Amicus Curiae Brief — Bowen v. Massachusetts

Supreme Court brief1988

Ask Donna

What actually matters in this document.

Text

FILED

MAR SC 1988

OP ANICA

wad

Nos. 87-712 and 87-929 4. ¥onr'!

IN THE SUPREME COURT OF THE UNIT

OCTOBER TERM, 1987

OTIS R. BOWEN, SECRETARY OF HEALTH

AND HUMAN SERVICES, et al.,

Petitioners,

Vv.

COMMONWEALTH OF MASSACHUSETTS

COMMONWEALTH OF MASSACHUSETTS,

Cross Petitioner,

Vv.

OTIS R. BOWEN, SECRETARY OF HEALTH

AND HUMAN SERVICES, et al.

On Writs of Certiorari to The United States

Court of Appeals For the First Circuit

BRIEF OF AMICI CURIAE VICTORIA GRIMESY,

LISA M. MAYO, ERIKA SMITH, LUCY RICO,

MICHELLE BOLES, GINA MOSQUEDA, CENTER ON

LAW AND SOCIAL POLICY, MICHIGAN LEGAL

SERVICES, NATIONAL HEALTH LAW PROGRAM,

NATIONAL HOUSING LAW PROJECT, NATIONAL

LEGAL AID AND DEFENDER ASSOCIATION,

NATIONAL SENIOR CITIZENS LAW CENTER, SOLANO

COUNTY LEGAL ASSISTANCE, IN SUPPORT OF THE

COMMONWEALTH OF MASSACHUSETTS

RICHARD ROTHSCHILD

Attorney of Record

MARK GREENBERG

Western Center on Law and

Poverty, Inc.

3535 West Sixth St.

Los Angeles, California 90020

(213) 487-7211

(Counsel for Amici continued on next page)

Counsel for Amici (continued)

TAMARA DAHN

Solano County Legal Assistance

930 Marin St.

Vallejo, California 94590

(707) 643-0054

GILL DEFORD

National Senior Citizens Law

Center

1052 W. Sixth St., #700

Los Angeles, California 90017

(213) 482-3550

CHARLES GREENFIELD

Legal Aid Society of Santa

Clara County

210 S. First St.

San Jose, California 95113

(408) 998-5200

JANE PERKINS

RODGER SCHWARTZ

National Health Law Program

2639 S. La Cienega Bl.

Los Angeles, California 90034

(213) 204-6010

PETER REID

Legal Aid Society of San Mateo

County

298 Fuller St.

Redwood City, California 94063

(415) 365-8411

MANUEL ROMERO

National Housing Law Project

1950 Addison St., 2nd Floor

Berkeley, California 94704

(415) 548-9400

INTEREST OF THE AMICI......

TABLE OF CONTENTS

SUMMARY OF ARGUMENT.....<+-. e*eeerees#3es- TTTTT.

The Tucker Act does not divest a....8

District Court from exercising

jurisdiction over a state’s third

party complaint seeking federal

financial participation for costs

arising in an underlying action

between beneficiaries and _ the

state.

A. Course of Events in..........-.

Grimesy v. McMahon v. Bowen

B. A third party complaint.......

seeking to enjoin denial of

federal financial

participation for costs not

yet incurred does not meet

the elements of a Tucker Act

claim.

Cc. A finding that the Tucker.....

Act divests a district court

of jurisdiction in Social

Security Act third party

complaint litigation would

cause severe problems of

judicial and program

administration.

i. HHS’ Position would......

result in multiple

forums and duplicative

litigation.

ii. HHS’ Position would.......31

have the effect of

creating a national

trial court and a

National Court of

Appeals for Social

Security Act litiga-

tion.

II. An expansive construction of the....36

Tucker Act raises troublesome

implications in other areas of

law affecting federal program

beneficiaries.

A. Federal Housing Programs..... -.36

B. Other Federal Programs......... 45

- «9. e*esee#*es. ~TTTTTT

TABLE OF AUTHORITIES

Cases Page(s)

Amoco Prod. Co. Vv. Hodel,....-eeeeee004+44

815 F.2d 352 (5th Cir. 1987),

cert. petition pending

Committee for Fairness, et al.,.....+.++.36

v. Pierce,

C.A. No. 87-0324 JHP (D.D.C.)

Commonwealth of Massachusetts v.........33

Departmental Grant Appeals Board,

815 F.2d 778 (1st Cir. 1987)

Conille v. Pierce, ....cceeeeeseseseseses 36

649 F. Supp. 1133 (D. Mass.

1986), aff’d, No. 87-1120 (lst

Cir., Feb. 19, 1988)

Council of Large Public Housing.........37

Authorities v. HUD,

C.A. No. 82-1210 NHJ (D.D.C.)

Edelman V. JOrdan,...seeseeeseeesevevevedh

415 U.S. 651 (1974)

Frisby v. HUD, ..cccecccees re © 8 TUT TTTTTT

755 F.2d 1052 (3d Cir. 1982)

Grimesy v. McMahon v. Bowen,.........passim

Federal Circuit Court of Appeals

Case No. 87-1228; Ninth Circuit

Court of Appeals Case No. 87-

1745

DEMEROS Go GOMER c ccocccccecsoeseorve TTTTrT 12

No. 85-5285 (E.D. Pa. July 14,

1986)

Johnson v. Secretary of HUD,......... ~++44

710 F.2d 1130 (5th Cir. 1983)

iii

Kali Vv. HOCKLOE, ccccccccccccccccecsccccecha

800 F.2d 971 (9th Cir. 1986)

Laguna Hermosa Corp. v. Martin,.........21

643 F.2d 1376 (9th Cir. 1981)

Mann Vv. 7! PPP Prrrrrrrrerrerrereririt..

803 F.2d 1552 (11th Cir. 1986)

Maryland Dept. of Human Resources v.....33

Dept. of Health and Human Services,

763 F.2d 1441 (D.C. Cir. 1985)

McCarthy Vv. HEintZ, .cccceccccceesesesesel2

Civ. No. H-85-597 (MJB)

(D.Conn. Apr. 23, 1986)

Merrill Tenant Council v. HUD,..........44

638 F.2d 1086 (7th Cir. 1981)

Morrison v. Heckler,.....ceeesceeeeeeeeel2

602 F.Supp. 1482 (D.Minn. 1984),

aff’d, 787 F.2d 1285 (8th Cir.

1986)

New Mexico Vv. REGAN, .. eee eee cceceseese se 44

745 F.2d 1318 (10th Cir. 1984),

cert. denied, 471 U.S. 1065

(1985)

PORES Ge Biv ecccccecococoooscoeseeocesoele

713 F.2d 1341 (7th Cir. 1983),

subsequent decision sub nom

Cowherd v. HUD, 827 F.2d 40

(7th Cir. 1987)

Portsmouth Redevelopment & Housing......44

Authority v. Pierce,

706 F.2d 471 (4th Cir.), cert.

denied, 464 U.S. 960 (1983)

Rowe v. United States,..........+.- wTTTT: :.

633 F.2d 799 (9th Cir. 1980),

cert. denied, 451 U.S. 970 (1981)

Russell Vv. LOMAPTIOU, cccccccccccccccccsecd®

621 F.2d 1037 (9th. Cir. 1980)

State of Minnesota by Noot v. Heckler,..33

718 F.2d 852 (8th Cir. 1983)

Tenants for Justice v. Hill,.......+++++39

413 F.Supp. 389 (E.D. Pa. 1975)

Thomas v. Pierce,......ssseeeeeeeee+-SUpra

662 F. Supp. 519 (D. Kan. 1987),

, Case No. 87-2121

(10th Cir.)

Topps Vv. BOWEN, ccc ccc ee eee ssseseseeceseel2d

No. 85-NC-0187W (N.D. Utah, Jan.

13, 1986)

Trans-Bay Engineers and Builders,.......44

Inc. v. Hills,

551 F.2d 370 (D.C. Cir. 1976).

United States Vv. RiMB, cccccccccccccceG,s 20

395 U.S. 1, 3 (1968)

United States v. Mitchell,...........5, 17

463 U.S. 206 (1983)

United States v. Mottaz,...........+.+-6, 19

476 U.S. 834, 106 S.Ct. 2224

(1986)

United States v. Testan,........seeeeees 18

424 U.S. 392 (1976)

Uram v. United States,.......cseeeeeees --29

216 Ct.Cl. 418 (1978)

Statutes

Housing and Community Development.......39

Amendments of 1978,

12 U.S.C. §1701z-11

Tax Reform Act of 1986, P.L. 99-514.....14

Ree ee ndcncboedsesceecesueseessl

Ss i dec eeesasccaccesneereeden

a eS ak ccacnecececeoxcceeia Me

ee! SAO. c ccccenenceonssosule

i, SE cocccccesceccecesselll

ie. Gn ccasdsacconceeceseseskeln

C0, GI icc ncccoccoscesossele

SO Gi, CR i cc cccccccccccestis

Dies Mea scicccaccecessecsceests

42 U.S.C. BRESGBccccccecececeoeceseseeeeee

Regulations

24 C.F.R. §290.25(b) (1978).........+4+-39

24 C.F.R. §290.27(b) (1978)... eee eee e ee 3D

INTEREST OF THE AMICI

In the pending case, the Court is

being asked to decide whether the Tucker

Act prevents a district court from exercis-

ing jurisdiction over a _ state’s action

challenging a disallowance of funds in the

Medicaid Program. The resolution of this

issue will have profound importance for

other Social Security Act litigation, and

may affect access to the district courts

and regional courts of appeals in many

other areas of law.

Disallowance litigation is only one

type of litigation affecting administration

of the grant-in-aid programs under the

Social Security Act. The other major type

of litigation occurs when program benefici-

aries sue a state for alleged violations of

the Act. In such instances, the state

often files a third party complaint against

the federal government, alleging that if

the state is liable to program beneficiar-

ies, the federal government should be

obligated to provide federal financial

participation in the state’s costs. The

disposition of Bowen v. Massachusetts may

have a critical effect on such third party

complaint litigation.

Amici include the plaintiffs in

Grimesy _v. McMahon v. Bowen, currently

pending before the Federal Circuit Court of

Appeals (Case No. 87-1228) and before the

Ninth Circuit Court of Appeals (Case No.

87-1745). As more fully set forth below,

the Grimesy litigation offers an example of

the implications of HHS’ Tucker Act juris-

dictional arguments when applied to third

party complaint litigation. HHS has argued

in Grimesy that when a class of welfare

recipients sues state officials for pros-

pective relief and back benefits, and the

state files a third party complaint against

HHS, the third party complaint arises in

part under the Tucker Act and may only be

heard in the United States Claims Court.

Relief for plaintiffs in Grimesy has been

stayed pending resolution of this jurisdic-

tional issue.

Amici believe that the Grimesy litiga-

tion helps illustrate some of the problems

that would result if HHS’ Tucker Act

jurisdictional argument were accepted in

this case. Applying HHS’ jurisdictional

argument to third party complaint litiga-

tion would lead to duplicative litigation

in multiple forums, and could cause chaotic

dispositions of issues arising under the

Social Security Act.

In addition to the Grimesy plaintiffs,

amici include legal services organizations

and public interest law offices who repre-

sent indigent clients in issues concerning

federal grant-in-aid programs, federal

housing programs, and other federally

funded programs for the poor.

Amici have an interest in this case

because the result may affect Social

Security Act litigation whenever benefici-

aries sue a state and the state initiates a

third party complaint against HHS. Amici

believe the position being urged by HHS

would result in countless’ procedural

problems for Social Security Act and

related litigation.

Amici also fear that the expansive

view of the Tucker Act urged by HHS could

adversely affect access to the federal

courts in other areas affecting the poor.

HHS’ Tucker Act argument, if accepted,

would shift much of the nation’s litigation

on the rights of beneficiaries and states

in federal grant-in-aid programs to the

United States Claims Court and the Federal

Circuit Court of Appeals. This would

create a morass of procedural and substan-

tive problems. Amici wish to suggest some

of the most troublesome ramifications of

the position espoused by HHS.

SUMMARY OF ARGUMENT

The broad construction of the Tucker

Act being urged by the United States raises

serious problems in contexts other than

Medicaid disallowances.

The implications of the broad con-

struction are illustrated by Social Secur-

ity third part complaint litigation. This

is litigation where beneficiaries sue a

state for violation of the Social Security

Act, and the state files a third party

complaint against HHS. The third party

complaint typically seeks to insure federal

financial participation in the costs of any

orders issued by the court in the underly-

ing litigation.

In Grimesy _v. McMahon, now pending

before the Federal and Ninth Circuits, HHS

contends that a state’s third party com-

plaint in such a case arises in part under

the Tucker Act. This contention is incon-

sistent with established Tucker Act prece-

dent. A Tucker Act claim based on a

federal statute must seek a money judgment

based on a statute that mandates compen-

sation for damages sustained. United

States _v. Mitchell, 463 U.S. 206, 216-17

(1983). A state’s third party complaint

alleges no wrongful withholding of funds,

and no wrongful conduct for which the state

is entitled to “compensation” for “damages

sustained.” Moreover, a Tucker Act claim

must be for “actual, presently due money

damages”, United States v. King, 395 U.S.

1, 3 (1968), based on the past acts of the

federal government. United States v.

Mottaz, 476 U.S. 834, 106 S.Ct. 2224, 2234

(1986). A state’s third party complaint

cannot allege an entitlement to any actual,

presently due amount, and cannot allege

entitlement based on any past acts of the

United States.

If the Tucker Act were broadly con-

strued to divest district courts of juris-

diction over state third party complaints

in Social Security litigation, there would

be two major undesirable consequences.

First, such a result would ensure bifurca-

tion of cases, since the Claims Court could

not exercise jurisdiction over the case

between beneficiaries and the state. The

bifurcation would create inefficiency,

confusion, and potential chaos at both the

trial and appellate stages.

Second, such a result would shift much

Social Security Act litigation to the

Claims Court and Federal Circuit Court of

Appeals. Neither court has expertise in

Social Security Act litigation. There is

no evidence of Congressional intent to

shift such cases to these courts. It would

be difficult for low income beneficiaries

to regularly litigate in Washington. It

would be inappropriate to shift the fre-

quently controversial litigation brought by

indigent claimants to a trial court lacking

the protections of the Article III

judiciary. If the Federal Circuit were

made a de facto national court of appeals

for Social Security Act litigation, there

would be increased burdens on both that and

this court.

Finally, the government has recently

made an even more expansive Tucker Act

jurisdictional argument in the context of

federal housing programs. The United

States has supeyees that an action for

declaratory and injunctive relief arises

under the Tucker Act when it has financial

consequences, even when the plaintiffs do

not seek money. Thomas v. Pierce, 662 F.

Supp. 519 (D. Kan. 1987) appeal pending,

No. 87-2121 (10th Cir. 1988). This argu-

ment, if accepted, could convert virtually

any case in which program beneficiaries

allege illegal conduct by the United States

into a Tucker Act action. The Court should

reject this major alteration of jurisdic-

tion in the federal courts.

I. The Tucker Act does not

divest a District Court

from exercising juris-

diction over a state’s

third party complaint

seeking federal finan-

cial participation for

costs arising in an

underlying action

between beneficiaries

and the state.

Apart from disallowance cases, there

is another major area of litigation con-

cerning grant-in-aid programs under the

Social Security Act. This other category

arises when program beneficiaries sue a

state for alleged violation of the Social

Security Act. In such cases, the states

often file a third party complaint against

HHS, alleging that has been following the

directives of HHS, and that if the state

practice violates federal law, so do HHS’

directives. Typically, the state seeks

injunctive relief to prohibit HHS from

sanctioning the state for compliance with

court orders, and to require HHS to provide

federal financial participation in the cost

of compliance with the court’s order.

Amici believe this category of cases

is distinguishable from disallowance

litigation. Even if this Court holds that

the Claims Court has exclusive jurisdiction

over disallowance cases, the Court could

still make clear that state claims in third

party complaint litigation do not arise

under the Tucker Act. Alternatively, the

Court could reserve the issue for another

day. However, amici fear that an expansive

construction of the Tucker Act here could

encourage lower courts to find the Tucker

Act precludes district court jurisdiction

over third party complaints in these cases.

However the Court decides this case,

there are considerations in both Tucker Act

jurisprudence and in the practical reali-

ties governing Social Security Act litiga-

tion that should lead to a holding that

district court jurisdiction in these third

party complaint cases is not limited by the

Tucker Act.

In the following section, amici will

describe the facts of Grimesy v. McMahon v.

Bowen, an example of such third party

complaint litigation. They will then

explain both why this category is disting-

uishable from disallowance litigation, and

why an expansive construction of the Tucker

Act in the disallowance context could cause

- 10-

severe damage in third party complaint

litigation. The difficulties posed by

applying an expansive view of Tucker Act

jurisdiction in third party complaint

litigation help to demonstrate some of the

disturbing implications of HHS’ arguments

in this case.

A. Course of Events in

Grimesy v. McMahon v.

Bowen

The Grimesy litigation! began when

AFDC Program beneficiaries sued California

officials for injunctive relief and back

benefits based on an illegal program

practice. J.A. at 23. Plaintiffs filed

1 The following description is based

on the pleadings and orders, as they appear

in the Joint Appendix (”J.A.”) on file in

Federal Circuit No. 87-1228.

2 AFDC is a cooperative federal

state program of assistance to families

with needy children, pursuant to Title IV-A

of the Social Security Act, 42 U.S.C. §601

et seq.

The legal issue in Grimesy concerned

counting of income in AFDC. California,

when determining AFDC eligibility and

benefits for families in which the parent

was between the age of 18 and 19, “deemed

(continued...)

suit in state court. The state removed the

case to the United States District Court

for the Northern District of California.

J.A. at 18. Since the state engaged in its

practice at the direction of the Secretary

of Health and Human Services (HHS), the

state filed a third party complaint against

HHS. J.A. at 85~87. The third party

complaint alleged that AFDC is a coopera-

tive federal-state program and that the

state is entitled to receive federal

2(...continued)

available” the income of the parents of the

18 year old parent, regardless of whether

the parent was still in school. Plaintiffs

contended that deeming of grandparent

income when an eighteen year old parent was

not in school or not expected to graduate

by age nineteen violated both the Social

Security Act, 42 U.S.C. §602(a)(39), and

state law. The district court, and every

court that addressed the issue concluded

that the challenged practice violated

federal law. See J.A. at 90-94; Kali v.

Heckler, 800 F.2d 971 (9th Cir. 1986);

Morrison v. Heckler, 602 F.Supp. 1482

(D.Minn. 1984), aff’d, 787 F.2d 1285 (8th

Cir. 1986); Jiminez v. Cohen, No. 85-5285

(E.D. Pa. July 14, 1986); McCarthy v.

Heintz, Civ. No. H-85-597 (MJB) (D. Conn.

Apr. 23, 1986): Topps v. Bowen, No. 85-NC-

O187W (N.D. Utah, Jan. 13, 1986).

- 12 <-

financial participation (FFP) for expendi-

tures made pursuant to an approved state

plan. The state sought an order providing

that if it were liable to plaintiffs, HHS

be required to provide FFP for the AFDC

program expenses incurred as a result of

compliance with the court’s order. J.A. at

87. HHS did not object to the district

court’s jurisdiction.

On June 25, 1986, the district court

issued an order holding both the state’s

practice and the federal regulation on

which the state practice was based violated

the Social Security Act and were invalid.

J.A. at 90-94. The court enjoined the

state practice, and enjoined HHS from

taking any action whatsoever against the

state by way of compliance proceedings,

audit disallowance or otherwise because of

the state’s compliance with the order.

J.A. at 93. Both the state and HHS ap-

pealed to the United States Court of

Appeals for the Ninth Circuit. (Ninth Cir.

-i3-

Cases No. 86-2403, 86-2559). Each defend-

ant subsequently dismissed their appeal,

after the enactment of legislation which

barred the practice plaintiffs challenged

in the litigation. ?

On July 23, 1986, the district court

issued a subsequent order holding class

members were entitled to corrective pay-

ments for the benefits lost while the

state’s unlawful practice was in effect.

J.A. at 95-96.

On December 22, 1986, the district

court entered an order implementing a

procedure for provision of the corrective

benefits. J.A. at 1-8. The order included

a paragraph enjoining HHS from sanctioning

the state for its compliance with the order

or denying federal financial participation

for the administrative and program costs

3 On October 22, 1986, Congress

enacted the Tax Reform Act of 1986, P.L.

99-514. The Tax Reform Act amended 42

U.S.C. §602(a)(39) to prohibit any deeming

of grandparents’ income when an eighteen

year old parent seeks AFDC benefits.

- 14 -

. |

incurred in complying with the order. J.A.

at 8. The court also issued an order

denying HHS’ motion to reconsider its

orders of June 25 and July 23. J.A. at 9-

15.

HHS then filed notices of appeal in

both the Federal and Ninth Circuits. It

alleged that the part of the state’s third

party complaint seeking federal financial

participation in the cost of retroactive

: benefits arose under the Tucker Act, and

that therefore the state’s claim should

have been filed in the United States Claims

Court. See Fed. Cir. Case No. 87-1228, HHS

Substitute Br., at 1-2. HHS contends that

the Federal Circuit has exclusive jurisdic-

tion over the question, and that its Ninth

Circuit appeal is only protective in

nature. HHS Substitute Br., at i. The

jurisdictional issues are currently pending

before both courts.

To date, HHS has limited its argument

to contending that the state’s third party

- 15 «

complaint should have been heard in the

Claims Court, and appealed to the Federal

Circuit. However, HHS has not precluded

the possibility of arguing that when a

state’s third party complaint arises in

part under the Tucker Act, the Federal

Circuit should exercise exclusive jurisdic-

tion over the entire underlying

litigation. 4

4 HHS’ Federal Circuit Brief in

Grimesy contains this suggestive text:

“This Court has also held that exclu-

sive appellate jurisdiction in the Federal

Circuit lies over appeals including non-

Tucker Act issues that would have been

decided by the regional courts of appeals

had they not appeared in the same case as a

Tucker Act claim. It is beyond cavil that

the plaintiffs’ petition for relief from

California, as contrasted with the Califor-

nia’s third party complaint against the

federal government, cannot be construed as

coming within the scope of the Tucker Act.

Nevertheless, this Court has stated that

where the jurisdiction of the district

court “was based, in whole cr in part” (28

U.S.C. 1295(a)(2)) on a non-tax Tucker Act

Claim, the entire appeal is within the

exclusive jurisdiction of the Federal

Circuit, no matter what other claims have

been joined with the Tucker Act claim in

the complaint. Perhaps, although this

Court need not consider that question

today, this principle would extend so far

(continued...)

° 16° i

ee — = —— P

Disposition of Grimesy in the Federal

Circuit has been stayed pending resolution

of this case; HHS’ corresponding request to

the Ninth Circuit is pending. See Fed.Cir.

Case No. 87~1228, Order, January 19, 1988.

B. A third party complaint

seeking to enjoin

denial of federal

financial participation

for costs not yet

incurred does not meet

the elements of a

Tucker Act claim.

Whether or not a disallowance case

arises under the Tucker Act, a third party

complaint seeking to require the federal

government to share in the costs of com-

pliance with a court order is not a claim

arising under the Tucker Act.

In United States v. Mitchell, 463 U.S.

206 (1983), this Court restated the test

4(...continued)

as to bring within the jurisdiction of this

Court non-Tucker Act claims raised by other

parties in a multiple party cases, such as

this one.”

HHS Substitute Br., at 30, n.10 (citations

omitted).

- 17 -

: |

for determining whether claims founded on a

federal statute are subject to Tucker Act

jurisdiction:

The claim must be one

for money damages

against the United

States, and the claim-

ant must demonstrate

that the source of

substantive law he

relies upon ‘can fairly

be interpreted as

mandating compensation

by the Federal Govern-

ment for the damages

sustained.’

463 U.S. at 216-17, quoting United States

vy. Testan, 424 U.S. 392, 400 (1976) (cita-

tions omitted).

A third party complaint seeking to

require HHS to share in the cost of com-

pliance with any court orders issued in an

underlying action does not meet the Mit-

chell test. A complaint in such a case

does not seek “compensation” and does not

allege any right to “damages.” It does not

allege wrongful withholding of funds, or

any wrongful conduct, by HHS. = Se

contingent request that if the state is

- 18 -

ee ne

held liable, the court order HHS to provide

federal participation for al] AFDC program

expenses incurred as a result of compliance

with the court’s order.

In substance, such a complaint s

declaratory relief. The state allegés no

present injury, since there has ‘been no

determination of state liabi

statement that HHS would fuse to provide

federal participation r those costs. The

state simply seeks a declaration of rights

against HHS in case of state liability.

The state does not seek “damages” within

any ordinary meaning of the word.

Moreover, “damages for the | federal)

Government’s past acts” is “the essence of

a Tucker Act claim for monetary relief.”

' United States v. Mottaz, 476 U.S. 834, 106

S.Ct. 2224, 2234 (1986) (emphasis added).

In the third party complaint, the state

does not sue HHS for losses previously

incurred by the state. Tne claim is made

before any determination that the state is

- 19 «

seek judicial review and orders aS f0

future Medicaid services are not ones

for "money damages,” regardless of

whether the reviewing court determines

the Secretary's future obligation to

pay. Sec. Br. 15 n. ll. If that is so,

it is also clear that an action for re-

view of an agency decision is not an

action for a money judgment or money

damages, since it simply determines the

correctness of the agency's substantive

legal decision, and not the Secretary's

monetary liability. Yet the Secretary

contends that if reimbursement for past

audit periods is involved in a case,

that fact transforms the case into a

suit for money damages . >=

13/7 In a similar context, this Court

rejected 4a characterization of reim-

bursement under the Education for All

Handicapped Children _ as “damages.”

Q the Town of

(footnote continued)

e 63 «-

The legislative history of the APA

amendments supports the conclusion that

Congress did not intend to include

actions such as this within the term

“money damages." The term “money

damages" was added to the APA in the

1976 amendments. The legislative his-

tory of the cere demonstrates an intent

to equate the term with well-known

claims for damages which arose in con-

tract and tort actions. See 121 Cong.

Rec. 29, 995 (1975)(remarks of Sen.

Bumpers); Sovereign Immunity: Hearing

on S. 3568, before the Sub Comm, on

(footnote continued)

Burlington v. Department of Education,

471 U.S. 359, 370-371 (1985). "Reim-

bursement merely requires “payment

of “expenses” that “should have been paid

all along.” Id. The remedy of reim-

bursement sought in Burlington was deter-

mined by this Court not to be “damages”

but a “post hoc determination of finan-

cial responsibility.” Id. The same

characterization applies here.

Administrative Practice and Procedure of

the Senate Judic. Comm. , 9lst. Cong., 2d

Sess. (1970) at 18. Inde 2d, the ref-

erences to the Tucker Act which appear

in the House and Senate Reports on the

APA amendments are exclusively concerned

with contract claims. H.R. Rep. No.

94-1656 at 5, 12; S. Rep. No. 94-996 aft

4, l2.

In labeling the Commonwealth's case

as a suit for money damages, the Secre-

tary ultimately would make jurisdiction

turn upon the fact that he has already

acted to recoup the disputed amounts

from subsequent reimbursement. Under

the current system of advance funding

and retroactive audit and disallowance,

the Secretary recoups disallowed funds

from future payments. See 42 U.S.C. §§

1396b(d). Thus the Secret *ry need not

commence an enforcement action to

- 63 -

recover disallowed funds. Compare

Bennett v. Kentucky Department of

Education, 470 U.S. at 658 (enforcement

action). In the absence of preliminary

injunctiv2 relief, the Secretary's power

to recoup monies from future advances

invariably means that 4 state must

pursue litigation after re- coupment

takes place. Thus the court of appeals

noted that the "structure of the

Medicaid program . . . makes it in-

evitable that disallowance decisions

concern money past due.” Pet. App. 44a.

It is this posture (as a plaintiff pur-

suing a suit after recoupment) which ex-

poses a State to simplistic character-

izations of its case as a suit for

‘money past-due” and “money damages."

The Secretary relies upon his re-

coupment of funds from future payments

to support his novel argument on

- 66 -

jurisdiction, yet the Secretary concedes

that the district court would have ju-

risdiction over an action which sought

review of his decision but granted only

“prospective” relief. Sec. Br. at 15 fn.

! If this is so, then jurisdiction

would turn upon the outcome of each

State's request for preliminary relief,

if such relief were obtained, no

because

request for money “past-due” would be

present. There is no evidence what-

soever that Congress intended such an

uncertain basis for jurisdiction.

The court below determined that the

term “money damages” in § 702 should be

read "to mean any monetary relief,

whether it is in the nature of damages

or in the nature of specific relief.”

Commonwealth of Mass. v. Departmental

Grant Appeals Board, 815 F.2d at 783;

o 67 «

see Pet. App. 5a-6a. That conclusion is

nof consistent with the evidence that

Congress intended to authorize grant

program Litigation in the district

court, but it is also beside the present

point which is that the district court

could (and did) grant complete relief by

reversing the agency's decision and re-

manding the matter, 247

sOQurces v. HHS, 763 F. 2d 1441, 1446

(D.C. Cir. 1985), reached the result we

seek here by distinguishing an action

for “money damages” from one for "speci-

fic relief.” The Secretary's brief as-

sumes the considerable burden of exam-

ining and undermining the Maryland dis-

tinction. As demonstrated above, how-

ever, this case seeks neither "money

damages” nor “monetary relief,” and the

district court Satisfactorily resolved

the dispute by reversing the Board's

decision. Therefore, the Court need not

adopt the reasoning of Maryland to

reject the Secretary's characterization

that this action is a suit for "money

damages.”

- 68 -

In sum, this is not a case for

“money damages” beyond the jurisdiction

of the district courts.

The Tucker Act Does Not

Create an "Adequate

Remedy” in the Claims

Court that Bars District

Court Review.

The waiver of sovereign immunity

contained in section 702 includes

“falgency action made reviewable by

statute and final agency action for

which there is no other adequate remedy

in a court. = § U.S.C. § 704. The

Secretary argues that 4a disallowance is

unreviewable in the district court be-

cause the Tucker Act provides an “ade-

quate remedy” in the Claims Court. Sec.

at 43-44. The Secretary assumes,

Br.

for the sake of his argument, that the

Commonwealth's action is not one

~~ +

for “money damages." sec. 8r. set ii.

But if the Commonwealth's action is not

One for “money damages," it follows (as

we argue in Point II, below) that an

action for judicial revew of a dis-

allowance is not within the jurisdiction

of the Claims Court under the Tucker

Act. If this is so, then the

Secretary's argument that an action un-

der the Tucker Act is “adequate” fails ag

fortiori. However, even if Congress

conferred jurisdiction on the Claims

Court over such “non-monetary” Claims,

we argue below that jurisdiction does

not preclude district court jurisdiction

under the APA because, by the

Secretary's own admission, the remedies

- 70 -

in the Claims Court are not “ade-

quate.°*”

The relevant provision in section

704 was primarily “intended . - : to

codify the existing law concerning

ripeness and exhaustion of remedies,”

(Mass. VY: bept. Grant Appeals Board, 815

F.2d 778, 784 (1st Cir. 1987)), by en-

suring that pre-enforcement review would

not be available if “subsequent review

in enforcement proceedings is ‘ade-

quate.'" administrative Procedure Act:

Legislative History, S. Doc. 248, 79th

Cong. 2d Sess. 38 (1946). Thus the Se-

cretary is reading 4 limitation in the

waiver 1 section 702 where none exists,

15/7 Indeed, in conceding that the

Commonwealth could litigate in the dis-

trict court if it waived the federal

share of past expenditures, the

Secretary acknowledges that an award of

money is not an adequate remedy in an

ongoing grant program.

- M1 -

or was intended. At the least, he 1s

urging on the Court an overly broad

reading of the purported limitation.

Even if section 704 imposes the

limitation urged by the Secretary, it

would not apply in this case, because

the remedy in the Claims Court is not

“adequate.” The Tucker Act remedy in

the Claims Court is inadequate because

the Claims Court has no authority to

provide the injunctive and declaratory

relief available in the district court

and often necessary to complete relief

Lé/

in a disallowance case. “The

——————

16/ The Claims Court is an Article I

court, created by the Federal Courts

Improvement Act (FCIA) of 1982, Pub. L.

No. 97-164, 96 Stat. 25. The jurisdic-

tion of the Claims Court includes the

trial jurisdiction of the “United States

Court of Claims,” which was abolished by

the FCIA. The decisions of the Claims

Court are appealable under 28 U.S.C.

§ 1295(a)(3), to the United States Court

of Appeals of the Federal Circuit.

» 92

Claims Court Or district court

exercising Tucker Act jurisdiction ordi-

narily lacks’ the authority to grant

specific performance of contracts as

well as other forms of equitable

relief.” Spectrum Leasing Corp. ¥-

United States, 764 F.2d at 895 n. 7 (ci-

tation omitted). Only “in limited cir-

cumstances the Claims Court when exer-

cising Tucker Act jurisdiction may be

empowered to grant such equitable relief

where the relief sought is in the form

of money.” Id. at 895 n. 7. In fact,

prior to 1972, the Claims Court's pre-

decessor (the Court of Claims) had no

power to enter any equitable relief.

See, e@.9., United States v- King, 395

U.S. 1 (1969); Richardson v. Morris, 409

u.S. 464 (1973) (per curiam). In 1972,

the Tucker Act was amended to grant the

» «

Court of Claims “the power to remand ap-

propriate matters to any administrative

or executive body or official with such

directions as it may deem proper and

just." Pub. L. No. 92-415, 86 Stat. 652

(1972) (amending 28 U.S.C. § 1491). The

legislative history of this “remand pro-

vision" demonstrates that Congress in-

tended that the remand power conferred

on the Court of Claims was more limited

than the equitable jurisdiction of the

ii/ In fact, Congress

district courts.

limited the equitable power given the

Court of Claims after the Department of

Justice expressed its concern about

17/ See S. 1704, 90th Cong., 2d Sess.

(1968); S. Rep. 1465, 90th Cong., 2d

Sess. 4 (1968); S. Rep. 92-1066, 92d

Cong., 2d Sess. 2 (1972); H.R. 12392,

92d Cong., 2d Sess. (1972); H.R. Rep.

92-1023, 92d Cong., 2d Sess. 5 (1972).

—

giving that court authority “over 4 wide

range of governmental activities” or

authorizing persons to "claim all sorts

of relief against any agency of the

aoveranent °° The

legislative his-

tory further shows that Congress intended

the remand power to be exercised only in

government contract disputes. See S.

Rep. 92-1066 at 3; H.R. Rep. 92-1023 at

Following the enactment of the “re-

mand provision,” this Court and_ the

Court of Claims consistently held that

the Tucker Act did not authorize perman-

ent or preliminary injunctive relief,

declaratory judgments, or writs of man-

damus. E.g., Lee Y- Thornton, 420

, 92d Cong., 2d Sess. 114, 121,

123, 134, 127 (1972).

» 9% «

y.S. 139 (1975) (per curiam); Smith v-

United States, 654 F.2d 50, »3 (Ct. Cl.

1981) .+2/

The limited remedies available in

the Claims Court are particularly inade-

quate in grant-in-aid disputes. The

Secretary concedes that “the remedial

powers of the Claims Court. .- : will be

limited to the power to render a money

judgment and the limited power of remand

to the agency that is given by 28 U.S.C.

§ 1491(a)(2)[,)" and that the “court

will not have the power to issue a de-

claratory judgment that the GAB has mis-

construed the law, or to enjoin peti-

19/ In the Federal Courts Improvement

Act of 1982 (the “FCIA"), Congress for

the first time gave the Claims Court

authority to enter declaratory

judgments, injunctions, and other equit-

able relief in certain contract cases.

See Pub. L. No. 97-164, § 133, 96 Stat.

25, 40 (1982) (codified at 28 y.8§.C.

§ 1491(a)(3))-

oe 1 «

tioners henceforth to construe the law

differently when dealing with

respondent.” Sec. Br. at 45 (footnote

omitted). Since the Claims Court cannot

enter declaratory or injunctive relief

(Sec. Br. at 45), the States could be

required to commence suit in the Claims

Court for each disputed period. The

Claims Court would also be barred from

ieeuien preliminary injunctions to pre-

vent irreparable harm to individual

beneficiaries or to States concerned

about the elimination of disputed

services. *2/

20/7 The Secretary suggests that since

such cases are “simply a dispute about a

stream of money payments over time,” the

Claims Court can provide complete relief

and provide a “statement of the law that

will bind the federal government in

future dealings with the plaintiff.”

Sec. Br. at 44. The Claims Court cannot

however, provide “complete” relief.

Furthermore, the Secretary's statement

grossly minimizes the important services

at stake and ignores the limited re-

sources of beneficiaries and States to

repeatedly litigate in the Claims Court.

In sum, the language and legislative

history of the APA and the Tucker Act

demonstrate that the remedies available

in the Claims Court are not “adequate”

remedies which would bar district court

review of grant disallowances under the

APA.

c. The Social Security Act

and the Federal Courts

Improvement Act Support

District Court Review of

Grant Disallowances.

The jurisdiction of the district

court over this case also is supported

by considering the "entire statutory

system of remedies against the

Government to make a workable, consist-

ent and equitable whole.” Feres v.

United States, 340 U.S. 135, 139, (1950).

The Secretary does not address the

overall statutory context of this case.

His narrow focus fails to take into ac-

count related legislative enactments and

their histories, and ignores they

anomalous consequences of his position.

The Social Security Act (SSA) and

Federal Courts Improvement Act of 1982

(FCIA) demonstrate long-term and pre-

vailing Congressional intent to (1) vest

power to review agency action under

Title XIX and other titles of the Social

Security Act in the district courts and

the regional courts of appeals, and (2)

limit the creation and jurisdiction of

“specialized” courts, particularly those

created by the FCIA.

l. The Social Security Act is one

of the most complex statutes Congress

has ever enacted. See Schweiker v. Gray

oe FW «

Panthers, 453 U.S. 34, 43 (1981). Pur-

suant to the Act, federal agencies have

promulgated extensive regulations which

set forth detailed policies and require-

ments for the programs covered by the

Act.

The Social Security Act has a

breadth of social impact that is equal

to the depth of its terms. The Medicaid

program is the largest of several coop-

erative federal-state programs operated

under the authority of the Social

Security Act to provide medical, finan-

cial, and other assistance to needy

citizens. Programs under the Act in-

clude: Medicaid (Title XIX), social

services (Title XX), and aid to families

with dependent children (AFDC) (Title

IV). Non-grant programs created by the

Act include Social Security and Medicare.

e 66 «

The district courts and regional

courts of appeals have substantial expe-

rience deciding cases involving grant-

in-aid programs under by the _ Social

Security Act. This judicial experience

has developed because Congress has often

explicitly provided for judicial review

of agency action under the Social Secur-

ity Act in those courts. E.g., 42

¥.6.¢. § 405(g) (Social Security dis-

ability cases reviewable in district

court); 42 U.S.C. § 139500(f£) (district

court review of certain actions brought

by Medicare providers).

In the Medicaid Act itself, Congress

has specifically authorized review in

the court of appeals for “compliance”

questions closely related (and sometimes

nearly identical) to those raised in

Medicaid disallowance disputes. Under

42 U.S.C. § 1396c, the Secretary may

os 1 ©

review state plans, and amendments

thereto, to determine whether they

comply with the Medicaid Act. The

"state plans” submitted to the Secretary

under the Medicaid program contain

lengthy and detailed descriptions of

services provided under that program.

If the Secretary rules that a plan does

not comply with the Act, he may termi-

nate federal Medicaid grants in whole or

in part. Id. The Secretary's decision

on a “compliance” matter is subject to

judicial review in the court of appeals

in which the State is_ located. 42

U.S.C. § 1316(a)(3); State of Ohio v.

Dept. of HHS, 761 F. 2d 1187 (6th Cir.

1985) .44/ Past litigation in the

21/ Under the Secretary's regulations,

amendments to a state plan are subject

to his approval, but effective on the

date indicated by the state. 45 C.F.R.

(footnote Continues).

courts of appeal demonstrate that a

question of law or policy can often form

the basis for either a disallowance or

compliance dispute. E.g., Massachusetts

v. Grant Appeals Board, 698 F. 2d 22

(lst. Cir. 1983). The court of appeals

noted in this case that disallowances

are used by the Secretary “to implement

important policies governing ongoing

programs.” Pet. App. 4a. Given the

fact that Congress expressly authorized

court of appeals review for such closely