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

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URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385016_0330%3A10

## Record

- **Collection:** Supreme Court brief
- **Document type:** Amicus Curiae Brief
- **Published:** January 1, 2014

## Text

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

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385016_0330%3A10. Public record. Not legal advice.