Opposition Brief — Shoppers Food Warehouse MD Corp. v. Moreno

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No. 99-1738

In the

Supreme Court of the United States

CHILDREN'S SEASHORE HOUSE,

Petitioner,

Vv.

MICHELE K. GUHL, et al.,

Respondents.

On Petition for a Writ of Certiorari to the United

States Court of Appeals for the Third Circuit

BRIEF OF THE RESPONDENTS IN OPPOSITION TO

THE PETITION FOR A WRIT OF CERTIORARI

JOHN J. FARMER, JR.

ATTORNEY GENERAL OF NEW JERSEY

Attorney for Respondents

R.J. Hughes Justice Complex

PO BOX 112

Trenton, New Jersey 08625

(609) 633-1972

NANCY KAPLEN

Assistant Attorney General

RHONDA 5S. BERLINER-GOLD

Deputy Attorney General

Counsel of Record and On the Brief

QUESTION PRESENTED

Did the Court of Appeals for the Third Circuit and the

district court correctly determine that petitioner had no

standing to bring the 42 U.S.C. § 1983 complaint alleging

violation of the provisions of Title XIX of the Social Security

Act in regard to disproportionate share payments to out-of-

state hospitals.

TABLE OF CONTENTS

Page

CQUISSTBOIN PRRESSISINEMIE. 65 wo bec ccess i

TABLES OF CORRES 6 45 oer ee A ae ee ii

TABLE OF APWUGNEEL 6 6 dn 6¢ 665655 bw sad reins iii

TABLE OF AUTERUNEMEE Ss 0 6 6k bose ses cedes ili

STATUTORY PROVISIONS INVOLVED .......... ]

STATEDGENT OF THiS CAR. 6 nce ce ec teccs. 1

A. The Action and Decision Below ............ ]

B. Statutory Background................... 2

REASONS FOR DENYING THE WRIT........... 12

I. The Decision Below Correctly Determined That

CSH Had No Standing to Bring this Lawsuit... .14

A. Hospitals Are Not the Intended

RE 6 6 eres oe os ES 15

B. The BBA Does Not Impose a Binding

Obligation on the States to Make DSH

Payments to Hospitals ............. 15

C. The Obligation to Make DSH

Payments is too Vague to be

Judicially Enforced ............. 21

Il. There is No Irreconcilable Conflict Among

the Circuit Courts Meriting the Attention of

this Court in this Matter................ 23

ili

Ill. Social and Financial Significance Is Not a

Basis for Granting Certiorari............. 25

IV. There is no Need for this Court to Examine

this Matter on an Interlocutory Basis... ... . 26

CONCLUSION Pe a a arabe og eG gS aa So eee 27

TABLE OF APPENDIX

oN la

December 10, 1997 Letter to State Medicaid Directors

from Sally K. Richardson ................... 17a

35 Fed.Reg. at 10079....................... 20a

TABLE OF AUTHORITIES

Cases Cited:

American Construction Co. vy. Jacksonville,

T. & K. R. Co., 148 U.S. 372 ere 26

Blessing v. Freestone, 520 U.S. 329 (oo) ae 12,14,25

Blum v. Bacon, 457 U.S. 132 (1982)..... Rae as 20

Brotherhood of Locomotive Firemen v. Bangor &

Aroostook R. Co., 389 U.S. 327 i) a7

Chevron, U.S.A., Inc. v. Natural Resources Defense

Council, Inc., 467 U.S. 837 (1984)............ 18,20

Children's Hosp. and Health Ctr v. Belshe,

188 F.3d 1090 (9th Cir. 1999), petition for

certiorari filed, 68 U.S.L.W. 3595

(U.S. Mar. 9, 2000)(No. 99-1497).......... 13,19,23

Children's Seashore House v. Waldman,

197 F.3d 654 (Sd Cir. 1999). ........... 16,17,21,23

Golden State Transit Corp. v. Los Angeles,

Se Pere es eee 12,14

Good Samaritan Hosp. v. Shalala,

pS a ee ee ee ee ee 20

Hall v. Sullivan, 129 F.3d 113, 1997 WL 643921

Se ER a ee ee a ee Cee eo 23

Hamilton-Brown Shoe Co. v. Wolf Bros. & Co.,

ee ee ee cs eee eee bee ee 27

Harris v. McRae, 448 U.S. 297 (1980) ............. 2

HCMF Corp. v. Gilmore, 26 F.Supp.2d 873

Pee, Wy BEDS rae SG A al a 828 oS Aca 18

Landgraf v. USI Film Products, 511 U.S. 264

SN aos wc 5 ae Ge EEN alae a a eee 24,25

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

Pennhurst State School and Hospital v. Halderman,

* Va ee I so a ek ele Ge ae ae ees 14

Planned Parenthood Affiliates of Michigan v. Engles,

eg fo Ae | er rere 11

Queen of Angels/Hollywood Presbyterian Medical

Ctr. v. Shalala, 65 F.3d 1472 (9th Cir. 1995)..... 18,20

Rite Aid of Pennsylvania v. Houstoun, 171 F.3d 842

Cee a Ss ae ee se a a eee eae 3

Rosado v. Wyman, 397 U.S. 397 (1970)... ........ 20

Russello v. United States, 464 U.S. 16 ces 6a ee 19

Shalala v. Guernsey Mem. Hosp..,

WW WE. OF CHD. 6 ice ok son bon cdadbacal, 20

Thomas Jefferson Univ. v. Shalala, "

eR a es ee 20,21

Udall v. Tallman, 380 U.S. 1 (1965)... .. re ee 20,21

United States v. Congress of Industrial Organizations,

335 U.S. 106 (1948) ....................... 17

United States v. Stephens, 208 F.2d 105

a rN Ml ing. 19

United Wire, Metal & Machine Health and Welfare

Fund, et al. v. Morristown Memorial Hosp. , 793

F.Supp. 524 (D.N.J. 1992).................... 7

United Wire, etc. v. Morristown Memorial Hosp..,

995 F.2d 1179 (3rd Cir. 1993), cert. denied sub nom,

New Jersey Carpenters Welfare Fund v. Dunston,

510 U.S. 944 (1993)... 2... 7

West Virginia University Hospitals v. Casey, 885 F.2d

oe ee reer oe ee 4

Wilder v. Virginia Hospital Assoc.,

496 U.S. 498 (1990)... 2... 2... kk. 14,15,21-22

Will v. Michigan Dept. of State Police,

OP) US. TEN oo oon os wh occ. 1,25

Wright v. Roanoke Redevelopment and Housing

Authority, 479 U.S. 418 (1987)... .....0...008. 14

Statutes Cited:

S030. {0 2.3 es. eee 2

BVUELe. 1... ae 2,4

42 U.S.C. § 1396a(a)(5)..... OPO ree Ne he: 2

42 U.S.C. § Te oo i eee passim

USL. 19

USC. 42 eee 2

2 U.S.C. § Tee 64 kee ee ee passim

42 U.S.C. (19S Ree 16

42 U.S.C. § 1396e-40BIMA). 0. oo ee ce 18

42 U.S.C. § 1396r-4(c)(3)........ es enn ae 22-23

42. U.S.C. § 198MM... os ee 6,8,19

42 U.S.C. 4 19M. « 6 5 cnc eth eee 11,19

42 U.S.C. § 1396r-4((I)(A). oe eee ee eee 18

42 U.S.C. § 1396r-4(A(1)(A)()(b). . 2. ee ee ee 18

42 U.S.C. § 19064. os eA ee 19

42 U.2AL: 3 OR 4 48k een ee eee passim

Pub.L. No. 96-499, § 962(a).... 0... c ccc e cece ee. ;

Pub... Me. 97-26. 901 ce. ee 3

Vii

Pub. L. No. 100-203, TitleIV,§4112............. 6

Pub. L. No. 105-33, §4711(d)................. 10

Health Cue Reform Act of 1992, L. 1992, c. 160,

(Chapter 160), N.J.S.A. 26:2H-18.51 et — ee ee 7

N.J.S.A. 26:2H-18.51(c)........0.0........... 7

NJ.S.A. 26:2H-18.52. 2.0.00. eee. 7

N.J‘S.A. 26:2H-18.58(a).......2.0............. 8

N.J.S.A. 26:2H-18.58¢....................... 8

N.J.S.A. 26:2H-18.59.......0................ 8

N.J.S.A. 26:2H-18.59e....................... 8

N.J.S.A. 30:4D-3(c).. 2.020.000.0202... er

OM MONRO kee ss Sa cee. 2

si aisiniaiis walk Re OR ET EPO rola Ie 6

Regulations Cited:

beh hi die ins SE Oe 2

WOOT, FOIE os oo on ee 2

Te Ms GMM ok oro 8 484k Sd ee 26

42 C.P.R. § 490.33... cece 26

ek es. . 26

ie Sa Te 8 ee ee he ee eG 4-6

ee SS 6 5 52S eee eee aes 11

ee Re errr we Se ee eer an 8

Other Sources Cited:

ks SS SS eee eC ee Tee eer eee 17

H.R. Conf. Rep. No. 217., 105th Cong.,

BU Me SES ks x ok oo he ee ea eae 17

Come. Rec. 36305 (ume 25, 1997) . 2. cc ccs ae

QS Fed. Ree. SONG CAFES) ww i wes 3

45 Fed. Reg. SG009 (1963)... eee 4

So WOU. Ree. OTOOTS CIGD) «ok cc cee scene 12

GO Fo tiee. S42G5 COG). 6k ke eee cues 6

Bee TD. TRU CID 5 ov hs eee wee 11,24

pee ere re ee 11,24

STATUTORY PROVISIONS INVOLVED

Petitioner only set forth part of section 1923 of the

Social Security Act, codified at 42 U.S.C. § 1396r-4, in its

appendix. As the respondents refer to other portions of that

Statute in this brief, the entire section is reproduced at App.,

infra, la.

STATEMENT OF THE CASE

This interlocutory petition for a Writ of Certiorari

seeks to appeal part of the decision of the Court of Appeals

for the Third Circuit, finding that petitioner has no standing

under 42 U.S.C. § 1983 to bring this action based upon the

current hospital reimbursement provisions of Medicaid law.

A. The Action and Decision Below

The complaint in this matter was filed in the

federal district court for the District of New Jersey on May 8,

1998, after the Boren Amendment was repealed by Congress

and replaced by the Balanced Budget Act of 1997. It alleged

claims pursuant to 42 U.S.C. § 1983 for alleged violations of

Medicaid law and the Equal Protection Clause against officials

of the State of New Jersey acting in their official Capacity

only. Consequently, the only relief sought and available is

prospective injunctive relief, as any other relief would be

barred by the Eleventh Amendment. Will v. Michigan Dept.

of State Police, 491 U.S. 58 (1989).

On December 8, 1998, the district court granted

the State's motion to dismiss for failure to state a cause of

action. The district court held that Children's Seashore House

had no standing to bring its claim based upon Medicaid Law

and that its Equal Protection Clause claim was without merit.’

Children's Seashore House appealed to the United

States Court of Appeals for the Third Circuit. On November

' Children's Seashore House sought to amend its complaint to

add a claim pursuant to the Commerce Clause which was never addressed

by the district court.

30, 1999, the Third Circuit affirmed in part, reversed in part

and remanded the matter back to the district court. The Third

Circuit agreed with the district court that Children's Seashore

House did not have standing to pursue its claim premised on

the Medicaid Act, but found further fact finding was needed

on the Equal Protection claim. In addition, the Third Circuit

stated that on remand Children's Seashore House could renew

its motion to assert iis Commerce Clause claim. This matter

is currently pending before the district court on Petitioner's

claims pursuant to the Equal Protection Clause and the

Commerce Clause.

B. Statutory Background

The Medicaid program is a joint federal-state -

program designed to provide medical assistance to individuals

"whose income and resources are insufficient to meet the cost

of necessary medical services." 42 U.S.C. § 1396. Although

a State is not required to participate in the program, once a

state has been accepted into the program, it must comply with

the Medicaid statute and federal regulations. Harris v.

McRae, 448 U.S. 297 (1980). As required by 42 U.S.C. §

1396a(a)(5), the Department of Human Services (DHS) has

been designated as the single state agency responsible for

administering the Medicaid Program in New Jersey; the

Division of Medical Assistance and Health Services

(DMAHS) is charged with responsibility for the daily

operation of the program. N.J.S.A. 30:4D-3(c), 30:4D-5.

The State of New Jersey, in conformity with 42

U.S.C. § 1396a(a), must submit a State Plan to the United

States Department of Health and Human Services (HHS) for

approval. The State Plan describes the policy and methods

used to set payment rates for each type of service included in

the program in order to qualify for federal matching funds and

to ensure that its program conforms to federal requirements.

The State Plan, and any subsequent proposed amendment

(State Plan Amendment or SPA) must meet federal

requirements. 42 U.S.C. § 1396a(b); 42 C.F.R. §§ 430.10,

430.12. See Rite Aid of Pennsylvania v. Houstoun, 171 F.3d

842, 846 (3rd Cir. 1999). All initial State plans and

amendments are approved or disapproved by the Health Care

Financing Administration (HCFA), acting for the Secretary of

HHS.

Prior to legislation enacted by Congress in 1980

and 1981, certain institutional providers, including hospitals,

were reimbursed by state Medicaid agencies on a reasonable

cost basis, 48 Fed. Reg. 56046 (1983). The 1981 legislation

changed the standard for reimbursement of nursing and

intermediate care facilities. Pub.L. No. 96-499, § 962(a)

required that the rates paid to these providers through states’

Medicaid programs be "reasonable and adequate to meet the

costs which must be incurred by efficiently and economically

operated facilities." In 1981, the controlling statute, 42

U.S.C. § 1396a(a)(13)(A), was again amended to include

hospitals, and to require, inter alia, that states "take into

account the situation of hospitals which serve a

disproportionate number of low income patients with special

needs." Pub.L. No. 97-35, § 2173. This change is known as

the "Boren Amendment." As amended, Section

1396a(a)(13)(A) provided in relevant part as follows:

A State plan for medical assistance

must-- ... provide-- ... for payment

... Of the hospital ... services

provided under the plan through the

use of rates (determined in

accordance with methods and

standards developed by the State and

which, in the case of hospitals, take

into account the situation of hospitals

which serve a _ disproportionate

number of low income patients with

special needs ...) which the State

finds, and makes assurances

Satisfactory to the Secretary, are

reasonable and adequate to meet the

costs which must be incurred by

efficiently and economically operated

facilities in order to provide care and

services in conformity with applicable

State and Federal laws, regulations,

and quality and safety standards and

to assure that individuals eligible for

medical assistance have reasonable

access (taking into account

geographic location and reasonable

travel time) to inpatient hospital

services of adequate quality; and

such State makes further assurances,

satisfactory to the Secretary, for the

filing of uniform cost reports by each

hospital ... and periodic audits by the

State of such reports....42 U.S.C.A.

§ 1396a (West Supp.1989). [West

Virginia University Hospitals v.

Casey, 885 F.2d 11, 22 (3d Cir.

1989)].

Although the Secretary of Health and Human

Services promulgated regulations designed to implement the

Boren Amendment, the regulations did not include explicit

criteria for federal review of states' methods and standards for

establishing payment rates. Such a list, the Secretary

concluded, might be viewed as imposing federal standards for

payments rates, and as such would have been contrary to

Congress’ intent, which placed the responsibility for

developing such rates upon the states, 48 Fed. Reg. 56049

(1983). The regulations only required that a State, in order

to receive HCFA approval of a State plan change in payment

methods and standards, must:

(a)...make assurances satisfactory to

HCFA that the requirements set forth

in paragraphs (b) through (i) of this

section are being met, must submit

the related information required by §

447.255 of this subpart, and must

comply with all other requirements of

this subpart.

(b) Findings. Whenever the

Medicaid agency makes a change in

its methods and standards, but not

less often than annually, the agency

must make the following findings:

(1) Payment rates.

(i) The Medicaid agency pays for

inpatient hospital services and long-

term care facility services through the

use of rates that are reasonable and

adequate to meet the costs that must

be incurred by efficiently and

economically operated providers to

provide services in conformity with

applicable State and Federal laws,

regulations, and quality and safety

standards.

(ti) With respect to inpatient hospital

services--

(A) The methods and standards used

to determine payment rates take into

account the situation of hospitals

which serve a _ disproportionate

number of low income patients with

special needs...[42 C.F.R. §

447.253].?

A subsequent statute, 42 U.S.C. § 1396r-4,

implementing the requirements of 42 U.S.C. §

1396a(a)(13)(A), was added by Congress on December 22,

1987. It required states to submit a SPA to the Secretary by

July 1, 1988, defining disproportionate share hospitals, and

providing for increased payments to those hospitals as of July

1, 1988. Pub. L. No. 100-203, Title IV, § 4112. °

On September 30, 1988, New Jersey submitted to

HCFA SPA 88-29, which was intended to comport with 42

U.S.C. § 1396r-4. This SPA covered disproportionate share

("DSH") payments to various types of hospitals. It indicated

that New Jersey had a statewide pooling arrangement in

accordance with 42 U.S.C. § 1396r-4(e), and stated that New

Jersey would "reimburse disproportionate share hospitals

located in a state other than New Jersey according to the

approved Title XIX (Medicaid) reimbursement methodology

in the state in which the hospital is located." SPA 88-29 was

? HCFA has proposed to amend the regulations to remove this

entire provision as it is inconsistent with the Balanced Budget Act of 1997,

discussed infra. 64 Fed.Reg. 54263 (1999).

> Also in 1988, several amendments were made to 42 U.S.C. §

1396r-4, adding language which created an exception to the original

requirements imposed by that statute. New Jersey and other states that

met certain criteria came under § 1396r-4(e), captioned "special rule,"

which permitted states to limit DSH payments to acute care hospitals

involved in a statewide “pooling arrangement." The statewide pooling

arrangement referred to in the "special rule" was a function of New

Jersey's unique hospital rate-setting system. At the time 42 U.S.C. §

1396r-4(e) was enacted, New Jersey hospital rates were set by statute,

under an "all-payor” system which set the rates charged by hospitals for

the various paying entities. L.1978 c. 83 (Chapter 83). This rate system

included a statewide pooling arrangement, whereby all hospitals collected

an assessment to reimburse those hospitals which paid for a

"disproportionate share" of "uncompensated care.”

PR renee oN NT RS Te

later split into four parts; the out-of-state portion was

designated as SPA 88-29(d).*

In 1992, New Jersey's hospital rate setting system

was invalidated by the decision in United Wire, Metal &

Machine Health and Welfare Fund, et al. v. Morristown

Memorial Hosp., 793 F.Supp. 524, (D.N.J. 1992), and the

system was replaced by the State Legislature.°

Under the Health Care Reform Act of 1992, L.

1992, c. 160, (Chapter 160), N.J.S.A. 26:2H-18.51 et seq.,

effective January 1, 1993, the State replaced the rate-setting

system with a deregulated, free market system by calendar

year 1994 (1993 served as a transition year). In enacting

Chapter 160, the Legislature recognized a "need to continue

this State's current system of providing disproportionate share

payments to hospitals in the State," and thus created a funding

source for the State's hospitals. N.J.S.A. 26:2H-18.51(c).

Under Chapter 160, disproportionate share hospitals are

designated as such by the Commissioner of Human Services.

N.J.S.A. 26:2H-18.52. The actual payment of the charity

care subsidy, because it constitutes a DSH payment, is done

through DMAHS, so that the State can then submit claims for

federal financial participation (FFP). While the exact

formulas for distributing charity care have changed on several

occasions since 1992, as the result of legislative amendments,

the basic concept has remained unchanged.

Charity care payments, including DSH payments,

are made from the Health Care Subsidy Fund created by

Chapter 160. The Fund is a “nonlapsing fund” dedicated for

* As explained infra at n.8, this SPA was superseded the same

day it was approved.

* The issue in United Wire was unrelated to any issues in this

matter. The decision in United Wire was overturned in United Wire, etc.

v. Morristown Memorial Hosp., 995 F.2d 1179 (3rd Cir. 1993), cert.

denied sub nom, New Jersey Carpenters Welfare Fund v. Dunston,

510 U.S. 944 (1993), but the State Legislature had already changed the

payment system.

use by the State to (among other things) distribute charity care

subsidy payments to hospitals. N.J.S.A. 26:2H-18.58(a).

Funding for these charity care payments currently comes from

several sources as determined by the Legislature. N.J.S.A.

26:2H-18.58(a), N.J.S.A. 26:2H-18.58c. In each year since

1993, the Legislature has provided a specific, set amount to

be distributed. This fund is distributed to in-state hospitals

pursuant to specific statutory formulas (which have varied

from year to year). The formulas do two things: first, they

identify which particular acute care hospitals will be eligible

in a given year, and second, they determine how the limited

subsidy amount for that year will be distributed among those

eligible hospitals. See N.J.S.A. 26:2H-18.59, and 59e. Not

every acute care hospital in the State is eligible for or receives

a charity care subsidy in a given year. Nor does the subsidy

act as a strict “reimbursement,” covering all of a hospital’s

charity care expenses. Rather, it represents a particular

hospital’s percentage of the limited State-wide subsidy

amount, as set by the Legislature for that year.

Certain hospitals also receive an additional DSH

payment adjustment from the Hospital Relief Subsidy Fund.

N.J.A.C. 10:52-8.2(a)(4). This additional payment is based

upon the facility’s percentage of clients with AIDS,

tuberculosis, substance abuse and addiction and complex

birth.

During the time that New Jersey was revising its

hospital rate setting methodology, and after it had been

informed by HCFA that it did not need to make DSH

payments to out-of-state hospitals,° the State stopped making

® DMAHS Director Saul M. Kilstein was informed by William

L. Engelhardt, Acting Associate Regional Administrator of HCFA, in a

letter dated June 21, 1993, that the State could, if it wished, withdraw

SPA 88-29(d) (which had not yet been approved by HCFA), because it

was not required to make DSH payments to hospitals outside of the State’s

DSH pool, pursuant to 42 U.S.C. § 1396r-4(e).

je payments to out-of-state hospitals, on or about July 1,

An amended SPA concerning, inter alia, DSH

payments to out-of-state hospitals, SPA 96-30, was submitted

to HCFA on or about September 30, 1996. This SPA was

subsequently divided into two separate SPAs, and the part that

concerned DSH payments to out-of-state hospitals was

redesignated as SPA 96-30B. That SPA states that “[tJhe

New Jersey Medicaid Program will not make disproportionate

share hospital payments to any facility located in a state other

than New Jersey.” It was approved by HCFA on June 30,

1997, and had an effective date of September 20, 1996.°

The most significant event for purposes of this

matter occurred on August 5, 1997 when President Clinton

signed the Balanced Budget Act of 1997 (BBA). Section 4711

of the BBA replaced the Boren requirements with a new

Section 1902(a)(13)(A) of the Social Security Act. The new

Statute requires the State plan to provide

(A) for a _ public process for

determination of rates of payment

under the plan for hospital services,

nursing facility services, and services

” On page 5 of its petition, Children's Seashore House asserts

the amount it believes it would have been entitled to in DSH payments

from New Jersey during fiscal years 1996-1999. These figures were

neither presented to the district court nor the Court of Appeals below and

the respondent contests the accuracy of those amounts. Moreover, the

complaint in this matter only seeks prospective relief, as the Eleventh

Amendment would bar any claim for retroactive monetary damages, and

the complaint was not filed until May 8, 1998, after the statutory changes

repealing the Boren Amendment.

. On that same date, June 30, 1997, HCFA also approved SPA

88-29(d), with an effective date July 1, 1988. However, SPA 88-29(d)

was immediately superseded by SPA 96-30B.

—

of intermediate care facilities for the

mentally retarded under which --

(i) proposed rates, the

methodologies underlying __ the |

establishment of such rates, and

justifications for the proposed rates

are published,

(ii) providers, beneficiaries

and their representatives, and other

concerned State residents are given a

reasonable opportunity for review and

comment on the proposed rates,

methodologies, and justifications,

heed odes

(ili) final rates, the

methodologies underlying __ the

establishment of such rates, and

justifications for such final rates are

published, and

(iv) in the case of hospitals,

such rates take into account (in a

manner consistent with section 1923)

the situation of hospitals which serve

a disproportionate number of low-

income patients with special needs...

[42 U.S.C. § 1936a(a)(13)(A)].”

Thus, the State no longer must make "findings" and

"assurances" to the Secretary that the remmbursement rates are

"reasonable and adequate" to meet the costs which must be

incurred by "efficiently and economically operated facilities"

* The BBA was signed into law on August 5, 1997, and these

provisions apply to services furnished on or after October 1, 1997. Pub.

L. No. 105-33, § 4711(d).

in order to provide care and services in conformity with

applicable laws, regulations and quality and safety standards

or to assure that individuals eligible for medical assistance

have "reasonable access" to inpatient hospital services of

adequate quality. Also removed is the requirement for

periodic audits.

The BBA also set state-specific DSH allotments.

Now codified at 42 U.S.C. § 1396r-4(f), states’ DSH

allotments were changed so that set amounts are provided

each year beginning with Fiscal Year 1998. Congress

reached a decision about how much each individual state was

entitled to receive and there is no evidence that it included in

its calculations that any state be required to give away

Significant portions of its DSH allotment to other states.

After the enactment of the BBA and in accord

with the public process requirements of the BBA, the State

adopted a regulation, N.J.A.C. 10:52-4.4(b), which provides

that “[t]he Division shall not reimburse out-of-State hospitals

for disproportionate share hospital (DSH) payments even if

the DSH payments are included in the Claim-specific

reimbursement methodology approved by the State Medicaid

agency in the state in which the hospital is located."

N.J.A.C. 10:52-4.4(b) was proposed on April 6, 1998, 30

N.J.R. 1258(a), and adopted on June 18, 1998, effective July

20, 1998, 30 N.J.R. 2653(a), following the public comment

period.'°

‘© The State did not actually have to comply with the public

notice requirements. HCFA has interpreted the Statutory language of the

BBA to mean that States are not required to subject their existing rates to

a public process. See, December 10, 1997 letter to State Medicaid

Directors, from Sally K. Richardson, 18a. This interpretation is entitled

to deference. See, e.g., Planned Parenthood Affiliates of Michigan v.

Engles, 73 F.3d 634 (6th Cir. 1996), discussing a similar letter from Sally

K. Richardson which was also sent to all state Medicaid Directors, and

noting that the court would “accord deference to this reasonable agency

interpretation of the statutory requirements of Medicaid" (Jd. at 638,

Citations omitted).

REASONS FOR DENYING WRIT

In this case, petitioner Children's Seashore House

("CSH") is not challenging the rates it receives for treating

Medicaid recipients from New Jersey as inadequate. Rather,

petitioner is challenging New Jersey's refusal to give it an

extra payment, known as a DSH payment.'' The DSH

payment is not payment for services rendered and is not

related to medical care. Rather, it is a subsidy to compensate

a qualifying hospital for the high percentage of otherwise

uncompensated care provided by the hospital. Petitioner

already receives a DSH payment from its home state,

Pennsylvania, which must take into account all charity care

provided by CSH, including those charity care patients it

treats from other states. 55 Fed.Reg. at 10079 (1990), 21a.

The courts below correctly held that CSH did not

have standing to pursue this 42 U.S.C. § 1983 action

predicated upon an alleged violation of Medicaid law.

Following the repeal of the Boren Amendment, the new

statutory scheme does not impose a binding obligation on

New Jersey to make any "payments" to hospitals. The only

requirement is that the State have "a public process" for

determination of rates of payment. Consequently, as the

three-prong test enunciated by this court in Golden State

Transit Corp. v. Los Angeles, 493 U.S. 103, 106 (1989) and

Blessing v. Freestone, 520 U.S. 329, 340-41 (1997), to

determine whether a plaintiff has standing to bring this action

has not been met, the courts below properly dismissed the

claim, and there is no basis for granting certiorari.

In addition, petitioner posits a split in authority

based upon this case and the Ninth Circuit's split decision in

'' Petitioner's allegation in foomote 9 on page 13 of its petition

that it recently reduced its licensed inpatient beds due to Medicaid

reimbursement reductions was never presented to the district court nor the

Court of Appeals below and the respondent does not admit that this is an

established fact. Moreover, this matter only concerns DSH payments, not

payment rates in general.

Children's Hosp. and Health Ctr v. Belshe, 188 F.3d 1090

(9th Cir. 1999), petition for certiorari filed, 68 U.S.L.W.

3595 (U.S. Mar. 9, 2000)(No. 99-1497). However, the

matter in the Ninth Circuit was Originally filed in 1995,

before the enactment of the BBA. In contrast, the case at bar

was filed in May 1998, after the enactment of the BBA, and

the petitioner waived its argument that the Boren Amendment

still applied on appeal to the circuit court. Moreover, the

Ninth Circuit never addressed the Standing issue present in

this matter. In addition, contrary to California, New Jersey

followed the public process required by the BBA. Therefore,

under either the Ninth Circuit's analysis or the Third Circuit's

analysis, the result would be the same and there is no

irreconcilable split meriting the attention of this Court.

Finally, the circuit court did not apply the BBA retroactively

as this matter was filed after the BBA was in effect.

Consequently, a circuit court decision as to whether hospitals

can continue to sue under the repealed-Boren Amendment is

irrelevant to the case at bar.

Furthermore, petitioner's argument regarding the

"social and financial" need for a private cause of action to

enforce the DSH provisions is not an adequate reason to grant

certiorari. Hospitals do not have Standing to sue pursuant to

§ 1983 in accordance with the well-established test for making

such determination. Consequently, there is no basis for

granting certiorari based upon public policy considerations

best left to the legislative action.

Lastly, this is an appeal of an interlocutory order.

The matter is currently Proceeding in the district court

following the remand by the Third Circuit. There is no

pressing need for this Court to hear this matter on an

interlocutory basis.

I. The Decision Below Correctly Determined That CSH

Had No Standing to Bring this Lawsuit

The courts below correctly held that CSH does not

have standing to bring this lawsuit pursuant to 42 U.S.C. §

1983. Consequently, this petition is without merit.

"Section 1983 provides a cause of action for ‘the

deprivation of any rights, privileges, or immunities secured

by the Constitution and laws' of the United States." Wilder

v. Virginia Hospital Assoc., 496 U.S. 498, 508 (1990).

Section 1983 provides a cause of action for violations of

federal statutes as well as the Constitution. Maine v.

Thiboutot, 448 U.S. 1, 4 (1980). However, a plaintiff will

not be permitted to sue under § 1983 where the statute does

not create enforceable rights, privileges or immunities within

the meaning of § 1983 or where Congress has foreclosed such

enforcement in the statute in the enactment itself. Wright v.

Roanoke Redevelopment and Housing Authority, 479 U.S.

418, 423 (1987).

In order to determine whether a federal law

creates a "federal right" that is enforceable under § 1983,

courts apply a three-prong test. First, the court must

determine whether "the provision in question was intend[ed]

to benefit the putative plaintiff." Golden State Transit Corp.

v. Los Angeles, 493 U.S. 103, 106 (1989) (citations and

internal quotations omitted). Second, if the provision was

intended to benefit the putative plaintiff, the court must

determine whether the provision merely reflects a

"congressional preference" for a certain kind of conduct

rather than a binding obligation on the governmental unit.

Only a binding obligation is enforceable. Pennhurst State

School and Hospital v. Halderman, 451 U.S. 1, 19 (1981).

Third, there is no enforceable right where the interest the

plaintiff asserts is "'too vague and amorphous'” such that it is

""beyond the competence of the judiciary to enforce." Golden

State, supra, 493 U.S. at 106, quoting Wright, supra, 479

U.S. at 431-32. See also Blessing v. Freestone, 520 U.S. 329,

340-41 (1997).

A. Hospitals Are Not the Intended Beneficiary

Applying the three-prong test in this Case, it is

Clear that health care providers are no longer the intended

beneficiaries of the reimbursement system. Contrary to the

prior language of the Boren Amendment which required the

state plan to provide for "payment," Wilder, 496 U.S. at 510,

the new legislative scheme only requires the state plan to

provide for "a public process" for determinations of rates of

payment. 42 U.S.C. § 1396a(a)(13)(A). Thus, the first

prong of the three prong test -- that health care providers are

the intended beneficiaries -- is not met.”

B. The BBA Does Not Impose a Binding Obligation on

the States to Make DSH Payments to Hospitals

Even assuming arguendo that the first prong could

be met, the second prong -- whether the legislative scheme

imposes a binding obligation on the States -- cannot be met.

First, the only binding obligation imposed by the new scheme

is to have a "public process" in place. 42 U.S.C. §

1396a(a)(13)(A). While that process includes publication of

Proposed and final rates, along with the underlying

methodologies for establishing those rates and the

justifications for those rates, there is no requirement as there

was with the Boren Amendment that the states make findings

and assurances that the rates are "reasonable and adequate."

As stated by the Third Circuit

2 Even if health care providers are still intended beneficiaries,

the State does not concede that out-of-state Providers, as opposed to in-

State providers, are the intended beneficiaries. Indeed, as set forth below,

HCFA has taken the position that the hospital reimbursement provisions

do not apply to out-of-state providers.

[Bly replacing the Boren Amendment

with a requirment that a State

establish a public process by which

its rates would be determined,

Congress has removed a party's

ability to enforce any substantive

right. [Children's Seashore House v.

Waldman, 197 F.3d 654, 659 (3d

Cir. 1999) (citations omitted)].

Nor does 42 U.S.C. § 1396r-4 create a binding

obligation on the States. Again, as the Third Circuit noted,

[42 U.S.C. §1396]r-4 imposes neither

procedural nor substantive

requirements on a state that provide a

basis for CSH to press its claims.

Rather, r-4 is a definitional provision

that describes certain procedures that

a state must satisfy, such as

submitting a qualifying plan to the

Secretary of Health and Human

Services by a certain date to establish

an adequate state disproportionate

Share hospital adjustment plan. 42

U.S.C. § 1396r-4(a). Moreover, r-4

sets the parameters of what is a DSH,

what constitutes an adequate payment

adjustment, and what limits are

placed on federal financial

participation and on state allotments

for each year. We are satisfied that

CSH cannot predicate its claim on

these provisions. [Children's

Seashore House, 197 F.3d at 659-

60].

The legislative history of the BBA makes Clear

that in repealing the Boren Amendment, Congress intended to

foreclose further lawsuits against the states. CSH's assertions

to the contrary notwithstanding, the amendment was designed

to free states from excessive federal Oversight, and to

eliminate the use of the Boren Amendment by hospitals and

nursing facilities as a basis for seeking judicial review as to

the adequacy of the rates established by the states. The House

Report explicitly declared, “It is the Committee intention that,

following enactment of this Act, neither this nor any other

Provision of Section 1902 will be interpreted as establishing

a cause of action for hospitals and nursing facilities relative to

the adequacy of the rates they receive.” H.R. Rep. No. 110-

149, at 591. That report also noted that under the Boren

Amendment, “[a] number of courts found that state systems

failed to meet the test of reasonableness and some states have

had to increase payments to these providers as a result of

these judicial interpretations." H.R. Rep. No. 149, supra, at

591, accord, H.R. Conf. Rep. No. 217., 105th Cong., Ist

Sess. 867 (1997). “The Boren amendment has produced

endless lawsuits ... Repealing the Boren amendment takes it

out of the courts.” Cong. Rec. $6305 (June 25, 1997),

Statement of Sen. Gramm.

House Conference Report No. 105-217 of July 30,

1997, the House/Senate conference agreement dealing with

the Boren Amendment, taken as a whole, demonstrates a clear

intent to repeal the Boren Amendment, and does not support

the interpretation given by petitioner. The statement of the

current law in the House Report (prior to the adoption of the

BBA) acknowledges that courts were invalidating states’

plans, and both the House and Senate reports state the intent

to repeal the Boren Amendment. See generally United States

v. Congress of Industrial Organizations, 335 U.S. 106, 112-

13 (1948)(remedial laws are to be interpreted in light of

previous experience and prior enactments).

Contrary to petitioner's argument that the BBA

strengthened the DSH provisions, the final version of the

BBA did not adopt the language of the House version which

specifically required that states take into account the situation

of hospitals that serve a disproportionate number of low-

income patients with special needs, and make assurances that

the average level of payments made to hospitals would not

drop for an 18 month period. A fair reading of the legislative

history supports the State's position that the BBA was

intended to limit suits brought under the Boren Amendment.

HCMF Corp. v. Gilmore, 26 F.Supp.2d 873, 879 (W.D.

Virginia 1998) ("The Balanced Budget Act of 1997 replaced

the repealed Boren Amendments standard with a public notice

process for states to follow in setting payment rates. There

can be but one reasonable conclusion from Congress's action:

Congress precluded a right of action under § 1983 for

reimbursement claims for services rendered on or after

October 1.")

Even if there is a binding obligation to make DSH

payments to in-state hospitals, the language of § 1396r-4

simply does not indicate any requirement to make DSH

payments to out-of-state providers. It is well settled that “[i}n

Statutory interpretation, the starting point is always ‘the

language [of the statute] itself.”” Queen of Angels/Hollywood

Presbyterian Medical Ctr. v. Shalala, 65 F.3d 1472, 1477

(9th Cir. 1995)(citations omitted). Under step one of the now

familiar two-part test enunciated in Chevron, U.S.A., Inc. v.

Natural Resources Defense Council, Inc., 467 U.S. 837, 842-

43 (1984), a reviewing court first determines “whether

Congress has spoken directly to the precise question at issue.”

Id. at 842. If the intent of Congress is clear, that ends the

inquiry, because both the Court and the Secretary “must give

effect to the unambiguously expressed intent of Congress.”

Id. at 842-43.

The language of § 1396r-4 nowhere indicates any

requirement that out-of-state providers should be considered

in implementing the statute. To the contrary, it refers to

hospitals “in the state,” 42 U.S.C. § 1396r-4(b)(1)(A),

(defining a DSH institution); hospitals “in a state,” 42 U.S.C.

§ 1396r-4(f)(1)(A); the “statewide” arithmatic mean, 42

U.S.C. § 1396r-4(f)(1)(A)(I)(b); the utilization rate “for all

hospitals in the state” 42 U.S.C. § 1396r-4(f)(1)(D); and in 42

U.S.C. § 1396r-4(e), the “statewide” pooling arrangement.

Especially significant is Congress’ determination when

enacting the BBA to provide for specific state limits on the

amount of DSH each state is entitled to receive. 42 U.S.C. §

1396r-4(f). If Congress’ intent was to include out-of-state

providers in these calculations, it could have made this point

explicitly as it did in § 1396a(a)(16), requiring coverage of

services provided to recipients outside of their home state.

"[W]here Congress includes particular language in one section

of a statute but omits it in another section of the same Act, it

is generally presumed that Congress acts intentionally and

purposely in the disparate inclusion or exclusion." Russello

v. United States, 464 U.S. 16, 23 (1983)(citations omitted).

The Court should not expand the coverage of the statute,

especially in light of the significant policy implications. See

United States v. Stephens, 208 F.2d 105, 107 (Sth Cir. 1953)

("[C]ourts cannot, upon the pretence [sic] of construing [a

Statute], enlarge its coverage to bring within it those not

expressly or by clear intendment embraced within its

terms.").

Moreover, the Secretary has interpreted § 1396r-4

not to apply to out-of-state providers. It is the Secretary’s

position that DSH payments need not be made to out-of-State

providers because the Medicaid statute does not require that

DSH payments be used for "medical assistance” or any other

Medicaid-related expenditure, but that the hospital can use the

money for any purpose. See Brief of United States as Amicus

Curiae, attorneys for the Secretary of Health and Human

Services, in Children's Hospital and Medical Center y.

Belshe, Docket No. C 95-1076 MHP (N.D. Cal.), at p.17

n.6. '° Further evidence of the Secretary's position on this

° In a split decision, the Ninth Circuit affirmed the district

court's opinion in that matter, finding that the Boren Amendment applied

to out-of-state providers notwithstanding the Secretary's interpretation to

the contrary. Children's Hospital and Health Center v. Belshe, 188 F.3d

1090 (9th Cir. 1999). A petition for a writ of certiorari is currently

issue is found in HCFA's acceptance of New Jersey's State

Plan Amendment specifically stating that New Iersey will not

make DSH payments to out-of-state hospitals."

Where Congress has not spoken to the precise

question at issue, “the question for the court is whether the

[Secretary’s interpretation] is based on a_ permissible

construction of the statute.” Chevron, 467 U.S. at 842-43;

Queen of Angels, 65 F.3d at 1477. A reviewing court need

not conclude that the Secretary’s interpretation of the statute

is the “only reasonable one, or even the ‘best’ one[,]” Queen

of Angels, 65 F.3d at 1477, and deference is due the

Secretary’s reasonable construction of a statute that she

administers. Id.; see also Rosado v. Wyman, 397 U.S. 397,

406-07 (1970). “Confronted with an ambiguous statutory

provision, we generally will defer to a permissible

interpretation espoused by the agency entrusted with its

implementation.” Good Samaritan Hosp. v. Shalala, 508

U.S. 402, 414 (1993) (citations omitted).

Similarly, where the Secretary’s interpretation of

her own regulations is reasonable, a reviewing court must

defer to that interpretation. Shalala v. Guernsey Mem. Hosp..,

514 U.S. 87, 94-95 (1995); see also Blum v. Bacon, 457 U.S.

132, 141 (1982)(“interpretation of any agency charged with

the administration of a statute is entitled to substantial

deference”); Thomas Jefferson Univ. v. Shalala, 512 U.S.

504, 512 (1994); Udall v. Tallman, 380 U.S. 1, 16

(1965)(“When the construction of an administrative regulation

rather than a statute is in issue, deference is even more clearly

in order.”). Accordingly, the Secretary’s administrative

interpretation of her regulations must be given “controlling

weight unless it is plainly erroneous or inconsistent with the

pending, 68 U.S.L.W. 3595 (U.S. Mar. 9, 2000)(No. 99-1497).

'* As HCFA explained in its Amicus brief in Children's Hospital

and Medical Center, its interpretation of the statute is that states can make

DSH payments to out-of-state providers, but they are not required to do

so.

regulation." Jd. at 16-17; accord Thomas Jefferson Univ.,

512 U.S. at 512.

Thus, as there is no Statutory requirement to make

DSH payments to out-of-state hospitals, this Court should

defer to the Secretary's interpretation. As the Third Circuit

noted, "federal approval of the amendment to the plan ...

could foreclose a statutory argument challenging the denial of

DSH payments." Children's Seashore House, 197 F.3d at

661.

C. The Obligation to Make DSH Payments is too

Vague to be Judicially Enforced

Lastly, CSH also cannot meet the third prong of

the test -- that the obligation is not too vague and amorphous

to be judicially enforced. There simply is no longer any

requirement in the statute and implementing regulations that

the State make elaborate “findings” in order to give

“assurances” to HCFA when seeking approval of a rate

change. Contrary to the Boren Amendment requirements,

there are no specific procedural or substantive requirements

which must be met in either 42 U.S.C. § 1396a(a)(13)(A) or

42 U.S.C. § 1396r-4, or any payment standard contained

within.

Under Wilder, the Supreme Court relied upon the

specificity of considerations that the states had to review

contained in the Boren Amendment, and measured the states’

compliance against a benchmark of “reasonable and adequate”

rates:

[T]he statute and regulation set out

factors which a State must consider in

adopting its rates. For example,

when determining methods for

calculating rates that are reasonably

related to the costs of an efficient

hospital, a State must consider: (1)

the unique situation (financial and

otherwise) of a hospital that serves a

disproportionate number of low

income patients, (2) the statutory

requirements for adequate care in a

nursing home, and (3) the special

situation of hospitals providing

inpatient care when long-term care at

a nursing home would be sufficient

but is unavailable. 42 U.S.C. §

1396a(a)(13)(A) (1982 ed., Supp. V).

In addition, the statute requires the

State, in making its findings, to judge

the reasonableness of its rates against

the objective benchmark of an

"efficiently and economically

operated facilit[y]" providing care in

compliance with federal and state

standards while at the same time

ensuring "reasonable access" to

eligible participants. [Wilder, 496

U.S. at 519, and n. 17].

It is abundantly clear that with the repeal of the Boren

Amendment, states are no longer required to review a laundry

list of considerations and measure whether an efficient facility

would be adequately reimbursed.

CSH argues that the criteria in 42 U.S.C. § 1396r-

4 requiring a payment adjustment for DSH hospitals

evidences Congress’ intent that it should receive a DSH

payment from New Jersey in addition to what it receives from

Pennsylvania. Not only is there no statutory language which

requires a state to make DSH payments to out-of-state

providers, the statute does not even require any specific level

of payment to any hospital, whether in-state or out-of-state.

For example, a state can pay “a minimum specified additional

payment” as long as the payment is “reasonably related” to

“costs, volume, or proportion of services.” 42 U.S.C. §

1396r-4(c)(3). This standard is Clearly too vague and

amorphous to be judicially enforced.

Having failed to establish the three prongs of the

test for standing, it is clear that CSH has no Standing to bring

this action challenging New Jersey's failure to make out-of-

state DSH payments as part of its hospital reimbursement

scheme. Consequently, the decisions below were correct and

there is no basis for granting this petition for a writ of

certiorari.

II. There Is No Irreconcilable Conflict Among the Circuit

Courts Meriting the Attention of this Court in this

Matter.

Petitioner posits that certiorari should be granted

because there is a conflict among the circuit courts as to

whether hospitals may continue to seek recourse against states

following the repeal of the Boren Amendment. However,

there is no irreconcilable conflict meriting the attention of this

Court.

The alleged conflict arises from the Ninth

Circuit's decision in Children's Hosp. and Health Ctr. y.

Belshe, supra, 188 F.3d 1090, wherein the court held that

California must either have payment methodologies that had

been validly determined under the Boren Amendment or that

complied with the new public process requirements of the

BBA. Id. at 1095. California did not adopt rates in

compliance with the public notice requirements of the BBA.

Therefore, the Ninth Circuit evaluated the rates to see if they

complied with the Boren Amendment.

In contrast, the Third Circuit in deciding this

matter did not apply the Boren Amendment and looked solely

to the BBA. Children's Seashore House, 197 F.3d at 659.

'° The other case cited by petitioner, Mall v. Sullivan, 129 F.3d

113, 1997 WL 643921 (2d Cir. 1997), is an unpublished opinion. In that

matter the parties agreed that as of whatever date the Boren Amendment

Unlike the Ninth Circuit case, this matter was filed after the

Boren Amendment was repealed and the BBA was already in

effect. Moreover, on appeal to the circuit court, CSH

abandoned its argument that the Boren Amendment applied to

this matter and argued solely that the BBA and § 1923 gave

rise to standing. Consequently, there is no basis for this Court

to grant certiorari on the issue of whether the Boren

Amendment still applies.

Furthermore, the Ninth Circuit did not even

address the standing issue which is the basis of the Third

Circuit's decision. The Ninth Circuit did not examine the

three-prong test or make any determination as to whether the

plaintiffs had standing to bring the suit under 42 U.S.C. §

1983. Thus, there is no direct legal conflict between the two

decisions.

Additionally, even under the holding of the Ninth

Circuit case, the ultimate outcome of this matter would not be

different because New Jersey complied with the public notice

requirements of the BBA. Contrary to California, following

the enactment of the BBA, New Jersey complied with the new

public process requirements of the BBA when it proposed an

administrative regulation on April 6, 1998, which was

adopted on June 18, 1998. 30 NJR 1258(a); 30 NJR 2653(a).

Consequently, under either circuit court's analysis, the Boren

Amendment is inapplicable and only the BBA applies to a

determination of the issue.

Lastly, petitioner's argument based upon

Landgraf v. USI Film Products, 511 U.S. 264 (1994), that the

BBA should not be applied retroactively is equally

unpersuasive. First, the BBA is not being applied

retroactively because New Jersey complied with the BBA's

public notice requirements after the BBA was enacted.

Moreover, this case was filed after the BBA was enacted and

after New Jersey complied with the BBA's requirements,

was repealed, the appeal would be moot because there cannot be

prospective relief to enforce requirements that have been repealed.

making the BBA the law in effect when the operative acts

occurred. Further, as this Court noted in Landgraf, "[t}he

first rule is that 'a court is to apply the law in effect at the

time it renders its decision.'" Jd. at 264 (citation omitted).

This is especially appropriate when the intervening statute

authorizes or affects the Propriety of prospective relief. Jd.

at 275. In the case at bar, the only relief available is

Prospective injunctive relief.'° Consequently, the court below

was correct in applying the law in effect at the time it

rendered its decision, which is the BBA.

Therefore, there is no need for this Court to grant

certiorari in this case. The ultimate outcome would be the

same whether analyzed based on the Third Circuit's decision

or Ninth Circuit's decision. Moreover, the two cases are

factually distinct and the reasoning utilized by the Third

Circuit below complies with this Court's decision in

Landgraf.

III. Social and Financial Significance Is Not a Basis for

Granting Certiorari

Petitioner asserts that this Court should grant

certiorari because DSH payments "implicate significant

portions of state and federal budgets" and because there needs

to be a method to ensure that states follow the requirements of

§ 1396r-4. However, these are policy issues that are best left

to Congress.

Balancing the social and financial concerns raised

by petitioner with the concerns faced by states under the

Boren Amendment, Congress enacted the BBA. As noted

above, the BBA does not require the payments petitioner

seeks. Instead of seeking relief in the appropriate forum, i.e.

Congress, petitioner is asking this Court to intervene in a

in their official capacity Only. Therefore, the Eleventh Amendment bars

any monetary relief. Will v. Michigan Dept. of State Police, 491 U.S. 58

(1989)

policy, rather than legal, issue. Certiorari is simply

unwarranted in such a case. |

Furthermore, it is respectfully submitted that these

policy factors do not change the analysis of whether § 1396r-4

creates a private cause of action. The test is not whether it

would be a good thing to allow hospitals to contest their DSH

payments. Rather, the test is whether the statute was intended

to benefit the plaintiff; whether the provision imposes an

unambiguous binding obligation; and whether the interest

asserted is too vague and amorphous such that it is beyond the

competence of the judiciary to enforce. Blessing, supra, 520

U.S. at 340-41. As demonstrated above in Point I, § 1396r-4

fails this test.

In addition, a private right of action is not

necessary to ensure that states meet the requirements of §

1396r-4. The federal government still has oversight authority

to make sure that states comply with federal law, and HCFA

could take measures against any state that violated the

provisions of § 1396r-4, including withholding payments. See

42 C.F.R. §§ 430.32, 430.33 and 430.35.

In sum, the "social and financial" considerations

raised by petitioner do not warrant review of this matter by

this Court, especially since the matter was correctly decided

by the court below.

IV. There is no Need for this Court to Examine this

Matter on an Interlocutory Basis

This matter is currently pending in the district

court following the remand by the Third Circuit.

Consequently, this appeal is of an interlocutory order.

Ordinarily, this Court will not issue a writ of

certiorari to review an interlocutory order of the circuit court

of appeals "unless it is necessary to prevent extraordinary

inconvenience and embarrassment in the conduct of the

cause." American Construction Co. v. Jacksonville, T. & K.

R. Co., 148 U.S. 372, 384 (1893). "[E)}xcept in

extraordinary cases, the writ is not issued until final decree."

Hamilton-Brown Shoe Co. v. Wolf Bros. & Co., 240 U.S.

251, 258 (1916).

The remand of this matter back to the district

court by the circuit court is sufficient grounds for denial of

this petition. Ibid. See Brotherhood of Locomotive Firemen

v. Bangor & Aroostook R. Co., 389 U.S. 327, 328

(1967)(denying certiorari because the Court of Appeals

remanded the case, making it unripe for review). .

As there is no final order in this matter and no

unusual circumstances present in the case at bar, the petition

for a Writ of Certiorari should be denied.

CONCLUSION

For the foregoing reasons, the petition for a writ of

certiorari should be denied.

Respectfully submitted,

John J. Farmer, Jr.

Attorney General of New Jersey

Attorney for Respondents

Nancy Kaplen