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

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## Record

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

## Text

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

---

Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385016_0330%3A20. Public record. Not legal advice.