Amicus Curiae Brief — Armstrong v. Exceptional Child Ctr., Inc., 135 S. Ct. 44 (2014) (No. 14-15)

BRIE’ No. 14-15

In the Supreme Court of the United States

RICHARD ARMSTRONG, ET AL., PETITIONERS

Vv.

EXCEPTIONAL CHILD CENTER, INC., ET AL.

ON WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

BRIEF FOR THE UNITED STATES AS AMICUS CURIAE

SUPPORTING PETITIONERS

DONALD B, VERRILLI, JR.

Solicitor General

Counsel of Record

JOYCE R. BRANDA

Acting Assistant Attorney

General

EDWIN S. KNEEDLER

Deputy Solicitor General

ALLON KEDEM

Assistant to the Solicitor

General

MARK B. STERN

ALISA B. KLEIN

JEFFREY E. SANDBERG

Attorneys

Department of Justice

Washington, D.C. 20530-0001

SupremeCtBriefs@usdoj.gov

(202) 514-2217

SSS ss SSS

TS

Library cf Conpre-3

Liw Litery

QUESTION PRESENTED

Under 42 U.S.C. 1396a(a)(30)(A), a State’s plan for

medical assistance under the Medicaid Act must “pro-

vide such methods and procedures relating to the

utilization of, and the payment for, care and services

available under the plan * * * as may be neces-

sary * * * to assure that payments are consistent

with efficiency, economy, and quality of care and are

sufficient to enlist enough providers so that care and

services are available under the plan at least to the

extent that such care and services are available to the

general population in the geographic area.” The ques-

tion presented is:

Whether Medicaid providers may maintain a cause

of action under the Supremacy Clause to enforce Sec-

tion 1396a(a)(30)(A) by asserting that it preempts a

State’s allegedly inconsistent provider-reimbursement

rates.

(I)

% os

me

TABLE OF CONTENTS

Page

eee OE es TE TD siicsiisccnstcsoncintemsectsermmennnntnarnsencionaininis 1

eo oc cidadisicgibinlabindongennhaanemiaeinniaaimaiiniata 1

I I vis sitittccnneeecietnienaneninriveiniovenianennine 8

Argument:

Medicaid providers cannot maintain a cause of action

under the Supremacy Clause to enforce Section 30(A)

ee I i iiccticrsscicccicsstnenccntnnincaniciirniemnianensinnmmnimanaen 10

A. No federal statute provides a cause of action to

enforce Section 30(A) against state officials................ 11

B. This Court has never squarely decided if or when a

nonstatutory cause of action for equitable relief on

preemption grounds should be recognized under the

Supremacy Clause or otherwise, although it has

entertained injunctive actions raising preemption

C. The creation of a private cause of action to enforce

Section 30(A) against state officials under the

Supremacy Clause would not be appropriate.............. 21

Css csesncsineiiscaichietdipiiieannenniiaitiinneaiineiiianiniinninisuncneataite 34

TABLE OF AUTHORITIES

Cases:

Alexander v. Choate, 469 U.S. 287 (1985) .........ccccccsereenenee 2

Alexander v. Sandoval, 532 U.S. 275 (2001).............000+ 20, 28

American Ins. Ass'n v. Garamendi, 539 U.S. 396

I ante aaada liclil edaiesldiintnidindainmndansieniaiisannnaltaieth 16

Arkansas Dep't of Health & Human Servs. v.

Ahlborn, 547 U.S. 268 (2006)........--ccccceeceeeeeeseneecensnsenennnnes 16

Arlington Cent. Sch. Dist. Bd. of Educ. v. Murphy,

BO eC vetetiivtntsinsesiniscencitiniinmnisiniatnannneionpniniomenvintiones 22

Astra USA, Inc. v. Santa Clara Cnty., 131 S. Ct.

I sacisiacsiceiesrnsiesiesenenndehticaintehiceenneniisiaeieidpiiaisiotiininhapreennieinirtia 27

Cases—Continued: Page

Bennett v. Arkansas, 485 U.S. 395 (1988) .........cccseceeeeeeeees 22

Bennett v. Kentucky Dep't of Educ., 470 U.S. 656

ETI cisstunsishieidccineenderaninmbeamasendinssdsanianintannansiciaasinnnennteniniouncants 22

Blessing v. Freestone, 520 U.S. 329 (1997) .......-.00-+ 11, 13, 28

Burks v. Lasker, 441 U.S. 471 (1979).......:.:-scscscssssrsesssessenes 16

Bush v. Lucas, 462 U.S. 367 (1983) .............csseccsessessessesresees 20

California Dep't of Human Res. Dev. v. Java,

ee Be ED sancneeieccntienercemviirennsesontetemnaninenstnseesecneiin 17

Chapman v. Houston Welfare Rights Org.,

I ee GID Siaciinccinisiusonescsisarisnsacicniatsaunteininininiessineseizooses 19

City of Burbank v. Lockheed Air Terminal, Inc.,

BR eRe AEN Mintek inane 32

Dennis v. Higgins, 498 U.S. 439 (1991)............ccccecesee-e 19, 24

Douglas v. Independent Living Ctr. of S. Cal., Inc.,

ks Se IID erircetnensiieinnbitsinininnoininensvereeianneenten passim

Edelman v. Jordan, 415 US. 651 (1974).........:.cccccceeeeees 26, 29

Equal Access for El Paso, Inc. v. Hawkins, 509 F.3d

697 (5th Cir. 2007), cert. denied, 555 U.S. 811 (2008) ......11

Erie R.R. v. Tompkins, 304 U.S. 64 (1938) .....-.....ccececeeeeeeees 20

Florida Lime & Avocado Growers, Inc. v. Paul,

ks Re ceniitnietectnassientccnieagnaterenninnenninntiorecosenenencumennend 33

Gade v. National Solid Wastes Mgmt. Ass'n,

I Ca Fae Ce witectcteastctiisitascesnenecininiinmesiompannnnannions 32

German Alliance Ins. Co. v. Home Water Supply

Se ek CI acincensncrnciectnniciateieimnnnitintevmeesneenemans 23

Golden State Transit Corp. v. City of L.A.,

EB a witiritntsirtersnttsicitieninenneesncnee 17, 18, 19, 20

Gonzaga Univ. v. Doe, 536 U.S. 273

CD icicccncinnetnsbiteiondinnineionesnnndaledteheniannmsenieitd 8, 11, 12, 14, 15, 24

Independent Living Ctr. of S. Cal, Inc. v. Shewry,

Oe re Pee Oe Gai BI iceccsecscccnernssesnccvsistntivenceris 6, 32

Cases—Continued: Page

Kiobel v. Royal Dutch Petroleum Co., 133 S. Ct. 1659

aa auaaemeilaieeademenanenenatenaemaiesaegmaimacsiadinnides 20

Long Term Care Pharmacy Alliance v. Ferguson,

pe Es Le en 12, 13

Lorillard Tobacco Co. v. Reilly, 533 U.S. 525 (2001)........... 33

Love v. Foster, 90 F.3d 1026 (5th Cir. 1996), aff’d,

a heal es IE a DAA ERE SR ms HS EAE a nls 17

Maine v. Thiboutot, 448 U.S. 1 (1980) ..................0.. 14, 25, 26

Managed Pharmacy Care v. Sebelius, 716 F.3d 1235

(2013), cert. denied, 134 S. Ct. 900, and 134 S. Ct.

Ea IRRRC AU Ee A ee t aN kencec RAEV SE 7, 24

Mandy R. v. Owens, 464 F.3d 1139 (10th Cir. 2006),

cert. denied, 549 U.S. 1305 (2007)...............ccecsssseressereecereee 12

National Fed’n of Indep. Bus. v. Sebelius, 132 S. Ct.

ea Oe Ta edaaaiemasinietabheneeia 22

National Foreign Trade Council v. Baker,

26 F. Supp. 2d 287 (D. Mass. 1998), aff'd,

I, Se ED iviccescocssetssitsteiicdiianibieinniibeniinetnntiennnnteesennens 17

New York Ass'n of Homes & Servs. for the Aging v.

DeBuono, 444 F.3d 147 (2d Cir. 2006) ...........cccccccscesseseves 12

Olmstead v. L.C., 527 U.S. 581 (1999).............ccccssserssscsreseenees 3

Orthopedic Hosp. v. Belshe, 103 F.3d 1491 (9th Cir.

1997), cert. denied, 522 U.S. 1044 (1998) ...............0c0sc0000 6, 7

Pacific Gas & Elec. Co. v. State Energy Res. Conser-

vation & Dev. Comm’n, 461 U.S. 190 (1983)............00c000 33

Pediatric Specialty Care, Inc. v. Arkansas Dep't of

Human Servs., 443 F.3d 1005 (8th Cir. 2006),

cert. granted, judgment vacated in part, 551 U.S.

Pennhurst State Sch. & Hosp. v. Halderman,

GE TE BD cee teeiesiiisshinsandeinstibinaiinintsariniitisinanmninel 22

Cases—Continued: Page

Philpott v. Essex Cnty. Welfare Bd., 409 U.S. 413

Do -* Oe aicsiapidneebenuennmaneinionenaeasininlancaieamnsnanaiasiin 22

Pharmaceutical Research & Mfr. of Am. v.

Walsh, 538 U.S. 644 (2008) .........-cce-sserereeesenens 16, 22, 24, 32

Pharmaceutical Research & Mfr. of Am. v.

Thompson, 362 F.3d 817 (D.C. Cir. 2004) ............ecccceeen 24

Planned Parenthood of Kansas & Mid-Missour: v.

Moser, 747 F.3d 814 (10th Cir. 2014) ............ccscsseseserenenenens 33

Quern v. Jordan, 440 U.S. 332 (1979) ...........cesssssesnenseesnees 29

Ray v. Atlantic Richfield Co., 435 U.S. 151 (1978)............. 32

Rosado v. Wyman, 414 F.2d 170 (2d Cir. 1969), rev'd,

ee I os ciscinicdenmnnneninadsnnatanienianieieanchinagnainants 17

Rowe v. New Hampshire Motor Transp. Ass'n,

BN Ee I ID ivnicciccoseanecninseacinseanbscrabaenaianensinessisselbieabeannes 16

Sanchez v. Johnson, 416 F.3d 1051 (9th Cir.

fs aaensetshiuiinanaamuisenadsinaiaiiins 12, 13, 14, 23, 25

Shaw v. Delta Air Lines, Inc., 463 U.S. 85 (1983) .......... 7,16

Sosa v. Alvarez-Machain, 542 U.S. 692 (2004) ...........c000-+++ 20

Steel Co. v. Citizens for a Better Env't, 523 U.S. 83

III... niissisialainsnniaieeentinennesisobeeesnidioaimmmnnmesenniiaaesasieasaiatan 16

Suter v. Artist M., 503 U.S. 347 (1992)......... 15, 27, 28, 29, 30

Swift & Co. v. Wickham, 382 U.S. 111 (1965).......... Be in tae 20

Tenet v. Doe, 544 U.S. 1 (2005) ..........csscccssersereneesereenenenncnnsenes 27

Verizon Md. Inc. v. Public Serv. Comm'n,

I OE CI I vcrsveetcnncencirnnctintsomntesciczenpninncecsonsen 16, 19, 33

Virginia Office for Prot. & Advocacy v. Stewart,

ot te S06 Ul lS 18, 19, 31

Watters v. Wachovia Bank, N.A., 550 U.S. 1 (2007)........... 16

Westside Mothers v. Olszewski, 454 F.3d 532

a i vrieccisestsichcssinsntnnnssinnisineannaatentanemmnieninecensvnanvineie 12

Wheeldin v. Wheeler, 373 U.S. 647 (1963) ..........ccccccecseeseernes 20

Vil

Cases—Continued: Page

Wilder v. Virginia Hosp. Ass’n, 496 U.S. 498

Ce creneisectidinlienenininiemnenecmanninentitomniamtieiitansinnaeitn 2, 28, 30

Will v. Michigan Dep't of State Police, 491 U.S. 58

I cccsnicinstnienssicnspiastniontesestichansoimmamemnsesneimaneneeenineinnninnineionens 28

Young, Ex parte, 209 U.S. 123 (1908) .......ccsesecessereeeeees 17, 18

Constitution, statutes, regulations and rule:

U.S. Const:

Art. I, § 8:

CL. 1 (Spending Clause...............ssssesssssvees 21, 23, 26

CL 3 (Commerce Clause)................sscsssccssessseseess 19

Art. VI, Cl. 2 (Supremacy Clause).............ccsssesee» passim

BIE TE eciisasaieaenanbaedmeianinangeesiincineninmieniannnrenen 19

Balanced Budget Act of 1997, Pub. L. No. 105-33,

§ 4711, 111 Stat. 507-508 (42 U.S.C.

BIT io cc:anienitinticbesinenbtntneuteninnanetemnemearermiciamssnenecnee 31

Medicaid Act, 42 U.S.C. 1396 et seq.:

ee rcueterinteuss aaeemcniaeiial 2

a sc ccsscrneisdipssninteciseeseniensednieninanenmemennatita 2

42 U.S.C. 1396a(a)(13)(A) (1988) ..........cccccesscesseereeees 23, 30

Oe aE, Fe ccenvevcisescrenssvesenscemcessnseenens passim

te, TIA. cocvizccachecoasmnevasesciubcaniediansiansinawnneenentia 3

kD IRR aR ARE EES ai acai octet AE 2

ee nh susamaeenenncsamnensennecnaninssiianli 3

ee, Cnc crasemusacnembeiiaieckabiciantaneennemanennetl 3

Be IE scccesvesnccocsesssneciecosivensvmaiminwamcnsetcsll

oe eareaaneoneciel 3

Vil

Statutes, regulations and rule—Continued: Page

Social Security Act, 42 U.S.C. 301 ef 869. ........cccccecsessesesereees l

Tit. XIX:

GB UDG. BD ceeresctccttccitinninimeaee 3

4B UBL. RGD cccentrtctissincicimmmmninns 3

4B UB. TERT ccetennensnininitiiimianaian 3

GB URLS... TG ccccnceenscrscremenivvvictenntiaianmmaaia 30

GB DBC. SET ncincnervrctessinittitsininimmmunmminns 30

BR UB... DIE sscinictorsnicnrcnemcinenmnicipamamamiae 17

9D UBS. GIG cncictcentominiictiminnmniiniomaaiaal 17

BD ULE... GIR vicccecstrnsececvstnsvnsntpereerscinisiiniiicinamamaentiaaaa 17

GB UE, CEB teciciccteceemnuninemittininammnate passim

Idaho Code Ann. (2006):

© DD vrccccctnntcinceoniominmmuaniioniinmemalias 5

© BB RII cccecerecttenititniiinmmimnn ee 4

42 C.F.R.:

eeies GDI ncccceeesssvisstnmininimeniaemmal 2

Boctioms GIB.I0 66 BOG, secscesesssesssesnicintictiinmnveneniamiin 3

Sostian CIID ccncincimininstinniiminniiniememdaaas 3

Bestia GTI cccccntnitsmnersinnitiiimummmmmell 3, 4

Betas GOI sescncceccceissssenscssitisnatiiatmaaapaamaniaieanaiaiiaa 4

Becton GID oancesesevisrsssinsiininnsseinitinatimmantiaianaiiaal 4

Boctlies CID occevicscnssnittiniicisicinaimammegl 4

Boats COE ccsesscsnssimuinisinsssniintiinniaiamgamaaiaamiale 3

ears GI niccccessnssininensninsissninsticiisiataniemama ieee 3

Soathowns GOLDS 60 BOC. .ecceccsccecescsssssscessinterenneeaiiiianani 3

Beatie GERI cccsnctnssinnsciiiintisiliniiiiniaeaiaiaian 4

Soctiorn GOO.IGD-GOB BL neccesccsccscesnssnssscsnsecesnsnssesiscienniiaiats 3

Bethe CED. SII cesiceecnssinerscssnssttisiritieannciaaiiaiipsieniimal 3

Bostioms 668. BGS 66 GOW, ccrecccesecsicssissccsnsinniemiagesiiiuaniaiiiaa 3

Boctinmn 461 BORG OG, cesiccccssnvsinasecsnssvvinnessisitisissidiiamaasaaiaay 4

Regulations—C ontinued: Page

EEE 4

al 4

EE an 4

EEE 4

I a ctetsamelaensens 25

Miscellaneous:

1 C.L. Bates, Federal Equity Procedure (1901) ..........c000.. 19

76 Fed. Reg. (May 6, 2011):

TT itesitaitiaeinaihtcinanindiinimpeenaennsenionisinsestnccnremeentseieees 10

ES 14

BRE SY | ae 4

Governors’ Proposal on Welfare and Medicaid:

Hearings Before the Senate Comm. on Finance,

ee ay Sie CI, Ce ecccecceccceccccecessesscvesevercsuosevecsecenes 30

H.R. Conf. Rep. No. 761, 103d Cong., 2d Sess. (1994)........30

John Harrison, Ex Parte Young, 60 Stan. L. Rev. 989

EUNICE a AE 18

9 John E. Murray, Jr., Corbin on Contracts

RSET SATS LA AA RTE 23

4 John Norton Pomeroy, Jr., Equity Jurisprudence

EER ES 18

Restatement (Second) of Contracts (1981) ..........:cccccccccccsoee 22

In the Supreme Court of the United States

No. 14-15

RICHARD ARMSTRONG, ET AL., PETITIONERS

Vv.

EXCEPTIONAL CHILD CENTER, INC., ET AL.

ON WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

BRIEF FOR THE UNITED STATES AS AMICUS CURIAE

SUPPORTING PETITIONERS

INTEREST OF THE UNITED STATES

This case concerns whether Medicaid providers can

bring a federal cause of action directly under the Su-

premacy Clause to enjoin state Medicaid reimburse-

ment rates as_ inconsistent with 42 U.S.C.

1396a(a)(30)(A). The United States participated as

amicus curiae in Douglas v. Independent Living

Center of Southern California, Inc., Nos. 09-958, 09-

1158, and 10-283, in which the same question was

presented, but the Court ultimately vacated and re-

manded on other grounds. 132 S. Ct. 1204 (2012).

STATEMENT

1. a. The Medicaid program, established in 1965

by Title XIX of the Social Security Act (SSA), 42

U.S.C. 1396 et seq., is a cooperative federal-state pro-

gram to provide medical care to needy individuals.

(1)

2

Douglas v. Indep. Living Ctr. of S. Cal., Inc., 132 5.

Ct. 1204, 1208 (2012); Wilder v. Virginia Hosp. Ass’n,

496 U.S. 498, 502 (1990). Medical providers who fur-

nish services under Medicaid receive payment directly

from the States, and the federal government in turn

reimburses States for a fixed percentage of the ex-

penses that they incur on behalf of Medicaid-eligible

individuals. 42 U.S.C. 1396b. State participation in

Medicaid is voluntary, but those States that elect to

participate must comply with requirements imposed

by the Medicaid Act and by the Secretary of Health

and Human Services (HHS) in her administration of

the Act. See 42 U.S.C. 1396a; Douglas, 132 S. Ct. at

1208; Wilder, 496 U.S. at 502. Within those limits,

however, each State enjoys great flexibility in design-

ing and administering its own program. Alexander v.

Choate, 469 U.S. 287, 303 (1985).

To qualify for federal funds, participating States

must submit to the Secretary, through the Centers for

Medicare & Medicaid Services (CMS), a “plan for

medical assistance” detailing the nature and scope of

the State’s Medicaid program and demonstrating its

compliance with the Medicaid Act. 42 U.S.C. 1396a(a);

42 C.F.R. 430.10; Wilder, 496 U.S. at 502. Among

other requirements, a State’s plan must

provide such methods and procedures relating to

the utilization of, and the payment for, care and

services available under the plan * * * as may

be necessary to safeguard against unnecessary uti-

lization of such care and services and to assure that

payments are consistent with efficiency, economy,

and quality of care and are sufficient to enlist

enough providers so that care and services are

available under the plan at least to the extent that

3

such care and services are available to the general

population in the geographic area.

42 U.S.C. 1396a(a)(30)(A) (Section 30(A)). The Secre-

tary reviews the State’s plan, and any subsequent

amendment thereto, and determines whether it com-

plies with statutory and regulatory requirements. 42

U.S.C. 1316(a)(1) and (b), 1396a(b); 42 C.F.R. 430.10 et

seg. If the Secretary disapproves the plan or plan

amendment, the State can seek reconsideration and,

ultimately, judicial review in the court of appeals. See

42 U.S.C. 1316(a)(2)-(5) and (b); 42 C.F.R. 430.18,

430.38, 430.60 et seg. If the State does not act in com-

pliance with an approved plan, the Secretary may

initiate a compliance action and withhold federal

funds. 42 U.S.C. 1396c; 42 C.F.R. 430.35.

b. Congress has enacted a “waiver” program per-

mitting States to apply to CMS for permission to

provide home or community-based services (HCBS) as

part of the “medical assistance” furnished under a

state plan. 42 U.S.C. 1396n(c); 42 C.F.R. 430.25(c)(2),

440.180-440.181, 441.300 et seg. The waiver program

authorizes States to provide a range of services “to

individuals who would otherwise require institutional

earc.” Olmstead v. L.C. ex rel. Zimring, 527 U.S. 581,

601 n.12 (1999). Among other things, a State may

obtain a waiver to provide residential “habilitation”

services to qualifying beneficiaries if the State demon-

strates that the cost of caring for those individuals in

an HCBS program would not exceed the cost of insti-

tutional care. Pet. App. 17; 42 U.S.C. 1396n(c)(4)(B)

and (5); 42 C.F.R. 440.180(b)(6). A waiver granted by

CMS is provided for a three-year term and may be

4

renewed for five-year terms. 42 C.F.R. 430.25(h)(2)(i)

and (h)(3), 441.304."

As with state plans, a State may amend its waiver

program from time to time, subject to federal review

and approval. 42 C.F.R. 430.25(f)(1). The State or

CMS may terminate a waiver program at any time

with 30 days’ notice. 42 C.F.R. 441.307. If CMS de-

cides to terminate a waiver, the State may request

review of that decision under the same procedures

applicable to the disallowance of a state plan or plan

amendment. See 42 C.F.R. 441.308.

ec. The State of Idaho has a CMS-approved HCBS

waiver program to provide residential habilitation

services to individuals with developmental disabilities.

Pet. App. 17; ef. 42 C.F.R. 430.25(c)(2), 440.150,

441.301. The waiver program includes individually

tailored support services, such as skills training, that

are “designed to assist eligible participants to reside

successfully in the community.” Reply Br. App. 3-4.

In 2006, the State modified the reimbursement

rates for services provided under its HCBS waiver

program. Pet. App. 17. Thereafter, as required by

state law, Idaho officials developed a revised payment

rate methodology that considered the actual costs

incurred by providers. /d. at 18; Reply Br. App. 5-6;

see Idaho Code Ann. § 56-118(1)-(2) (2006) (requiring

a “methodology for reviewing and determining reim-

bursement rates to private businesses providing

* * * residential habilitation agency services” that

' CMS recently issued a final rule amending in certain respects

the procedures and requirements for obtaining or renewing an

HCBS waiver. 79 Fed. Reg. 2948 (Jan. 16, 2014) (amending 42

C.F.R. 441.301 et seq.). Those changes do not bear upon the issues

in this case.

5

“incorporate[s} * * * the actual cost of providing

quality services”). In 2009, state officials proposed to

the Idaho legislature that the relevant reimbursement

rates be increased consistent with that revised meth-

odology. Pet. App. 18; Reply Br. App. 7-8.? The Idaho

legislature did not appropriate the necessary funds,

however, and reimbursement rates remained at 2006

levels. Pet. App. 12, 19; Reply Br. App. 8.

2. a. Respondents (plaintiffs below) are five corpo-

rations that provide residential habilitation services to

Medicaid beneficiaries in Idaho. Pet. App. 16. Peti-

tioners are two officials responsible for administration

of the State’s Medicaid program. /bid.

In 2009, respondents filed suit in federal district

court in Idaho, claiming that the applicable reim-

bursement rates for residential habilitation services

were too low to satisfy the requirements of Section

30(A) and for that reason were “preempted” by that

provision of the Medicaid Act. Respondents sought an

injunction ordering the State to implement the revised

rates that were proposed, but not adopted, in 2009.

Pet. App. 11. The parties stipulated to all relevant

facts, see Reply Br. App. 1-10, and filed cross motions

for summary judgment. Pet. App. 15, 20.

* In December 2009, the State submitted a waiver amendment

advising CMS of the State’s intent eventually to implement a

revised payment methodology consistent with Idaho Code Ann.

§ 56-118 (2006). See Reply Br. App. 14-17. That waiver amend-

ment did not, however, alter the payment methodology then in

effect and approved by CMS. Thus, contrary to respondents’

assertions, see Br. in Opp. 7-8, CMS’s approval of the State’s

December 2009 waiver amendment has no bearing on the posture

or outcome of this litigation.

6

b. The district court granted summary judgment in

respondents’ favor. Pet. App. 15-24. The court re-

jected petitioners’ suggestion that respondents lacked

a valid cause of action, holding, based on Ninth Circuit

precedent, that “providers have standing under the

Supremacy Clause to challenge a state law reducing

reimbursement rates, as preempted by [Section

30(A)].” Jd. at 23 (citing Indep. Living Ctr. of S. Cal.,

Inc. v. Shewry, 543 F.3d 1050, 1065 (9th Cir. 2008),

cert. denied, 557 U.S. 920 (2009)). On the merits, the

court acknowledged that the stipulated facts “ap-

pear[ed] to support” the State’s contention that the

reimbursement rates remained “consistent with” the

substantive criteria of Section 30(A), including effi-

ciency, economy, quality of care, and beneficiary ac-

cess to services. Jd. at 22 (citation and quotation

marks omitted). Nonetheless, relying upon Orthope-

dic Hospital v. Belshe, 103 F.3d 1491 (9th Cir. 1997),

cert. denied, 522 U.S. 1044 (1998), the court held that

the State’s continued use of the 2006 reimbursement

rates was unlawful because the rates did not reflect

sufficient consideration of “actual provider costs,” Pet.

App. 22, and because the legislature’s refusal to adopt

the higher rates proposed in 2009 was motivated by

“budgetary concerns,” id. at 21-22 (citing Belshe, 103

F.3d at 1499 n.3).

The district court denied reconsideration, Pet. App.

7-14, and entered a judgment directing the State to

“implement immediately” an increase in the applicable

reimbursement rates. /d. at 5-6.

c. The court of appeals affirmed by unpublished

disposition. Pet. App. 1-4. The court held that re-

spondents “have an implied right of action under the

Supremacy Clause to seek injunctive relief against the

7

enforcement or implementation of state legislation.”

Id. at 2. Acknowledging that four Justices of this

Court “would have held otherwise” in Douglas, id. at 3

(citing 1382 S. Ct. at 1212 (Roberts, C.J., dissenting)),

the court of appeals nonetheless considered itself

bound by circuit precedent and by “prior holdings of

the Supreme Court * * * that have recognized a

private right of action under the Supremacy Clause.”

Ibid. (citing Shaw v. Delia Air Lines, Inc., 463 U.S.

85, 96 n.14 (1983)). The court expressed some doubt

that a State’s inaction (ze., its failure to increase

rates) could be “preempted under the Supremacy

Clause,” id. at 4 n.2, but held that petitioners had

forfeited any argument in this respect.

On the merits, the court of appeals reaffirmed its

understanding that Section 30(A) “require[s] that

reimbursement rates bear a reasonable relationship to

provider costs.” Pet. App. 3 (citing Belshe, 103 F.3d at

1499). The court also affirmed the district court’s

conclusion that the State’s reimbursement rates had

impermissibly “remained in place for ‘purely budget-

ary reasons.’” Id. at 4.*° It accordingly affirmed the

grant of summary judgment to respondents. /bid.

* The panel did not attempt to reconcile this holding with the

Ninth Circuit’s earlier decision in Managed Pharmacy Care v.

Sebelius, 716 F.3d 1235 (2013), cert. denied, 134 S. Ct. 900, and 134

S. Ct. 986 (2014), in which the court had deferred to CMS'’s inter-

pretation that Section 30(A) does not require States to prepare or

rely upon provider cost studies in setting provider reimbursement

rates. See id. at 1245-1250 (“joinfing]” those circuits that “have

agreed that § 30(A) does not require any ‘particular methodology’

for satisfying its substantive requirements” (citation and quotation

marks omitted)).

8

SUMMARY OF ARGUMENT

A. Respondents do not dispute that Medicaid pro-

viders possess no statutory private right of action to

enforce 42 U.S.C. 1396a(a)(30)(A)—either under 42

U.S.C. 1983 (Section 1983) or directly under the Medi-

eaid Act. Section 30(A) does not confer on providers

any individual right; nor does it entitle them to a cer-

tain level of payments that would be enforceable un-

der this Court’s decision in Gonzaga University v.

Doe, 536 U.S. 273 (2002). Instead, Section 30(A) offers

only broad criteria to guide HHS’s and the States’

determinations regarding the adequacy of the meth-

ods and procedures set out in a State’s Medicaid plan.

B. This Court has never squarely decided if or

when a private party has a cause of action to enjoin

operation of state laws as preempted by a federal

statute that itself contains no private right of action

and confers no individual rights enforceable under

Section 1983. The Court has, however, decided dozens

of preemption claims against state officials on their

merits in cases brought in federal court, perhaps im-

plicitly assuming that a federal cause of action exists

in some circumstances. Although the Court has not

directly explored the nature or source of the cause of

action, its cases reflect a longstanding judicial prac-

tice: private parties may bring a suit in federal court

to enjoin state regulatory action from which the plain-

tiffs claim immunity under federal law.

C. The present case does not require the Court ei-

ther to reexamine that practice or otherwise attempt

exhaustively to catalog the range of circumstances

under which a nonstatutory cause of action may be

available to enjoin state officials from violating federal

law. Even assuming that a nonstatutory cause of

9

action is available in other circumstances, recognition

of a private right of action under the Supremacy

Clause in this case would be incompatible with the

statute, the methods for its enforcement, and re-

spondents’ claim.

First, Section 30(A) is part of a cooperative federal-

state program enacted pursuant to Congress’s Spend-

ing Clause authority. In such an arrangement, Medi-

caid providers are akin to third-party beneficiaries.

Under traditional principles, third parties have judi-

cially enforceable contract rights only where, unlike

here, the contract was intended to confer on them a

legally enforceable right.

Second, the language and structure of Section

30(A) confirm that private enforcement by Medicaid

providers would not be appropriate. The statute pro-

vides little guidance to courts about how to apply and

balance its general, and sometimes competing, policy

objectives. ‘t therefore calls for interpretation and

evaluation by the responsible agency, rather than

private judicial enforcement.

Third, the shared assumption of this Court and

Congress with respect to federal-state programs un-

der the SSA has been that private enforcement under

a nonstatutory cause of action is not available. If

respondents’ contrary view were correct, then several

prior rulings of this Court regarding the unavailability

of an implied right of action and a suit under Section

1983 could easily have been circumvented. Amend-

ments to the SSA, enacted by Congress in 1994, simi-

larly reflect the understanding that the SSA’s state

plan provisions are not privately enforceable.

Finally, respondents do not assert the type of

preemption claim previously entertained by this Court

10

on the basis of a nonstatutory cause of action: re-

spondents face no affirmative enforcement action by

the State in which federal preemption would have

been a defense at law, nor do they seek immunity from

allegedly preempted state regulation.

ARGUMENT

MEDICAID PROVIDERS CANNOT MAINTAIN A CAUSE

OF ACTION UNDER THE SUPREMACY CLAUSE TO

ENFORCE SECTION 30(A) AGAINST STATE OFFICIALS

The Department of Health and Human Services is

committed to ensuring that state Medicaid programs

afford beneficiaries meaningful access to covered care

and services. It is essential under Section 30(A) that

States carefully consider what impact payment rates

may have on the availability of providers sufficient to

furnish covered care and services to Medicaid benefi-

ciaries.*

The question in this case, however, does not con-

cern the States’ substantive obligations under Sec-

tion 30(A), but instead whether Medicaid providers

have a private right of action directly under the Su-

premacy Clause to sue state officials to enjoin the

operation of state laws that are assertedly not in com-

pliance with Section 30(A). As we explain below, given

the features of Section 30(A) and the statutory scheme

* In 2011, HHS promulgated a proposed rule to “create a stand-

ardized, transparent process for States to follow as part of their

broader efforts to” comply with Section 30(A). 76 Fed. Reg. 26,342

(May 6, 2011). Nearly 200 comments were submitted in response

to the proposed rule. HHS has informed this Office that it contin-

ues to proceed with the rulemaking and currently intends to issue

a final rule within the coming year.

1]

in which it appears, no such private right of action is

available.

A. No Federal Statute Provides A Cause Of Action To

Enforce Section 30(A) Against State Officials

Respondents do not assert any private right of ac-

tion to enforce Section 30(A) under 42 U.S.C. 1983 or

under the Medicaid Act itself. Nor have they disputed

that no such statutory cause of action exists under this

Court’s precedents.

1. To seek redress under Section 1983, “a plaintiff

must assert the violation of a federal right, not merely

a violation of federal law.” Blessing v. Freestone, 520

U.S. 329, 340 (1997) (emphasis omitted). In Blessing,

the Court set forth three “factors” for courts to con-

sider in deciding whether a statute confers a right

enforceable under Section 1983: (1) whether Congress

“intended that the provision in question benefit the

plaintiff,” (2) whether “the right assertedly protected

by the statute is” “so ‘vague and amorphous’ that its

enforcement would strain judicial competence,” and

(3) whether the provision is “couched in mandatory,

rather than precatory, terms.” Jd. at 340-341 (cita-

tions omitted). In Gonzaga University v. Doe, 536

U.S. 273, 283 (2002), the Court clarified that “anything

short of an unambiguously conferred right” could not

“support a cause of action brought under” Section

1983, and emphasized that only “rights, not the broad-

er or vaguer ‘benefits’ or ‘interests, * * * may be

enforced under the authority of that section.” Jbid.

After Gonzaga, nearly every court of appeals to

consider the issue, including the Ninth Circuit, has

correctly held that Section 30(A) does not confer on

Medicaid providers individual rights enforceable un-

der 42 U.S.C. 1983. See Equal Access for El Paso,

12

Inc. v. Hawkins, 509 F.3d 697, 703-704 (5th Cir. 2007),

cert. denied, 555 U.S. 811 (2008); Mandy R. v. Owens,

464 F.3d 1139, 1147-1148 (10th Cir. 2006), cert. denied,

549 U.S. 1305 (2007); Westside Mothers v. Olszewski,

454 F.3d 532, 542-543 (6th Cir. 2006); New York Ass’n

of Homes & Servs. for the Aging v. DeBuono, 444 F.3d

147, 148 (2d Cir. 2006) (per curiam); Sanchez v. John-

son, 416 F.3d 1051, 1058-1062 (9th Cir. 2005); Long

Term Care Pharmacy Alliance v. Ferguson, 362 F.3d

50, 58-59 (1st Cir. 2004). But see Pediatric Specialty

Care, Inc. v. Arkansas Dep't of Human Servs., 443

F.3d 1005, 1016 (8th Cir. 2006) (declining to reconsid-

er circuit precedent holding that Section 30(A) is en-

forceable by providers and beneficiaries through Sec-

tion 1983), cert. granted, judgment vacated in part,

551 U.S. 1142 (2007).

As the courts of appeals have concluded, Section

30(A) does not contain “the sort of ‘rights-creating’

language critical to showing the requisite congres-

sional intent to create new rights.” Gonzaga, 536 U.S.

at 287 (citation omitted). Section 30(A) provides only

that “methods and procedures” must be included in

state plans “relating to” utilization and payment to

assure that payments are “consistent with efficiency,

economy, and quality of care” and are “sufficient to

enlist enough providers so that care and services are

available” at least to the extent that they “are availa-

ble to the general population in the geographic area.”

42 U.S.C. 1396a(a)(30)(A). That provision “has an

aggregate focus” and is directed at the “overall meth-

odology” of the state plan. Sanchez, 416 F.3d at 1059.

It speaks of Medicaid providers not as rights holders,

but as being “‘enlisted’ as subordinate partners in the

administration of Medicaid services.” bid. Like the

13

“substantial compliance” provision at issue in Bless-

ing, Section 30(A) is a “yardstick” for designing and

evaluating “systemwide performance” based on “the

aggregate services provided by the State.” 520 U.S.

at 343 (emphasis omitted); see ibid. (concluding that

“the requirement that a State operate its child sup-

port program in ‘substantial compliance’ with Title IV-

D {of the SSA] was not intended to benefit individual

children and custodial parents”). Section 30(A) thus

does not itself unambiguously create an “individual

entitlement to services.” Jbid.

Moreover, as this Court and the courts of appeals

have repeatedly noted, the language of Section 30(A)

is “broad and general” in character. Douglas v. Inde-

pendent Living Ctr. of S. Cal., 182 S. Ct. 1204, 1210

(2012); accord Sanchez, 416 F.3d at 1060 (“‘broad and

diffuse’”); Long Term Care Pharmacy Alliance, 362

F.3d at 58 (similar). Neither the Medicaid Act nor any

regulations promulgated by the Secretary identify a

judicially administrable standard by which

the statute’s broad policy objectives—“efficiency,”

“economy,” “quality of care,” and “enlist[ing]” enough

providers to make care and services “available

* * * at least to the extent that such care and

services are available to the general population in the

geographic area,” 42 U.S.C. 1396a(a)(30)(A)—are to

be measured. Cf. Blessing, 520 U.S. at 340-341 (stat-

ing that enforcement of “vague and amorphous” pro-

vision “would strain judicial competence”) (citation

omitted); Gov’t Br. at 15, Belshe v. Orthopaedic Hosp.,

521 U.S. 1116 (1997) (No. 96-1742) (making similar

argument regarding “efficiency, economy, and quality

of care”). Nor does Section 30(A) give any guidance

as to how a court should balance such general,

14

and sometimes competing, policy objectives.° See

Sanchez, 416 F.3d at 1059-1060.

Indeed, the assessment of a State’s compliance

with Section 30(A) necessarily turns on determina-

tions and predictions of legislative fact of the sort

appropriate for expert judgment by the State and

CMS and for resolution in the course of their ongoing

bilateral relationship. Cf. Douglas, 132 S. Ct. at 1210.

Judicial interpretation and weighing of these objec-

tives in private Section 1983 suits would require

courts to make predictive and policy judgments in the

first instance, supplant the expert role of CMS, and

interfere with the flexibility Section 30(A) affords to

the State and CMS in assessing performance and

appropriate responses to deficiencies. Cf. Gonzaga,

536 U.S. at 292 (Breyer, J., concurring in the judg-

ment). Moreover, permitting such suits to proceed

under Section 1983 would also “threaten[] to defeat

the uniformity that Congress intended by centralizing

administration of the federal program in [CMS].”

Douglas, 132 S. Ct. at 1211.

2. It is also undisputed that the Medicaid Act itself

does not afford providers a statutory cause of action to

enforce Section 30(A) against noncompliant States.

See Maine v. Thiboutot, 448 U.S. 1, 6 (1980) (stating

that the SSA, of which the Medicaid Act is a part,

“affords no private right of action against a State”).

* The proposed rule issued by the Secretary also does not pro-

vide “nationwide standards” or adopt a “singular approach” to

compliance. 76 Fed. Reg. at 26,344. Instead, in view of “local

variations” and other considerations, the proposed rule creates

“Federal guidelines to frame alternative approaches for States to

demonstrate consistency with [Section 30(A)’s] access require-

ments.” /bid.

15

Indeed, a court’s “role in discerning whether persona!

rights exist in the implied right of action context”

substantially resembles its inquiry “in discerning

whether personal rights exist in the § 1983 context,”

as “({bJoth inquiries simply require a determination as

to whether or not Congress intended to confer indi-

vidual rights upon a class of beneficiaries.” Gonzaga,

536 U.S. at 285. Thus, “where the text and structure

of a statute provide no indication that Congress in-

tends to create new individual rights,” as is the case

here, “there is no basis for a private suit, whether

under § 1983 or under an implied right of action.” Jd.

at 286; see Suter v. Artist M., 503 U.S. 347, 363-364

(1992) (declining to recognize an implied statutory

private right of action for the same reasons that led

the Court to conclude that such a suit could not pro-

ceed under Section 1983).

B. This Court Has Never Squarely Decided If Or When A

Nonstatutory Cause Of Action For Equitable Relief

On Preemption Grounds Should Be Recognized Under

The Supremacy Clause Or Otherwise, Although It Has

Entertained Injunctive Actions Raising Preemption

Claims In Certain Circumstances

1. This Court has never squarely decided if or

when a federal court should create or recognize a

cause of action for equitable relief directly under the

Supremacy Clause in the absence of a federal statuto-

ry cause of action. To be sure, this Court has sug-

gested that “{a] plaintiff who seeks injunctive relief

from state regulation, on the ground that such regula-

tion is pre-empted by a federal statute which, by vir-

tue of the Supremacy Clause of the Constitution, must

prevail, * * * presents a federal question which

the federal courts have jurisdiction under 28 U.S.C.

16

§ 1331 to resolve.” Shaw v. Delta Air Lines, Inc., 463

U.S. 85, 96 n.14 (1983); see ibid. (“[F]Jederal courts

have jurisdiction over suits to enjoin state officials

from interfering with federal rights.”). But Shaw

addressed only subject-matter jurisdiction, not the

existence of a private right of action. Thus, contrary

to the court of appeals’ understanding, Shaw is not a

“holding[]” of this Court “recogniz{ing] a private right

of action under the Supremacy Clause.” Pet. App. 3;

see Verizon Md. Inc. v. Public Serv. Comm'n, 535

U.S. 635, 642-643 (2002) (“It is firmly established in

our cases that the absence of a valid (as opposed to

arguable) cause of action does not implicate subject-

matter jurisdiction, i.e., the courts’ statutory or con-

stitutional power to adjudicate the case.”) (quoting

Steel Co. v. Citizens for a Better Env't, 523 U.S. 83, 89

(1998) (emphasis omitted)); Burks v. Lasker, 441 U.S.

471, 476 & n.5 (1979) (the question whether a cause of

action exists, unlike “a question of jurisdiction,” may

be assumed without being decided).

The Court has, however, decided the merits of doz-

ens of preemption claims in cases brought against

state officials in federal court—without identifying the

basis for the underlying cause of action. E.g., Rowe v.

New Hampshire Motor Transp. Ass’n, 552 U.S. 364

(2008); Watters v. Wachovia Bank, N.A., 550 U.S. 1

(2007); Arkansas Dep't of Health & Human Servs. v.

Ahlborn, 547 U.S. 268 (2006); American Ins. Ass’n v.

Garamendi, 539 U.S. 396 (2003); Pharmaceutical

Research & Mfrs. of America (PhRMA) v. Walsh, 538

U.S. 644 (2003) (plurality opinion). These decisions

could be read as implicitly assuming that a nonstatu-

tory federal cause of action exists under some circum-

stances. But cf. Steel Co., 523 U.S. at 91 (“[D]rive-by

17

jurisdictional rulings * * * have no precedential

effect.”).°

Some Members of the Court have expressed ap-

proval in some contexts of a federal cause of action to

prevent enforcement against plaintiffs of an allegedly

preempted state law in the absence of a right under

Section 1983. See, e.g., Golden State Transit Corp. v.

City of L.A., 493 U.S. 103, 119 (1989) (Kennedy, J.,

dissenting) (plaintiffs may pursue preemption claim

“by seeking declaratory and equitable relief in the

federal district courts through their powers under

federal jurisdictional statutes,” because “[t]hese stat-

utes do not limit jurisdiction to those who can show

the deprivation of a right, privilege, or immunity se-

cured by federal law within the meaning of § 1983”)

(citing 28 U.S.C. 1331, 2201, and 2202). Others have

reached a contrary conclusion in the specific context

of Section 30(A) suits, while acknowledging that the

courts may exercise equitable authority in suits like

Ex parte Young, 209 U.S. 123 (1908). See Douglas,

132 S. Ct. at 1213 (Roberts, C.J., dissenting). But the

Court has not, at least in modern times, directly ad-

dressed the circumstances in which a nonstatutory

* In a number of this Court’s preemption cases in which the

cause of action was not discursed, the record discloses that the

plaintiffs had asserted claims under Section 1983. See, e.g., Nat’

Foreign Trade Council v. Baker, 26 F. Supp. 2d 287, 293 (D. Mass.

1998), aff’d 181 F.3d 38 (1st Cir. 1999), aff'd sub nom. Crosby v.

Nat'l Foreign Trade Council, 530 U.S. 363 (2000); Love v. Foster,

90 F.3d 1026, 1028 (5th Cir. 1996), aff'd, 522 U.S. 67 (1997); J.A. at

4, Cal. Dep't of Human Res. Dev. v. Java, 402 U.S. 121 (1971)

(No. 507); Rosado v. Wyman, 414 F.2d 170, 177 (2d Cir. 1969),

rev'd, 397 U.S. 397 (1970). Others might have satisfied the stand-

ards for asserting “rights,” “privileges,” or “immunities” under

Section 1983 even if that provision was not expressly invoked.

18

private right of action to enjoin state officials from

enforcing a state statute, regulation, or policy that

allegedly conflicts with, and is thus preempted by,

federal law should be fashioned or recognized, or the

basis for such a private right of action.

2. Nevertheless, the Court’s cases do reflect a

longstanding practice of entertaining suits by private

parties in federal court to enjoin state regulation of

primary conduct as to which the plaintiffs claim im-

munity under federal law. Cf. Golden State Transit,

493 U.S. at 113 (Kennedy, J., dissenting) (The Court

has long permitted “a private party [to] assert an

immunity from state or local regulation on the ground

that the Constitution or a federal statute, or both,

allocate the power to enact the regulation to the Na-

tional Government, to the exclusion of the States.”).

The suit in Ex parte Young, 209 U.S. 123 (1908), is

an early example. Some have described Ez parte

Young as invoking an accepted principle of equity

jurisprudence: that a plaintiff could anticipatorily

bring a suit in equity to bar an action at law against

which the plaintiff in equity (the defendant in the

prospective action at law) would have a valid defense.

See Virginia Office for Prot. & Advocacy v. Stewart,

131 S. Ct. 1682, 1642 (2011) (VOPA) (Kennedy, J.,

concurring) (describing the suit in Ex parte Young as

“nothing more than the pre-emptive assertion in equi-

ty of a defense that would otherwise have been availa-

ble in the State’s enforcement proceedings at law,”

and citing John Harrison, Ex parte Young, 60 Stan. L.

Rev. 989, 997-999 (2008)); cf. 4 John Norton Pomeroy,

Jr., Equity Jurisprudence §§ 1360-1364 (4th ed.

19

1919); 1 C.L. Bates, Federal Equity Procedure § 540

(1901).’

Although the question now before the Court is

whether respondents have an implied right of action

“directly under the Supremacy Clause,” Pet. i, this

Court’s cases suggest that the Supremacy Clause

itself may not furnish the only, or even the best, un-

derstanding of or basis for the source of a nonstatuto-

ry cause of action to enjoin the enforcement of state

action that is inconsistent with federal law—as distin-

guished from supplying the rule of decision on the

merits (that federal law preempts conflicting state

law) in a case otherwise properly before the court.

The Supremacy Clause “is not a source of any federal

rights,” but rather it “‘secures’ federal rights by ac-

cording them priority whenever they come in conflict

with state law.” Golden State Transit, 493 U.S. at 107

(quoting Chapman v. Houston Welfare Rights Org.,

441 U.S. 600, 613 (1979)) (brackets omitted); see

Douglas, 132 S. Ct. at 1212 (Roberts, C.J., dissenting);

Dennis v. Higgins, 498 U.S. 489, 450 (1991) (con-

’ The issue in Hz parte Young was not whether a cause of action

existed; rather, it was whether a suit for prospective injunctive

relief against a state official to enforce federal law would be barred

by the State’s Eleventh Amendment immunity from suit. The

immunity principles established in Ez parte Young apply not only

where the cause of action is judicially fashioned, as in Ex parte

Young itself, but also where the cause of action is conferred by a

federal statute, such as Section 1983. “In determining whether the

doctrine of Ex parte Young avoids an Eleventh Amendment bar to

suit, a court need only conduct a ‘straightforward inquiry into

whether the complaint alleges an ongoing violation of federal law

and seeks relief properly characterized as prospective.” VOPA,

131 S. Ct. at 1639 (quoting Verizon Md., 535 U.S. at 645) (brackets

omitted).

20

trasting Supremacy Clause with Commerce Clause in

this respect); cf. Swift & Co. v. Wickham, 382 U.S.

111, 116-129 (1965). The Court’s practice of entertain-

ing affirmative preemption suits in federal court in

certain circumstances may instead be better under-

stood as rooted in the courts’ historical exercise of

equitable powers—from times predating the develop-

ment of modern implied-cause-of-action jurispru-

dence—e.g., to bring a suit in equity to assert preemp-

tively a defense that otherwise would have been avail-

able in an action at law. See pp. 18-19, supra.* But

regardless whether the underpinning of the Court's

practice is a general equitable cause of action, the

Supremacy Clause, or some other source of law, the

ability of private parties to obtain protection in the

face of state compulsion that violates federal law has

considerable historical grounding and appropriately

vindicates the supremacy of federal law. Cf. Douglas,

® See Bush v. Lucas, 462 U.S. 367, 373 & n.10 (1983) (discussing

“common-law approach to the judicial recognition of new causes of

action”); Alexander v. Sandoval, 532 U.S. 275, 286-287 (2001)

(discussing development of Court’s modern jurisprudence). That

practice may have reflected a pre-Erie understanding that the

“general” law recognized such suits in equity. See Wheeldin v.

Wheeler, 373 U.S. 647, 651 (1963) (noting federal courts’ creation of

common-law rights before Erie R.R. v. Tompkins, 304 U.S. 64

(1988)). Or, perhaps relatedly, it may have reflected an under-

standing that the conferral of subject-matter jurisdiction on a

federal court (including jurisdiction over suits in equity) itself

allowed the court to exercise equitable authority in certain familiar

circumstances. See Golden State Transit, 493 U.S. at 119 (Kenne-

dy, J., dissenting); cf. Kiobel v. Royal Dutch Petroleum Co., 133 S.

Ct. 1659, 1663 (2013) (discussing Sosa v. Alvarez-Machain, 542

U.S. 692, 724 (2004)). In any event, the practice is now well estab-

lished and serves an important purpose in vindicating the suprem-

acy of federal law.

21

132 S. Ct. at 1213 (Roberts, C.J., dissenting) (approv-

ing federal courts’ “equitable powers to enforce the

supremacy of federal law when such action gives ef-

fect to the federal rule”).

C. The Creation Of A Private Cause Of Action To En-

force Section 30(A) Against State Officials Under The

Supremacy Clause Would Not Be Appropriate

To resolve the question presented in this case, the

Court need not decide as a general matter if or when a

private party can bring a federal nonstatutory cause

of action for equitable relief against state officials on

preemption grounds—rooted in general equitable

jurisprudence, under the Supremacy Clause, or oth-

erwise. Nor need the Court reexamine past cases that

reached the merits of preemption claims brought in

federal court. We assume for present purposes that a

nonstatutory cause of action is properly available to

vindicate the supremacy of federal law in certain other

circumstances. But there are particular reasons why

creation of a private right of action based directly on

the Supremacy Clause to enforce the federal statutory

provision at issue here would not be compatible with

the nature of the statute, the methods for its enforce-

ment, and respondents’ claim.

1. First, as a general matter, Section 30(A) is a

provision of a cooperative federal-state program en-

acted pursuant to Congress’s Spending Clause author-

ity, and as to which Congress neither provided an

express right of action for private parties nor con-

ferred individually enforceable rights. Recognition of

a nonstatutory cause of action for Medicaid providers

in this setting would be in tension with the nature of

the federal-state relationship under Medicaid.

22

This Court has often said that a law enacted pursu-

ant to the Spending Clause operates “in the nature of

a contract” between the federal government and the

State. Pennhurst State Sch. & Hosp. v. Halderman,

451 U.S. 1, 17 (1981); see National Fed’n of Indep.

Bus. v. Sebelius, 132 S. Ct. 2566, 2602 (2012) (plurali-

ty) (Roberts, C.J.); Arlington Cent. Sch. Dist. Bd. of

Educ. v. Murphy, 548 U.S. 291, 296 (2006). Of course,

this Court has also recognized that neither the federal

statute itself nor the resulting arrangement with a

fund recipient constitutes an ordinary contract. See

Bennett v. Kentucky Dep't of Educ., 470 U.S. 656, 669

(1985).° But private parties who receive payment or

other assistance through Spending Clause legislation

are in a situation similar to that of third-party benefi-

ciaries. Cf. PhRMA, 538 U.S. at 683 (Thomas, J.,

concurring in the judgment). Under traditional con-

tract principles, third parties have judicially enforcea-

ble rights only if they are intended, rather than inci-

dental, beneficiaries of the contract, and only if

“recognition of a right to performance in the benefi-

ciary is appropriate to effectuate the intention of the

parties.” Restatement (Second) of Contracts § 302(1)

(1981). When the contract is a government contract,

“[t]he distinction between an intention to benefit a

third party and ar intention that the third party

* The Act of Congress establishing the joint federal-state pro-

gram, for example, remains binding law with the full force and pre-

emptive effect of federal] legislation under the Supremacy Clause.

E.g., Bennett v. Arkansas, 485 U.S. 395, 397 (1988) (per curiam)

(SSA preempts state law providing for attachment of federal

benefits paid to state prisoners); Philpott v. Essex Cty. Welfare

Bd., 409 U.S. 413, 417 (1973) (SSA preempts state law requiring

reimbursement through payment of federal disability benefits).

23

should have the right to enforce that intention” is

vigorously enforced. 9 John E. Murray, Jr., Corbin on

Contracts § 45.6, at 92 (rev. ed. 2007); see German

Alliance Ins. Co. v. Home Water Supply Co., 226 U.S.

220, 230-231 (1912). In light of Congress’s decision

not to confer individual rights or a statutory right of

action in a Spending Clause provision like Section

30(A), see pp. 11-15, supra, the analogy to third-party

beneficiaries counsels against creating a nonstatutory

right of action under the Supremacy Clause to enforce

that provision.

2. The text and structure of Section 30(A) also con-

firm that creating or recognizing a private right of

action for Medicaid providers against state officials

would not be appropriate. Courts of appeals have

found Section 30(A)’s commands to be prohibitively

“broad and diffuse” in considering potential Section

1983 enforcement. See Sanchez, 416 F.3d at 1060;

p. 13, supra. Those same terms would be no less diffi-

cult to interpret and apply in the context of a private

suit for injunctive relief brought under the Supremacy

Clause or otherwise. Absent more specific guidance

about how to measure a State’s compliance with the

general standards of economy, efficiency, quality of

eare, and beneficiary access to services, such determi-

nations are ones properly made by HHS through the

exercise of its expert judgment and through the

mechanisms of its bilateral relationship with the

State. See p. 4 n.1, supra (discussing proposed HHS

regulations to guide and promote state compliance

with Section 30(A)); 42 U.S.C. 1396a(a)(13)(A) (requir-

ing States to have public process for determination of

rates for institutionalized care).

24

As previously discussed (at page 3, supra), the Sec-

retary is required to review and approve or disap-

prove the State’s plan and any plan amendments (in-

cluding HCBS waiver amendments) to ensure compli-

ance with Medicaid Act requirements, including Sec-

tion 30(A). If the Secretary disapproves a state plan

or plan amendment, the State may seek reconsidera-

tion. And if the decision is upheld, the State may

petition for judicial review in the court of appeals.

Apart from the plan-approval process, if the state

plan does not comply with Section 30(A), the Secre-

tary can also undertake a compliance action and with-

hold federal funds. That administrative process

brings to bear “the expertise, uniformity, widespread

consultation, and resulting administrative guidance

that can accompany agency decisionmaking.” Gon-

zaga, 536 U.S. at 292 (Breyer, J., concurring in the

judgment). And although the agency’s action in ap-

proving or disapproving a state plan or amendment is

subject to judicial review, the agency's interpretation

and application of Section 30(A) are reviewed with

substantial deference in such proceedings. See Doug-

las, 132 S. Ct. at 1210; PhRMA, 538 U.S. at 672-673

(Breyer, J., concurring in part and in the judgment);

accord Managed Pharmacy Care v. Sebelius, 716 F.3d

1235, 1246-1250 (9th Cir. 2013) (applying Chevron

deference to interpretation of Section 30(A) reflected

in CMS’s approval of State plan amendment), cert.

denied, 134 S. Ct. 900, and 134 S. Ct. 986 (2014);

PhRMA v. Thompson, 362 F.3d 817, 822 (D.C. Cir.

2004) (same).

By contrast, recognition of a private right of action

under the Supremacy Clause would mean that multi-

ple federal courts across different jurisdictions would

25

similarly (and perhaps simultaneously) be called upon

to decide questions of compliance with Section 30(A).

Judicial proceedings would move forward on different

evidentiary records and would result in different fac-

tual findings, which would in turn be reviewable on

appeal only under the “clearly erroneous” standard,

Fed. R. Civ. P. 52(a)(6). And, as evidenced by the

wide array of approaches the courts of appeals have

taken in their interpretation of Section 30(A), U.S.

Cert. Stage Amicus Br. at 10-11, Douglas v. Indep.

Living Ctr., supra (09-958), the proceedings would

risk the development and application of different legal

standards. See Sanchez, 416 F.3d at 1061 (noting

“that exclusive agency enforcement might fit the

scheme better than a plethora of private actions

threatening disparate outcomes” (quotation marks

and citation omitted)).

3. The conclusion that Section 30(A) is not enforce-

able through a private suit by Medicaid providers is,

moreover, consistent with what apparently has been

the shared assumption of the Court and Congress that

no nonstatutory cause of action is available to chal-

lenge actions by state officials on the ground that they

are inconsistent with SSA provisions governing state

plans under cooperative federal-state programs.

a. In Thiboutot, supra, this Court first made ex-

plicit the conclusion that Section 1983—which renders

actionable the “deprivation of any rights, privileges,

or immunities secured by the Constitution and laws,”

ibid. (emphasis added)—is presumptively available

not only to redress violations of the Constitution or of

statutes assuring equal protection, but also to redress

violations of all federal statutes that confer individual

rights, including statutes enacted pursuant to Con-

26

gress’s Spending Clause authority. In addition to the

plain language of Section 1983, the Court looked to its

prior cases, which it read as resolving “any doubt”

about the scope of the statute. Thiboutot, 448 U.S. at

4-5. The Court concluded that those cases, including

several involving the SSA, had “relied on the availabil-

ity of a § 1983 cause of action for statutory claims.”

Id. at 5-6. In ali of those cases, the Court reasoned,

Section 1983 “was necessarily the exclusive statutory

cause of action because, as the Court held in [Kdel-

man v. Jordan, 415 U.S. 651, 673-674 (1974)], the SSA

affords no private right of action against a State.”

Thiboutot, 448 U.S. at 6.

If a nonstatutory cause of action fashioned under

the Supremacy Clause or on another basis had been

available, however, the critical premise underlying the

Court’s reasoning—that the Court’s prior SSA cases

had removed “any doubt” as to Section 1983’s applica-

bility to statutory claims—would have been unfound-

ed. Each of the prior cases equally could have been

explained as arising under a nonstatutory cause of

action. See Thiboutot, 448 U.S. at 6 (string-citing

cases seeking prospective relief from state programs

alleged to be “inconsistent” with provisions of the

SSA). A holding by this Court that a private cause of

action is available under the Supremacy Clause to

enforce provisions of the SSA would thus be in consid-

erable tension with its ruling in Thiboutot.

Such a holding would also displace the Court’s im-

plied-right-of-action and Section 1983 jurisprudence,

which looks to the terms and purposes of the particu-

lar statute involved, not to more general and amor-

phous standards drawn from elsewhere, such as the

Supremacy Clause. This Court has previously ex-

27

pressed similar concerns in declining to recognize an

extra-statutory cause of action. For example, in Astra

USA, Inc. v. Santa Clara County, 131 S. Ct. 1342,

1345 (2011), the Court declined to recognize a third-

party-beneficiary claim to enforce the terms of a con-

tract between HHS and a drug company where the

contractual terms were dictated by a federal-state

cooperative program enacted under Congress’s

Spending Clause authority. There, as here, the par-

ties did not dispute that there was no private right of

action under the statutory provision at issue; the stat-

ute instead vested enforcement authority in HHS. /d.

at 1347-1348. As a result, to allow a suit on a third-

party-beneficiary rationale would have rendered

meaningless the absence of a private right of action

under the statute. Jd. at 1348. Such a suit, the Court

explained, “is in essence a suit to enforce the statute

itself.” Ibid. In those circumstances, the Court con-

cluded, it would make “scant sense” to allow that claim

to go forward “[njo matter the clothing in which [the

plaintiffs] dress their claims.” Jd. at 1345 (quoting

Tenet v. Doe, 544 U.S. 1, 8 (2005)) (first brackets in

original).

Similar considerations are present here. Under the

Ninth Circuit’s ruling, private parties who lack a stat-

utory cause of action could simply re-style their suit

as a preemption action to enjoin state officials from

enforcing a state law that was adopted to implement

the State’s undertakings pursuant to a federal-state

program. In Suter, for example, the plaintiffs’ claim

that the State had not made “reasonable efforts” at

family reunification in its judicial proceedings, 503

U.S. at 352, could have been re-pleaded as a claim that

the State’s inadequate efforts were “preempted” by

28

the reasonable-efforts provision of the Adoption Act.

In Blessing, the State’s alleged failure to abide by

Title IV-D’s “substantial compliance” requirements,

520 U.S. at 332-333, would have been cognizable had

plaintiffs instead challenged the State’s program as

“preempted” by the substantial-compliance provision.

And in Alexander v. Sandoval, 532 U.S. 275 (2001),

the plaintiffs could have pursued their claim that the

State’s policy of offering its driving-license examina-

tion only in English violated the Department of Jus-

tice’s disparate-impact regulation, see id. at 279, by

the simple expedient of filing suit under the Suprema-

cy Clause instead of under Title VI of the Civil Rights

Act of 1964.

That respondents here have sought only injunctive

relief does not mitigate the inconsistency between

private judicial enforcement and the federal-state

cooperative scheme that Congress created, where

Congress has not conferred individual rights or a

private right of action. Significantly, in all of the

cases mentioned above, the plaintiffs sought only

prospective relief, not damages. £.g., Suter, 503 U.S.

at 352; Blessing, 520 U.S. at 337; Sandoval, 532 U.S.

at 279; see Wilder v. Virginia Hosp. Ass'n, 496 U.S.

498, 504 & n.4 (1990). But where Congress has con-

ferred legal rights or immunities under such a statute,

Section 1983 presumptively supplies an appropriate

cause of action for either damages or equitable relief,

as appropriate." The court of appeals’ decision dis-

Section 1983 does not provide a cause of action for damages

against States or state employees in their official capacity. See

Will v. Michigan Dep't of State Police, 491 U.S. 58, 71 & n.10

(1989). And, unless properly abrogated, sovereign immunity would

bar retrospective damages in cases asserting an implied statutory

29

places this coherent framework under the Medicaid

Act.

b. Subsequent federal legislation reinforces the

conclusion that no Supremacy Clause or other non-

statutory cause of action should be recognized in this

context. Two identical provisions of the SSA, added

by Congress in 1994, point to the conclusion that the

SSA is privately enforceable only when a cause of

action lies under Section 1983 or is properly implied

directly under the statutory provision at issue. After

this Court’s decision in Suter, which held that the

“reasonable efforts” provision of the SSA’s Adoption

Act was not actionable either directly or under Section

1983, Congress adopted amendments to the SSA that

provide:

In an action brought to enforce a provision of this

chapter, such provision is not to be deemed unen-

forceable because of its inclusion in a section of this

chapter requiring a State plan or specifying the re-

quired contents of a State plan. This section is not

intended to limit or expand the grounds for deter-

mining the availability of private actions to enforce

State plan requirements other than by overturning

any such grounds applied in Suter v. Artist M., 112

S. Ct. 1360 (1992), but not applied in prior Supreme

Court decisions respecting such enforceability;

provided, however, that this section is not intended

to alter the holding in Suter v. Artist M. that sec-

tion 671(a)(15) of this title is not enforceable in a

private right of action.

right of action against state officials acting in their official capaci-

ty. See Quern v. Jordan, 440 U.S. 332, 337-349 (1979); Edelman,

415 US. at 677.

30

42 U.S.C. 1320a-2; see 42 U.S.C. 1320a-10 (similar).

The Conference Report explained that “[t]he intent of

this provision is to assure that individuals who have

been injured by a State’s failure to comply with the

Federal mandates of the State plan titles of the [SSA]

are able to seek redress in the federal courts to the

extent they were able to prior to the decision in Suter

v. Artist M.” H.R. Conf. Rep. No. 761, 103d Cong., 2d

Sess. 926 (1994). The Report also made clear, howev-

er, that there was “no intent to overturn or reject the

determination in Suter that the reasonable efforts

clause to Title IV-E does not provide a basis for a

private right of action.” /bid.

These amendments indicate that Congress, like the

Court in Suter, was acting on the understanding that a

private right of action should be available to enforce

the state plan provisions of federal-state programs

under the SSA only when such a cause of action is

available under Section 1983 or established implied-

private-right-of-action principles. Where a cause of

action is not available under either Section 1983 or the

particular SSA provision at issue, the amendments

appear to contemplate that the provision simply will

not be privately enforceable.”

" In Wilder, this Court addressed the Boren Amendment, a for-

mer Medicaid Act provision requiring States to make payments

based on rates that were “reasonable and adequate to meet the

costs which must be incurred by efficiently and economically

operated facilities” that provide inpatient hospital, skilled nursing,

and other institutional services. 42 U.S.C. 1396a(a)(13)(A) (1988).

Wilder held that this provision created a right enforceable by

Medicaid providers under Section 1983. 496 U.S. at 524. There

was widespread criticism of that ruling. See Governors’ Proposal

on Welfare and Medicaid: Hearings Before the Senate Comm. on

Finance, 104th Cong., 2d Sess. 88 (1996) (statement of Hon. Donna

31

4. Finally, respondents here face no affirmative

enforcement action by the State, in which federal

preemption would be a defense at law. Cf. Douglas,

132 S. Ct. at 1213 (Roberts, C.J., dissenting); VOPA,

131 S. Ct. at 1642 (Kennedy, J., concurring). Nor do

respondents seek immunity from allegedly preempted

state regulation that the State seeks to impose on

their primary conduct. The allegedly preempted re-

imbursement rates—or, more precisely, the State’s

allegedly preempted “failure to amend existing reim-

bursement rates,” Pet. App. 21; see id. at 4 n.2—do

not regulate respondents’ primary conduct. Rather,

the rates merely offer providers less money for cer-

tain services than what they believe should be paid

under the cooperative federal-state Medicaid pro-

gram. Section 30(A), however, is intended to serve

broad and general programmatic interests of the

federal government and the State, not to confer reim-

bursement rights on providers. The reimbursement

relationship between a State and a provider is essen-

tially contractual in nature. It would be anomalous for

one party to a prospective or existing contract (a pro-

vider) to have a legal right—a cause of action—to

insist that the other party (the State) increase its offer

for a future contract or to increase its payments under

an existing contract.

E. Shalala) (“We favor the repeal of the Boren Amendment. It has

been the provider suits that have driven [States] crazy.”). Con-

gress repealed the Boren Amendment and replaced it with a more

limited requirement that States provide for public participation in

their ratemaking processes for such institutional services. See

Balanced Budget Act of 1997, Pub. L. No. 105-33, § 4711, 111 Stat.

507-508 (42 U.S.C. 1396a(a)(13)(A) (cited at p. 23, supra)).

32

By contrast, almost all of the cases relied upon by

respondents (see Br. in Opp. 11) and the court of ap-

peals (see Indep. Living Ctr. of S. Cal., Inc. v. Shewry,

543 F.3d 1050, 1053-1055 (9th Cir. 2008)) involved

claims for relief from state-law requirements or other

burdens that were allegedly inconsistent with federal

law.” In City of Burbank v. Lockheed Air Terminal,

Inc., 411 U.S. 624 (1973), for example, an airport own-

er sought to enjoin an ordinance imposing a curfew on

jet aircraft, alleging that the ordinance was preempt-

ed by the Federal Aviation Act. Jd. at 625-626. In

Ray v. Atlantic Richfield Co., 435 U.S. 151 (1978),

tanker vessel operators urged that state regulation of

tanker operation and design was preempted by the

federal Ports and Waterways Safety Act. Jd. at 154-

155. And in Gade v. National Solid Wastes Manage-

ment Association, 505 U.S. 88 (1992), a trade associa-

tion of regulated waste-removal businesses sought to

enjoin enforcement of a state licensing requirement as

* Since Gonzaga, this Court has decided only one case, PhRMA,

in which a private party sued in federal court to enjoin state offi-

cials from enforcing an allegedly preempted state law in circum-

stances even arguably similar to those here. The basis for the

plaintiff’s cause of action was not addressed by the Court, ef. 538

U.S. at 683 (Thomas, J., concurring in the judgment), but the case

differed in important respects from this one. There, the question

was not whether the State had complied with obligations imposed

as a condition of receiving federal Medicaid funds, but rather,

whether the State’s invocation of its Medicaid authority to impose

independent regulatory requirements on drug manufacturers was

consistent with the Medicaid Act. Jd. at 649-650. Thus, unlike this

case, the state law at issue in PhRMA constituted an affirmative

exercise of the State’s authority to create and enforce what were in

essence regulatory requirements governing primary conduct. In

bringing suit, the manufacturers were in effect asserting an im-

munity from those regulations.

33

inconsistent with federal law. Jd. at 93-94." Such

decisions illustrate the traditional operation of the

negative injunction applied in Ex parte Young that

permits “‘the pre-emptive assertion in equity of a

defense that would otherwise have been available in

the State’s enforcement proceedings at law.’” Doug-

las, 132 S. Ct. at 1213 (Roberts, C.J., dissenting) (quo-

ting VOPA, 131 S. Ct. at 1642 (Kennedy, J., concur-

ring)); see Planned Parenthood of Kansas & Mid-

Missouri v. Moser, 747 F.3d 814, 829-830 (10th Cir.

2014).

Under the circumstances of this case, respondents

cannot avail themselves of that equitable cause of

action. They concededly are “not subject to or threat-

ened with any enforcement proceeding like the one in

Ex parte Young.” Douglas, 132 S. Ct. at 1213 (Rob-

erts, C.J., dissenting). Rather, respondents “simply

seek a private cause of action [that] Congress chose

not to provide.” /bid.

8 See also, ¢.g., Verizon Md., 535 U.S. at 642-643 (challenge by

telecommunication carrier to order of state utility commission);

Lorillard Tobacco Co. v. Reilly, 533 U.S. 526 (2001) (suit by tobac-

co companies challenging state restrictions on tobacco advertis-

ing); Pac. Gas & Elec. Co. v. State Energy Res. Conservation &

Dev. Comm'n, 461 U.S. 190 (1983) (challenge by utilities to condi-

tions on construction of nuclear plants); Fla. Lime & Avocado

Growers, Inc. v. Paul, 373 U.S. 132 (1963) (suit by farmers chal-

lenging state law regulating sale of avocados).

34

CONCLUSION

The judgment of the court of appeals should be re-

versed.

Respectfully submitted.

DONALD B. VERRILLI, JR.

Solicitor General

JOYCE R. BRANDA

Acting Assistant Attorney

General

EDWIN S. KNEEDLER

Deputy Solicitor General

ALLON KEDEM

Assistant to the Solicitor

General

MARK B. STERN

ALISA B. KLEIN

JEFFREY E. SANDBERG

Attorneys

NOVEMBER 2014