Amicus Curiae Brief — Bowen v. Massachusetts
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Supreme Court, U
7
a)
Nos. 87-712 and 87-929 FILED
= eee MAR 31 t
WI@L, JR.
Supreme Court of the United Sty, °°"
OCTOBER TERM, 1987
OTis R. BOWEN, SECRETARY OF HEALTH AND HUMAN
SERVICES, et al.,
. Petitioners,
COMMONWEALTH OF MASSACHUSETTS,
Respondent.
COMMONWEALTH OF MASSACHUSETTS,
Cross-Petitioner,
OTIs R. BOWEN, SECRETARY OF HEALTH AND HUMAN
SERVICES, et al.,
Cross-Respondents.
On Writs of Certiorari to the United States
Court of Appeals for the First Circuit
BRIEF OF THE
COUNCIL OF STATE GOVERNMENTS,
INTERNATIONAL CITY MANAGEMENT ASSOCIATION,
NATIONAL ASSOCIATION OF COUNTIES,
NATIONAL CONFERENCE OF STATE LEGISLATURES,
U.S. CONFERENCE OF MAYORS,
NATIONAL GOVERNORS’ ASSOCIATION, AND
NATIONAL LEAGUE OF CITIES
AS AMICI CURIAE IN SUPPORT OF
RESPONDENT/CROSS-PETITIONER
BARRY SULLIVAN BENNA RUTH SOLOMON *
CYNTHIA GRANT BOWMAN Chief Counsel
JENNER & BLOCK JOYCE HOLMES BENJAMIN
One IBM Plaza STATE AND LOCAL LEGAL CENTER
Chicago, IL 60611 444 N. Capitol Street, N.W.
(312) 222-9350 Suite 349
Washington, D.C. 20001
(202) 638-1445
Of Counsel * Counsel of Record for
Amici Curiae
WILSON - Eras Printine Co., Inc. - 789-0096 - WASHINGTON, D.C. 20001
QUESTIONS PRESENTED
1. Whether Congress intended, by enacting the 1976
amendments to the Administrative Procedure Act, to de-
prive the federal district courts of jurisdiction to review
Medicaid disallowance disputes.
2. Whether bifurcation of litigation over Medicaid
disallowances is required by the interaction of the Ad-
ministrative Procedure Act and the Tucker Act.
(i)
TABLE OF CONTENTS
QUESTIONS PRESENTED ...........2.......2222.0..-:ccseceeceeeeees
TABLE OF AUTHORITIES ....................22....0..ccsssccesseeee
INTEREST OF THE AMICI CURIAE...........................
STATEMENT OF THE CASE .........0..22222..2..2..-seeeess
SUMMARY OF ARGUMENT ............0.0.2......- eee
IG esc cnnnecnresenveinsnnitinisiinanatannentstammsnaiinibihniie
I. CONGRESS HAS NOT LEGISLATED TO DE-
PRIVE THE DISTRICT COURTS OF JURIS-
DICTION TO GRANT COMPLETE RELIEF
IN MEDICAID DISALLOWANCE CASES,
NOR HAS IT MANIFESTED ANY INTEN-
BE DO BD OD ccpencemcemesinientitinunisineahiinmianicnmnas
A. The Relief Requested In This Case Is Not
Barred By The “Money Damages Exception”
DO FEE GPO ccienmnstcnnceniniensiniaaes
1. The Commonwealth has not requested
GOCE) GI cccccccesssncncnsecheeenaemaablilies
GID cscsinsnitsiiiccrcnntiniitintteiitpinisiaidiaaimemaliniediiis
3. The relief requested here is not “money
damages” within the meaning of Section
CO GF GRD GID sievccensinsacntenieeueamens
B. No Adequate Remedy Is Available In The
SD GI viccinetcinnicnstsakicdamenisttinciileediatenicians
C. The Tucker Act Does Not “Impliedly Forbid”
The Relief Sought Here —........ ee...
D. The Secretary’s Interpretation Of The APA
Amendments Contradicts The Essential Pur-
pose Of Those Amendments _....................
(iii)
11
iv
TABLE OF CONTENTS—Continued
Page
II. THE DISTRICT COURT IS THE APPROPRI-
ATE TRIBUNAL TO REVIEW MEDICAID
DISALLOWANCES. ..........22..222.22--cc--ceceeeseceeeeeeeeeees 18
Ill. EVEN IF THE DISTRICT COURT LACKS
JURISDICTION TO GRANT COMPLETE RE-
LIEF, IT NONETHELESS HAS JURISDIC-
TION OVER THE COMMONWEALTH’S
CLAIMS FOR PROSPECTIVE INJUNCTIVE
SI ‘iissnnasliesiatadnicictasibcihsierssiineieciquteneitinnieninnsninctenienes 22
IEEE | eccchintecidscenitnndensniienscninesumsniiidsisiiamasmmeninesiensietieson 26
Vv
TABLE OF AUTHORITIES
CASES:
Alabama Rural Fire Insurance Co. v. Naylor, 530
F.2d 1221 (5th Cir. 1976) ...............................2.....
American Science & Engineering, Inc. v. Califano,
571 F.2d 58 (1st Cir. 1978) -..............-22--2-- ee.
Amoco Production Co. v. Hodel, 815 F.2d 352 (5th
Cir. 1987), petition for cert. pending, No. 87-
SERRA SIE SS EE Sa en 8 a en
Beller v. Middendorf, 632 F.2d 788 (9th Cir. 1980),
cert. denied, 454 U.S. 855 (1981) —.......................
Burlington School Committee v. Department of
Education, 471 U.S. 359 (1985) 2.000002.
Califano v. Sanders, 430 U.S. 99 (1977) ............. med
Cannon v. University of Chicago, 441 U.S. 677
i a al
Carter v. Seamans, 411 F.2d 767 (5th Cir. 1969),
cert. denied, 397 U.S. 941 (1970) -..........----...2......
Cook v. Arentzen, 582 F.2d 870 (4th Cir. 1978) ....
County of Alameda v. Weinberger, 520 F.2d 344
En nc ee
Delaware Division of Health & Social Services v.
Department of Health & Human Services, 665
F. Supp. 1104 (D. Del. 1987) -—............-20--.--....
Denton v. Schlesinger, 605 F.2d 484 (9th Cir.
MT RES EATS WDM ES REMI OS OE
Dermott Special School District v. Gardner, 278
F. Supp. 687 (E.D. Ark. 1968) -..........-.----....
Duke Power Co. v. Carolina Environmental Study
Group, Inc., 488 U.S. 59 (1978) -.............-....-.--...
Giordano v. Roudebush, 617 F.2d 511 (8th Cir.
TURAL RB TES CRE RE > a
Glidden Co. v. Zdanok, 370 U.S. 530 (1962)...
Hahn v. United States, 757 F.2d 581 (3d Cir.
Healy v. Sea Gull Specialty Co., 237 U.S. 479
ERE SECIS ac CUE See Ue SC
International Engineering Co. v. Richardson, 512
F.2d 573 (D.C. Cir. 1975), cert. denied, 423
Se I CE eainritinsiicinceinsintiernticiiceniieitiniyiliinnctiaemneanne
Page
-
vi
TABLE OF AUTHORITIES—Continued
Page
Keller v. Merit Systems Protection Board, 679 F.2d
ON EEE 24
Laguna Hermosa Corp. v. Martin, 643 F.2d 1376
Gi Gn, TE ccsssssnmnstinntesiinnbematabtidsssnsion 23
Larson v. Domestic & Foreign Commerce Corp.,
337 U.S. 682 (1949). -..... -desiosshsteliaitndnutiaiaibaiael 17
Lee County School District v. Gardner, 263 F.
err Bi Sai, MI ace scccccccsncnssntessintincnitenimees 10, 11
Maryland Department of Human Resources v.
Department of Health & Human Services, 763
I GS ae 9, 23
Massachusetts v. Department Grant Appeals
Board, 815 F.2d 778 (1st Cir. 1987) ~ —_ 14
Matthews v. United States, 310 F.2d 109 (6th Cir.
SE sie ate ia Ee a Ee 24
Megapulse, Inc. v. Lewis, 672 F.2d 959 (D.C. Cir.
Melvin v. Laird, 365 F. Supp. 511 (E.D.N.Y.
1973) ..... eTaoPe ..24, 24-25
Merrill Lyneh, Pierce, F enner & ‘Smith, "Ine. v.
Curran, 466 U.S. 368 (1968) ...............-................. 17
Minnesota ex rel. Noot v. Heckler, 718 F.2d 852
(Sth Cir. 1983) - ‘ 23
National Association of Counties v. ‘Baker, No. 87-
5287 (D.C. Cir. Mar. 11, 1988) —......... 9
New Mexico v. Regan, 745 F.2d 1318 (10th Cir.
1984), cert. denied, 471 U.S. 1065 (1985)... 24
North Side Lumber Co. v. Block, 753 F.2d 1482
(9th Cir.), cert. denied, 474 U.S. 931 (1985). 15
Portsmouth Redevelopment & Housing Authority
v. Pierce, 706 F.2d 471 (4th Cir.), cert. denied,
164 U.S. 960 (1983). ; 24
Quern v. Jordan, 440 U.S. 332 (1979) 7
Ramirez de Arellano v. Weinberger, 745 F.2d 1500
(D.C. Cir. 1984), vacated, 471 U.S. 1113
(1985) ‘ : 15
Rowe v. United States, 633 F.2d 799 (9th Cir.
1980), cert. denied, 451 U.S. 970 (1981) ... 23, 25
vii
TABLE OF AUTHORITIES—Continued
Page
Sharp v. Weinberger, 798 F.2d 1521 (D.C. Cir.
1986) _.... a a dente 15, 18
Shaw v. Gwatney, 795 F.2d 1351 (8th Cir. 1986)... 23
Spectrum Leasing Corp. v. United States, 764 F. od
EE 15
United States v. Mottaz, 476 U.S. 834 (1986)... 6, 7
Warner v. Cox, 487 F.2d 1301 (5th Cir. 1974)... 14
Wingate v. Harris, 501 F. Supp. 58 (S.D.N.Y.
IIIT riiclishti. diesels aadeinilbbenithtaneatiiasasse Pas Oe ee 14
CONSTITUTIONAL PROVISIONS:
FR ae eee 22
EET RSA AR OR 2
STATUTES:
Administrative Procedure Act, 5 U.S.C. (& Supp.
IV) § 551 et seq.:
5 U.S.C. (Supp. IV) § 702 ................................... passim
EE ET SETS ee oO 5
Federal Courts Improvement Act of 1982, Pub. L.
No. 97-164, 96 Stat. 25:
| ES ee 19, 20
Social Security Act, Tit. XIX, 42 U.S.C. (& Supp.
EE passim
I 20
42 U.S.C. § 1896b(d) (1)............................... Mn &
pe | eee &
| ae TEE 2
Tucker Act:
28 U.S.C. § 1491 (a) (1) ............ BE REESE NN Oa oe 19
33 U. BAe § 14691 (a) (B).............................. ee 12
eee a 19
LD aabbdiaditahia 19, 21
CONGRESSIONAL MATERIALS:
S. Rep. No. 275, 97th Cong., 2d Sess. (1981)... 19, 20
S. Rep. No. 996, 94th Cong., 2d Sess. (1976).__-:10, 16
S. Rep. No. 1066, 92d Cong., 2d Sess. (1972) _....... 12, 13
viii
TABLE OF AUTHORITIES—Continued
Page
H.R. Rep. No. 1023, 92d Cong., 2d Sess. (1972). 12, 13
H.R. Rep. No. 1656, 94th Cong., 2d Sess. (1976). 10, 15,
Adminstraiive Procedure Act Amendments of
1970: Hearimgs on S. 796, S. 797, S. 798, S. 799,
S. 800, S. 1210, 8S. 1289, S. 2407, S. 2408, S. 2715,
S. 2792, C. 3128, S. 2296, and S. 3297 Before
fhe Subcomm. on Administrative Practice and
Procedure oj the Senate Comm, on the Judiciary,
94th Cong. 28 Sesa, (1976) ...................................
Collateral Relief in the Court of Claims: Hearing
on H.R, 12979 and H.R, 12392 Before Subcomm.
\o. 2 of the House Comm. on the Judiciary, 92d
nn a er I ic ce iicniinseicnniesinnninaamtciacmntdeinatan
Sovere.gn Immunity: Hearing on S. 2568 Before
fhe Subcomm. on Adminstrative Practice and
Procedure oj the Senate Comm. on the Judiciary,
Yist Cong., 2d Sess. (1970) —......................10, 11,
| 18 Cong. Rec. 15,009 (1972) . santaniatananvinibitenansitiies
118 Cong. Res. 15,010 (1978) ......................................
121 Cong. Ree. 29,956 (1975) ...............................--.....
bOCKS AND OTHER AL THORITIES:
. Bator, ?. Mishkin, D. Shapire & H. Wechsier,
Hari & Weensler's The Federai Courts and the
Federal System (2d ed. 1973) . ahaa
Cyse, Proposed Rejorms in Federai Nonstatutory’
Tudicual Review: Sovereign lmmumty, Indis-
vensable Parties, Mandamus, 75 Harv. L. Rev.
1479 (1962) .
rainvon, Noustatutory Review oj Federal Admin-
strative Action: The Need for Statutory Re-
‘orm of Sovereign Immunity, Subject Matter
‘uriwdiction, and Parties Defendant, 68 Mich.
L. Rev. 389 (1970)
16, 17
16, 17
17, 18
12
19
ie «
ix
TABLE OF AUTHORITIES—Continued
The Federalist P
I i asieliinemenaben
No. 46 (J. Madison). a el
No. 78 (A. Hamilton) 00000
RR
Petrowitz, Federal Court Reform: The Federal
Courts Improvement Act of 1982—And Beyond,
BREE
32 Am. U.L. Rev. 543 (1983) .......... 20
1986 Annual Report of the Director of the Ad-
ministrative Office of the United States Courts. 20
IN THE
Supreme Court of the United States
OCTOBER TERM, 1987
Nos. 87-712 and 87-929
OTIs R. BOWEN, SECRETARY OF HEALTH AND HUMAN
SERVICES, et al.,
7 Petitioners,
COMMONWEALTH OF MASSACHUSETTS,
Respondent.
COMMONWEALTH OF MASSACHUSETTS,
Cross-Petitioner,
Vv.
Otis R. BOWEN, SECRETARY OF HEALTH AND HUMAN
SERVICES, et al.,
Cross-Respondents.
On Writs of Certiorari to the United States
Court of Appeals for the First Circuit
BRIEF OF THE
COUNCIL OF STATE GOVERNMENTS,
INTERNATIONAL CITY MANAGEMENT ASSOCIATION,
NATIONAL ASSOCIATION OF COUNTIES,
NATIONAL CONFERENCE OF STATE LEGISLATURES,
U.S. CONFERENCE OF MAYORS,
NATIONAL GOVERNORS’ ASSOCIATION, AND
NATIONAL LEAGUE OF CITIES
AS AMICI CURIAE IN SUPPORT OF
RESPONDENT /CROSS-PETITIONER
2
INTEREST OF THE AMICI CURIAE
The amici curiae are organizations whose members
include state, county, and municipal governments and
officials throughout the United States. Thus, amici have
a compelling interest in legal issues that affect state and
local governments.
This case presents an important jurisdictional issue
affecting a State’s claim to federal reimbursement of
Medicaid expenses. Medicaid is a cooperative state and
federal program which permits participating States to
share with the federal government the costs of providing,
among other things, “health or rehabilitative services for
mentally retarded individuals.” 42 U.S.C. § 1396d(d) (1).
Here, the Secretary of Health and Human Services ruled
that the Commonwealth of Massachusetts was not en-
titled to reimbursement for certain services provided to
handicapped individuals in intermediate care facilities
for the mentally retarded. On appeal, the United States
District Court for the District of Massachusetts reversed
the Secretary’s determination. The First Circuit affirmed
on the merits, but reversed the monetary judgment en-
tered by the district court in favor of the Commonwealth.
The court of appeals concluded that, although the district
court was authorized to grant prospective relief, retro-
active reimbursement was a money judgment that could
be obtained only from the Claims Court.
The jurisdictional issue in this case is a recurring one
concerning the appropriate forum for litigating disputes
over the interpretation of cooperative grant programs.
Almost invariably, a suit to determine the legitimacy of
state expenditures under a federal grant program will
have monetary consequences, just as declaratory or in-
junctive relief against a State, which is not barred by
the Eleventh Amendment, may impose severe financial
costs. Moreover, because the Claims Court has only lim-
ited equitable powers, disputes arising under federal
grant programs would, in many instances, entail two
lawsuits rather than one if the district courts lacked the
power to grant full relief.
A holding that only the Claims Court can determine
the scope of a federal grant program would also have
serious practical consequences for state and local govern-
ments. The district courts have greater familiarity both
with state-federal grant programs and with the particular
state plans governing the implementation of the Medicaid
statute in their particular regions. The district courts
also have more experience deciding complex issues of
statutory and regulatory interpretation than the Claims
Court, which has a specialized expertise. And, just as the
district courts have greater expertise than the Claims
Court in these matters, so too do the regional courts of
appeals have greater expertise than the Federal Circuit.
Finally, substantial burdens would be placed upon state
and local governments if they were required to litigate
in Washington all appeals over grants-in-aid.
Because of the importance of this jurisdictional ques-
tion to amici and their members, amici respectfully sub-
mit this brief to assist the Court in its resolution of this
case.’
STATEMENT
Amici adopt the statement of respondent and cross-
petitioner, the Commonwealth of Massachusetts.
SUMMARY OF ARGUMENT
1. This case presents the question whether the district
court is deprived of jurisdiction over all Medicaid disal-
lowance cases which may result in the payment of federal
funds to a State. Such a result is neither required by the
language of the Administrative Procedure Act (“APA”)
nor supported by the legislative history of that statute.
' Pursuant to Rule 36 of the Rules of this Court, the parties
have consented to the filing of this brief. Their letters of consent
have been filed with the Clerk of the Court.
4
First, the relief that the Commonwealth has requested
in this case is not “money damages” within the meaning
of the APA. The prayer for relief is prospective; and the
only retroactive relief sought is reimbursement, which, as
this Court has previously held, does not constitute dam-
ages. Second, there is no indication that Congress in-
tended to deprive the district courts of jurisdiction over
grant-in-aid litigation when it enacted the 1976 amend-
ments to the APA. The drafters of the amendments used
the term “money damages” interchangeably with “con-
tract damages” or “tort damages” and in fact considered
grant-in-aid cases to be appropriate for review under
the APA.
Moreover, district court review is not precluded by a
Tucker Act remedy in the Claims Court. The Claims
Court has very limited equitable powers and is unable to
offer the prospective injunctive relief required by the
Commonwealth in this case. Indeed, the legislative his-
tory of both the APA and the Tucker Act shows that
Congress never intended that the jurisdiction of the
Claims Court should extend to cases like this one. Finally,
this Court should not infer that Congress intended to
deprive the district courts of jurisdiction over Medicaid
disallowances when district court review was available in
1976, at the time the APA amendments were enacted.
2. There are important policy reasons why Medicaid
disallowance cases should be decided by the district courts
rather than by the Claims Court. The Claims Court has
specialized expertise in the areas of government contracts,
government employment, and patents. When Congress
reorganized the court system to centralize and unify
adjudication in these areas, it explicitly disavowed any
intent to do so in other areas of substantive law. Grant-
in-aid cases are especially appropriate for decision by
5
regional courts, which are familiar both with the Medi-
caid statute and with the implementing state plans.
8. Even assuming that the district court lacks juris-
diction to grant relief as to the accrued sums owed to the
Commonwealth, the district court nonetheless has juris-
diction to decide the underlying issues of prospective
statutory interpretation presented here. The fact that
such a decision may form the basis for a subsequent
money judgment is not sufficient to deprive the district
court of jurisdiction over the prospective claims. It falls
to Congress, not this Court, to eliminate whatever ineffi-
ciencies of judicial decisionmaking may result from the
bifurcation of claims because of the interaction of the
APA and the Tucker Act.
ARGUMENT
I. CONGRESS HAS NOT LEGISLATED TO DEPRIVE
THE DISTRICT COURTS OF JURISDICTION TO
GRANT COMPLETE RELIEF IN MEDICAID DIs-
ALLOWANCE CASES, NOR HAS IT MANIFESTED
ANY INTENTION TO DO SO.
The Secretary contends that the district court is de-
prived of jurisdiction in this case by the force of three
provisions contained in the 1976 amendments to the APA:
(1) the “money damages exception” in Section 702;
(2) the proviso in Section 704 that there be “no other
adequate remedy in a court”; and (3) the statutory pre-
clusion proviso in Section 702. As we show below, how-
ever, the language, legislative history, and underlying
purpose of the APA amendments manifest no intent by
Congress to divest the district courts of jurisdiction over
Medicaid disallowances. Moreover, in the absence of any
clear indication of such congressional intent, this Court
should not infer that Congress intended to repeal a rem-
edy that was available at the time the APA amendments
were enacted.
6
A. The Relief Requested In This Case Is Not Barred
By The “Money Damages Exception” To The APA.
The Secretary’s principal argument (Pet. Br. 15-34)
against district court jurisdiction in this case rests upon
Section 702 of the APA, which provides that “[a]n action
in a court of the United States seeking relief other than
money damages” shall not be dismissed on grounds of
sovereign immunity. 5 U.S.C. (Supp. IV) § 702 (em-
phasis added). The Secretary no longer disputes that
the Medicaid statute covered the services the Common-
wealth provided to mentally retarded citizens; and he con-
cedes that, if those services are covered, the Medicaid
Statute mandates reimbursement. (Pet. Br. 17.) How-
ever, because the Commonwealth is unwilling to waive
recovery of the more than $10 million already improp-
erly withheld by the federal government, the Secretary
insists that the district court and the First Circuit had
no jurisdiction over this case. (Pet. Br. 15 n.11.)
The Secretary’s argument lacks merit for several rea-
sons. First, the Commonwealth did not request the dis-
trict court to award “money damages.” Second, the reim-
bursement requested by the Commonwealth does not con-
stitute “money damages.” Third, there is no evidence
that Congress intended, by using the phrase “money dam-
ages” in the APA amendments, to oust the district courts
of jurisdiction over grant-in-aid litigation.
1. The Commonwealth has not requested money
damages.
As this Court has recently reaffirmed, in the context of
a case where the Government raised the issue of juris-
diction under the Tucker Act, “ ‘{j] urisdiction generally
depends upon the case made and relief demanded by the
plaintiff.’” United States v. Mottaz, 476 U.S. 834. 850
(1986), quoting Healy v. Sea Gull Specialty Co., 237 U.S.
479, 480 (1915) (Holmes, J.). In Mottaz, the Indian
claimant sought to compel the Government to purchase
7
from her certain lands that had been transferred pre-
viously to the Forest Service. Because the relief sought
consisted of payment of the current fair market value of
the land, rather than damages equal to compensation for
a past taking, this Court held that the case did not fit
within the scope of the Tucker Act. 476 U.S. at 838,
850-51.
Under Mottaz, analysis of the relief requested in this
ease must thus begin with the prayer for relief. The
Commonwealth asked the district court to:
1. Enjoin the Secretary . . . from failing or refus-
ing to reimburse the Commonwealth, or from recover-
ing from the Commonwealth, the federal share of
expenditures for medical assistance to eligible resi-
dents ....
2. Set aside the Board’s Decision ....
3. Grant such declaratory and other relief as the
Court deems just.
(Pet. App. 93-94, 98-99.) The Commonwealth’s prayer
for relief is entirely prospective. Although substantial
monetary consequences may flow from a prospective order,
that fact does not transform the resulting public expendi-
tures into retroactive damages. Cf. Quern v. Jordan, 440
U.S. 332, 337, 347-49 (1979). Moreover, any impact the
prospective order will have upon sums past due simply
flows from the assumption that the Secretary would reim-
burse the Commonwealth without the need for a separate
suit for collection, once it was determined that the sums
had been wrongfully withheld. (See Cross-Pet. 11.) In
short, the prayer for relief here does not request “money
damages.”
2. Reimbursement does not constitute money dam-
ages.
The superficial similarity between the relief requested
here and retroactive damages is simply an accidental
by-product of the statutory framework governing the
8
Medicaid program. Medicaid funds are provided to a
State in advance, based on a quarterly estimate of ex-
penditures to be made by the State. 42 U.S.C. § 1396b
(d) (1). Subsequently, based on retroactive audits, the
Secretary may determine, as he did in this case, that
certain state expenditures were not reimbursable under
Medicaid and should have been disallowed. 42 U.S.C.
$ 13896b(d) (5). Before judicial review is available con-
cerning the merits of the Secretary’s interpretation of
the Medicaid statute, the amounts disallowed are re-
couped from the federal contributions for succeeding
years, although the State is still required to provide all
necessary services during those subsequent years.” Thus,
the Medicaid “account” between a state and the federal
government is periodically adjusted on a retroactive basis.
Where, as here, there is a dispute regarding the scope of
the statute, the federal government is invested with a
self-help remedy—recoupment from subsequent federal
grants despite the pendency of litigation. Under the
statutory scheme, therefore, the State is invariably in
the position of seeking to recoup the disallowed funds
from the federal government, rather than vice versa.
If, in fact, a decision could be obtained from the admin-
istrative and judicial process at the moment of disallow-
ance, prospective injunctive relief would be adequate to
prevent the Secretary’s wrongful withholding of accrued
sums. Thus, as this Court held in Burlington School
Committee v. Department of Education, 471 U.S. 359,
370-71 (1985), reimbursement in this type of case simply
does not constitute “damages.” Because the statute con-
templates a post hoc determination of financial respon-
sibility, reimbursement merely requires the government
“to belatedly pay expenses that it should have paid all
along.” Id.
———————EEEEEe
* The State may elect to retain the funds pending a final determi-
nation by the Departmental Grant Appeals Board, but must then
pay interest on the sums retained if the disallowance is upheld.
42 U.S.C. § 1396b(d) (5).
9
Based on similar considerations, the District of Colum-
bia Circuit has held that, where a state or local govern-
ment sues to obtain funds to which it is entitled under
a statute, instead of money in compensation for losses
suffered from the withholding of those funds, the relief
sought is not barred by Section 702 of the APA, even
though the court’s order may ultimately require payment
of money by the federal government. National Associa-
tion of Counties v. Baker, No. 87-5287, slip op. 5-7
(D.C. Cir. Mar. 11, 1988); Maryland Department of
Human Resources v. Department of Health & Human
Services, 763 F.2d 1441, 1446-48 (D.C. Cir. 1985). Thus,
the court of appeals has found that neither the reim-
bursement of Medicaid disallowances nor the disburse-
ment of funds sequestered pursuant to the Gramm-
Rudman Act constitutes “money damages” within the
meaning of the APA. /d.
As in Burlington School Committee, National Associa-
tion of Counties, and Maryland Department of Human
Resources, the reimbursement sought here does not con-
stitute “money damages.”
3. The relief requested here is not “money damages”
within the meaning of Section 702 of the APA.
The legislative history of the APA provides no direct
evidence as to the meaning of the phrase “money dam-
ages.” The precise question before this Court was never
raised during the hearings on the 1976 amendments to
the APA, when the “money damages exception” was
added to the statute. It is clear, however, from the legis-
lative history that the witnesses, drafters, and legislators
involved in the 1976 amendments primarily associated the
term “money damages” with the traditional notion of
damages in contract and tort. For example, when Sen-
ator Bumpers introduced the bill, he stated that “[d]am-
ages in tort or contract may be available because of
statutes waiving the defense, but damages are sometimes
not an adequate remedy.” 121 Cong. Rec. 29,955 (1975)
10
(remarks of Sen. Bumpers) (emphasis added). See also
Sovereign Immunity: Hearing on S. 3568 Before the
Subcomm. on Administrative Practice and Procedure of
the Senate Comm. on the Judiciary, 91st Cong., 2d Sess.
(1970) (“1970 Hearing”) at 18 (“Congress has made
great strides in establishing—through the Tucker Act
and the Federal Tort Claims Act—systems of federal
monetary liability for contract and tort”) (statement of
Roger C. Cramton).
The only evidence to suggest that Congress ever con-
sidered the impact of the APA amendments upon the
reviewability of grants-in-aid is indirect. As the Secre-
tary has noted (Pet. Br. 32-34), both the House and
Senate Reports on the 1976 amendments refer to “admin-
istration of Federal grant-in-aid programs” as one area in
which the government had been raising the sovereign
immunity defense, thus alerting the Committee to the
importance of ameliorating the effect of this doctrine.
H.R. Rep. No. 1656, 94th Cong., 2d Sess. 9 (1976),
reprinted in 1976 U.S. Code Cong. & Admin. News 6121,
6129; S. Rep. No. 996, 94th Cong., 2d Sess. 8 (1976).
At a minimum, one may thus conclude that Professor
Cramton, who raised this issue during the 1970 hearing
(see 1970 Hearing at 121), and the Committee which
gave heed to his advice and included this reference in the
official report, believed that sovereign immunity was not
an appropriate defense in litigation over grants-in-aid.
Moreover, contrary to the Secretary’s reading (Pet.
Br. 34), the cases that gave rise to Professor Cramton’s
concern were cases in which plaintiffs had sought money
from the federal government. In Lee County School Dis-
trict v. Gardner, 263 F. Supp. 26, 28-30 (D.S.C. 1967),
the plaintiff sued to enjoin deferral of payment of federal
funds to which the school district was entitled; and in
Dermott Special School District v. Gardner, 278 F. Supp.
687, 690-92 (E.D. Ark. 1968), the “deferral” amounted
11
to a withholding of some $80,000 in federal financial as-
sistance.* The federal government raised a sovereign im-
munity defense in both cases. The defense was rejected
by both courts, on the ground that the plaintiffs had not
sought a positive order directing the payment of funds,
but had merely requested that “the defendants be ordered
to cease an allegedly unlawful interference with the flow
of funds to which the plaintiffs are already otherwise
legally entitled.” Lee County, 263 F. Supp. at 30; Der-
mott, 278 F. Supp. at 691.‘ The relief requested in those
cases is remarkably similar to that sought here. (See Pet.
App. 93-94, 98-99.)
In sum, there is substantial, if somewhat indirect, evi-
dence that Congress intended district court review to be
available in cases involving grant-in-aid programs like
that at issue here; and there is no evidence to suggest
that Congress intended to deprive the district courts of
the authority to grant complete relief in grant-in-aid
cases when it enacted the 1976 amendments.
B. No Adequate Remedy Is Available In The Claims
Court.
The Secretary also argues that district court review
was foreclosed in this case because the Commonwealth
has an adequate remedy in the Claims Court. (Pet. Br.
3 Federal financial assistance had already been approved in each
case and was withheld when the districts failed to comply with
subsequently promulgated guidelines.
*These cases reflect the tortuous reasoning required prior to
the enactment of the 1976 amendments, when it was unclear
whether affirmative relief was available against the government.
Professor Cramton clearly thought that the necessity for such
formulations merely wasted judicial resources before reaching the
merits of the case. See 1970 Hearing at 48-50, 98-109.
12
34-35, 43-44.) However, the Commonwealth seeks injunc-
tive and declaratory relief concerning the Secretary’s
interpretation and application of the Medicaid statute in
the future. (Pet. App. 93-94, 98-99.) This relief, as the
Secretary ultimately concedes (Pet. Br. 45), is clearly
not available from the Claims Court. Nonetheless, the
Secretary suggests that the Claims Court’s power to
remand the case to the agency will allow the Common-
wealth to obtain adequate relief. (Pet. Br. 44.) As the
legislative history of the 1972 amendments to the Tucker
Act makes clear, however, the Claims Court’s limited
equitable powers are wholly inadequate to the remedy
sought and required by the Commonwealth here.
The Tucker Act was amended in 1972 to grant certain
specific and very limited equitable powers to the Court of
Claims, specifically, the right to reinstate wrongfully dis-
charged government employees, to place civil and military
employees in appropriate duty or retirement status, to cor-
rect records, and “to remand appropriate matters to any
administrative or executive body or official with such
direction as it may deem proper and just.” 28 U.S.C.
$ 1491(a)(2).° It is clear from the legislative history
that the Claims Court’s power to remand cases to the
agency is limited to government contract cases in which
the record is inadequate for review. See H.R. Rep. No.
1023, 92d Cong., 2d Sess. 4 (1972); S. Rep. No. 1066,
92d Cong., 2d Sess. (1972), reprinted in 1972 US.
Code Cong. & Admin. News 3118-19: 118 Cong. Rec.
15,010 (1972). This limited power of remand is obvi-
ously not an adequate remedy in this case.
5 See H.R. Rep. No. 1023, 92d Cong., 2d Sess. 1-7 (1972): S. Rep.
No. 1066, 92d Cong., 2d Sess. (1972), reprinted in 1972 U.S. Code
Cong. & Admin. News 3116-3121; 118 Cong. Rec. 15,009-10 (1972):
Collateral Relief in the Court of Claims: Hearing on H.R. 12979
and H.R. 12392 Before Subcomm. No. 2 of the House Comm. on
the Judiciary, 92d Cong., 2d Sess. (1972) (“1972 Hearing” ).
13
Indeed, Congress rejected an earlier version of the 1972
amendments to the Tucker Act because it would have
empowered the Court of Claims to “issue such orders and
grant such relief as the district courts may issue and
grant in civil cases against the United States” (see 1972
Hearing at 2), and therefore could potentially have been
interpreted as equating the powers of the Court of Claims
with those of the district court. Jd. at 115-28 (statement
of Deputy Assistant Attorney General Jaffe; letter of
Deputy Attorney General Kleindienst). The Justice De-
partment objected that this language would create uncer-
tainty about whether the Court of Claims had jurisdiction
over a wide range of governmental activities, and would
therefore engender additional collateral litigation. See
1972 Hearing at 126-28. In response to this objection,
an alternative version was proposed and accepted, to
make clear that the amendment did not alter the juris-
diction of the Court of Claims. See H.R. Rep. No. 1023,
supra, at 2.
In addition, the legislative history of the 1972 amend-
ments is replete with explicit assurances that the amend-
ments were not intended to expand the jurisdiction of
the Court of Claims beyond its traditional subjects—
government contracts and government disputes with its
civilian and military employees. See H.R. Rep. No. 1023,
supra, at 3 (“the amended bill does not extend the classes
of cases over which the Court of Claims has jurisdiction,
and it is not intended to confer jurisdiction over any type
of case not now included within its jurisdiction”) ; S. Rep.
No. 1066, supra, reprinted in U.S. Code Cong. & Admin.
News 3117; 118 Cong. Rec. 15,010 (1972); 1972 Hearing
at 16-17 (statement of Judge Cowen); id. at 61 ‘(state-
ment of Thomas H. King). It is therefore not surpris-
ing that all of the cases cited by the Secretary to sup-
port the proposition that adequate relief may be granted
by the Claims Court (Pet. Br. 43 n.38) fall within that
court’s traditional exclusive jurisdiction over contracts
14
between the government and private parties. See Amer-
ican Science & Engineering, Inc. v. Califano, 571 F.2d 58
‘1st Cir. 1978); Alabama Rural Fire Insurance Co. v.
Naylor, 530 F.2d 1221 (5th Cir. 1976); Jnternational
Engineering Co. v. Richardson, 512 F.2d 573 (D.C. Cir.
1975), cert. denied, 423 U.S. 1048 (1976); Warner v.
Cox, 487 F.2d 1301 (5th Cir. 1974). None of these cases
involved a dispute between a State and the federal gov-
ernment under a statutory grant-in-aid program.“
In sum, the legislative history of the Tucker Act
makes clear that the equitable powers of the Claims
Court are totally inadequate to provide the relief that
the Commonwealth has sought and requires in this case.
That legislative history also shows that Congress never
anticipated that the Claims Court would be permitted to
expand its subject matter jurisdiction beyond the tradi-
tional subjects of its jurisdiction, and, in fact, that Con-
gress clearly meant to foreclose that expansion.
In the final analysis, the Secretary would apparently
require the Commonwealth to obtain relief from the
®* The only cases in which district court review of a grant-in-aid
program has been found precluded by the exclusive jurisdiction of
the Claims Court have involved unusual circumstances where the
court's decision would have no prospective effect at all. For example,
Massachusetts v. Department Grant Appeals Board, 815 F.2d 778
‘lst Cir. 1987), concerned reimbursement for the expense of pro-
viding abortions under Medicaid during the pendency of a challenge
to the Hyde Amendment: The Commonwealth provided the abor-
tions pursuant to court order during that interim period, but would
not do so if the legal challenge failed. Similarly, Wingate ». Harris,
501 F. Supp. 58 (S.D.N.Y. 1980), involved reimbursements to nurs-
‘ag homes which had since been decertified. Both of these cases
involved expenditures that were discontinued and would not be
resumed; therefore the courts’ decisions could not have had any
prospective effect. Even assuming that those cases were correctly
decided, they are very different from the case at hand, where the
Commonwealth continues to provide the medical services disallowed
by the Secretary.
te
15
Claims Court in this or similar cases by means of re-
peate’ suits for damages. (Pet. Br. 45 n.41.) Quite ob-
viously, this procedure does not provide an adequate rem-
edy for a State, which requires the certainty available
from injunctive and declaratory relief in order to plan
and budget expenditures for the future. Repeated law-
suits would also result in a clear waste of public re-
sources, on the part of both litigants and the judiciary.
In short, if the district court does not have jurisdiction
to grant relief in this case, an adequate remedy is simply
not available to the Commonwealth.
C. The Tucker Act Does Not “Impliedly Forbid” The
Relief Sought Here.
Finally, the Secretary argues that the district court
does not have jurisdiction here because the Tucker Act
impliedly forbids the relief sought. (Pet. Br. 44-46.)
Again, the cases which the Secretary cites in support of
this proposition all involve the Claims Court’s well-
established exclusive jurisdiction over government con-
tracts and employment. See Sharp v. Weinberger, 798
F.2d 1521 (D.C. Cir. 1986); Spectrum Leasing Corp. v.
United States, 764 F.2d 891 (D.C. Cir. 1985); North
Side Lumber Co. v. Block, 753 F.2d 1482 (9th Cir.),
cert. denied, 474 U.S. 931 (1985) .*
By contrast, the legislative history of the statutory
preclusion proviso of Section 702 of the APA demon-
strates that Congress did not intend to preclude the re-
lief sought by the Commonwealth in this case. The draft-
ers of the proviso had very specific prohibitions in mind,
such as provisions prohibiting injunctive and declaratory
relief against the collection of federal taxes. See H.R.
Rep. No. 1656, supra, at 13, reprinted in 1976 U.S. Code
7 The Secretary also cites the dissent in Ramirez de Arellano v.
Weinberger, 745 F.2d 1500 (D.C. Cir. 1984), vacated, 471 U.S. 1113
(1985). A quite different question was presented there: whether
the Tucker Act prohibits specific relief for a taking. 745 F.2d at
1550-56.
16
Cong. & Admin. News 6133; S. Rep. No. 996, supra, at
11; Administrative Procedure Act Amendments of 1976:
Hearings on S. 796, S. 797, S. 798, S. 799, 8. 800, S.
1210, S. 1289, S. 2407, S. 2408, S. 2715, S. 2792, C. 3123,
S. 3296 and S. 3297 Before the Subcomm. on Adminis-
trative Practice and Procedure of the Senate Comm. on
the Judiciary, 94th Cong., 2d Sess. (1976) (“1976 Hear-
ings’) at 86 (statement of Francis M. Gregory, Jr.).
Moreover, when the drafters considered the preclusive
effect of the Tucker Act, they were explicitly concerned
that the APA not be interpreted to take away the exclu-
sive jurisdiction of the Court of Claims over government
contracts or to grant authority to order the specific per-
formance of government contracts. See H.R. Rep. No.
1656, supra, at 12-13, reprinted in 1976 U.S. Code Cong.
& Admin. News 6133." None of these concerns is impli-
cated by the case at hand.
The framers of the statutory preclusion proviso re-
peatedly emphasized that its purpose was not to withdraw
any specific relief that was available, but only to make
clear that the APA amendments did not confer new
authority where Congress had specified that only certain
remedies were available. H.R. Rep. No. 1656, supra, at
13, reprinted in 1976 U.S. Code Cong. & Admin. News
6133; S. Rep. No. 996, supra, at 11-12. In 1976, when
the APA amendments were enacted, review of Medicaid
disallowances was availabe in the district courts. See
County of Alameda v. Weinberger, 520 F.2d 344 (9th
Cir. 1975). To imply that the 1976 amendments divested
the district courts of this jurisdiction would thus directly
*In general, the prohibitions encompassed by the statutory pre-
clusion proviso were prohibitions against types of relief that were
not available from the government at all. Here, by contrast, the
Secretary does not argue that the Commonwealth is seeking a type
of relief that was not previously available. He argues only that
the Commonwealth should be required to seek that relief in a differ-
ent forum.
17
contradict these congressional assurances, as well as set-
tled principles of statutory construction. See Merrill
Lynch, Pierce, Fenner & Smith, Inc. v. Curran, 456 U.S.
358, 381-82 (1982). See also Cannon v. University of
Chicago, 441 U.S. 677, 696-99 (1979). In light of Con-
gress’ presumed familiarity with a remedy that was
already recognized, this Court should not conclude that
Congress intended to repeal that remedy, in the absence
of a clearly expressed congressional] intent to do so.
D. The Secretary’s Interpretation Of The APA Amend-
ments Contradicts The Essential Purpose Of Those
Amendments.
The Secretary’s interpretation of the APA amendments
to foreclose review here is not only contradicted by the
language and legislative history of the statute, but is
contrary to the most central purpose those amend-
ments. As this Court stated in Califano v. Sanders, 430
U.S. 99, 104 (1977), “the [APA] statute undoubtedly
evinces Congress’ intention and understanding that judi-
cial review should be widely available to challenge the
actions of federal administrative officials.”
The central concern of the drafters of the 1976 APA
amendments was to make clear that affirmative relief was
available against the government, even where judicial
review had not been provided by statute. See, e.g., 121
Cong. Ree. 29,955-56 (1975) (remarks of Sen. Bumpers) ;
H.R. Rep. No. 1656, supra, at 4-5, reprinted in 1976 U.S.
Code Cong. & Admin. News 6124-25; 1976 Hearings at
230-31 (statement of Richard K. Berg). In particular,
Congress recognized that it was necessary to dispel con-
fusion arising out of certain statements in Larson v.
Domestic & Foreign Commerce Corp., 337 U.S. 682, 691
n.11 (1949), to the effect that sovereign immunity was
waived only where relief could be had by ordering the
cessation of conduct by the government, and not where
affirmative action was required. See 1970 Hearing at 98-
109. The bill’s proponents thus intended to make clear
that affirmative relief was available. An explicit goal
18
was to prevent attorneys for the federal government from
repeatedly raising arguments based on sovereign immun-
ity and setting jurisdictional traps for plaintiffs, instead
of concentrating their efforts, and those of the judiciary,
on the merits of the case. See, e.g., Cramton, Nonstatu-
tory Review of Federal Administrative Action: The Need
for Statutory Reform of Sovereign Immunity, Subject
Matter Jurisdiction, and Parties Defendant, 68 Mich. L.
Rev. 389, 420-23 (1970); 1970 Hearing at 48-50.° To
prevent this waste of resources, the amendment was to
sound a loud and certain trumpet that the government
did indeed mean to open itself generally to suits for spe-
cific relief arising out of actions by administrative agen-
cies.
In this case, the Commonwealth contests an adminis-
trative agency’s interpretation of a statute that governs
the future relationship between the Commonwealth and
the federal government, and the Commonwealth seeks af-
firmative injunctive relief. In light of all the indications
that Congress intended the APA amendments to open the
district courts to similar suits, and not to take away
any remedy then available, there is no basis for this
Court to conclude that the 1976 amendments were in-
tended to divest the district courts of jurisdiction in cases
such as this.
Il. THE DISTRICT COURT IS THE APPROPRIATE
TRIBUNAL TO REVIEW MEDICAID DISALLOW-
ANCES.
The Secretary also argues that a variety of public
policy reasons—centralization, uniformity, and effi-
ciency—require that Medicaid disallowance cases be heard
*As Justice (then Judge) Scalia observed in Sharp v. Wein-
berger, 798 F.2d 1521, 1522 (D.C. Cir. 1986): “If there is a
less profitable expenditure of the time and resources of federal
courts and federal litigants than resolving a threshold issue of
which particular federal court should have jurisdiction, it does not
come readily to mind.” Such a waste is particularly obvious in
this case because the Secretary did not raise the jurisdictional
issue until he had litigated the merits and lost.
in the Claims Court. (Pet. Br. 38-43.) The Secretary’s
arguments simply obfuscate the vital public policies which
are at stake here.
It is true that Congress intended to centralize the deci-
sion of certain types of cases when it enacted the Federal
Courts Improvement Act (“FCIA”).’® In particular, the
legislative history of the FCIA manifests a concern with
non-uniformity of decisions and forum-shopping in the
highly complex and technical area of patents, which Con-
gress saw as resting upon fact questions in need of spe-
cial expertise and uniformity of decision. See S. Rep. No.
275, 97th Cong., 2d Sess. 5-7, 39 (1981), reprinted in
1982 U.S. Code Cong. & Admin. News 15-17, 48. The
legislative history shows an equally strong opposition,
however, to centralization and specialization of judicial
decisionmaking beyond the limited areas within the
traditional jurisdiction of the Court of Claims and the
Court of Patent Appeals." Although there had been
extensive lobbying efforts to establish a number of spe-
cialized courts, as well as a national court of appeals,
Congress rejected those efforts and strongly reaffirmed
its general commitment to the regional court system. See
S. Rep. No. 275, supra, at 4, 39-40, reprinted in 1982 U.S.
©” Among other things, the FCIA combined the trial level juris-
dictions of the former Court of Claims and the Court of Patent
Appeals in the new Claims Court, and centralized all appeals from
such cases in the new Court of Appeals for the Federal Circuit.
See 28 U.S.C. §§ 1295, 1491(a)(1), 1498(a). The new Claims Court
is an Article I court. 28 U.S.C. § 171(a).
11 In fact, the proponents of the 1976 APA amendments also
expressed concern with overcentralization of adjudication. See
Byse, Proposed Reforms in Federal “Nonstatutory” Judicial Re-
view: Sovereign Immunity, Indispensable Parties, Mandamus, 75
Harv. L. Rev. 1479, 1494-96 (1962). Professor Byse pointed out
that nonstatutory review actions often involve questions of local
significance with which local judges are familiar, and that cen-
tralization of adjudication in Washington imposes severe burdens
and expense upon litigants.
Code Cong. & Admin. News 14, 48-49; see also Petrowitz,
Federal Court Reform: The Federal Courts Improvement
Act of 1982—And Beyond, 32 Am. U.L. Rev. 543, 544-50
(1983). Moreover, the legislative history clearly shows
that the FCIA was not intended to expand the subject
matter jurisdiction of the former Court of Claims. S. Rep.
No. 275, supra, at 4, reprinted in 1982 U.S. Code Cong.
& Admin. News 14.
In light of these strong statements, the Secretary’s
argument that decision of Medicaid disallowance cases
by the district courts somehow contravenes public policy
is unconvincing. Cases concerning Medicaid disallow-
ances are particularly appropriate for decision by the
regional courts. The statute itself is based on a concept
of regionalism, as the Medicaid program is structured
around a variety of state plans. 42 U.S.C. § 1396a. The
district courts are familiar not only with the Medicaid
statute, but also with the intricacies of the particular
state plans in their respective States. The expertise of
the Claims Court, on the other hand, lies in the areas of
government contracts, government employment, patents,
and certain tax matters. See, ¢.g., 1986 Annual Report
of the Director of the Administrative Office of the United
States Courts 335." The same distinction exists between
the regional courts of appeals and the Federal Circuit.
The policy arguments raised by the Secretary concern-
ing bifurcation, or “claim splitting,” are similarly inap-
posite. (Pet. Br. 39-42.) Even if this case were sub-
mitted initially to the Claims Court, bifurcation would
result because the Claims Court could not give complete
relief. Indeed, that scenario would turn the usual order
on its head because the State would be required first to
‘2 In the court year ended September 30, 1986, for example, the
Claims Court disposed of 669 complaints, of which 248 involved
government contracts, 165 involved government employment, and
139 involved tax matters. 1986 Annual Report of the Director of
the Administrative Office of the United States Courts 335.
21
seek a judgment for damages before seeking the more
comprehensive equitable relief available from the dis-
trict court. This procedure would also have the untoward
result that the collateral estoppel effect of a judgment
would run from an Article I court to an Article III
court. See 28 U.S.C. §171(a). On the other hand, if the
litigation begins in the district court, the Secretary has
it within his own power to avoid a second suit. If the
Secretary's interpretation of the statute is approved by
the district court, that will end the litigation; if the Sec-
retary loses, he could simply calculate the amounts past
due and pay them over to the State.
Finally, the Secretary’s arguments in this case threaten
to expand the jurisdiction of the Claims Court far beyond
its traditional boundaries. Historically, the Claims Court
was created as a tribunal to relieve Congress of the pres-
sure caused by numerous private bills. Glidden Co. v.
Zdanok, 370 U.S. 530, 552-53 (1962); see also P. Bator,
P. Mishkin, D. Shapiro, and H. Wechsler, Hart &
Wechsler’s The Federal Courts and the Federal System
1326-30 (2d ed. 1973). Although its jurisdiction has been
expanded at various times, the Claims Court is still essen-
tially a tribunal for claims against the federal govern-
ment by private individuals who have contracted with it,
have been employed by it, or have been required to turn
over their property to it. For reasons having to do with
reluctance to tell the sovereign what to do, its remedies
have largely been limited to money. This case, however,
concerns the relationship between two sovereigns—a State
and the federal government—and the Secretary’s argu-
ments may be extended to cover disputes arising out of
any grant-in-aid program where there is no statutory
provision for review.”
% As other amici point out, the federal government has already
raised this jurisdictional issue in the context of other statutes and
in cases in which the government has been named as a third-party
¢efendant by a State, which has itself been. sued by ultimate
,
The sovereignty of the States was so important to the
Framers of the Constitution that cases in which a State
is a party may be brought as a matter of original juris-
diction in this Court. U.S. Const. Art. III, § 2. Given the
importance that the Framers placed both upon state sov-
ereignty and upon an independent judiciary, the notion
that a State could be required to sue the federal govern-
ment in an Article I tribunal clearly would have aston-
ished the founders. See, e.g., The Federalist Nos. 45-46
(J. Madison) and Nos. 78-79 (A. Hamilton). Should the
Secretary’s argument prevail, a State would presumably
be required to decide between bringing suit in the Claims
Court or in this Court.
The absurd results which necessarily flow from the
Secretary’s position cannot have been envisaged by Con-
gress either in drafting the APA amendments or in out-
lining and expanding the jurisdiction of the Claims
Court. This Court should reject the Secretary’s interpre-
tation and affirm Congress’ intent to open the district
courts to challenges to actions by administrative agen-
cies, holding that the district court has jurisdiction over
this case and the authority to order complete relief.
III. EVEN IF THE DISTRICT COURT LACKS JURIS-
DICTION TO GRANT COMPLETE RELIEF, IT
NONETHELESS HAS JURISDICTION OVER THE
COMMONWEALTH’S CLAIMS FOR PROSPECTIVE
INJUNCTIVE RELIEF.
Unlike the Court of Appeals, we believe that the district
court has jurisdiction to grant complete relief in this
case. However, even assuming, for the sake of argument,
that the district court la-ks authority to order the pay-
beneficiaries of a grant-in-aid program; this practice results in
the pendency of two separate lawsuits over the same issues. See
Brief of Victoria Grimesy, et al., as amici curiae in support of the
Commonwealth of Massachusetts.
ee ene.
ment of the accrued sums due to the Commenwealth, the
district court nonetheless has jurisdiction over the claims
for prospective injunctive relief.
The authority for this proposition is overwhelming.
Every federal court to confront this jurisdictional ques-
tion in the context of a case involving a Medicaid dis-
allowance with any prospective effect has concluded either
that the entire case should be decided by the district court
or that the district court should decide the nonmonetary
claims and transfer to the Claims Court the claim for
past sums disallowed. Maryland Department of Human
Resources v. Department of Health & Human Services,
763 F.2d 1441, 1446-48 (D.C. Cir. 1985) (district court
jurisdiction over entire claim) ; Minnesota ex rel. Noot v.
Heckler, 718 F.2d 852, 859-60 (8th Cir. 1983) (district
court jurisdiction over prospective nonmonetary claims
and Claims Court jurisdiction over retroactive monetary
claims) ; Delaware Division of Health & Social Services v.
Department of Health & Human Services, 665 F. Supp.
1104, 1117 (D. Del. 1987) (district court jurisdiction
over entire claim).
14 In addition, there is significant precedent in a variety of other
contexts to the effect that the district court does not lose jurisdic-
tion over a claim for nonmonetary relief simply because it may
form the basis for a subsequent monetary judgment. Shaw v.
Gwatney, 795 F.2d 1351, 1356 (8th Cir. 1986) (suit for reinstate-
ment and back pay by National Guard officer); Hahn v. United
States, 757 F.2d 581, 589 (3d Cir. 1985) (suit by participants in
national health service scholarship program seeking declaratory,
injunctive, and monetary relief from denial of constructive-service
credit); Megapulse, Inc. v. Lewis, 672 F.2d 959, 971 (D.C. Cir.
1982) (suit by government contractor to enjoin alleged violation
of Trade Secrets Act); Laguna Hermosa Corp. v. Martin, 643 F.2d
1376, 1379 (9th Cir. 1981) (suit to extend concession agreement) ;
Rowe v. United States, 633 F.2d 799, 802 (9th Cir. 1980), cert.
denied, 451 U.S. 970 (1981) (suit by bidders for oil and gas leases) ;
Beller v. Middendorf, 632 F.2d 788, 797-800 (9th Cir. 1980)
(Kennedy, J.), cert. denied, 454 U.S. 855 (1981) (suit to challenge
discharge from Navy of those who engage in homosexual activity) ;
24
None of the contrary authority cited by the Secretary
involves an ongoing state-federal relationship under a
grant-in-aid program, and most of the cases cited involve
questions within the Claims Court’s traditional jurisdic-
tion over government contracts and employees. See Ports-
mouth Redevelopment & Housing Authority v. Pierce, 706
F.2d 471 (4th Cir.), cert. denied, 464 U.S. 960 (1983)
(government contract); Matthews v. United States, 810
F.2d 109 (6th Cir. 1987) (discharge of air traffic con-
trollers) ; Keller v. Merit Systems Protection Board, 679
F.2d 220 (11th Cir. 1982) (civil service discharge) ;
Denton v. Schlesinger, 605 F.2d 484 (9th Cir. 1979)
(military discharges); Cook v. Arentzen, 582 F.2d 870
(4th Cir. 1978) (military discharge); Carter v. Sea-
mans, 411 F.2d 767 (5th Cir. 1969), cert. denied, 397
U.S. 941 (1970) (military discharge)."’ In all of these
cases, unlike the case at bar, the Claims Court was able
to afford an adequate remedy to the plaintiffs.
Although there is some difference of opinion among the
circuits on this question, the reasoning of those cases
finding that the district court retains jurisdiction over
the nonmonetary and prospective claims is persuasive. In
Melvin v. Laird, for example, Judge Weinstein con-
vincingly demonstrated that the expansion of the powers
Giordano v. Roudebush, 617 F.2d 511, 514 (8th Cir. 1980) (suit
for reinstatement and back pay by physician at veterans’ hospital) ;
Melvin v. Laird, 365 F. Supp. 511, 516-20 (E.D.N.Y. 1973)
(Weinstein, J.) (suit by former army officer seeking declaratory
and injunctive relief for alleged deprivation of constitutional rights
in court martial). See also Duke Power Co. v. Carolina Environ-
mental Study Group, Inc., 438 U.S. 59, 71 n.15 (1978).
1° Two cases cited by the Secretary involve mineral royalty pay-
ments, which, we submit, are more similar to a government con-
tract relationship than to a grant-in-aid relationship. Amoco
Production Co. v. Hodel, 815 F.2d 352 (5th Cir. 1987), petition for
cert. pending, No. 87-372; New Mexico v. Regan, 745 F.2d 1318
(10th Cir. 1984), cert. denied, 471 U.S. 1065 (1985).
em em
of the Court of Claims was not intended to oust the dis-
trict courts of jurisdiction over claims for equitable relief.
See 365 F. Supp. at 516-20. It would be particularly
surprising to infer such an ouster, without any clear
expression of congressional intent, when the result would
be to oust an Article III court of jurisdiction and force
plaintiffs—particularly sovereign States—to bring suit in
the Claims Court, an Article I tribunal. See Hahn v.
United States, 757 F.2d at 590. Finally, a holding that
the district court has no jurisdiction over agency review
whenever it is coupled with a claim for monetary relief
would contradict this Court’s statement in Califano v.
Sanders, 430 U.S. 99 (1977), to the effect that Congress
intended judicial review of agency actions to be widely
available. See Rowe v. United States, 633 F.2d at 802.
Even though bifurcation of claims may be somewhat
inconvenient and inefficient, the case law noted above
shows that such bifurcation is not unusual. If this Court
holds that the APA precludes the district court from
granting complete relief, the resulting bifurcation would
simply reflect the interaction of the APA and the Tucker
Act, and is a matter for legislative, rather than judicial,
concern. For these reasons, this Court should hold that
the district court had jurisdiction to review this case.
CONCLUSION
The judgment of the court of appeals should be affirmed
in part and reversed in part, and the decision of the dis-
trict court should be affirmed. In the alternative, this
Court should affirm the judgment of the court of appeals.
Respectfully submitted,
BARRY SULLIVAN BENNA RUTH SOLOMON *
CYNTHIA GRANT BOWMAN Chief Counsel
JENNER & BLOCK JOYCE HOLMES BENJAMIN
One IBM Plaza STATE AND LOCAL LEGAL CENTER
Chicago, IL 60611 444 N. Capitol Street, N.W.
(312) 222-9350 Suite 349
Washington, D.C. 20001
(202) 638-1445
Of Counsel * Counsel of Record for
Amici Curiae
March 31, 1988
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