Amicus Curiae Brief — Wilder v. Virginia Hospital Assn.

Supreme Court Of The United States

OCTOBER TERM, 1988

GERALD L. BALILES, ET AL.,

Petitioners,

Vv

THE VIRGINIA HOSPITAL ASSOCIATION,

Respondent.

BRIEF AMICI CURIAE OF THE STATES OF CONNECTICUT,

ALABAMA, ALASKA, ARIZONA, CALIFORNIA, COLORADO,

DELAWARE, FLORIDA, GEORGIA, HAWAII, IDAHO, ILLINOIS,

INDIANA, IOWA, KANSAS, KENTUCKY, LOUISIANA, MAINE,

MARYLAND, MASSACHUSETTS, MICHIGAN, MINNESOTA,

MISSISSIPPI, MISSOURI, MONTANA, NEVADA,

NEW HAMPSHIRE, NEW JERSEY, NEW MEXICO, NEW YORK.

NORTH CAROLINA, NORTH DAKOTA, OHIO, OKLAHOMA,

OREGON, PENNSYLVANIA, RHODE ISLAND,

SOUTH CAROLINA, SOUTH DAKOTA, TENNESSEE, TEXAS,

UTAH, VERMONT, WASHINGTON, WEST VIRGINIA and

WYOMING IN SUPPORT OF THE PETITIONER

COMMONWEALTH OF VIRGINIA

CLARINE NARDI RIDDLE

ATTORNEY GENERAL

OF CONNECTICUT

(Continued Inside)

Assistant Attorney General

ARNOLD L. MENCHEL

Assistant Attorney General

KENNETH A. GRAHAM*

Assistant Attorney General

Office of the Attorney General

55 Elm Street — PO. Box 120

Hartford, Connecticut 06101

*Counsel of Record

RICHARD J. LYNCH

ADDITIONAL ATTORNEYS GENERAL

Ha Kail Kil

t it Hla iil

State of Illinois

Neil F. Hartigan

_ Attorney General of Illinois

100 West Randolph Street, 12th Floor

Chicago, Illinois 60601

State of Indiana

Linley E. Pearson

Attorney General of Indiana

219 State House

Indianapolis, Indiana 46204

State of Iowa

Thomas J. Miller

Attorney General of lowa

Hoover Building — Second Floor

Des Moines, Iowa 50319

State of Kansas

Robert T. Stephan

Attorney General of Kansas

Judicial Center — Second Floor

Topeka, Kansas 66612

Commonwealth of Kentucky

Frederic J. Cowan

Attorney General of Kentucky

State Capitol, Room 116

Frankfort, Kentucky 40601

State of Louisiana

William J. Guste, Jr.

Attorney General of Louisiana

2-3-4 Loyola Building

New Orleans, Louisiana 70112

State of Minnesota

Hubert H. Humphrey, III

Attorney General of Minnesota

102 State Capito!

St. Paul, Minnesota 55155

State of

Mike Moore

Attorney General of Mississippi

P.O. Box 220

Jackson, Mississippi 39205

State of Missouri

William L. Webster

Attorney General of Missouri

Supreme Court Building

P.O. Box 899

Jefferson City, Missouri 65102

State of Montana

Marc Racicot

Attorney General of Montana

Justice Building

215 North Sanders

Helena, Montana 59620

State of Nevada

Brian McKay

Attorney General of Nevada

Heroes Memorial Building

Capitol Complex

Carson City, Nevada 89710

State of New Hampshire

John P. Arnold

Attorney General of New Hampshire

208 State House Annex

Concord, New Hampshire 03301

State of New Jersey

Peter N. Perretti, Jr.

Attorney General of New Jersey

Richard J. Hughes Justice Complex, CN112

Trenton, New Jersey 08625

State of New Mexico

Hal Stratton

Attorney General of New Mexico

P.O. Drawer 1508

Santa Fe, New Mexico 87504-1508

\

State of North Dakota

Nicholas J. Spaeth

Attorney General of North Dakota

Office of Attorney General

600 E. Boulevard

Bismarck, North Dakota 58505

State of Ohio

Anthony J. Celebrezze, Jr.

Attorney General of Ohio

State Office Tower

30 West Broad Street

Columbus, Ohio 43266

State of Oklahoma

Robert H. Henry

Attorney General of Oklahoma

112 State Capitol

Oklahoma City, Oklahoma 73105

State of Oregon

David Frohnmayer

Attorney General of Oregon

Department of Justice

100 Justice Building

Salem, Oregon 97310

Pierre, South Dakota 57501-5090

State of Tennessee

Charles W. Burson

Attorney General of Tennessee

450 James Robertson Parkway

Nashville, Tennessee 37219

State of Texas

Jim Mattox

Attorney General of Texas

P.O. Box 12548

Austin, Texas 78711

State of Utah

Paul Van Dam

Attorney General of Utah

236 State Capitol

Salt Lake City, Utah 84114

State of Vermont

Jeffrey L. Amestoy

Attorney General of Vermont

Previlion Office Building

State Street

Montpelier, Vermont 05602

oe

Kenneth Eikenberry

Stemmay Gensets oS Washington

INTRODUCTION ............ |

I. HEALTH CARE PROVIDERS ARE NOT

THE INTENDED BENEFICIARIES OF

Il. BECAUSE PROVIDERS ARE NOT THE

INTENDED BENEFICIARIES OF THE

MEDICAID ACT, PROVIDERS LACK

STANDING TO SUE STATE MEDICAID

AGENCIES IN § 1983 ACTIONS OVER

ALLEGED VIOLATIONS OF SAID ACT

Ill. NEITHER THE LANGUAGE NOR THE

HISTORY OF SECTION 1396 SUPPORTS

FINDING THAT PROVIDERS HAVE

RIGHTS ENFORCEABLE THROUGH

SECTION 1983 ..

CONCLUSION

APPENDIX

17

1A

No. 88-2043

gn The

Supreme Court Of The United States

OCTOBER TERM, 1988

GERALD L. BALILES, ET AL..,

Petitioners,

v.

THE VIRGINIA HOSPITAL ASSOCIATION,

Respondent.

BRIEF AMICI CURIAE OF THE STATES OF CONNECTICUT,

ALABAMA, ALASKA, ARIZONA, CALIFORNIA, COLORADO,

DELAWARE, FLORIDA, GEORGIA, HAWAII, IDAHO, ILLINOIS,

INDIANA, IOWA, KANSAS, KENTUCKY, LOUISIANA, MAINE,

MARYLAND, MASSACHUSETTS, MICHIGAN, MINNESOTA,

MISSISSIPPI, MISSOURI, MONTANA, NEVADA,

NEW HAMPSHIRE, NEW JERSEY, NEW MEXICO, NEW YORK,

SOUTH CAROLINA, SOUTH DAKOTA, TENNESSEE, TEXAS,

UTAH, VERMONT, WASHINGTON, WEST VIRGINIA

INTRODUCTION

The States of Connecticut, Alabama, Alaska, Arizona,

California, Colorado, Delaware, Florida, Georgia, Hawaii,

Idaho, Illinois, Indiana, lowa, Kansas, Kentucky, Louisiana,

Maine, Maryland, Massachusetts, Michigan, Minnesota, Mis-

sissippi, Missouri, Montana, Nevada, New Hampshire, New

Jersey, New Mexico, New York, North Carolina, North Dakota,

Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South

Carolina, South Dakota, Tennessee, Texas, Utah, Vermont,

Washington, West Virginia and Wyoming (hereinafter the

‘Amici States’’) submit this brief in support of the Petitioner

Commonwealth of Virginia. The decision of the Fourth Cir-

cuit in Baliles v. Virginia Hospital Association, 868 F.2d 653

(4th Cir. 1989), should be reversed.

QUESTION PRESENTED

) Whether the Medicaid statutes give health care providers

(ie., hospitals and nursing homes) a private right of action

enforceable through 42 U.S.C. § 1983 (1982) to challenge state

reimbursement decisions in federal court.

iv

INTEREST OF AMICI CURIAE

The State of Connecticut et al. submit this brief as amici

curiae in support of the petitioner in this case, Commonwealth

of Virginia. Virginia seeks reversal of the decision of the United

States Court of Appeals for the Fourth Circuit in Virginia

Hospital Association v. Baliles, 868 F.2d 653 (4th Cir. 1989).

In urging the Court to reverse the decision of the circuit below,

the State of Connecticut is joined by 45 additional states.’

The amici states, individually and collectively, have an over-

riding interest in the question presented in this case: whether

health care service providers have a right enforceable through

section 1983 to sue in federal court for a particular level of

Medicaid reimbursement.

This case presents the same issue on which this Court

granted certiorari in Coos Bay Care Center v. Oregon, 803 F.2d

1060 (9th Cir. 1986), cert. granted, 481 U.S. 1036, judgment

vacated and remanded on issue of mootness, 484 U.S. 806

(1987) (Coos Bay): Did Congress intend to permit providers

of health care services under 42 U.S.C.§ 1396a(a)(13)(A) (1986)

to bring suit against the states under 42 U.S.C. § 1983 (1982)

when it amended the Medicaid statutes in 1980? The issue

is no less important today than it was in 1987 when a majority

of the states, several organizations representing local govern-

ments, and the United States Solicitor General all joined

Oregon in requesting this Court to reverse the decision of the

Ninth Circuit Court of Appeals allowing providers to sue.

Indeed, the rapid growth of litigation in the area and the

enormous amounts of money at stake bear stark witness to

the Court’s prudence in agreeing to hear that case and the

ever-increasing importance to the States of the decision in this

case.

' This brief of amici curiae is filed pursuant to Rule 36.4 of the Rules of

the Supreme Court. Amicus State of Arizona does not participate in the

Medicaid program directly. However, it participates in a cooperative state-

federal program under a special grant that provides funds for indigent

health care. Because of the similarities between this special grant program

and the Medicaid program, Arizona has an interest in the issues presented

in this case.

The number of challenges to state reimbursement systems

by providers of inpatient hospital and long-term care services

to Medicaid recipients has been substantial in recent years.”

Each of these challenges has the potential to involve very large

amounts of money drawn from both state and federal trea-

suries.* Because the total number of state and federal dollars

paid annually through medical assistance programs is truly

staggering, the burgeoning number of cases has the poten-

tial to subject federal and state governments to liability run-

ning easily into the hundreds of millions of dollars.‘

Medicaid is a voluntary, cooperative federal-state program

that provides funds to reimburse certain costs of medical treat-

ment for the needy. Each of the amici states participates in

the Medicaid program, except Arizona. See footnote 1. As

required by federal law, a participating staté’s Medicaid pro-

gram must fund institutional medical care, including care in

inpatient hospitals, nursing facilities, and intermediate care

facilities (collectively referred to as “‘providers’’). The amount

’ See Appendix A for a representative sample of section 1983

to Medicaid reimbursement rates which was appended to the brief of thirty-

seven states as amici curiae concerning the Petition for Certiorari in this

case.

* For example, Volk, et al. v. Oregon, et al, cited in Appendix A, although

involving only one year’s reimbursement schedule and involving the nursing

home industry but not hospitals, has over $5 million at stake, more than

$3 million of which is federal money. The several Pennsylvania cases may

entail liability of $80 million.

* As the United States Solicitor General noted in his brief in support of

the State of Oregon in Coos Bay, the federal contribution to the Medicaid

program for medical assistance totalled $23.4 billion in 1986. Brief For The

United States As Amicus Curiae Supporting Petitioners, at 2, citing

HEALTH CARE FINANCING ADMIN., DEP’T OF HEALTH AND

HUMAN SERVICES, MEDICAID FINANCIAL REPORT: FISCAL

YEAR 1986. Federal funds comprised at least 50 and in some cases more

than 70 percent of each state's medical assistance program in 1986. 49 Fed.

Reg. 46,957 (1984). The average figure was approximately 58 percent. Thus,

treating 1986 as a representative year, and including the states’ contribu-

tion, the total medical assistance budget is over $40 billion per year.

of federal-state dollars directed to needy persons through pri-

vate, for-profit providers is a major portion of the overall

Medicaid program.

The amici states have a substantial financial stake in the

outcome of this case and a significant legal interest in its reso-

lution. The decision below holds that a health care provider

may bring an action under section 1983 to challenge the

provider reimbursement rate set by a state and approved by

the federal government. Providers are thus free to attack, on

a year-by-year and provider-by-provider basis, the “‘reason-

ableness”’ of each state’s reimbursement rates. Every routine

rate challenge may be made a federal case.

Many of the amici states already are caught up in the

explosion of provider litigation based on alleged federal rights

to specific levels of reimbursement. Indeed, some amici states

are under siege by multiple lawsuits for different years,

different classes of providers and inconsistent claims as to

the rate allegedly guaranteed by federal law. Millions of state

and federal dollars are potentially at stake in each lawsuit.

Collectively, hundreds of millions of dollars are involved. The

amici states therefore file this brief and urge the Court to

reverse the decision of the circuit below.

TABLE OF AUTHORITIES

Cases Cited: Page(s)

Al-Charles, Inc. v. Heintz, 620 F.Supp. 327, 335

SR ie a a eee 6

Almond Pharmacy, Inc. v. Mankowitz, 587 F.Supp.

925, 927-928 (N.D. IIL, E.D. 1984) ............. 6-7

Arden House, Inc. v. Heintz, 612 F.Supp. 81, 84

ee ener at Sy, ee 6

Association of Seat Lift Manufacturers v. Heckler, 619

F.Supp. 1570, 1571 (W.D. Mo., W.D. 1985) .......... 8

Cannon v. University of Chicago, 441 U.S. 677, 690

ee ee ee eae 10

i TEE i ee et 2

Cervoni v. Secretary of H.E.W., 581 F.2d 1010, 1018

ee Pa hh ree 2

Coos Bay Care Center v. Oregon, 803 F.2d 1060 (9th

Cir. 1986), cert. granted, 481 U.S. 1036, judgment

vacated and remanded on issue of mootness, 484

U.S. 806 (1987) (Coos Bay)...................... v

Cort v. Ash, 422 U.S. 66, 78 (1975) ............. 4, 5, 15

Dialysis Centers, Ltd. v. Schweiker, 657 F.2d 135, 139

I eis Seer = Be keep 2

Edwards v. District of Columbia, 821 F.2d 651, 656

Gas Gas SEED ow cece ctawivi dene 10

TABLE OF AUTHORITIES (continued)

Cases Cited: : Page(s)

Geriatrics, Inc. v. Harris, 640 F.2d 262, 265 (10th Cir.

PE CU UUb ob dwav eves eeeberersssccccccss 2

Green v. Cashman, 605 F.2d 945, 946 (6th Cir.

EN SEIS Se ee eee 2

Grossman v. Axelrod, 646 F.2d 768, 771 (2nd Cir.

EEE ESS eee ee ee 3

In Re Park Nursing Center, Inc., 28 B.R. 793, 805

(Bankr. E.D. Mich., S.D. 1983).............------ 3

Maine v. Thiboutot, 448 U.S. 1 (1980)..........4...... g

Massachusetts Mut. Life Ins. Co. v. Russell, 473 US.

SUL GL, Ure h Uls dveleeceeecece ess 4

Middlesex County Sewerage Auth. v. Nat'l Sea

Clammers Ass’n, 453 U.S. 1, 19 (1981) (Sea

SE ae ee 5,9

Minnesota Assoc. of Health Care Facilities v.

Minnesota Dept. of Public Welfare, 742 F.2d

442, 446 (8th Cir. 1984), cert. denied, 469 US.

Live keine eceeevecvecess 3, 12

Mississippi Hosp. Ass’n., Inc. v. Heckler, 701 F.2d

Eee eee 14

Murthy v. Perales, 1989 WL 19136, CC.H. MEDICARE

& MEDICAID GUIDE 437,818 (S.D.N-Y. 1989) .... 3

TABLE OF AUTHORITIES (continued)

Cases Cited: Page(s)

Nebraska Health Care Ass'n v. Dunning, 778 F.2d

ie aly ge we pllnl, 16

Northlake Community Hospital v. United States, 654

F.2d 1234, 1242 (7th Cir. 1961) .................. 2

Northwest Airlines, Inc. v. Transport Workers, 451 U.S.

Vee Tet sek Cuedend bok ike’ cain MOBI. 4

Oberlander v. Perales, 740 F.2d 116, 121 (2nd Cir.

igh ob 544 kb. ale ee Ce ob oe es 2,3

Pennhurst State School and Hospital v. Halderman,

ee a 74 ko 0 ped ee videsnamareas passim

Pennsylvania Pharmaceutical Ass'n v. Dept. of Public

Welfare, 542 F.Supp. 1349, 1355-1356 (W.D. Penn.

5 90 sie. 455 5S hes wi i eS Hes ales 7

Plaza Health Laboratories v. Perales, No. 88-8939

(S.D.N-Y. 1989), aff'd 878 F.2d 577 (2d Cir.

| BE ee hE ee Pee 3

SE 84.56 base Vane xsh es udu ks ee meeedeaded:. 2

St. Francis Hospital Center v. Heckler, 714 F.2d 872,

875 (7th Cir. 1983), cert. denied 465 U.S. 1022

I ho Sone re EME Se £6 eh ecw es » 3

St. Joseph Hospital v. Electronic Data Systems, 573

F.Supp. 443, 447 (S.D. Texas 1983) ............... 2

State Dept. of Public Welfare v. Bair, 463 N.E. 2d

1388, 1390-91 (Ind. App. 1 Dist. 1984) ......... 7-8

x

TABLE OF AUTHORITIES (continued)

Cases Cited: Page(s)

Thomas v. Johnston, 557 F.Supp. 879, 903

ee ee rr ere 2-3

Vantage Healthcare v. Virginia Board of Medical

Assistance Services, 684 F.Supp. 1329, 1331-1332

(E.D. Va. 1988) ......- 6-6-0 eee eee eee eens 6

Virginia Hospital Association v. Baliles, 868 sh

F.2d 658 (4th Cir. 1989) ............... iii, v, 11, 12

Wehunt v. Ledbetter, 875 F.2d 1558, 1563-1566

ee a dasa 0.6. pia h eh wins o's 5, 10, 15

West Allis Memorial Hosp., Inc. v. Bowen, 852

F.2d 251, 255 (7th Cir. 1988).............. 5, 10, 15

Wisconsin Hospital Ass'n v. Reivitz, 733 F.2d 1226,

REST OCT TERT Te 13-14

Wright v. City of Roanoke Redevelopment & Housing

Auth., 479 U.S. 418, 423-24 (1987) (Roanoke) ... 9, 12

Statutory Provisions:

Ss cece ten vsseceeewsanceent 5

ee I, gg occ cence cecorecesumeen 5

pO NO” re er passim

sss ccc eene senna passim

Administrative Provisions:

es a ee oes eere en dnkeaeeeen 12

Se oe eek wt aceene wee Wales 4,12

TABLE OF AUTHORITIES (continued)

Administrative Regulations: Page(s)

48 Fed. Reg. 56,046 (1983)........................ 13

48 Fed. Reg. 56,052 (1983)........................ 13

49 Fed. Reg. 46,957 (1984) ........................ vi

Preamble to Final Rule, Medicaid Program; Payment

for Long-Term Care Facilities and Inpatient

Hospital Services, 48 Fed. Reg. 56,046 at

GaSe 06s oy eeu ewUeS eS wheiy....... 13

Preamble to Interim Final Rule, Medicaid Program;

Payment for Long-Term Care Facility Services

and Inpatient Hospita: Services, 46 Fed. Reg.

47,964, 47,066 (1961) ...................... 15-16

Other Authorities:

Brief for the United States As Amicus Curiae

Supporting Petitioners, at p. 2, citing

HEALTH CARE FINANCING ADMIN.,

DEP’T OF HEALTH AND HUMAN

SERVICES, MEDICAID FINANCIAL

REPORT: FISCAL YEAR 1986................ vi

126 Cong. Rec. 17,885-86 (1980)................... 13

S. Rep. 96-471, 96th Cong., Ist Sess. 28-29... . 13, 14, 15

SUMMARY OF ARGUMENT

It is settled law that health care providers are not the

intended beneficiaries of the Medicaid Act. Further, the better

reasoned caselaw extends this settled principle of law to its

next logical step, to wit, because providers are not the intended

beneficiaries of the Medicaid Act, providers lack standing to

sue state Medicaid agencies in § 1983 actions over alleged vio-

lations of said act.

In addition to lacking standing, Congressional intent, as

revealed by the language and history of the 1980 amendments

to the Medicaid statutes, refutes the circuit court’s conclu-

sion that the Medicaid statutes give providers a legally

enforceable right to sue states over reimbursement rates under

the aegis of section 1983. The Boren Amendment to 42 U.S.C.

§ 1396(a)(13)A) provides only that states must provide “‘assur- |

ances”’ to the Secretary of Health and Human Services that

rates are reasonable and adequate. There is no language in

the amended statute suggesting enforceable rights. The his-

tory of the amendments confirms that Congress intended to

decrease federal oversight of state rate-making. Layering fed-

eral judicial scrutiny on top of administrative and state court

judicial review runs directly counter to that intent. Rather

than reducing federal oversight of the state rate-making

process and entrusting the states with primary responsibility

for those rates, as Congress intended, the result below

increases federal oversight and transfers primary rate-setting

authority to the courts by means of § 1983 actions.

ARGUMENT

I. HEALTH CARE PROVIDERS ARE NOT THE

INTENDED BENEFICIARIES OF THE SOCIAL

SECURITY ACT.

The amici states respectfully submit that the point of

departure for appropriate analysis of the question presented

is the settled principle of law that the intended beneficiaries

of the Social Security Act are the recipients of benefits and

not health care providers. Silver v. Baggiano, 804 F.2d 1211,

1216-1217 (11th Cir. 1986); Oberlander v. Perales, 740 F.2d

116, 121 (2nd Cir. 1984); Geriatrics, Inc. v. Harris, 640 F.2d

262, 265 (10th Cir. 1981) (nursing home provider “‘is not the

intended beneficiary of Medicaid program.”;; Dialysis Centers,

Ltd. v. Schweiker, 657 F.2d 135, 139 (7th Cir. 1981) (“the

statute manifests no Congressional intent to protect the finan-

cial interests of health care providers’’); Northlake Commu-

nity Hospital v. United States, 654 F.2d 1234, 1242 (7th Cir.

1981) (‘The provider . . . is not the intended beneficiary of

the Medicare program.’”’ (emphasis in original)); Green v.

Cashman, 605 F.2d 945, 946 (6th Cir. 1979) (‘We do not find

in the statute authorizing Medicare and Medicaid any legis-

lative intention to provide financial assistance to providers

of care for their own benefit. Rather, the statute is designed

to aid the patients and clients of such facilities.’); Cervoni v.

Secretary of H.E.W., 581 F.2d 1010, 1018 (1st Cir. 1978) (phy-

sicians not intended beneficiaries under Medicare Program);

Case v. Weinberger, 523 F 2d 602, 607 (2nd Cir. 1975) (‘A

nursing facility’s ‘need’ for patients has nothing to do with

the statutory benefits structure... . The benefits to a

nursing home from its participation in Medicaid reimburse-

ment result from nothing more than a statutory business rela-

tionship.”’); St. Joseph Hospital v. Electronic Data Systems,

573 F.Supp. 443, 447 (S.D. Texas 1983) (case law “clearly estab-

lishes that providers are not the intended beneficiaries of the

Medicaid Program.”); Thomas v. Johnston, 557 F.Supp. 879,

903 (W.D. Texas 1983) (‘‘[I}t is abundantly clear that it is

Medicaid recipients and not Medicaid providers who are the

intended beneficiaries of the Medicaid program.”’); In Re Park

Nursing Center, Inc., 28 B.R. 793, 805 (Bankr. E.D. Mich., S.D.

1983).

To the contrary, health care providers are business enti-

ties that made the voluntary business decision to enter the

Medicare or Medicaid Program. St. Francis Hospital Center

v. Heckler, 714 F.2d 872, 875 (7th Cir. 1983), cert. denied 465

U.S.1022 (1984) (Medicare); Middletown Haven, Inc. v. Maher,

C.C.H. MEDICARE & MEDICAID GUIDE 434,249 (Conn.

Super. Ct. 1984) (Medicaid).

It is self-evident that health care providers are no more

the intended beneficiaries of the Medicaid Program than con-

struction companies are the intended beneficiaries of govern-

ment appropriations to build elementary schools. Rather, both

are businesses participating in government programs

designed to assist those in need.° If a health care provider is

dissatisfied with his future anticipated rate levels, his remedy

is to not renew his contract (provider agreement) with the

government and to leave the Medicaid Program. Minnesota

Assoc. of Health Care Facilities v. Minnesota Dept. of Public

Welfare, 742 F.2d 442, 446 (8th Cir. 1984), cert. denied, 469

U.S. 1215 (1985), (providers are free to decline to participate

in the Medicaid Program if they are dissatisfied with a state’s

rates).

° Indeed, the law of the Second Circuit is that providers have no property

interest in prospective reimbursement rates. Oberlander v. Perales, 740 F.2d

at 120; Grossman v. Axelrod, 646 F.2d 768, 771 (2nd Cir. 1981). See also

Murthy v. Perales, 1989 WL 19136, CC.H. MEDICARE & MEDICAID

GUIDE 437,818 (S.D.N_Y. 1989) (“the contractual nature of the relation-

ship between a Medicaid provider and the State __ indicates] that the

provider's interest does not rise to the level of a constitutionally protected

property interest.” (Citing Plaza Health Laboratories v. Perales, No. 88-8939

(S.D.N.Y. 1989), aff'd 878 F.2d 577 (2d Cir. 1984) (emphasis in original).

II. BECAUSE PROVIDERS ARE NOT THE INTENDED

BENEFICIARIES OF THE MEDICAID ACT, PRO-

VIDERS LACK STANDING TO SUE STATE

MEDICAID AGENCIES IN § 1983 ACTIONS OVER

ALLEGED VIOLATIONS OF SAID ACT®

As demonstrated infra, it is undisputed that the express

wording of 42 U.S.C. § 1396a(a)(13)(A) does not contain a spe-

cific grant of a private right of action and merely sets forth

certain obligations of the state Medicaid agency to the Secre-

tary of Health and Human Services for approval of state

Medicaid plans. Indeed the only part of federal Medicaid law

that addresses provider challenges to their Medicaid rates is

42 C.F.R. § 447.253, the federal regulation mandating that

state Medicaid agencies establish an administrative appeals

Poaprereapeer! sear artetreeos sec scteertagemmA

- uniform administrative procedure acts generall

attend judialel soview of the soceed of egunay nal dnsialens,

this results in state court judicial review as well.

As we turn to the issue of whether a third party, non-

intended beneficiary provider possesses by implication an

enforceable right under 42 U.SC. § 1396a(a)(13)(A), the appro-

priate point of departure is Cort vu. Ash, 422 US. 66, 78 (1975),

which held that, in determining whether a private remedy is

* As will be demonstrated herein, being an intended beneficiary is neces-

sary to have enforceable rights in a statute. However, even when one is an

intended beneficiary (which in this case providers are not), such status in

and of itself does not establish enforceable rights. See Pennhurst State

School and Hospital v. Halderman, 451 U.S. 1 (1981).

” This evinces federal intent that provider challenges to Medicaid rates

be confined to state administrative hearings and subsequent state court

judicial review and not be brought in the form of § 1983 actions. See Massa-

chusetts Mut. Life Ins. Co. v. Russell, 473 U.S. 134, 147 (“{wjhere a statute

expressly provides a particular remedy, a court must be chary of reading

others into it.”); Northwest Airlines, Inc. v. Transport Workers, 451 U.S.

77, 97 (1981) (“The presumption that a remedy was deliberately omitted

from a statute is strongest when Congress has enacted a comprehensive

legislative scheme including an integrated system of procedures for

implicit in a statute not providing one, the first relevant factor

is whether the plaintiff is ‘‘one of the class for whose especial

benefit the statute was enacted . . ”’ (emphasis in original).*

Two circuits have recently invoked this Cort v. Ash

analysis to reject attempts to imply private rights of action

in other sections of the Social Security Act. Wehunt v. Led-

better, 875 F.2d 1558, 1563-1566 (11th Cir. 1989) (re: Title IV-D

of the Social Security Act, 42 U.S.C. §§ 651 et seq.); West Allis

Memorial Hosp., Inc. v. Bowen, 852 F.2d 251, 255 (7th Cir.

1988) (re: 42 U.S.C. § 1395nn(b\2)\(B) of the Medicare fraud por-

tion of the Social Security Act). Those cases are most signifi-

cant because, like § 1396a(a)(13)(A) in this case, both cases

involved sections of the Social Security Act in which it was

the government and not private parties charged with enforce-

ment responsibility. See 875 F.2d at 1565; 852 F.2d at 255.

The West Allis case, involving health care providers and the

Medicare program, is of particular interest. eee

held that:

“{Njeither . . . [the statute] nor its legislative his-

tory suggests that Congress intended to provide a

private remedy to Medicare providers such as West

Allis. . . . The Secretary is charged with the

administration of the Medicare Program. .. .

Where a statute is framed as a ‘general prohibition

or command to a federal agency, as it is in the present

case, a private right of action will seldom be implied

[citations omitted] . . . it is the Government, and

not private parties, which is charged with the enforce-

ment of the Medicare program. . . ”’ 852 F.2d at 255.

8 As will be demonstrated herein, the failure of non-intended beneficiary

health care providers to pass muster under the Cort vu. Ash interest analysis

with respect to § 1396a(a)(13\A) deprives health care providers of standing.

In addition, the issue of whether under § 1983 there is any secured right

to enforce remains. Footnote 7 supra, Argument III infra, and the case

of Middlesex City Sewerage Auth. v. National Sea Clammers, 453 U.S. 1

(1981), demonstrate that health care providers fail on the latter issue as well.

Turning to the question presented, substantial caselaw

has evolved as to lack of provider standing to sue state

Medicaid agencies in § 1983 actions over an alleged violation

of § 1396a(a)(13)(A) due to lack of intended beneficiary status.

Vantage Healthcare v. Virginia Board of Medical Assistance

Services, 684 F.Supp. 1329, 1331-1332 (E.D. Va. 1988) (“‘A

number of courts, drawing on the statutory language, have

stated that the Medicaid Act was enacted for the express and

special benefit of the individual recipients. Such courts have

held that health care providers are not the intended benefi-

ciaries of the Medicaid Act . . . [describing and rejecting case

law permitting providers to bring such §'1983 actions on the

basis of perceived “‘parallel interests’ with Medicaid patients

as] the extreme end of the spectrum.”); Al-Charles, Inc. v.

Heintz, 620 F.Supp. 327, 335 (D.Conn. 1985)

(“To the extent that the plaintiff [nursing home] is

alleging here that the Title XIX Medicaid program

creates an entitlement program for providers of med-

ical services, as distinguished from recipients of med-

ical services, such a claim has no merit . . Finally,

to the extent that the claim rests on the assertion that

the plainatiff has some entitlement under the

Medicaid program, is an intended beneficiary of the

Medicaid program, or has some federally protectable

property interest in reimbursement rates determined

by the state under the Medicaid program, the claim

is insupportable. ’);

Arden House, Inc. v. Heintz, 612 F.Supp. 81, 84 (D. Conn. 1985)

(‘the test of a proper § 1983 claim is whether the claimant

can ‘demonstrate that it has suffered an injury by the adminis-

tration of a joint federal-state cooperative program and was

an intended beneficiary of that program. [citation omitted].

(emphasis in original). . . . The defendants contend, and the

Court finds, that under this analysis, Arden House is not ar.

intended beneficiary of the Medicaid program.’”’); Almond

Pharmacy, Inc. v. Mankowitz, 587 F.Supp. 925, 927-928 (N.D.

Ill., E.D. 1984) (provider’s § 1983 action over Medicaid

payment dispute dismissed, with court distinguishing

between welfare recipients’ right to sue in federal court as

opposed to health care providers who are not the intended

beneficiaries of the Medicaid Act and whose claims of alleged

violations of the State Plan are enforceable in the state court

system); Pennsylvania Pharmaceutical Ass'n v. Dept. of

Public Welfare, 542 F.Supp. 1349, 1355-1356 (W.D. Penn. 1982)

(‘Congress enacted Title XIX of the Social Security

Act to provide health care for the poor and aged, not

to subsidize or otherwise to benefit health care

providers [citations omitted]. By design the Medicaid

program is structured to provide needed medical ser-

vices tothe poor. . . . If a provider finds participa-

tion in the program unprofitable he should withdraw

from the program [citations omitted]... . “[After

finding a lack of standing in the providers’ challenge

to the sufficiency of Pennsylvania’s reimbursement

schedules, the District Court declared:] ‘“The poor,

not the health care providers, are the intended bene-

ficiaries of the Medicaid Act . . Accordingly, we

find that Congress did not vest the . . [provider]

plaintiffs with an interest to challenge a state's pay-

ment schedules on the ground that these payments

are insufficient . . .’);

State Dept. of Public Welfare v. Bair, 463 N.E. 2d 1388,

1390-91 (Ind. App. 1 Dist. 1984), (wherein the Indiana Court

of Appeals held that providers lack standing to challenge the

reimbursement system since the Medicaid program was for

the benefit of recipients and not for the benefit of health care

providers. The Indiana Court of Appeals declared:

‘‘{I}t is obvious that the purpose of the Medical Assis-

tance program is to ensure qualified recipients receive

needed medical care and prescription drugs. Any

resulting benefit to the plaintiffs is merely incidental

and bears no relationship to the purpose of the

program. It is clear the legislation here in question

is not intended to serve as a welfare program for phar-

macists [citations omitted]. The plaintiffs, therefore,

have no standing.’”’);

See also Association of Seat Lift Manufacturers v. Heckler,

619 F.Supp. 1570, 1571 (W.D. Mo, W.D. 1985) (Medicare

providers lack standing to sue Secretary because providers

not within ‘‘zone of interest” contemplated by Congress in

enacting Medicare Act. Medicare Act not intended to subsi-

dize providers).

The Amici states respectfully submit that the cases in

Medicaid Act was enacted to provide health care to the indi-

gent institutionalized elderly, who are the intended benefi-

ciaries, and not to enrich health care providers, who are not

the intended beneficiaries of the Medicaid Program.

Not only are the providers, who are not the intended bene-

ficiaries of the Act, in this case attempting to do something

to which they are not legally entitled, but the ironic and

socially disastrous results that would ensue if they succeed

would be a nationwide disruption of the Medicaid Program

via a flood of § 1983 actions against state Medicaid agencies

and the resultant slowdown if not diversion of the valuable,

scarce taxpayer dollars set aside for the care of Title XIX

Medicaid patients, the true intended beneficiaries of the

Medicaid Program.

III. NEITHER THE LANGUAGE NOR THE HISTORY

OF SECTION 1396 SUPPORTS FINDING THAT

PROVIDERS HAVE RIGHTS ENFORCEABLE

THROUGH SECTION 1983.

In Maine v. Thiboutot, 448 U.S. 1 (1980), this Court held

that the phrase “and laws” in 42 U.S.C. § 1983 (1982)* must

be read literally, so as to create under that section a private

cause of action against state officials for violations of rights

conferred by federal statutes. One year after Thiboutot, this

Court ‘“‘recognized two exceptions to the application of 1983

to statutory violations.’ Middlesex County Sewerage Auth.

v. Nat'l Sea Clammers Ass'n, 453 U.S. 1, 19 (1981) (Sea

Clammers), citing Pennhurst State School and Hospital v. Hal-

derman, 451 U.S. 1 (1981) (Pennhurst). The Court held that

a section 1983 action will not lie where (1) Congress has fore-

closed private enforcement of the federal statute in the statute

itself, or (2) the statute does not create ‘‘enforceable rights”

under section 1983. Sea Clammers, 453 U.S. at 19; Pennhurst,

451 US. at 28; see also Wright v. City of Roanoke Redevelop-

ment & Housing Auth., 479 U.S. 418, 423-24 (1987) (Roanoke).

Clearly, Congress did not intend to grant enforceable rights

to providers of health care services when it amended the

Medicaid statutes in 1980.

In Pennhurst the Court concluded that whether Congress

intended to create rights enforceable under the aegis of sec-

tion 1983 must be determined from the language and history

of the act if the act does not expressly provide for such actions.

In this case, the language is not the right- or duty-creating

® 42 USC. § 1983 (1982) provides, in pertinent part:

Every person who, under color of any statute, ordinance, regula-

tions, custom, or usage, of any State or Territory or the District

of Columbia, subjects or causes to be subjected, any citizen of

the United States or other person within the jurisdiction thereof

to the deprivation of any rights, privileges, or immunities secured

by the Constitution and laws, shall be liable to the party injured

in an action at law, suit in equity, or other proper proceeding for

language a court must find to support a claim of rights

enforceable under section 1983. In addition, the legislative

history demonstrates that Congress intended to increase state

autonomy and decrease federal oversight in the Medicaid reim-

bursement rate-setting process.

A. The language of section 1396 is not rights-creating

language.

The act under consideration in Pennhurst referred to

‘“rights’’ accorded to the intended beneficiaries of the act and

“obligations’’ on the part of the states. Despite that language,

this Court concluded Congress had not intended to create

enforceable rights against the states. Rather, the Court deter-

mined, the language in question was merely precatory, a

‘““nudge’’ in Congress’ preferred direction. Pennhurst, 451 U.S.

at 19.

The language of section 1396a(a)(13)(A) is far less likely

to be employed by a Congress desirous of creating enforce-

able rights than is the language at issue in Pennhurst. Sec-

tion 1396a(a)(13)(A) does not contain a specific grant of a

private right of action. See Wehunt, 875 F.2d 1558 (11th Cir.

1989) and West Allis, 852 F.2d 251 (7th Cir. 1988), analyzing

similar such sections of the Social Security Act. Nor does it

read like a statute designed to “dictate specifically what the

relevant government officials may and may not do.’ Edwards

uv. District of Columbia, 821 F.2d 651, 656 (D.C. Cir. 1987). Far

from containing “‘right- or duty-creating language,’ Cannon

v. University of Chicago, 441 U.S. 677, 690 n.13 (1979), sec-

tion 1396a(a13)A) permits participating states to devise

reimbursement rates ‘which the State finds, and makes assur-

ances satisfactory to the Secretary, are reasonable and ade-

quate to meet the costs which must be incurred by efficiently

and economically operated facilities. . . *’ The statute also

provides that these rates are to be set ‘“‘in accordance with

methods and standards developed by the State.” By its terms,

therefore, section 1396a(a)13)A) vests rate-making discretion

10

in the state, subject to the condition that it makes ‘‘assur-

ances satisfactory to the Secretary.’ As the Pennhurst Court

noted in the context of the statute at issue in that case, ‘‘[i}t

is at least an open question whether an individual’s interest

in having a State provide. . . ‘assurances’ [to the Secretary]

is a ‘right secured’ by the laws of the United States within

the meaning of § 1983.’ 451 U.S. at 28. Indeed, if the statu-

tory requirement of assurances by the states confers any right

on providers, it is only the right to have those assurances

provided to the Secretary. The provision of the assurances then

engages the machinery of the Secretary’s review. The Secre-

tary examines the assurances, the rates and the supporting

data to determine whether the rates meet the statutory stan-

dard. The providers’ “‘right,”’ if any, is the right to have the

Secretary perform his or her duty and conduct the required

review to ensure proper accountability, not the ‘‘right’’ to sub-

stitute themselves and the courts for the state, under the scru-

tiny of the Secretary, as rate-maker.

Thus, in Pennhurst, this Court did not find enforceable

rights despite language of right and obligation. Here, by con-

trast, the court of appeals found enforceable rights despite

the lack of right- or duty-creating language. This Fourth Cir-

cuit holding flies in the face of the limited language of ‘‘assur-

ances’’ this Court has previously found questionable as the

basis of ‘‘enforceable rights.”

The lower court acknowledged that the statute at issue

in this case, like the statute in Pennhurst, was enacted under

the spending power of Article I, section 8, clause 1, of the

United States Constitution. 868 F.2d at 657, n.3. Pennhurst’s

insistence on clear legislative direction in spending power

cases stemmed from the Court’s concern that states be

informed of their obligations in unambiguous terms when they

enter into a voluntary, federally supported program.

[Legislation enacted pursuant to the spending power

is much in the nature of a contract... . The

legitimacy of Congress’ power to legislate under the

A

“a

11

spending power .. . rests on whether the State

voluntarily and knowingly accepts the terms of the

“contract”. . . . There can, of course, be no knowing

acceptance if a State is unaware of the conditions or

is unable to ascertain what is expected of it.

451 US. at 17 (citations omitted). The lower court believed

this concern is “‘allay[ed]’’ in this case because the states

undoubtedly knew they were agreeing to pay reasonable and

adequate rates when they elected to participate in the pro-

gram. 868 F.2d at 659. It is one thing to say the states know-

ingly bound themselves to pay reasonable and adequate rates

under the supervision and control of the Secretary. However,

it is quite another to say they knowingly agreed to defend

expensive, time-consuming and disruptive litigation in state

and federal courts brought by each disgruntled provider over

every aspect of and change in their programs. Tb make a simple

analogy, even a consumer who felt she had no real choice but

to enter into a particular contract is entitled to know it has

an attorney fees provision in it.

Providers are voluntary participants in the Medicaid pro-

gram. See 42 C.F.R. § 447.204 (1985); Minnesota Assoc. of

Health Care Facilities v. Minnesota Dept. of Public Welfare,

742 F.2d 442, 446 (8th Cir. 1984), cert. denied, 469 U.S. 1215

(1985) (providers are free to decline to participate in the

Medicaid program if they are dissatisfied with a state’s rates).

Thus providers have the ability to opt out of the Medicaid

program any time a state’s rates are such that they believe

it is not economically desirable to participate. Even so, as a

condition to state participation, the Secretary requires each

state to have in place an administrative appeals process

through which providers may challenge reimbursement rates.

42 C.F.R. § 447.253(c) (1985). However, the Secretary, whose

interpretation is entitled to ‘“‘some deference,’ Roanoke, 479

U.S. 418, 427, expressly has rejected the call for private rights

of action in the regulations adopted to implement the Boren

Amendment on the ground that the statutes contained neither

mandate nor authority to provide judicial recourse for

12

dissatisfied providers. 48 Fed. Reg. 56,052 (1983), see also

Preamble to Final Rule, Medicaid Program; Payment for Long-

Term Care Facilities and Inpatient Hospital Services, 48 Fed.

Reg. 56,046 at 56,050 (1983).

B. The history of section 1396 supports a result directly

contrary to that reached in the circuit court.

By the earlier reference to the increasing numbers of suits

challenging state reimbursement rates, amici do not merely

suggest the federal courts will be met with a flood of litiga-

tion, although those waters are unquestionably rising. The

point, rather, is that year-by-year, provider-by-provider litiga-

tion over each aspect of each state’s plan is becoming the rule,

a reality manifestly inconsistent with Congress’ unmistak-

able intent to reduce rather than increase federal oversight

of the rate-making process. That intent is conspicuous in the

legislative history of the 1980 amendments to the Medicaid

statutes.

In 1980, in response to the “inherently inflationary”’

nature of the former “reasonable cost’’ standard, Congress

enacted the Boren Amendment to the Medicaid statutes.’

S. Rep. 96-471, 96th Cong., 1st Sess. 28-29.'’ The amendment

‘represented a significant change in the federal [reimburse-

ment] standard,’ offering the states an opportunity to effect

‘‘more stringent cost containment’’ while freeing them from

excessive ‘‘federal oversight of [their] reimbursement meth-

odologies.’’ Wisconsin Hospital Ass’n v. Reivitz, 733 F.2d

10N ow embodied in 42 U.SC. § 1396a(a)13A) (1986).

1 There was no Senate or House report accompanying the Boren Amend-

ment in 1980. Floor discussion of the Amendment, however, makes clear

that it was drawn from a bill reported the previous year by the Senate

Finance Committee. See 126 Cong. Rec. 17,885-86 (1980). The Boren Amend-

ment does not differ materially from the provision contained in the 1979

bill. See S.Rep. 96-471, supra, at 157-58. The text reported here is from

the Senate report that accompanied the 1979 bill.

13

1226, 1228 (7th Cir. 1984). Congress chose to “‘give[ ] the States

flexibility and discretion. . . to formulate their own methods

and standards of payment.” S. Rep. 96-471, at 28. By the same

token, Congress intended ‘‘to reduce federal oversight of state

reimbursement. .. ”’ Mississippi Hosp. Ass’n., Inc. v.

Heckler, 701 F.2d 511, 521 (5th Cir. 1983). While pointing out

that the Secretary would continue to insist on ‘‘assurances

. . . that the payment rates .. . are reasonable and ade-

quate,’ Congress “‘expect{ed] that the Secretary will keep

regulatory and other requirements to that minimum neces-

sary to assure proper accountability, and not overburden the

States and facilities with marginal but massive paperwork

requirements.” S. Rep. 96-471, at 29. It is distinctly ironic that

a Congressional effort to reduce cumbersome federal oversight

of state programs and to contain Medicaid costs has become

the impetus for a mounting tide of litigation and potential

liability.

In the opinion below, the Fourth Circuit Court of Appeals

acknowledged that, in Pennhurst, this Court left no doubt that

Congressional intent is the ‘touchstone’ of enforceable rights

inquiry. The lower court’s discussion of that intent, however,

is largely limited to statements that merely reiterate the stat-

utory references to ‘“‘reasonable and adequate”’ rates. See 868

F.2d at 658-59. The court acknowledged that the purpose

behind the Omnibus Budget Reconciliation Act (OBRA), of

which the Boren Amendment was a part, was to reduce the

federal budget. The court ignored, however, the parallel and

equally important intent of the Boren Amendment to reduce

federal oversight of state programs. Refusal to acknowledge

this central goal of the Boren Amendment spared the court

the unenviable task of reconciling the inevitably more intru-

sive effects of piecemeal litigation with Congress’ indisputable

intent to increase state autonomy in ratesetting.'”

'? Rather than having to defend its rates once, before a federal administra-

tive agency, the states will now be forced to defend piecemeal as each dis-

gruntled facility or band of facilities looks for the most sympathetic forum.

For example, the Commonwealth of Pennsylvania is currently embroiled

in six separate challenges. See Appendix A.

14

Based on its conclusion that Congress ‘‘intended no close

scrutiny by the Secretary [of Health and Human Services]”’

of assurances by the states, the court below reasoned that the

only way to effectuate the ‘‘guarantee’’ of reasonable and ade-

quate rates is to allow providers to bring suit. 868 F.2d at 659.

This deduction is based on a faulty reading of Congressional

intent and an unjustified denigration of the role of the Secre-

tary. The exclusive express enforcement mechanism of

§ 1396a(a)(13)(A) is the Secretary's authority to approve or

disapprove state Medicaid plans. The previously discussed

Wehunt and West Allis circuit court decisions apply this

Court’s Cort v. Ash decision to similar sections of the Social

Security Act that were construed to be exclusively enforced

by the government and held not to create enforceable rights

by private parties. 875 F.2d 1558 (11th Cir. 1989); 852 F.2d

251 (7th Cir. 1988).

The circuit court correctly noted that Congress intended

that state assurances would be considered satisfactory in the

absence of a formal finding to the contrary by the Secretary.

However, the court ignored the equally plain Congressional

insistence on “‘proper accountability”’ to ensure that payment

rates are, in fact, reasonably adequate to meet the costs which

must be incuired by efficiently and economically operated

facilities in order to provide care and services in conformity

with minimal state and federal quality of care requirements

and insure access to health care by Medicaid beneficiaries.

See S. Rep. 96-471, at 29. The court’s suggestion that Con-

gress intended the Secretary to become a mere rubber stamp

for whatever rates the states might conjure up is inconsistent

not only with these expressions of Congressional intent, but

also with the Secretary’s view reflected in the regulations

issued to implement the Boren Amendment,"® and the

13See eg. Preamble to Interim Final Rule, Medicaid Program; Payment

for Long‘Term Care Facility Services and Inpatient Hospital Services, 46

Fed. Reg. 47,964, 47,966 (1981). The regulations, as revised to meet the

requirements of the 1980 amendments, require states to submit assurances

at least annually and whenever they propose significantly to revise methods

(continued)

15

Secretary’s actions in reviewing state plans. See, e.g., Nebraska

Health Care Ass'n v. Dunning, 778 F.2d 1291 (8th Cir. 1985),

cert. denied, 497 U.S. 1063 (1987) (discussing Secretary’s dis-

approval of part of Nebraska’s plan for 1983-84).

Congress intended to decrease, not increase, federal over-

sight of the rate-setting process. To that end Congress cut back

federal administrative supervision to a level it deemed ade-

quate to ensure proper accountability. The court of appeals

has undone Congress’ balance by layering judicial scrutiny

onto administrative oversight. Supervision by litigation will

almost inevitably entail greater delay and disruption in the

administration of state Medicaid plans than would result from

oversight by the Secretary even under the more demanding

pre-Boren Amendment requirements. Further, it simply

makes no sense to conclude that Congress intended to decrease

federal oversight by the executive branch agency with the

expertise in the operation of the Medicaid program and instead

sought to give an increased role to the federal courts of the

judicial branch for oversight of the state rate-setting process

for healthcare providers. That result is manifestly inconsis-

tent with Congress’ intent and therefore erroneous.

13 (continued)

for determining payment rates. When amending plans or submitting new

ones, states must submit related information on short-term effects and,

mation a State submits with respect to these items to determine whether

it is reasonable to justify acceptance of the State’s assurance.’ /bid.

CONCLUSION

There is no valid public policy reason for health care

providers, who are not the intended beneficiaries of the Act,

to disrupt the Medicaid Program through § 1983 actions

against state Medicaid agencies. To the contrary, 42 C.F.R.

§ 447.253 provides providers with e. viable, efficient adminis-

trative remedy with subsequent state court judicial review

to pursue their Medicaid rate disputes. Further,

§ 1396a(a)(13)(A) vests the Secretary with exclusive enforce-

ment power over states’ assurances concerning their state

Medicaid plans. Failure to reverse the underlying circuit deci-

sion would disrupt this federal regulatory scheme and only

delay if not divert the delivery of Medicaid tax dollars to the

intended beneficiaries of the Medicaid Program.

For the reasons stated above, this Court should reverse

the underlying circuit decision.

Respectfully submitted,

CLARINE NARDI RIDDLE

ATTORNEY GENERAL

OF CONNECTICUT

RICHARD J. LYNCH

Assistant Attorney General

ARNOLD I. MENCHEL

Assistant Attorney General

KENNETH A. GRAHAM*

Assistant Attorney General

55 Elm Street, Fourth Floor

P.O. Box 120

Hartford, CT 06101

(203) 566-7098

Attorneys for Amicus Curiae

State of Connecticut

*Counsel of Record

(Additional Attorneys General listed on following pages.)

17

ADDITIONAL ATTORNEYS GENERAL

State of Alabama

Don Siegelman

Attorney General of Alabama

State House

11 South Union Street

Montgomery, Alabama 36102

State of Alaska

Douglas B. Baily

Attorney General of Alaska

Pouch K, State Capitol

Juneau, Alaska 99811

State of Arizona

Robert K. Corbin

Attorney General of Arizona

1275 West Washington

Phoenix, Arizona 85007

State of California

John K. Van de Kamp

Attorney General of California

1515 K Street, Suite 638

Sacramento, California 95814

State of Colorado

Duane Woodard

Attorney General of Colorado

1525 Sherman Street — Second Floor

Denver, Colorado 80203

State of Delaware

Charles M. Oberly, III

Attorney General of Delaware

820 North French Street, 7th Floor

Wilmington, Delaware 19801

18

State of Florida

Robert A. Butterworth

Attorney General of Florida

The Capitol

Tallahassee, Florida 32399-1050

State of Georgia

Michael J. Bowers

Attorney General of Georgia

132 State Judicial Building

Atlanta, Georgia 30334

State of Hawaii

Warren Price, III

Attorney General of Hawaii

State Capitol, Room 405

Honolulu, Hawaii 96813

State of Idaho

Jim Jones

Attorney General of Idaho

State House

Boise, Idaho 83720

State of Illinois

Neil F. Hartigan

Attorney General of Illinois

100 West Randolph Street, 12th Floor

Chicago, Illinois 60601

State of Indiana

Linley E. Pearson

Attorney General of Indiana

219 State House

Indianapolis, Indiana 46204

19

State of Iowa

Thomas J. Miller

Attorney General of Iowa

Hoover Building — Second Floor

Des Moines, Iowa 50319

State of Kansas

Robert T.

Attorney General of Kansas

Judicial Center — Second Floor

Topeka, Kansas 66612

Commonwealth of Kentucky

Frederic J. Cowa’.

Attorney General + Kentucky

State Capitol, Row 1 116

Frankfort, Kentucky 40601

State of Louisiana

William J. Guste, Jr.

Attorney General of Louisiana

2-3-4 Loyola Building

New Orleans, Louisiana 70112

State of Maine

James E. Tierney

Attorney General of Maine

State House, Station 6

Augusta, Maine 04333

State of Maryland

J. Joseph Curran, Jr.

Attorney General of Maryland

200 St. Paul Place

Baltimore, Maryland 21202

Commonwealth of Massachusetts

James M. Shannon

Attorney General of Massachusetts

1 Ashburton Place, 20th Floor

Boston, Massachusetts 02108

State of Michigan

Frank J. Kelley

Attorney General of Michigan

Law Building

Lansing, Michigan 48913

State of Minnesota |

Hubert H. Humphrey, III

Attorney General of Minnesota

102 State Capitol

St. Paul, Minnesota 55155

State of Mississippi

Mike Moore -

Attorney General of Mississippi

P.O. Box 220

Jackson, Mississippi 39205

State of Missouri

William L. Webster

Attorney General of Missouri

Supreme Court Building

P.O. Box 899

Jefferson City, Missouri 65102

State of Montana

Marc Racicot

Attorney General of Montana

Justice Building

215 North Sanders

Helena, Montana 59620

21

State of Nevada

Brian McKay

Attorney General of Nevada

Heroes Memorial Building

Capitol Complex

Carson City, Nevada 89710

State of New Hampshire

John P. Arnold

Attorney General of New Hampshire

208 State House Annex

Concord, New Hampshire 03301

State of New Jersey

Peter N. Perretti, Jr.

Attorney General of New Jersey

Richard J. Hughes Justice Complex, CN112

Trenton, New Jersey 08625

State of New Mexico

Hal Stratton

Attorney General of New Mexico

P.O. Drawer 1508 :

Santa Fe, New Mexico 87504-1508

State of New York

Robert Abrams

Attorney General of New York

The Capitol

Albany, New York 12224

State of North Carolina

Lacy H. Thronburg

Attorney General of North Carolina

P.O. Box 629

Raleigh, North Carolina 27602-0629

State of North Dakota

Nicholas J. Spaeth

Attorney General of North Dakota

Office of Attorney General

600 E. Boulevard

Bismarck, North Dakota 58505

State of Ohio

Anthony J. Celebrezze, Jr.

Attorney General of Ohio

State Office Tower

30 West Broad Street

Columbus, Ohio 43266

State of Oklahoma

Robert H. Henry

Attorney General of Oklahoma

112 State Capitol

Oklahoma City, Oklahoma 73105

Pierre, South Dakota 57501-5090

State of Tennessee

Charles W. Burson

Attorney General of Tennessee

450 James Robertson Parkway

Nashville, Tennessee 37219

State of Texas

Jim Mattox

Attorney General of Texas

P.O. Box 12548

Austin, Texas 78711

State of Utah

Paul Van Dam

Attorney General of Utah

236 State Capitol

Salt Lake City, Utah 84114

State of Vermont

Jeffrey L. Amestoy

Attorney General of Vermont

Pavilion Office Building

State Street

Montpelier, Vermont 05602

et ee

State of Washington

Kenneth Eikenberry

Attorney General of Washington

Highways — Licenses Bldg., PB 71

Olympia, Washington 98504

State of West Virginia

Charles G. Brown

Attorney General of West Virginia

26E, State Capitol

Charleston, West Virginia 25305

State of Wyoming

Joseph B. Meyer

Attorney General of Wyoming

123 State Capitol

Cheyenne, Wyoming 82002

No. 88-2043

In The

Supreme Court Of Che United States

OCTOBER TERM, 1988

GERALD L. BALILES, ET AL..,

Petitioners,

v.

THE VIRGINIA HOSPITAL ASSOCIATION,

Respondent.

APPENDIX TO BRIEF OF AMICI CURIAE

APPENDIX A

PENDING LITIGATION AT TIME OF

PETITION FOR WRIT OF CERTIORARI

Colorado:

Amisub (PSL) Inc., State v. State of Colorado, Depart-

ment of Social Services, No. 88-2482 — United States

Court of Appeals for the Tenth Circuit

Delaware:

The Medical Center of Delaware, Inc. v. Eichler, No.

89-MY-9-1-CA — (petition for removal to United States

District Court pending)

Georgia:

Health Facility Investments, Inc. dba Ansley Pavilion

v. Johnson, No. 1:89CF844JOF — United States

District Court, Northern District of Georgia

Hawaii:

Beverly Manor, Inc. v. Rubin, No. 85-0052 — United

States District Court, District of Hawaii

Idaho:

Idaho Health Care Association, et al. v. Bowen, No.

88-1425 — United States District Court, District of

Idaho

Jeff D., et al. v. Andrus, No. 87-3586 — United States

Court of Appeals for the Ninth Circuit

Pope v. Donovan, No. 67738 — District Court of the

State of Idaho

Illinois:

Chicago Osteopathic Medical Center, et al. v. Suter, No.

88C 1174 — United States District Court, Northern

District of Illinois

1A

Illinois Health Care Association, et al. v. Suter, No.

89C 849 — United States District Court, Northern

District of Illinoi

Michigan:

Health Care Association of Michigan, et al. v. Depart-

ment of Social Services, et al, No. 89-50063 CA —

United States District Court, Western District of

Michigan

Minnesota:

REM-Bemidji, Inc., et al. v. Sandra S. Gardebring,

Commissioner of the Minnesota Department of

Human Services et al, No. 4-88-Civil-562 — United

States District Court, District of Minnesota; dis-

missed without prejudice December 2, 1988, to

permit completion of administrative challenge

Mississippi:

Mississippi Health Care Association v. J. Clinton

Smith, No. JA 6-0765(B) — United States District

Court, Southern District of Mississippi, Jackson

Div. (consolidated with case below)

Independent Nursing Home Association v. J. Clinton

Smith, No. JA 6-0731 (W) — (same court as above)

Missouri:

A.G.I-Bluff Manor, Inc. v. Michael Reagen, Director,

Missouri Department of Social Services et ai, No.

85-4015-CV-CO5 — United States District Court,

District of Missouri

Nevada:

Hillhaven, Inc., et al. v. State of Nevada Department of

Human Resources, et al, No. CV 88-6222 — District

Court of the State of Nevada, Washoe County

2A

North Dakota:

North Dakota Hospital Association, et al. v. George A.

Sinner, et al., Civ. No. Al-87-126 — United States

District Court, Southwestern District of North Dakota

Ohio:

The Ohio Academy of Nursing Homes, Inc. v. Barry,

et al, (88AP-826) — Court of Appeals of the State of

Ohio (opinion June 22, 1989, certification to Ohio

Supreme Court pending)

Oregon:

Oregon Association of Hospitals v. Department of

Human Resources, (CF 88-225-DA) — United States

District Court, District of Oregon

Volk et al. v. State, et al, No. A50092 — Oregon Court

of Appeals

Francisca, et al. v. Department of Human Resources,

et al, No. 89-6244 — United States District Court,

District of Oregon

Pennsylvania:

West Virginia University Hospitals, Inc. v. Casey, 701

F.Supp. 496 (1988) under advisement on appeal to the

United States Court of Appeals for the Third Circuit

Temple University v. White, et al, Civ. No. 88-6646 —

Eastern District of Pennsylvania

Albert Einstein Medical Center, et al. v. White, et al.,

Civ. No. 88-8831 — same as above

Frankford Hospital v. Department of Public Welfare,

et al, Civ. No. 88-8927 — same court

Hahnemann University Hospital, et al. v. Department

of Public Welfare, et al, Civ. No. 88-9132 — same court

Hospital Association of Pennsylvania, et al. v. White,

et al, Civ. No. 88-9849 — same court

3A

South Carolina:

ANCO, Inc. et al v. State Health and Human Services

Finance Commission, et al, No. __.. — on appeal to

South Carolina Superior Court

Washington:

Folden et al. vu. DSHS, No. C87-802TB — United States

District Court, Western District of Washington

Multicare Medical Center, et al. v. State of Washington,

et al, No. C88-421Z — same court

Wisconsin:

Beverely California Corporation v. Wisconsin

Department of Health & Social Services, et al,

No. 89-CV-2689 — Dane County Circuit Court

St. Michael Hospital of Franciscan Sisters

of Milwaukee, Inc. v. Thompson, et al, No.

89-C-620C — United States District Court,

Western District of Wisconsin

4A