See 42 U.S.C. § 1396a(a)(13)(A) (1992).

Therefore, the Boren Amendment directly addressed providers.

Section 30(A), as we discussed in the prior section, focuses on

recipients in that it is directly keyed to the recipients’ access

to medical care, and as a result, the recipients are the direct

intended beneficiaries of the section.

However, in contrast to the Boren Amendment, section 30(A)

does not create an individual entitlement in favor of any

provider. The section benefits recipients by ensuring there is

an adequate number of providers in the marketplace. Therefore,

it may be true that health care providers as a group are

indirectly benefitted by section 30(A) because the section

requires that the payments to providers be sufficient to ensure

that Medicaid recipients have equal access to medical care. But

it cannot be said that section 30(A) necessarily confers upon

each provider an individual right to a particular payment because

the section does not focus directly on providers.

One example will suffice: Assume we have a nursing home in

Baton Rouge with 150 residents, which, following the 7%

reduction, is forced into bankruptcy and then liquidation.

Assume further that the district court decides that the relevant

40

geographic market to measure the access of recipients is the

Baton Rouge market for nursing home care and also that the

district court concludes that the recipients are entitled to the

same access to nursing home care in Baton Rouge as that of non-

Medicaid residents.25 Finally, assume that, once the nursing

home closes, all 150 residents are able to fill vacant beds in

other facilities in Baton Rouge. Under this scenario, there is

no violation of the recipients’ equal access rights, despite the

fact that the bankrupt nursing home was put out of business.

From this example, it is apparent that while recipients have

an individual entitlement to equal access to medical care, any

benefit to health care providers is indirect at best. The

statute does not confer any direct right upon the individual

provider because, as the above example illustrates, even if an

individual provider is forced to liquidate, the recipients’ right

to access is not necessarily violated. That the provider

plaintiffs may receive an indirect benefit under section 30(A) is

not sufficient to support a claim that they are its intended

beneficiaries. See Blessing, 520 U.S. at 344. Accordingly, we

25

This assumption is derived from the express requirements

of the equal access provision and from guidance provided by the

House Report accompanying the codification of the equal access

portion of section 30(A). See 42 U.S.C. § 1396a(a)(30)(A); H.R.

REP. NO. 101-247 (1989), reprinted in 1989 U.S.C.C.A.N. 1906

(“The question which the Secretary must ask is whether Medicaid

beneficiaries have access to provider services that is at least

as great as that of others in the area[.]”).

41

find that providers are not intended beneficiaries of section

30(A).26

We recognize that if the reimbursement rate reduction should

result in the widespread demise of providers or discharge of

Medicaid patients for fiscal reasons, the access of Medicaid

recipients to care and services may be adversely affected,

potentially to a degree that would violate section 30(A)’s

command of equal access. For this reason, evidence of financial

distress to providers resulting from the rate reduction is

clearly relevant to the question whether the equal access right

provided by section 30(A) to Medicaid recipients has been

violated. For the reasons we have indicated, however, the fact

that evidence of financial distress is relevant in a suit brought

by Medicaid recipients does not amount to an individual

entitlement on the part of any provider under the statute.

26

While we recognize the statutory maxim that “[t]he views

of a subsequent Congress form a hazardous basis for inferring the

intent of an earlier one,” Firestone Tire & Rubber Co. v. Bruch,

489 U.S. 101, 114 (1989) (internal quotations omitted) (quoting

United States v. Price, 361 U.S. 304, 313 (1960)) — a maxim that

has special force when the later Congress is amending a section

of the statute different from the one under consideration — we

note that our conclusion that providers are not intended

beneficiaries of section 30(A) is consistent with Congress’s

concern in its repeal of the Boren Amendment to preclude further

lawsuits by providers to contest the adequacy of their

reimbursement rates. See H.R. REP. NO. 105-149, at 1230 (1997)

(“It is the Committee’s intention that, following the enactment

of [the Balanced Budget Act of 1997], neither this nor any other

provision of [§ 1396a] will be interpreted as establishing a

cause of action for hospitals and nursing facilities relative to

the adequacy of the rates they receive.”).

42

(2) Vague and Amorphous

Having found that only the recipient plaintiffs are intended

beneficiaries of section 30(A), we turn to the second factor of

the Wilder/Blessing test.27 We agree with the district court and

the many other courts that have addressed the equal access

provision that it is not too vague and amorphous to be beyond the

competence of the judiciary to enforce. However, we reach this

conclusion employing a different analysis than that used by the

district court.28

27

Because we have concluded that health care providers are

not intended beneficiaries of the equal access provision, we

continue our analysis focusing only on the recipient plaintiffs.

28

The district court and the plaintiffs incorrectly

analyzed this prong of the Wilder/Blessing test. The district

court found that the equal access provision was not too vague and

amorphous to enforce because the

[p]laintiffs set forth a detailed and specific claim

that their federal rights under . . . the equal access

. . . section[] of the Medicaid statute were violated

through the defendants [sic] promulgation of the

proposed rates in an emergency rule without adequately

assuring the rates would not affect access to medical

care[.]

Evergreen, 116 F. Supp. 2d at 750-51. It is apparent that the

district court borrowed language from Blessing to analyze this

factor, see Blessing, 520 U.S. at 342; however, such reliance is

misplaced. In the first instance, the Court never reached the

vague-and-amorphous question because it found that the plaintiffs

had not “identified with particularity the rights they claimed.”

Id. The Court found that the plaintiffs had presented violations

of Title IV-D as an “undifferentiated whole” and did not

distinguish among the rights they were attempting to enforce.

See id. The Blessing Court advised that the complaint must be

“broken down into manageable analytic bites” before a court can

“ascertain whether each separate claim satisfies the various

criteria we have set forth for determining whether a federal

43

Hood asserts that section 30(A) “lack[s] sufficient

specificity and detail to create an enforceable right under

§ 1983.” Additionally, Hood contends that neither the statute

nor its underlying regulations provide any guidance to measure

equal access. Hood acknowledges that “[a] number of earlier

decisions” have found section 30(A) to be sufficiently definite

for courts to enforce; however, Hood argues that these cases were

decided “without the benefit of the Supreme Court’s reasoning in

Blessing.”

The plaintiffs respond by arguing that “the equal access

mandate was a regulation for 24 years and a statute now for the

last 11 years.” Therefore, the plaintiffs contend that “[a] body

of well established case law [from] multiple circuit courts

supports [the plaintiffs’] rights to enforce the equal access

mandate.”

We agree with those courts that have held that the equal

access mandate of section 30(A) is sufficiently definite to

enforce. See Bullen, 93 F.3d at 1005; Ark. Med. Soc’y, 6 F.3d at

527; Moody Emergency Med. Serv., Inc., 967 F. Supp. at 495.

First, in Wilder, the Supreme Court found that the idea of

“reasonable access” to medical care was not so vague and

amorphous to render the Boren Amendment unenforceable by the

statute creates rights.” Id. Because the Blessing Court did not

engage this analysis in determining whether the plaintiffs were

asserting a federal right, it is inapposite to our vague-and-

amorphous analysis.

44

courts. See Wilder, 496 U.S. at 519. Here, we are evaluating

recipients’ “equal access” to care and services. As with the

“reasonable access” requirement in the Boren Amendment, section

30(A)’s “equal access” mandate is also undefined by the statute

and its implementing regulations. See id. at 507. Still, the

Wilder Court found the provision sufficiently definite to

enforce, see id. at 519, as we do the “equal access” language of

section 30(A). Indeed, the equal access provision provides the

state and courts with a much less ambiguous “measuring rod” by

which to evaluate recipients’ access to care. See Ark. Med.

Soc’y, 6 F.3d at 527; see also Bullen, 93 F.3d at 1005 (“[T]he

term ‘equal access,’ as employed in section [30(A)], arguably

provides a more concrete standard [than ‘reasonable access’],

objectively measurable against the health care access afforded

among the general population[.]”).

Second, we understand that the phrase “geographic area”

could have many definitions depending upon the type of service or

the needs of recipients in a particular area. See Methodist

Hosps., Inc., 91 F.3d at 1029. However, courts are familiar with

the concept and are able to assess its meaning in a particular

case. See id. (recognizing that courts have “wrestled with the

concept of the ‘geographic market’ in antitrust law without

producing a mechanical definition” and concluding that

“[d]efining geographic markets for medical care has proven no

more tractable than geographic markets in general, but courts

45

soldier on”). Furthermore, the Boren Amendment required states

to “tak[e] into account geographic location and reasonable travel

time” in determining “reasonable access,” 42 U.S.C.

§ 1396a(a)(13)(A) (1992), and the Wilder Court upheld its

enforceablity. See 496 U.S. at 519-20. We follow Wilder and

conclude that the phrase “geographic area” is not too vague and

amorphous to be beyond the competence of the judiciary to

enforce.

Above all, the equal access provision affords the “objective

benchmark” of access to medical care equal to that of the general

population in the same geographic area. Cf. Wilder, 496 U.S. at

519; see also Bullen, 93 F.3d at 1005 (concluding that the equal

access provision is “objectively measurable against the health

care access afforded among the general population”); Ark. Med.

Soc’y, 6 F.3d at 527 (“The equal access provision . . . actually

gives a measuring rod for accessibility which . . . is

sufficiently specific.”). This finding of an “objective

benchmark” was critical in Wilder, and we conclude that it is

satisfied with respect to section 30(A).

(3) Binding Obligation

Finally, we agree with the district court that section 30(A)

“‘unambiguously impose[s] a binding obligation on the States.’”

Evergreen, 16 F. Supp. 2d at 751 (quoting Blessing, 520 U.S. at

341). As was the Boren Amendment, section 30(A) “is cast in

46

mandatory rather than precatory terms,” Wilder, 496 U.S. at 512,

in that it provides that a state plan “must” have methods and

procedures in place to assure payments are sufficient to maintain

equal access to medical care for Medicaid recipients. Also,

under the Medicaid Act, HCFA has the authority to withhold funds

for noncompliance with section 30(A). See 42 U.S.C. § 1396c; 42

C.F.R. § 430.35 (providing the bases for which HCFA may withhold

FFP); see also Wilder, 496 U.S. at 512.29 The Supreme Court in

Wilder found these factors persuasive when considering the Boren

Amendment, see Wilder, 496 U.S. at 512, as do we in our

consideration of section 30(A).

(4) Conclusion

We therefore find that recipients are intended beneficiaries

of section 30(A) because it directly addresses their access to

medical care. However, we conclude that because section 30(A)

did not confer upon providers an “individual entitlement” to a

particular level of payment, the district court erred as a matter

29

As further evidence of the mandatory nature of the

provision, in 1989, Congress, concerned that the equal access

regulation was receiving inadequate enforcement, codified the

“equal access” language of section 30(A). See Pub. L. No. 101-

239, § 6402, 103 Stat. 2260 (1989) (codifying 42 C.F.R.

§ 447.204, which provides that “[t]he agency’s payments must be

sufficient to enlist enough providers so that services under the

plan are available to recipients at least to the extent that

those services are available to the general population”). This

codification is clear evidence that Congress intended the equal

access provision to be mandatory on the states. See Ark. Med.

Soc’y, 6 F.3d at 526.

47

of law in holding that they are intended beneficiaries of the

section. Furthermore, we find that section 30(A) is sufficiently

definite for the judiciary to enforce and that Congress intended

to impose a binding obligation on states when it enacted the

section. As such, the recipient plaintiffs may maintain a suit

under § 1983 to redress violations of the federal rights

conferred upon them by section 30(A).30

2. The Insufficiency of the Plaintiffs’ Evidence

Concluding that recipients may bring a cause of action under

§ 1983 to redress violations of section 30(A) does not end our

examination into whether the recipient plaintiffs have

established a substantial likelihood of success in proving

violations of section 30(A). The question we must now consider

is, in the case of these recipient plaintiffs, whether evidence

exists in the record that supports a finding that after the

reimbursement rate reduction, recipients will not have access to

medical care equal to that of the non-Medicaid population in the

30

We agree with the district court that Congress did not

foreclose a remedy under § 1983 for violations of section 30(A).

As the Supreme Court held in Wilder, the administrative scheme

underlying the Medicaid Act “cannot be considered sufficiently

comprehensive to demonstrate a congressional intent to withdraw

the private remedy of § 1983.” 496 U.S. at 522.

48

same geographic area.31 See 42 U.S.C. § 1396a(a)(30)(A). The

district court held that Hood’s primary reason for the rate

reduction was budgetary and that “[t]here was no evidence of a

determination of the impact the seven percent . . . reduction

would have on providers.” Evergreen, 116 F. Supp. 2d at 752. We

conclude, however, that this was the wrong inquiry.

In order to succeed on a motion for preliminary injunctive

relief, the plaintiffs must, “by a clear showing, carr[y] the

burden of persuasion.” White v. Carlucci, 862 F.2d 1209, 1211

(5th Cir. 1989); see also Doe v. Duncanville Indep. Sch. Dist.,

994 F.2d 160, 163 (5th Cir. 1993) (“To obtain a preliminary

injunction, a movant has the burden of proving . . . a

substantial likelihood of success on the merits[.]”). The

plaintiffs have proffered affidavits and other documentary

evidence attempting to demonstrate a negative impact to Medicaid

recipients’ equal access to care and services. Most of the

affidavits submitted were by providers, in which they asserted

that should the 7% reimbursement rate reduction be implemented,

they may be forced into bankruptcy and will be unable to continue

to care for the recipients. The evidence also offers predictions

31

We note that the statute in section 30(A) speaks in

terms of “payments,” rather than “rates.” While a reimbursement

rate is a form of payment, there are other types of payment to

providers, such as those to DSHs and, possibly, co-payments made

by recipients. These additional payments must also be taken into

account in assessing whether the payments in the aggregate will

be adequate.

49

that providers may be compelled to discharge some recipients or

at least limit their access.

Regarding the actual impact on recipients, the record

reveals evidence on only two of the recipient plaintiffs — Donna

Methvien, mother of Victor Lee Methvien, Jr., and Farley Wayne

Luttrell. Donna Methvien, in her “affidavit,”32 attests that

should the reimbursement rate reduction go into effect, there

will be a severe “impact on [her] son’s life and others at the

community home in need of these special Medicaid funds.”

Furthermore, the record contains an affidavit by John Taylor,

Vice President of Program Operations for Evergreen Presbyterian

Ministries, Inc., in which he states that “[i]t is likely if the

budget cuts are implemented that we will not be able to provide

the services required or find an alternative treatment site for

Mr. Luttrell and other severely disabled patients who therefore

will lose access to needed medical care.”

The plaintiffs argue further that “[s]tate institutions

cannot absorb the number of residents if nursing facilities

cannot continue to accept Medicaid recipients.” However, aside

from deposition testimony from Jerry Barnard that “predicts that

Medicaid recipients may no longer be accepted by facilities if

32

We note that several of these “affidavits” were not

notarized or witnessed, and the district court recognized this

deficiency at a motions hearing on March 27, 2000. Ms.

Methvien’s “affidavit” was deficient in this manner.

50

their costs are not covered,” the plaintiffs point to no evidence

to support this contention.

In our evaluation of the plaintiffs’ evidence and of the

district court’s opinion, we find two problems with the district

court’s disposition of the evidence. First, the district court

failed to address whether the access of individual Medicaid

recipients will remain equal to that of the non-Medicaid

population in the same geographic area after the proposed 7% rate

reduction. Instead, as we stated above, the court found only

that LDHH had failed to conduct studies33 and failed to determine

the impact of the rate reduction on providers. Thus, there were

no findings on whether the plaintiffs carried their burden of

demonstrating on the evidence that these individual recipients

will be denied equal access to medical care.

Second, the plaintiffs failed to adduce evidence to support

any such findings. In order for the recipient plaintiffs to

establish a substantial likelihood on the merits, they must

present evidence which demonstrates that if the 7% rate reduction

is made effective, the recipients in a particular geographic area

will not receive access to medical care equal to that of the non-

33

The district court based its holding upon the fact that

there was no evidence that LDHH conducted studies before

implementing the rate reduction. While we do not reach the

merits of this conclusion, we note that studies, while helpful,

are not required by the language of section 30(A). Accord

Methodist Hosps., Inc., 91 F.3d at 1030 (“Nothing in the language

of [section 30(A)], or any implementing regulation, requires a

state to conduct studies in advance of every modification.”).

51

Medicaid population in that area. Instead of producing such

evidence, the plaintiffs put in evidence which predicted that the

providers would experience financial distress. While we agree

that the evidence presented by the plaintiffs is certainly

relevant, it provides us with no information on the actual impact

on the comparability to the general population of the recipients’

access to medical care. Instead, it focuses solely on the impact

on providers.

Moreover, there is no evidence from the plaintiffs that

focuses on geographic areas and on the access to the different

types of provider services available in those areas. In order

for courts to make a determination whether recipients are

receiving equal access to health care, there must be evidence in

the record regarding the relevant geographic area, the services

offered in the area, and the recipient’s relationship to that

area. As the Court of Appeals for the Seventh Circuit has

recognized, the phrase “geographic area” may have several

meanings, depending upon the type of access or the type of care.

See Methodist Hosps., Inc., 91 F.3d at 1029. However, there is

no evidence in the record addressing this concern; there are only

allegations of general state-wide access problems, which is not

sufficient for the district court to determine whether a

recipient’s access will actually be affected.

Against the plaintiffs’ failure to put on such evidence,

Hood advances some evidence that would tend to suggest that, at

52

least in the case of nursing home facilities, there is an excess

of available beds. A March 17, 2000 nursing home census shows

that there are many more certified beds34 for Medicaid recipients

than there are recipients to occupy them. A February 19, 1999

letter from the Louisiana Nursing Home Association, one of the

plaintiffs in this case, to Stephen Perry, the Governor’s Chief

of Staff, acknowledges this oversupply of beds in nursing

facilities. Castille testified in his deposition that this

oversupply of beds led to a moratorium though the year 2005 on

the issuance of new-facility need certificates, which are

required to construct new nursing home facilities.35 The

plaintiffs do not counter this evidence, and they had the burden

of both production and persuasion in the first instance.

We conclude that because the district court and the

plaintiffs’ evidence focused almost exclusively on the impact of

the reimbursement rate reduction on health care providers, the

question whether recipients’ access will be impaired was not

34

As Lisa Deaton, the Director of the Health Standards

Section of LDHH, states in her affidavit, a bed must be

“certified” in order to be occupied by a Medicaid recipient.

35

Moreover, Castille stated in his deposition that he had

meetings with the program directors within LDHH’s Medicaid

program, in which he received “no indiction . . . from any of the

program directors that there had been any exodus, large-scale or

otherwise, of providers to the Medicaid program.” Hood directs

our attention to the deposition testimony of Sally Thiel, a

Program Director for the Mental Health Rehabilitation Program at

LDHH, in which she states that there has been “a continuing

increase in the number of providers who want to become [mental

health rehabilitation] Medicaid providers.”

53

properly addressed. As we have stated, the focus of the

challenge must be on the recipients’ access and how it compares

to the non-Medicaid population in the same geographic area.36 We

therefore find that there is an inadequate evidentiary base for a

conclusion by the district court that the plaintiffs have a

substantial likelihood of success in proving a violation of

recipients’ right to equal access to medical care. Because there

are no findings, and inadequate evidence had there been such

findings, we conclude that the district court abused its

discretion in holding that the plaintiffs had a substantial

likelihood of success in proving violations of section 30(A).37

36

In addition, the plaintiffs provide very little

information on the twenty-three recipients who are plaintiffs in

this case, and except for a few recipients, we are given no

indication of where these recipients reside in the state or of

the type of Medicaid services necessary for their care.

Therefore, we recognize that a court could abuse its discretion

in entering state-wide injunctive relief on such a meager showing

by the plaintiffs.

37

One of the unresolved issues is the appropriate standard

of review by which a district court is to evaluate the actions of

a state agency. In Wilder, the Court recognized that a state’s

“substantial discretion in choosing among reasonable methods of

calculating rates may affect the standard under which a court

reviews whether the rates comply with the [Boren Amendment].”

496 U.S. at 519. The Court noted further that “the Courts of

Appeals generally agree that when the State has complied with the

procedural requirements imposed by the amendment and regulations,

a federal court employs a deferential standard of review to

evaluate whether the rates comply with the substantive

requirements of the amendment.” Id. at 520 n.18. However, the

Court “express[ed] no opinion as to which of the cases contains

the correct articulation of the appropriate standard of review.”

Id.

We note that courts, including our own, have employed the

arbitrary and capricious standard in evaluating the actions of a

54

IV. CONCLUSION

For the foregoing reasons, we VACATE the preliminary

injunction,38 VACATE the stay pending appeal, and REMAND to the

district court for further proceedings consistent with this

opinion.

state agency. See Abbeville Gen. Hosp. v. Ramsey, 3 F.3d 797,

804 (5th Cir. 1993); Miss. Hosp. Ass’n v. Heckler, 701 F.2d 511,

516 (5th Cir. 1983); see also Ark. Med. Soc’y, 6 F.3d at 529;

AMISUB (PSL), Inc. v. Colo. Dep’t of Soc. Servs., 879 F.2d 789,

795-96 (10th Cir. 1989); Neb. Health Care Ass’n v. Dunning, 778

F.2d 1291, 1294 (8th Cir. 1985).

The district court did not address the appropriate standard

of review and appears to have used a de novo standard. Using the

standard employed by the district court, we have concluded that

the court erred in its evaluation of the evidence. We do not,

however, mean to suggest that the de novo standard apparently

used by the district court is the correct standard either for the

district court or for this court. A more deferential standard is

more likely appropriate.

38

We recognize that plaintiffs have alleged several other

statutory, constitutional, and state law violations. In its

opinion, the district court stated that these claims were “so

intertwined” that “[s]hould plaintiffs be successful in their

[sections 13(A) and 30(A)] claims, it is likely that some

Constitutional and state law violations were also committed.”

Evergreen, 116 F. Supp. 2d at 754. Because the district court

found that the plaintiffs’ success on the merits regarding their

sections 13(A) and 30(A) claims was a predicate for their success

on the remaining claims, these additional claims also fail as a

basis for preliminary injunctive relief.

55