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

KECORD No. 14-15

» AND

BRIEFS

3n The

Supreme Court of the Anited States

°

RICHARD ARMSTRONG and LISA HETTINGER,

Petitioners,

Vv.

EXCEPTIONAL CHILD CENTER, INC.;

INCLUSION, INC.; TOMORROW’S HOPE

SATELLITE SERVICES, INC.; WDB, INC.; and

LIVING INDEPENDENTLY FOR EVERYONE, INC.,

Respondents.

°

On Writ Of Certiorari To The

United States Court Of Appeals

For The Ninth Circuit

+

AMICUS CURIAE BRIEF FOR

MEDICAID DEFENSE FUND

IN SUPPORT OF RESPONDENTS

S

LYNN S. CARMAN

203A Picnic Ave.

San Rafael, CA 94901

lynnscarman@hotmail.com

Telephone: 415-927-4023

Counsel for Amicus Curiae

Medicaid Defense Fund

—_——

a

COCKLE LEGAL BRIEFS (800) 225 6964

WWW COCKLELEGALBRIEFS COM

i

TABLE OF CONTENTS

Page

Interest of Amicus Curiae..............00.ccccccccesccsscesee 1

Factual and Legal Background ......................200+ 3

I Or IIo irccevciniecctescnceccnetscaassstonins 3

IIE oo cicvcsscswscesecnctensscitsnrnisasconcedauusezassensucooese 13

I. The principle, that the king must obey

Il.

Ill.

his own laws, and that an officer who

proposes to disobey the law of the land is

thereby stripped, in equity, of all powers

to so act to the injury of persons, has al-

ready been embedded sub silencio into

federal jurisprudence in respect to feder-

al officers. This principle should likewise,

for the same reasons, be articulated and

applied in State officer cases, such as the

Bond v. United States, 131 S.Ct. 2355

(2011), resolves many issues in favor of

ae ID inisstninsciconscssccnssessinsnnrsnivnss

The Respondents also have a federalism

cause of action, to prevent injury from

the acts of the Directors contrary to,

hence preempted under the Supremacy

Clause by the supreme federal law,

Section 30(A), and the State Plan con-

formance requirement of 42 U.S.C.

Se NID i iiinenciniceineenennaiesidinenDepinileumssldigoaide

13

16

‘3

TABLE OF CONTENTS -— Continued

Page

IV. The objections of the Petitioners that

the State’s acceptance of federal funding

subject to the conditions of the Medicaid

Act, constitutes a mere “contract,” in

which Medicaid beneficiaries are mere

“incidental beneficiaries of a contract,”

is irrelevant to the case made by the

RIE aM nee dine ot SE Scien eM te 23

V. The all-inclusive wording of the Suprem-

acy Clause repels the construction pro-

posed: that only “pre-enforcement” causes

of action exist under the Supremacy

EI cictcastaiminpesschcentedcaratcencsemmmianigenseosiannes 25

VI. The Court has ruled directly opposite

of this unsupported new theory of the

Petitioners and the Government: that

only “pre-enforcement” causes of action

exist under the Supremacy Clause ........... 26

VII. The claim that the Medicaid Act

foreclosed Supremacy Clause suits has

already been rejected by the Court,

oan lenansiamen 27

(SRL LIS SE TION SN el ot Be Me: MRS NR Oe 29

TABLE OF AUTHORITIES

Page

CASES

Abbott Laboratories v. Gardner, 387 U.S. 136

RSET aac Ge a ee a 13, 14, 28

Allen v. Baltimore & Ohio R. Co., 114 U.S. 311

PIII concsaieusinentnnshantcionbibeebesnansaseadaneneceeneesonieiios 19, 26

American School of Magnetic Healing v.

McAnnulty, 187 U.S. 94 (1902)............ccscccerseevereeees 13

Association of Data Processing Service Organi-

zations v. Camp, 397 U.S. 150 (1970)..................... 28

Barlow v. Collins, 397 U.S. 159 (1970)...............0...... 28

Blessing v. Freestone, 520 U.S. 329 (1997) ................ 28

Board of Liquidation v. McComb, 92 U.S. 531

EUIIPI Tics aceaninsaanlassnsstcnaneuieathesdedeiicabinnamesiniansenes 18, 26

Bond v. United States, 131 S.Ct. 2355, 564 U.S.

SO | BeeRUE ES a eae aie enn 8, 9, 16, 17, 18

Burgio and Camofelice, Inc. v. NYS Dept. of

Labor, 107 F.3d 1000 (2d Cir. 1997)................sesseeee0 4

California Pharmacists Assn. v. Douglas, 2:09-

SE GUAR: GE: ID encovvesoncssesiosconsssesiscerevsosves 2.

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

Be rE III csccssscncocisenmnianckeanbetionnitieni neasinicduanetines 16

Clayworth v. Bonta, 295 F.Supp.2d 1110 (E.D.

SEE ME (x hatiacins aiealstensysexcsucsabemsnnomesdabivvoromanienninent 1

Douglas v. Independent Living Center, 132

Ss, SII ca coscccccceshseuiaincussoemenionsovennenseninienceid 2

Ex parte Young, 209 U.S. 123 (1908)........-.0s+0+0e+0 18, 19

iV

TABLE OF AUTHORITIES - Continued

Page

Gade v. Natl Solid Wastes Mgmt. Assn., 505

Cts OD CO cevccctinniisesticccnsvettemniesnieaicopananiad 16

Golden State Transit Corp. v. Los Angeles, 493

Cy BE Ce wstinncichinstiintsnousimnimnndacianmaamn passim

Idaho v. Coeur d’Alene Tribe of Idaho, 521 U.S.

FE CG vitesecsesccisninnstiinantciniominnmae 16, 18

Independent Living Center v. Shewry, 543 F.3d

ROGT COUR Cie, TIDGD cccsccccsscescsseesincstiiictschinnsseetiiantabails l

Independent Living Center v. Maxwell-Jolly,

672 F.3d 644 (Ota Cir. BOOB) ....ccrccsrcressccscrscvesvecessonses 1

King v. Smith, 392 U.S. 309 (1968)..............ccccee 15, 28

Lawrence County v. Lead-Deadwood Sch. Dist.

Ne. 40-1, G60 UB. Bae Cee occtisaniemnniaiaan 16

Lime & Avocado Growers, Inc. v. Paul, 373 U.S.

BIFEe CIID vncscicesccececsessssvcoessesciesessindedsiaiaaaaniae 16

Managed Pharmacy Care v. Maxwell-Jolly, 603

FB. Ba 1SGS CaO G) nvvcesincrisiscssininansincsindecgmamal 2

Marbury v. Madison, 5 U.S. 137 (1803)................. 3, 26

New York v. United States, 505 U.S. 144 (1992)....8, 20

Pennhurst School and Hospital v. Halderman,

GBB UB. BD CBD G) wcevcccccnsinincsttstehisiinainiaatiaeaeeen 8

P.G.&E. v. State Energy Res. Cons. & Dev.

Comem., 462 UD. TBD Cie vccsicconmtieaietcon 16

Prinz v. United States, 521 U.S. 898 (1997)................ 8

Ray v. Atlantic Richfield Co., 436 U.S. 151

v

TABLE OF AUTHORITIES — Continued

Page

Rosado v. Wyman, 397 U.S. 397 (1970).....15, 26, 27, 28

Shaw v. Delta Air Lines, Inc., 463 U.S. 485

a ae a aceertiaeneminnennenion 16

Stark v. Wickard, 321 U.S. 288 (1944).................00. 9

Tennessee Elec. Power Co. v. TVA, 306 U.S. 118

EES a ol SE ae 17

Western Air Lines, Inc. v. Port. Auth. of NY and

NJ, 817 F.2d 222 (2d Cir. -1987)...................00+ 4,5,6

Western Pacific, Cal. R. v. Southern Pacific Co.,

RENTS SE Eee 3

Wilder v. Virginia Hospital Assn., 496 U.S. 498

ER SETA SS ee 28

CONSTITUTIONAL PROVISIONS

ESE ASS EE eo 16, 17, 19

a saicsctnsansansnniesenntiots 19

I ns iccictrsecsnbosnennamenceecesacncesons ..... passim

Si sna eeepnmegndicunmictenssaceseneesetesid 6

STATUTES

28 U.S.C.

as ceicisennsatioteden 18

a, seertsntnbnesonnnasoncseda 5

IP INILAD dniiiicdsninsasicnessvsetorecorncsscessoersecososorssces 5

vi

TABLE OF AUTHORITIES — Continued

Page

42 U.S.C.

EER Rue ene eeo ener 19, 22

ERE ER ee SC passim

Social Security Act, Title IV ...............-ccccccesseessseessosses 26

AUTHORITIES

de Tocqueville, Democracy in America (1839) .....21, 22

Hamburger, Law and Judicial Duty, 194-208,

ee : i eeubetesiianieieraennneenned 6,7

Harrison, Ex parte Young, 60 Stan. L. Rev. 989,

ROI i scinrig sn ceceeeacaniamiepenenanemmmnniaaeees 19

1

INTEREST OF AMICUS CURIAE'’

Amicus, the Medicaid Defense Fund (MDF), is a

nonprofit public interest law foundation, located in

San Rafael, California, which is organized to secure,

for charitable purposes, civil and economic rights of

health care consumers, especially but not limited to

their rights under the federal Medicaid Act.

To that end, MDF has freed up at least $400

million in funding for Medicaid programs in litigation

sponsored and supported by MDF during 2004

through the present, in California to pay:

— pharmacies in the case of Clayworth

v. Bonta, 295 F.Supp.2d 1110 (E.D. Cal. 2003),

(preliminary injunction enjoining 5% cut to

pharmacies in the Medicaid program in

California);

~— physicians, dentists, pharmacies, op-

tometrists, adult health care centers,

non-emergency medical transporters (NEMT),

and home health agencies in Independent

Living Center v. Shewry, 543 F.3d 1047 (9th

Cir. 2008); Independent Living Center v.

Maxwell-Jolly, 572 F.3d 644 (9th Cir. 2009);

‘ This amicus curiae brief is filed pursuant to Consent to

the filing of amicus curiae briefs in support of either party or of

neither party, filed by counsel for Petitioners on November 17,

2014, and by Respondents on November 19, 2014. (Docket, Case

No. 14-15). No counsel for a party authored this brief in whole

or in part, and no person or entity, other than amicus or its

counsel, made a monetary contribution specifically for the

preparation or submission of this brief.

2

(preliminary injunction enjoining 10% cut to

these Medicaid providers); vacated without

prejudice in Douglas v. Independent Living

Center, 132 S.Ct. 1204 (2012); appeal vol. dis-

missed, August 2014; settlement approved by

District Court (2014), pending CMS approval;

(with providers retaining all payments re-

ceived under the preliminary injunction);

— pharmacies, in Managed Pharmacy

Care v. Maxwell-Jolly, 603 F.Supp.2d 1230

(2009); (preliminary injunction enjoining 5%

cut to Medicaid pharmacies); vacated without

prejudice in Douglas v. Independent Living

Center, 132 S.Ct. 1204 (2012); appeal vol. dis-

missed, August 2014; settlement approved by

District Court (2014), pending CMS approval;

(with providers retaining all payments re-

ceived under the preliminary injunction);

— pharmacies, in California Pharmacists

Assn. v. Douglas 2:09-CV-08200 (C.D. Cal.

2010); (preliminary injunctions restraining

Maximum Allowable Cost pharmacy payment

reduction, and restraining Upper Billing

Limit on Medi-Cal pharmacy payments); ap-

peal pending.

A victory in this case by the Petitioners on the

Question Presented would be ruinous to thousands of

pharmacies and other providers in California, and

worse, compromise if not destroy access to quality

health care for millions of Medicaid beneficiaries in

California, for whom the Medicaid Defense Fund is

pledged to protect in the courts to the extent possible.

*

3

FACTUAL AND LEGAL BACKGROUND

The facts and the legal background of this case

are set forth in the respective briefs filed by the

Petitioners and the Respondents in this case.

°

SUMMARY OF ARGUMENT

Important principles compel the conclusion that

the Medicaid provider Respondents have a cause of

action under the Supremacy Clause to prevent injury

from continuing action of the defendant state official,

contrary to federal law.

The first principle is that law is not limited to

just that part which deals with the withholding of

rights, but, also includes the part of law which relates

to remedies to prevent injury to cognizable interests

of persons.

See Marbury v. Madison, 5 U.S. 137, 163 (1803),”

and Western Pacific, Cal. R. v. Southern Pacific Co.,

284 U.S. 47, 51-52 (1931),* for the general proposition

* [I}t is a settled and invariable principle in the laws of

England that every right, when withheld, must have

a remedy, and every injury its proper redress.

(Emphasis supplied).

* A person is a “party in interest”:

.. if the bill discloses that some definite legal right

possessed by the complainant is seriously threatened

or that the unauthorized and therefore unlawful

(Continued on following page)

4

that relief may be had for injury to a cognizable

interest of the plaintiff, not merely, only for the

withholding of a right. So that a plaintiff is not out of

court if he or she has no “right” created by Congress,

if the plaintiffs sue — as in case at bar — to prevent

injury under the injury branch of law, in which relief

is granted under the equity jurisdiction of the courts.

See Golden State Transit Corp. v. Los Angeles,

493 U.S. 103, 119 (1989) (Kennedy, J., dissent), and

two circuit cases — Western Air Lines, Inc. v. Port

Auth. of NY and NJ, 817 F.2d 222 (2d Cir. 1987), and

Burgio and Camofelice, Inc. v. NYS Dept. of Labor,

107 F.3d 1000, 1006 (2d Cir. 1997) — as typical opin-

ions which rule that injunctive relief is available to

prevent injury from a State officer’s action contrary to

federal law, despite absence of any Congressionally-

created right.

Thus Kennedy, J., asserted that:

By concluding that Golden State may not ob-

tain relief under § 1983, we would not leave

the company without a remedy. § 1983

does not provide the exclusive relief that the

federal courts have to offer. [P)laintiffs

may vindicate pre-emption claims by

seeking equitable relief in the district

court through their powers under the federal

action of the defendant . . . may directly and adversely

affect the complainant’s welfare.

(Emphasis supplied).

5

jurisdictional statutes. See 28 U.S.C. § 1331

(1982 ed.); 28 U.S.C. § 2201; 28 U.S.C. § 2202

(1982 ed.).

(Golden State, 493 U.S. at 119).

Western Air Lines explained, 817 F.2d at 225:

A claim under the Supremacy Clause that a

federal law preempts a state regulation is

distinct from a claim for enforcement of that

federal law.

(817 F.2d at 225), and:

The primary function of the Supremacy

Clause is to define the relationship between

state and federal law. It is essentially a pow-

er conferring provision, one that allocates

authority between the national and state

governments. .Aclaim under the Suprem-

acy Clause simply asserts that a federal

statute has taken away local authority.

In contrast, an implied private right of action

is a means of enforcing the substantive pro-

visions of a federa: law.

(817 F.2d at 225-226), and:

The question whether the Supremacy Clause

may be used as a sword in bringing a

§ 1983 action is, of course, different from

that decided in the affirmative by the Su-

preme Court in White Mountain Apache

Tribe v. Bracker, 448 U.S. 136 (1980) —

whether the Supremacy Clause may be

6

invoked as a shield against the imposition of

state taxes

(817 F.2d at 226).

Essentially, the Question Presented and Petition-

ers’ Opening Brief are strawmen which, by confining

themselves to the irrelevant issue of whether Medi-

caid providers have any Congressionally-created

“right,” ignore the established law of remedies to

prevent injury: namely, that no Congressionally-

created “right” is required of a plaintiff, to obtain

injunctive relief under equity jurisdiction of the

courts, to prevent injury from continuing action,

contrary to law, of any public official (be the official a

federal officer or a State officer).

Second, the historical precedent is that the king —

(here, a State) — must obey the law of the land and

his officers may not injure any person except under

the law of the land. (Magna Carta, 39 (nor will we go

upon him nor send against him, except by the law

of the land); Hamburger, Law and Judicial Duty, 194-

208, 216-217, 609 (2008).

Logically, without need of the Supremacy Clause,

this fundamental principle embodied in federal law

applies, by adoption of the Constitution by the people

of each of the States, to both federal officers and State

officers alike. (As to States, see The Federalist, No.

33, p. 205 (C. Rossiter ed. 1961) (A. Hamilton) (the

Supremacy Clause “only declares a truth which flows

7

immediately and necessarily from the institution of a

federal government); Law and Judicial Duty, 595.“

Under this common law principle, a State officer

(the Petitioner Armstrong), who violates the law of

the land (here, 42 U.S.C. § 1396a(aX30)A) — “Section

30(A)” — and the State plan, by not paying the rates

specified by the State plan, in violation of Section

30({A), is stripped by the ultra vires character of the

act of all powers to so act; so that persons injured

thereby — i.e., Medicaid providers who are paid less

than the federally imposed legal rate for their ser-

vices — have a historically grounded cause of action

under the equity jurisdiction of the courts to prevent,

by injunctive relief, the irreparable injury of having

to repeatedly sue the State to obtain the federally

imposed legal rates as well as the irreparable injury

of being prevented, by insufficient payments, from

furnishing quality services to beneficiaries as re-

quired by Section 30(A).

‘ As Hamilton put it, the new constitution extended “the

authority of the union to the persons of the citizens,” and thus

rather than have to act “by military force” against the states, the

government could exert itself “by the agency of the Courts” on

individuals. This was the “COERCION of the magistry” instead

of the “COERCION of arms.” (Id. at 595).

Hamburger’s thesis is that the Supremacy Clause merely

made explicit what was already implicit in the Constitution, and

was only added to ensure there was no dispute that by the

Constitution, the law of the land — i.e., federal law was supreme

throughout the country, any state law to the contrary. (/d. at

595-596).

8

See Pennhurst School and Hospital v. Halder-

man, 465 U.S. 89, 104-105 (1984):

[A]n official who acts unconstitutionally

is stripped of his official or representative

character, [Ex parte] Young, 209 U.S. 123,

160 (1908)" ..

[TJhe Young doctrine has been accepted as

necessary to hold state officials responsi-

ble to the supreme authority of the United

States. Young, supra, at 160.

Hence the fact, if it be a fact, that there is no Con-

gressionally-created “right” in case at bar, is irrele-

vant in this case, which goes off on principles entirely

unrelated to whether the plaintiff provider has a

Congressionally-created “right” or not.

Third, the system of federalism implicitly created

by the structure of the Constitution (New York v.

United States, 505 U.S. 144 (1992); Prinz v. United

States, 521 U.S. 898 (1997); and Bond v. United

States, 131 S.Ct. 2355, 564 U.S. __ (2011), was

created for the benefit of the citizens of this country

to preserve their liberty, by preventing any actor in

the system — let alone sets of actors — from gaming

the system to their advantage, contrary to the appli-

cable laws enacted by Congress, to the oppression or

injury of citizens.

See New York, 505 U.S. at 182-183.

* 209 U.S. 123, 160 (1908).

9

Also see Bond, 131 S.Ct. at 2363-2364:

Bond seeks to vindicate her own constitu-

tional interests. The individual, in a proper

case, can assert injury from governmental

action taken in excess of the authority that

federalism defines. Her rights in this regard

do not belong to a State.

and:

An individual has a direct interest in object-

ing to laws that upset the constitutional bal-

ance between the National Government and

the States when the enforcement of those

laws causes injury that is concrete, particu-

lar, and redressable.

Note: that reimbursement at less than the feder-

ally mandated amount, calculated as required by

Section 30(A) and as required by the State Plan

approved by CMS, is ongoing injury to Medicaid

providers in case at bar.

And, to require the providers to repeatedly sue,

each time that they are reimbursed less than the

rates mandated by Section 30(A) and/or by the State

Plan, is deemed, in equity, to be irreparable injury in

and of itself.

Indeed, in view of the fact that milk producers

had standing in Stark v. Wickard, 321 U.S. 288, 304-

305 (1944) to be paid at rates mandated by Congress,

so also do the Medicaid providers in case at bar have

a similar injury, with right to sue to prevent being

10

injured by payments at less than the federally man-

dated rates:

It is only when a complainant possesses

something more than the general interest in

the proper execution of the laws that he is in

a position to secure judicial intervention. His

interest must rise to the dignity of an inter-

est personal to him and not possessed by the

people generally. We deem it clear that

these producers have such a personal

claim as justifies judicial consideration. It is

much more definite and personal than the

right of complainants to judicial considera-

tion of their objections to regulations, which

this Court upheld in Columbia Broadcasting

System v. United States, 316 U.S. 407. In the

present case a reexamination of __ the facts

and the statute and Order will show that

delivering producers are assured minimum

prices [by the milk payment statute in ques-

tion] for their milk. The Order directs the

handler to pay [the milk producer] that min-

imum.

Hence, Medicaid providers (for themselves and

for the benefit of their beneficiary patients), have a

cause of action, to vindicate and preserve the federal-

ism system, for injunctive relief to prevent injury

from continued action of the defendant officials which

is contrary to both the requirements of Section 30{A)

and the Act’s requirement that a State operate its

federally-funded Medicaid program in compliance

with the State plan approved by CMS.

11

Summary and observation

The claim of the Petitioner’s Brief ~ that under

the continued failure of CMS to cut off all federal

funding for the continuing violation of the Medicaid

Act sued upon, that the State has a perfect right to

deliberately continually flout federal law, and injure

Medicaid providers — as well as injure beneficiaries in

need of the services which Congress enacted them to

receive — simply because Congress deigned not to

enact any “rights” in providers — is judicially intoler-

able.

It might well be called the Marie Antoinette

defense.

Le., the position of the defendants is, that when

the enforcement agency (here, CMS) fails to enforce

the Medicaid Act, that we are free to violate and

violate the Act, and injure and injure both Medicaid

providers and their beneficiary patients by deliber-

ately paying less than we have determined is the

minimum payable under Section 30(A) and which

minimum, to boot, has been approved by CMS.

This is especially contumacious where — as in

case at bar — the case does not turn on whether

Congress created any “enforceable rights,” but, in-

stead, turns on whether the traditional equity cause

of action to prevent irreparable injury threatened by

officials’ violation of law, should continue to be so

recognized and so sustained by the judiciary.

12

L.e., this extraordinary claim of Petitioners to be

able to injure providers and beneficiaries with impu-

nity, in violation of federal law — simply because

another actor in the federalism system (CMS) chooses

to continuously fail to enforce the Act — is flatly

contrary to the bedrock principles above mentioned.

But even more troubling is that both the State

and CMS are visibly gaming the federalism system,

by acting in parallel, to their mutual monetary ad-

vantage, by the State violating the Act on the one

hand, and CMS not cutting off federal funds to en-

force the Act, on the other hand.

If the State of Idaho and CMS can thereby, by

parallel action, willfully shred the federalism system

in respect to Medicaid providers, to their monetary

advantage, in continued violation of the Act — on the

basis that providers may not sue to prevent injury to

themselves or their beneficiary patients for whom

they sue jus tertii — then all the other States and

CMS can do the same in respect to all the remaining

Social Security Act programs for the aged, infirm, and

permanently injured of this country.

That is the grisly view from the promenade of the

case at bar. This honorable Court should and must

not permit the destruction of the federalism system,

which the State and the Obama Administration,

through CMS and the Solicitor General, propose to

the Court, which will greatly injure millions of aged,

disabled poor throughout the country.

+

13

ARGUMENT

I. The principle, that the king must obey his

own laws, and that an officer who propos-

es to disobey the law of the land is there-

by stripped, in equity, of all powers to so

act to the injury of persons, has already

been embedded sub silencio into federal

jurisprudence in respect to federal offic-

ers. This principle should likewise, for the

same reasons, be articulated and applied

in State officer cases, such as the case at

bar.

See injunctions to prevent injury from violation of

federal law by a federal officer, in none of which the

Respondents possessed any rights enacted by the

statute being violated:

— American School of Magnetic Healing

v. McAnnulty, 187 U.S. 94, 108 (1902):

The acts of all officers musi be justified

by some law and in case an officer violates

the law to the injury of an individual the

courts generally have jurisdiction to grant

relief. (187 U.S. at 108).

~ Abbott Laboratories v. Gardner, 387 U.S.

136, 142-43 (1967): There is jurisdiction in

equity for a suit to restrain the F.D.A., to

prevent injury to a plaintiff, from implement-

ing a regulation adopted contrary to the Fed-

eral Food, Drug, and Cosmetic Act of 1938.

(387 U.S. at 142-43).

14

Essentially, the Administrative Procedure Act

(A.P.A.), as initially enacted, was merely declaratory

of existing case law. As stated in Abbott Laboratories,

387 U.S. at 142-143, the Department of Justice

advised Congress in 1938 during the legislative

process which resulted in the A.P.A., that:

[E]ven without any express provision in the

[A.PA.] any citizen aggrieved by any order of

the Secretary, who contends [an] order is in-

valid, may test the legality of the order by

bringing an injunction suit against the Sec-

retary, the head of the Bureau, under the

general equity powers of the court. 83 Cong.

Rec. 7892 (1938).

By parity of reasoning, these basic principles

apply ipso facto to cases such as the case at bar,

where it is State officers, not a federal officer, who are

violating federal! law.

In essence, the test is not whether the plaintiff

has a Congressionally-created right, but rather, will

the plaintiff be adversely affected by the officer’s ultra

vires action.

Cases of violation of a federal law by a State

officer:

The following are cases in which injunctions

issued to prevent injury from State officials’ acts

contrary to federal law, which threatened to injure

the plaintiffs:

15

— In the Golden State case, 493 U.S. at

119, Justice Kennedy (dissenting) concluded

that although the plaintiff union had no

rights under the federal law in question, that

nevertheless, the plaintiff had a cause of ac-

tion for injunctive relief under the equitable

powers of the courts.

— In King v. Smith, 392 U.S. 309

(1968), (Social Security Act, Title IV),* in-

junction issued to prevent injury to AFDC

recipients, from implementing a State law

contrary to the Act.

— In Rosado v. Wyman, 397 U.S. 397

(1970), (Social Security Act, Title IV), injunc-

tion issued to prevent injury to AFDC recipi-

ents from implementing a State law contrary

to the Act.’

* Because King was pleaded as an Equal Protection claim

under the jurisdiction afforded by § 1983, the Court ruled

instead on the pendent Supremacy Clause claims first (which

was called a “statutory claim”) so as to avoid if puasible having

to address and rule upon the pleaded Bill of Rights claim.

But a “statutory claim,” where the plaintiff alleges injury

from State violation of a federal statute, is, by any name, a

preemptive Supremacy Clause cause of action.

” The Court exercised pendent jurisdiction to adjudicate the

Rosado case the same as the Court adjudicated King: ie., by

deciding the underlying “statutory claim,” — i.e., for injunction

from State action in violation of federal law, which threatened to

injure the plaintiffs: which by any other name is a preemptive

Supremacy Clause cause of action.

16

See Idaho v. Coeur d’Alene Tribe of Idaho, 521

U.S. at 281 (1997) (An allegation of ongoing violation

of federal law where the requested relief is prospec-

tive is ordinarily sufficient to seek injunctive relief).

~ Lawrence County v. Lead-Deadwood

Sch. Dist. No. 40-1, 469 U.S. 356, 259 n.6.

— Shaw v. Delta Air Lines, Inc., 463

U.S. 485 (1983).

— City of Burbank v. Lockheed Air Ter-

minal, Inc., 411 U.S. 624 (1973).

— Ray v. Atlantic Richfield Co., 436

U.S. 151 (1978).

— Gade v. Natl Solid Wastes Mgmt.

Assn., 505 U.S. 86 (1992).

— PG&E. v. State Energy Res. Cons. &

Dev. Comm., 461 U.S. 190 (1983).

— Lime & Avocado Growers, Inc. v.

Paul, 373 U.S. 132 (1963).

ll. Bond v. United States, 131 S.Ct. 2355 (2011),

resolves many issues in favor of the Re-

spondents.

First. The theory of the Directors and the Gov-

ernment that a plaintiff must plead a “right” in order

to maintain Article III standing and a cause of action

under the Supremacy Clause, is completely trashed

by the Bond decision. The Court held that Bond seeks

to vindicate her own constitutional interests, and that

an individual, in a proper case, can assert injury from

17

governmental action taken in excess of the authority

that federalism defines. (Jd., 131 S.Ct. at 2363-2364).

Second. Tennessee Elec. Power Co. v. TVA, 306

U.S. 118 (1939), in particular — so heavily relied on by

the defendants — is rejected out of hand. (/d., 131

S.Ct. at 2361-2364).

Third. Bond holds that an adverse effect from a

State or federal agency’s action in violation of the

federalism system, as in case at bar, is injury which is

sufficient for Article III standing and cause of action

purposes if the injury meets Article [II prudential

requirements. ([d., 131 S.Ct. 2366-2367).

Fourth. An individual has a direct interest in

objecting to State laws that upset the constitutional

balance between the Union and the States when the

enforcement of these State laws, is contrary to su-

preme federal law, and causes injury to the individual

that is concrete, particular, and redressable. (131

S.Ct. 2366-2367). In case at bar, the plaintiff Medi-

caid providers meet this test.

Fifth. The theory of the Director and the Gov-

ernment that because generally a plaintiff “cannot

rest his claim on the legal rights or interests of oth-

ers,” that ergo, only the Government may assert a

claim for the within State violations of Section 30(A),

is irrelevant in case at bar.

This is because here the Medicaid providers are

asserting their own injury from State government

18

action taken in excess of the limits on a State that

federalism defines. (131 S.Ct. at 2363-64).

L.e., here the plaintiffs assert their own injuries

(and the injuries of beneficiaries who are their pa-

tients, clients, or members for whom they are jus

tertii virtual representatives), from State action

which is in excess of a limitation on State authority

that federalism defines).

NOTE:

The federalism defense was raised by Bond as a

defense in proceedings commenced against Bond;

whereas, in case at bar, the plaintiffs allege their

Supremacy Clause defense in a preemptive suit in

equity to prevent irreparable harm to themselves (as

well as their beneficiary patients). Such preemptive

suits in equity are commonplace, where the injury

stems from the State’s violation of a restriction placed

upon it by federal law (constitutional or statutory).

Such preemptive suits to prevent irreparable

injury are well established, under the equity jurisdic-

tion afforded to the federal courts by Congress, and

by jurisdiction afforded to the federal courts by 28

U.S.C. § 1331. See, Idaho v. Coeur d’Alene Tribe of

Idaho, 521 U.S. 261, 281 (1997), (an allegation of an

ongoing violation of federal law with request for

prospective injunctive relief is ordinarily sufficient

under Ex parte Young, 209 U.S. 123); Golden State,

493 U.S. at 119 (Kennedy, J., dissent); Board of

Liquidation v. McComb, 92 U.S. 531, 540-541 (1876)

19

(Contracts Clause violation); Allen v. Baltimore &

Ohio R. Co., 114 U.S. 311 (Contracts Clause viola-

tion); John Harrison, Ex parte Young, 60 Stan. L. Rev.

989, 997-999 (2008).

Conclusion

For the above reasons, the plaintiffs have Article

III standing and a cause of action to obtain injunctive

relief to prevent being injured from the Directors’

preempted acts to implement Idaho law contrary to,

hence preempted under the Supremacy Clause, by

Section 30(A) and the Medicaid requirement of 42

U.S.C. § 13896a(a) that the Petitioner conform to the

State Plan approved by CMS.

Ill. The Respondents also have a federalism

cause of action, to prevent injury from

the acts of the Directors contrary to,

hence preempted under the Supremacy

Clause by the supreme federal law, Sec-

tion 30(A), and the State Plan conform-

ance requirement of 42 U.S.C. § 1396a(a).

A

This cause of action is implicit in the federalism

system created by the division, allocation, and limits

of federal and state powers by the Constitution; hence

shall be referred to in this brief as the “federalism

cause of action.”

Federalism is, simply, the allocation in the Con-

stitution of powers to the national government, the

20

reservation of all other powers to the states, and the

provisions, which include the Supremacy Clause,

which allocate federal/state powers by limiting State

powers, which created the boundaries between, and

the spheres of power of the national Government, the

States, and the three branches of the Government.

Central to federalism is the principle, which the

Court has recognized since the beginning, that a

State law must yield to a contrary federal law.

Also, the doctrine of federalism is based on the

premise that the Constitution is not a compact be-

tween and for the benefit of sovereign governments,

but, rather, was stated to be and was adopted by the

People, for their protection. New York, 505 U.S. at

181:

O’Connor, J.:

The Constitution does not protect the sover-

eignty of States for the benefit of the States

or state governments as abstract political en-

tities, or even for the benefit of the public of-

ficials governing the States. To the contrary,

the Constitution divides authority between

federal and state governments for the pro-

tection of individuals.

(Boldface emphasis supplied).

21

B

de Tocqueville is informative on this subject

In Democracy in America (1839) de Tocqueville

analyzed the allocations and the conflicts between

federal and State powers.

He reported that a chief concern of the Framers

was “to arm the Federal government with sufficient

power to enable to resist, within its sphere, the

encroachments of the several states,” but, at the same

time, to avoid confrontation of the Union directly

against a State, wherever possible."

He observed that to that end, that suits by pri-

vate citizens were deemed to be the means by which

State laws contrary to the interests of the Union

could be attacked without having to bring in the

Union as the litigant. Thus:

The Americans hold that it is nearly impos-

sible that a new law should not injure some

private interests by its provisions. These

private interests are assumed by Ameri-

can legislators as the means of assailing

such measures as may be prejudicial to

the Union, an: it is to these [private] inter-

ests that the protection of the Supreme

Court is extended.

(Boldface emphasis supplied).

* See, Alexander Hamilton, prior cited on this point at

Footnote 4.

22

Amicus comments that the true function of the

Court, to preserve the federalism system when, as in

case at bar, two of the primary actors are gaming the

system to their mutual financial advantage (consist-

ing of savings from less expenditures for Medicaid

services), is to accept these providers — who are

injured by ultra vires State and Government action —

who come into the Court to seek preventive relief.

For, without such injured victims of federalism

violations who sue to obtain injunctive relief to pre-

vent prospective injury, the federalism system could

not be maintained.

As per de Tocqueville, it is the private interests of

these injured providers which alone is the means of

assailing the measures at bar which are prejudicial to

the Union, (namely, continual violation by defendants

of Section 30(A) and the 42 U.S.C. § 1396a(a) re-

quirement that the State comply with the State Plan

approved by CMS).

Inclusion, rather than rejection of the Medicaid

provider plaintiffs should therefore be the preferred

goal of the Court, so as, by deeming that providers

have standing and a cause of action, the Court can

fulfill its constitutional mission of preserving the

federalism system, despite the obvious gaming of the

system, by (1) the payments below the standard

approved by CMS, in violation of Section 30(A), and

(2) the complicity failure of CMS to enforce the Medi-

caid Act by cutting off funding to Idaho’s Medicaid

program.

23

Conclusion as to the federalism cause of action

For the above reasons, the within federalism

cause of action should be affirmed by the Court.

IV. The objections of the Petitioners that the

State’s acceptance of federal funding sub-

ject to the conditions of the Medicaid Act,

constitutes a mere “contract,” in which

Medicaid beneficiaries are mere “inciden-

tal beneficiaries of a contract,” is irrele-

vant to the case made by the Respondents.

Again the Petitioners misperceive the nature of

an implied Supremacy Clause cause of action.

First

In a Supremacy Clause action, the preempting

federal statute strips the officer of all authority and

power to do the preempted acts complained of. The

essence of the decree is the absence of all power in the

defendant to adversely affect (i.e., injure) the plaintiff

by the lawless acts complained of, not, whether the

plaintiff was intended by the preempting statute or

some putative “contract” to be benefitted.

Second

In Golden State, 493 U.S. at 118, Kennedy, J.,

dissenting, stated that the immunity afforded the taxi

company by the stripping of the city, by the NLRA, of

all authority and power to interfere in the labor

24

dispute between the company and the union, “does

not benefit the company as an individual, but,

instead results from the Supremacy Clause’s separate

protection of the federal structure and from the

division of power in the constitutional system.”

Thus, it makes no difference whatsoever in the

Supremacy Clause claim of the plaintiffs, whether

Congress in Section 30{A), or the “parties” to the

“contract” intended to benefit Medicaid providers:

because the source of the immunity afforded the

plaintiffs is not the existence of any “right” created in

them by Section 30(A) or the putative “contract,” but,

rather, the Supremacy Clause’s protection of the

federal structure by striking down and rendering void

the preempted State action in question: which in turn

renders the Directors powerless to implement the

preempted State action of paying less than required

by Section 30(A), including, paying less than the rates

specified in the State Plan approved by CMS.

Conclusion on this point

For the above reasons it is irrelevant, in an

implied Supremacy Clause cause of action, whether

or not the plaintiffs were intended beneficiaries of the

preempting federal law (here, Section 30(A)), or of

some “contract” between the Government and the

State.

25

V. The all-inclusive wording of the Supremacy

Clause repels the construction proposed:

that only “pre-enforcement” causes of ac-

tion exist under the Supremacy Clause.

The words of the Supremacy Clause are clear:

they include all preemption suits to prevent injury to

a person from a State’s violation of a supreme federal

law, such as Section 30(A), not, just “pre-enforcement”

suits in those limited cases in which the plaintiff’s

conduct is regulated by a State government.

Thus the Supremacy Clause states:

This Constitution, and the Laws of the Unit-

ed States which shall be made in pursuance

thereof; and all Treaties made, or which shall

be made, under the Authority of the United

States, shall be the supreme Law of the Land;

and the Judges in every State shall be bound

thereby; any Thing in the Constitution or

Laws of any State to the Contrary notwith-

standing. (Emphasis supplied).

There being no words of limitation or exception

from this clear sentence, it follows that the Clause

applies to all preemption suits in equity which seek a

remedy to prevent being injured from a State’s viola-

tion of a federal law, not, just to some preemption

suits —i.e., to only so-called “pre-enforcement suits.”

Because this defense is contradictory to the plain

meaning of the words of the Supremacy Clause, it

should be rejected on this basis alone.

26

Also, the fundamental rule is that the judicial

power extends to all cases arising under the constitu-

tion. Marbury v. Madison, 5 U.S. at 178.

Hence the judicial power of the Court cannot be

withdrawn in respect to any class of Supremacy

Clause preemptive suits — which is what the Director

and the United States are asking the Court to do.

VI. The Court has ruled directly cpposite of

this unsupported new theory of the Peti-

tioners and the Government: that only

“pre-enforcement” causes of action exist

under the Supremacy Clause.

Kennedy, J., dissenting, approved a preemption

suit in Golden State, 475 U.S. at 119, in which the

preempting statute, the NLRA, regulated the defend-

ant’s conduct, not, the plaintiff’s conduct.

The Court in Rosado, 397 U.S. at 421, issued

equitable relief in respect to a preemptive Supremacy

Clause cause of action, which regulated defendant’s

conduct, not, the plaintiff’s conduct.

In that case the preempting law was a provision

of the Social Security Act, Title TV (AFDC) which

regulated the conduct of the State of New York, not

the plaintiff.”

* See, Rosado, 397 U.S. at 399; 414-15; 421. Concurrence:

Douglas J.:

(Continued on following page)

27

The Court in the Contract Clause Cases, issued

equitable relief in preemptive Supremacy Clause

actions in which the State, not the plaintiff, was

regulated. Board of Liquidation, 92 U.S. 531; Allen,

114 U.S. 311. Le., the Contract Clause prohibited the

State from interfering with contracts, and did not

regulate the successful plaintiffs at all.

These decisions and the view of Kennedy, J.,

refute the erroneous assertion that there is no

preemptive Supremacy Clause cause of action in the

universe except where the plaintiff sues to enjoin

State regulatory action which regulated the plain-

tiff’s conduct.

Vil. The claim that the Medicaid Act fore-

closed Supremacy Clause suits has al-

ready been rejected by the Court, several

times.

There is no evidence in the text or structure of

the Medicaid that Congress intended to specifically

foreclose any ability of beneficiaries or providers to

The claims below included the “statutory claim” that

“the State’s reduction in the overall level of payments

... Violated § 402(aX23) of the Social Security Act,” so

that the district court had pendent jurisdiction to de-

cide the federal law claim. (397 U.S.C. at 423-425).

Thus Rosado was a suit to enjoin State action in violation of

federal law, in respect to which the preempted State action had

nothing to do with regulating the conduct of the plaintiffs in that

case.

28

sue to obtain a remedy under any provision of the Act.

See Blessing v. Freestone, 520 U.S. 329, 346-348

(1997) (citing with approval holding in Wilder v.

Virginia Hospital Assn., 496 U.S. 498, 521 (1990),

that federal government’s power to reject state Medi-

caid plans or to withhold federal funding to States

whose plans did not comply with federal law, accom-

panied by limited state grievance procedures for

individuals, was insufficient to preclude reliance on a

cause of action for preemption.

Also, see, the seminal case of Rosado, 379 U.S. at

420:

We have considered and rejected the argu-

ment that a federal court is without power to

review state welfare provisions or prohibit

the use of federal funds by the States in view

of the fact that Congress has lodged in the

Department of HEW the power to cut off

federal funds for noncompliance with statu-

tory requirements. We are most reluctant to

assume Congress has closed the avenue of

effective judicial review to those individuals

most directly affected by the administration

of its program. Cf. Abbott Laboratories v.

Gardner, 387 U.S. 136, (1967); Association of

Data Processing Service Organizations uv.

Camp, 397 U.S. 150 (1970); Barlow v. Col-

lins, 397 U.S. 159 (1970). We adhere to King

v. Smith, 392 U.S. 309 (1968), which implicit-

ly rejected the argument that the statutory

provisions for HEW review of plans should

be read to curtail judicial relief.

°

29

CONCLUSION

First: This amicus brief addresses only the most

important issues in this case. We do not purport to

analyze all the other issues raised in this important

case.

Second: For the reasons given, the Court should

affirm the Ninth Circuit decision in this case in every

respect.

December 18, 2014.

Respectfully submitted,

LYNN S. CARMAN

203A Picnic Ave.

San Rafael, CA 94901

lynnscarman@hotmail.com

Telephone: 415-927-4023

Counsel for Amicus Curiae

Medicaid Defense Fund