Amicus Curiae Brief — Douglas v. California Pharmacists Association, (2009) (No. 1158)

RECORD

AND Nos. 09-958, 09-1158, and 10-283... ___. —

BRIEFS . wail

IN THE ee ae

Supreme Court of the Mnited Stress

i S- E TPK

TOBY DOUGLAS, Director of the Department of Health

Care Services, State of California,

Petitioner,

Vv.

INDEPENDENT LIVING CENTER OF SOUTHERN CALIFORNIA,

INcC., A Nonprofit Corporation,

TOBY DOUGLAS, Director of the Department of Health

Care Services, State of California,

Petitioner,

v.

CALIFORNIA PHARMACISTS ASSOCIATION, et al.,

TOBY DOUGLAS, Director of the Department of Health

Care Services, State of California,

Petitioner,

v.

SANTA ROSA MEMORIAL HOSPITAL, et al.,

On Writ of Certiorari to the United States

Court of Appeals for the Ninth Circuit

BRIEF OF MEMBERS OF CONGRESS AS AMICT

CURIAEIN SUPPORT OF RESPONDENTS

PAUL M. SMITH

Counsel of Record

MATTHEW S. HELLMAN

CAROLINE D. LOPEZ

JENNER & BLOCK LLP

1099 New York Avenue, NW

Washington, DC 20001

(202) 639-6000

mith@je . .

August 5, 2011 psmith@jenner.com rary of Congress

Law Library

i

TABLE OF CONTENTS

Ee SIRI TI sei cssseacives tases ccnsececduresscebcensan i

pe OP A igs 5 oy. Se ero iii

INTEREST OF AMICT CURTAE............0.0.0..cc00cseeeeees l

bj PS by gal tt) | | 4. y ee 2

IE ofikncctnndcciecacabavsndebnkadsnsdbelebeteciiabaniesadyednaes 5

I. Congress Has Relied On This Court’s

Long Tradition Of Allowing Private Suits

For Equitable Relief Under The

I I iii icccaiceecisekecdaniniennetnanteoeenns 5

ll. That Section 30A’s Obligations Arise

Under The Spending Clause Makes

Them More, Not Less, Suitable For

Enforcement Under The Supremacy

_* RR REPEAT Tet AEN CRRA 1]

A. This Court Has _ Consistently

Permitted Preemption Claims

Seeking To Enforce Obligations

Incurred Under The Spending

I sisal Fiackabnkididemiedis inudesiddumiibsidbipniieeds 12

B. A Remedy Under The Supremacy

Clause Is Particularly Useful In

- Spending Clause Caseg......................c000000. 13

ii

C. Congress Intends The Ultimate

Beneficiaries Of Spending Clause

Funds To Be Able To Obtain

Equitable Relief When A State Fails

To Comply With Its Obligations.............. 16

lll. The History of Section 30A Demonstrates

With Particular Clarity That Congress

Did Not Intend To Foreclose Actions

Under The Supremacy Clause............................. 21

CI I cscnsiensncebavanecsevscesisonsccseesminenansseesescnnes 24

TABLE OF AUTHORITIES

CASES

Arizona Public Service Co. v. Snead, 441

i ee Tal gishdcdadiuldnmoadinas 9

Arkansas Department of Health and

Human Services v. Ahilborn, 547 U.S.

a aa ade 12

Barnett Bank of Marton County, NA. v.

De BAS GE, ae HD vets bse ssdcincesctscceccnocs 9

Blum v. Bacon, 457 U.S. 132 (1982).........0.....00.0.. 12

California Federal Savings & Loan Ass'n v.

Guerra, 479 U.S. 272 (1987)...........ccccecccceeveceeeee 9

City of Walla Walla v. Walla Walla Water

i ee i 6

Cort v. Ash, 422 U.S. 66 (1975) .............. PALA BSS ERE 8

Crosby v. National Foreign Trade Council,

Se Re SD icsisissecsncibericcsconsbianansianesnes 6, 9

Dalton v. Little Rock Family Planning

Services, 516 U.S. 474 (1996) ...............:::00eee 12

Douglas v. Seacoast Products, Inc., 431 U.S.

LEE ES STS gS aia ee ees eA 9

Edelman v. Jordan, 415 U.S. 651 (1974).............. 10

Florida Lime & Avocado Growers, Inc. v.

pos gt | ree 6

Gade v. National Solid Wastes Management

a, He Ge Te CE sisitiseceniccevisiciiievesmenaiccinns 9

iv

Golden State Transit Corp. v. City of Los

Angeles, 493 U.S. 103 (1989)...........0..cccccccceccoees 4

Helvering v. Davis, 301 U.S. 619 (1937) ................ 2

/tel Containers International Corp. v.

Huddleston, 507 U.S. 60 (1993) ......000 oo. 9

Jones v. Rath Packing Co., 430 U.S. 519

RETR NER airs le PLEMENT LOL ES Oe ea a

Lawrence County v. Lead-Deadwood Schoo!

District No. 40-1, 469 U.S. 256 (1985) ............ 12

Lorillard Tobacco Co. v. Rerlly, 533 U.S. 525

HEPAT ERR AA IS is Cee ee 4

Malone v. White Motor Corp., 435 U.S. 497

IIIs a Lithciaithlinspietileectsccicachguasephausleaisbtianantadessadecssc, 4

Memphis Bank & Trust Co. v. Garner, 459

I MN ii s)

Microsoft Corp. v. 141 Limited Partnership,

F_UN eer 6

Northwest Central Pipeline Corp. v. State

Corporation Commission of Kansas, 489

Si 9

Ohio Bureau of Employment Services v.

Hodory, 431 U.S. 471 (1977) oo... cccccccccccccceceeeeee. 9

Osborn v. Bank .of the United States, 22

U.S. (9 Wheat.) 738 (1824) 0.0.0.0... ccccccccccccceeee 6

Pennhurst State School & Hospital v.

Halderman, 451 U.S. 1 (1981)................... 19, 20

PhRMA v. Walsh, 538 U.S. 644 (20093)............ 4,12

Vv

Puerto Rico Department of Consumer

Affairs v. Isla Petroleum soa 485 US.

SI incic- caccreymaiecaceasenonrmsacdcpisaésacotieticeorenseons cS)

Ray v. Atlantic Richfield Co., 435 U.S. 151

EER EPR svar vie nyo o LOE ECCS 9

Rosado v. Wyman, 397 U.S. 397 (1970) ......... 13, 14

Scheidler v. National Organization for

Women, Inc., 537 U.S. 393 (2003).............0000.... 5

Shaw v. Delta Air Lines, Inc., 463 U.S. 85

REE eel oe ot ee nS SRS 6

South Dakota v. Yankton Sioux Tribe, 522

ee rasasdeeambomn Bbjoakedens 5

State v. Wilson, 11 U.S. (7 Cranch) 164

RENEE ier ecg rena tere Oar ie aD 6

United States v. County of Fresno, 429 U.S.

I ee ee ee eee 9

Verizon Maryland, Inc. v. Public Service

Commission of Maryland, 535 U.S. 635

SING Uicinstisacitussiaabieeboastiosnieiakmdnammenaanameaeenescs 10

Wilder v. Virginia Hospital Ass'n, 496 U. S.

ri octcuicesbectceminaaiacieiabesunienisnoes 13, 21, 22

Ex parte Young, 209 U.S. 123 (1908)................ 9-10

STATUTES

I a aecaeee ee es econ oe 8

TE, A sien ecsn cess on nenecenesceesoxss-

Personal Responsibility and Work

Opportunity Reconciliation Act of 1996,

Pub. L. No. 104-193, 110 Stat. 2105 ............... 22

vi

Pub. L. No. 105-33, § 4711(a), 111 Stat. 251......

LEGISLATIVE MATERIALS

H.R. 2491, 104th Cong. (1995)...0000000.....ccococoe.

H.R. REP. NO. 105-149 (1997) .......00000000

Governors’ Perspective on Medicaid.

Hearing Before the Senate Committee

on Finance, 105th Cong. (1997) ....................

Medicaid Reform: The Governors’ View,

Hearing Before Subcommittee on Health

and Environment of the House

Committee on Energy & Commerce,

DOs Camas Ca ivsctiisicsseconicccetioateeenn

S. 1956, 104th Cong. (1996) ....... 0. ccccccccceseceseesees

OTHER AUTHORITIES

Brief for the United States as Amicus

Curiae, California Department of

Human Resources Development v. Java,

402 U.S. 121 (1971) (No. 70-507), 1971

Wie SETI issvinvnsciiiininsbesmenetaiatucioleaaeeae

Brief for the United States as Amiucus

Curiae, California Division of Labor

Standards Enforcement v. Dillingham

Construction, N.A., Inc., 519 U.S. 316

(1997) (No. 95-789), 1996 WL 340772...........

Brief for the United States as Amicus

Curiae, Carleson v. Remillard, 406 U.S.

598 (1972) (No. 70-250), 1971 WL

EE a HET RAS

23

vil

Brief for the United States as Amucus

Curiae, Crosby v. National Foreign

Trade Council, 530 U.S. 363 (2000) (No.

99-474), 2000 WL 194805... eee.

Brief for the United States as Amicus

Curiae, District of Columbia v. Greater

Washington Board of Trade, 506 U.S.

125 (1992) (No. 91-1326), 1992 WL

A iiniatiadhtbathesesectnédcsasccceccccesessse cece

Ann Devroy & Eric Pianin, Clinton Vetoes

GOP’s 7-year Balanced Budget Plan,

WASH. Post, Dec. 7, 1995, at Al ...........0.......

Jennifer Suttle, Cong. Research Serv., CRS

Report for Congress: Balanced Budget

Act of 1995: A Legislative History and

Brief Summary of H.R. 2491 (1996)..............

INTEREST OF AMICI CURIAE

Amici, Representative Henry A. Waxman,

Senator Max Baucus, House Minority Leader Nancy

Pelosi, Senate Majority Leader Harry Reid,

Representative George Miller, Senator Tom Harkin,

and Representative Sander M. Levin, are a group of

current Members of Congress who support private

rights of action for equitable relief in this context.

The personal experiences of amici, as Members of

Congress who have worked extensively on legislation

and oversight of Federal health programs, including

those authorized under Titles XVIII (Medicare) and

XIX (Medicaid) of the Social Security Act, provide

insight into Congress’ intent to preserve prospective

relief to vindicate the supremacy of the Medicaid Act

over contrary state legislation. Amici are uniquely

situated to do so.

Amici support the argument of Respondents that

Congress intended to preserve the private cause of

action for equitable relief to vindicate the supremacy

of Medicaid conditions over contrary state action.

Amici explain that Congress relied on this Court's

longstanding practice of hearing these causes of

action, except where statutes expressly barred them.

In contrast, the approach suggested by California

and the Solicitor General would upend centuries of

settled understanding and would undermine the

1 No person or entity other than amici and their counsel made a

monetary contribution to the preparation or submission of this

brief. Counsel of record for the parties have consented to the

filing of this brief, and letter of consent have been filed with the

clerk.

2

effectiveness of Medicaid. Amuci believe that such

suits are critical here to protect the intended

beneficiaries of Medicaid — the Medicaid recipients.

Allowing for prospective relief in this narrow context

supplements the agency's limited enforcement

resources, and can be a more effective measure than

using administrative means to cut off federal funding

to the program. Because Section 30A is no different

than any of the dozens of other Congressional

enactments that this Court has allowed to be

enforced through the Supremacy Clause, the

judgment below should be affirmed.

SUMMARY OF ARGUMENT

Nearly 75 years ago Justice Cardozo set forth the

basic principle that when “[federal] money is spent to

promote the general welfare, the concept of welfare

or the opposite is shaped by Congress, not the

states.” Helvering v. Davis, 301 U.S. 619, 645 (1937).

This case implicates not only that venerable

principle, but one of even older vintage: the right to

seek equitable relief under the Supremacy Clause

against state law that is inconsistent with

Congressional enactments.

In the posture this case comes to the Court, it is

undisputed that California has not complied with its

obligations to fund the Medicaid program that

Congress enacted and that California agreed to

administer. It is equally undisputed that for nearly

200 years, this Court has heard claims under the

Supremacy Clause seeking prospective relief based

on preemption of inconsistent state law without ever

3

requiring an express cause of action from Congress

to do so.

Now California, joined by the Solicitor General,

asks this Court to hold for the first time that Section

30A is not enforceable in a private suit seeking

equitable relief. This Court should reject that

position for four reasons.

First, Congress has relied on this Court’s

unbroken practice of permitting suits for equitable

relief under the Supremacy Clause. Congress is fully

capable of stating when it does not want to allow a

private cause of action. And it is fully capable of

stating when it does not want an enactment to be

construed as displacing state law. But when

Congress does not so state, it has long understood

that an action for equitable relief will be available to

individuals harmed by state law that is inconsistent

with federal law. California’s broad argument that

such relief is available only when Congress has

provided an express cause of action is irreconcilable

with the many cases from this Court allowing such

relief without ever requiring the plaintiff to identify

a right of action. And it is also irreconcilable with

this Court’s practice of presuming that equitable

relief is available under Ex parte Young unless

Congress affirmatively indicates otherwise. See infra

Part I.

Second, the efforts of California and the Solicitor

General to distinguish Section 30A on the ground

that it imposes obligations under the Spending

Clause are unavailing. This Court has routinely

allowed Supremacy Clause actions to enforce

4

obligations incurred under the Spending Clause.

Indeed, this Court not long ago affirmed the

availability of that very relief in a case in which the

plaintiffs argued that state regulation was

preempted by Medicaid. See PhRMA v. Walsh, 538

U.S. 644, 662-74 (2003). But more than that, the

Spending Clause context provides greater reason, not

less, to allow preemption actions. California and the

Solicitor General assert that the proper remedy here

is for the United States to cut off funding to a state

that does not comply with its Medicaid obligations.

But that would only dramatically exacerbate the

problems of Medicaid recipients in California. In

contrast, allowing private attorneys general to

supplement the agency’s enforcement powers

provides a remedy that is consistent with Congress’s

goals and vindicates the supremacy of federal law.

See infra Part ILA &B.

Third, California and the Solicitor General are

wrong when they contend that a preemption claim is

improper here because Respondents are seeking a

benefit rather than invoking an immunity. When a

state receives federal funds, Congress is equally

concerned that a state comply with a// the conditions

attached to those funds, whether they be a limitation

on how a state may regulate, or an obligation to

provide a certain standard of benefits. See infra

Part II.C.

Fourth, the argument that there is no right to

enforce Section 30A under the Supremacy Clause is

particularly weak because Congress has repeatedly

debated whether to eliminate Section 30A and/or bar

private rights of action, and it has consistently

5

refused to do so, even as it has eliminated other

rights-giving provisions in Medicaid. See infra Part

III. Congress has expressly chosen to maintain

Section 30A knowing full well that it provides

enforceable rights. This Court should not override

that decision, particularly when doing so would

require overturning two centuries of case law.

ARGUMENT

I. CONGRESS HAS RELIED ON THIS COURT'S

LONG TRADITION OF ALLOWING PRIVATE

SUITS FOR EQUITABLE RELIEF UNDER THE

SUPREMACY CLAUSE.

When Congress legislates, it does so with an

understanding of the legal principles that will govern

the interpretation of what it enacts. Asmici can attest

to the truth of that statement based on their

extensive legislative experience. And it is correct as

well as a matter of law under this Court’s well-

settled doctrines. See, e.g., South Dakota v. Yankton

Sioux Tribe, 522 U.S. 329, 351 (1998) (“We assume

that Congress is aware of existing law when it passes

legislation.”) (quoting Miles v. Apex Marine Corp.,

498 U.S. 19, 32, (1990)). For example, when

Congress uses terms drawn from the common law,

this Court understands that usage _ indicates

Congress’s intent to incorporate the terms’ common

law gloss. E.g. Scheidler v. Nat’? Org. for Women,

Inc., 537 U.S. 393, 402 (2003). Likewise, when

Congress chooses not to amend a statute in the face

of a judicial construction, it can be presumed to have

acceded to the interpretation this Court articulated.

6

E.g., Microsoft Corp. v. 141 Ltd. P’ship, 131 S. Ct.

2238, 2252 (2011).

The question in this case is whether Congress

intended to allow suits under the Supremacy Clause

to remedy state law inconsistent with the obligations

imposed by Section 30A of the Medicaid Act. And

for 200 years this Court’s decisions have indicated

that such relief is available to vindicate the

supremacy of federal law in the absence of an

express provision to the contrary. The line of

authority establishing this proposition encompasses

some of this Court's most seminal cases, both

longstanding and of more recent vintage, concerning

the preeminence of federal authority. See, e.g., State

v. Wilson, 11 U.S. (7 Cranch) 164, 166 (1812) (suit

initially brought in state court challenging state tax

as unconstitutional under Contracts Clause); Osborn

v. Bank of the United States, 22 U.S. (9 Wheat.) 738

(1824) (suit to enjoin state tax as unconstitutional

under Congress’s Article I power to constitute Bank

of United States); City of Walla Walla v. Walla Walla

Water Co. 172 U.S. 1 (1898) (finding tax

unconstitutional after considering only whether the

Court had jurisdiction); Fla. Lime & Avocado

Growers, Inc. v. Paul, 373 U.S. 132 (1963) (exercising

jurisdiction over private party claim that California

statute was preempted by federal regulation); Shaw

v. Delta Air Lines, Inc., 463 U.S. 85, 96 n.14 (1983)

(enjoining state law preempted by ERISA); Crosby v.

Nat’? Foreign Trade Council, 530 U.S. 363, 366

(2000) (enjoining state law restricting purchases

from Burma on preemption grounds).

7

Congress’s understanding that equitable relief is

available under the Supremacy Clause has been

bolstered by the consistent (until now) position taken

by the Executive Branch on this issue. Although the

Solicitor General now contends that it is unclear “if

.. @ private party can bring a federal nonstatutory

cause of action for equitable relief ... on preemption

grounds,” SG Br. at 16, the Executive has routinely

appeared in such cases in favor of federal

preemption, seeking the benefit of these private suits

to vindicate the supremacy of federal law. See, e.z.,

Brief for the United States as Amicus Curiae, Crosby

v. Nat? Foreign Trade Council, 530 U.S. 363 (2000)

(No. 99-474), 2000 WL 194805; Brief for the United

States as Amicus Curiae, District of Columbia v.

Greater Washington Bd. of Trade, 506 U.S. 125

(1992) (No. 91-1326), 1992 WL 12012049 (filing on

behalf of private plaintiffs seeking declaratory

judgment that state law is preempted by ERISA).

Indeed, even when the Solicitor General has

argued that the state law was not preempted by

federal law — thus arguing against private plaintiffs’

interest — the Executive never suggested the

plaintiffs’ lack of a cause of action. See, e.g., Brief for

the United..States as Amicus Curiae, Cal. Div. of

Labor Standards Enforcement v. Dillingham Constr.,

NA., Inc., 619 U.S. 316 (1997) (No. 95-789), 1996 WL

340772 (atguing against federal preemption where

plaintiffs sought declaratory judgment that ERISA

preempted state enforcement action, but failing to

raise cause of action question); Brief for the United

States as Amicus Curiae, Carleson v. Remillard, 406

U.S. 598 (1971) (No. 70-250), 1971 WL 133367

8

(opposing private plaintiffs on Social Security Act

preemption of state welfare regulation, but not

addressing cause of action); Brief for the United

States as Amicus Curtae, Cal. Dep’t of Human Res.

Dev. v. Java, 402 U.S. 121 (1971) (No. 70-507), 1971

WL 147066 (same).

Put simply, Congress is fully capable of saying

when it does not wish to provide a cause of action to

individuals. See, eg., 6 U.S.C. § 134 (“Nothing in

this part may be construed to create a private right

of action ... .”). Congress is also fully capable of

stating when federal law is not intended to preempt

state regulation. See, e.g., 29 U.S.C. § 1144(b)(2)(A)

(“(Nlothing in this subchapter shall be construed to

exempt or relieve any person from any law of any

State which regulates insurance... .”). But when

Congress imposes obligations that do not contain

limiting language of that sort, it relies on this

Court’s venerable practice of permitting suits to

enjoin state laws that are preempted by federal law.

Against this background, it is thus remarkable

that California’s lead argument is that Section 30A’s

absence of an express right of action signifies that

Congress “intended” to foreclose relief under the

Supremacy Clause. Pet’r Br. 20-33. This Court has

never required an express cause of action in its

Supremacy Clause cases. To the contrary, this Court

has remained steadfastly open to suits for purely

prospective relief as a critical but limited safeguard,

even while becoming more guarded against suits that

seek monetary relief. For example, since this Court

held in Cort v. Ash, 422 U.S. 66 (1975), that it would

apply a more stringent test for implying rights of

9

action in federal statutes, there have been no fewer

than nine cases in which this Court has upheld

injunctive relief under the Supremacy Clause.2 See,

e.g., Lorillard Tobacco Co. v. Reilly, 533 U.S. 525

(2001); Crosby v. Nat7 Foreign Trade Council, 530

U.S. 363 (2000); Barnett Bank of Marion Cnty., N.A.

v. Nelson, 517 U.S. 25 (1996); Gade v. Nat7 Solid

Wastes Mgmt. Ass'n, 505 U.S. 88 (1992); Memphis

Bank & Trust Co. v. Garner, 459 U.S. 392 (1983):

Ariz. Pub. Serv. Co. v. Snead, 441 U.S. 141 (1979);

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

Douglas v. Seacoast Prods., Inc., 431 U.S. 265 (1977);

Jones v. Rath Packing Co., 430 U.S. 519 (1977); see

also Golden State Transit Corp. v. City of Los

Angeles, 493 U.S. 103, 119 (1989) (even where

Section 1983 relief is unavailable, “plaintiffs may

vindicate [their] pre-emption claims by seeking

declaratory and equitable relief in federal district

courts through their powers under federal

jurisdictional statutes”) (Kennedy, J., dissenting).

Instead, a comparison to the E#x parte Young

doctrine is highly pertinent. See Ex parte Young,

2 During that period there were also at least seven such cases

in which this Court found that injunctive relief was

unwarranted. See, e.g. Itel Containers Int? Corp. v.

Huddleston, 507 U.S. 60 (1993); Northwest Cent. Pipeline Corp.

v. State Corp. Comm'n of Kan., 489 U.S. 493 (1989); Puerto Rico

Dep't of Consumer Affairs v. Isla Petroleum Corp., 485 U.S. 495

(1988); Cal. Fed. Sav. & Loan Ass'n v. Guerra, 479 U.S. 272

(1987); Malone v. White Motor Corp., 435 U.S. 497 (1978); Ohio

Bureau of Empl. Servs. v. Hodory, 431 U.S. 471 (1977); United

States v. County of Fresno, 429 U.S. 452 (1977). In not one of

those cases did the Court express doubt about the existence of a

cause of action in the first place.

10

209 U.S. 123 (1908). Far from requiring an express

authorization to pursue injunctive relief under £x

parte Young, this Court presumes that Congress

intends such relief to be available absent a clear

indication by Congress to the contrary. E.g., Verizon

Md., Inc. v. Pub. Serv. Comm'n of Md., 535 U.S. 635,

647 (2002) (allowing plaintiff to pursue relief under

Ex parte Young because statute did not “display any

intent to foreclose” that relief).

California and the Solicitor General apparently

recognize this anomaly, and indeed the Solicitor

General concedes in a footnote late in its brief that it

“is not suggesting that Congress has ‘displayed an

intent not to provide the more complete and more

immediate relief that would otherwise be available

under Ex parte Young.” SG Br. 32 n.12 (quoting

Verizon, 535 U.S. at 647) (internal quotation marks

omitted). Despite this concession, the Solicitor

General appears to contend Ex parte Young is not

relevant here because “(s]ome have described Young”

as permitting only a “defenslive]” action to prevent a

state from bringing its own punitive action against

the Young plaintiff. SG Br. at 19. Accord Pet’r Br.

at 41. But Ex parte Young is not so limited. Such

suits may be brought to compel state action required

by federal law, and not just to enjoin punitive action.

In the highly analogous case of Edelman v. Jordan,

for example, this Court explained that x parte

Young could be used to compel state officials to

comply with the federal time limits for processing

and paying applicants for a federal-state aid program

on a prospective basis. 415 U.S. 651, 655-56, 664-66

& n.11 (1974). The availability of injunctive relief

ll

was presumed there, even though the Court made no

mention of any private righi of action. The same

result should hold here.

Accordingly, because this Court has never

required an express cause of action to seek

preemption under the Supremacy Clause, and indeed

has consistently presumed that such relief would

always be available under Ex parte Young, this

Court should not disrupt Congress's expectations by

ruling that Section 30A does not permit private

enforcement under Supremacy Clause just because

Congress did not provide an express right of action to

do so.

Ul. THAT SECTION 30A’S OBLIGATIONS ARISE

UNDER THE SPENDING CLAUSE MAKES

THEM MORE, NOT LESS, SUITABLE FOR

ENFORCEMENT UNDER THE SUPREMACY

CLAUSE.

California and the Solicitor General contend that

because Section 30A’s obligations arise under

Congress’s Spending Clause authority they are

inappropriate for enforcement through the

Supremacy Clause. From amiuc/s perspective, that

conclusion does not follow. When a state or local

entity agrees to accept federal funds, it is obligated

to use those funds in the manner required by

Congress and to comply with any and all conditions

put on the funds. As we explain, allowing such suits

both comports with this Court’s past practice and

with common sense.

12

A. This Court Has Consistently Permitted

Preemption Claims Seeking To Enforce

Obligations Incurred Under The Spending

Clause.

At the outset, it is important to recognize that

notwithstanding the assertions of California and the

Solicitor General, this Court has never treated

Spending Clause obligations differently in allowing

claims to proceed under the Supremacy Clause.

When Congress exercises its Spending Clause

powers, inconsistent state law must give way under

the Supremacy Clause, just as it must to any other

enactment of Congress. See, e.g., Lawrence Cnty. v.

Lead-Deadwood Sch. Dist. No. 40-1, 469 U.S. 256,

258 (1985) (holding that the Payment in Lieu of

Taxes Act preempted state rules mandating how

local governments used the moneys); Blum v. Bacon,

457 U.S. 132, 138 (1982) (holding that federal

regulations pursuant to the Emergency Assistance

Program, which is federally funded under the Social

Security Act, preempted state provisions regarding

emergency assistance).

Indeed, this Court has heard numerous

preemption challenges to state law under Medicaid

itself. See Ark. Dep't of Health & Human Servs. v.

Ahlborn, 547 U.S. 268, 279-80 (2006) (holding that

Medicaid preempted state laws regarding liens on

settlement agreements); PARMA, 538 U.S. at 662-74

(examining whether a preliminary injunction was

appropriate where state action was allegedly

preempted by Medicaid); Da/ton v. Little Rock

Family Planning Servs., 516 U.S. 474, 475 (1996)

(per curiam) (discussing proper scope of injunctive

13

relief while declining to grant certification on the

question whether the Hyde Amendment preempted

contrary state laws).

B. A Remedy Under The Supremacy Clause Is

Particularly Useful In Spending Clause Cases.

Despite the many cases allowing Spending Clause

challenges, California and the Solicitor General

argue that the only proper remedy is for the federal

government to withhold funds from states that fail to

comply with relevant federal law. Having reserved

to the federal government the remedy of cutting off

Medicaid funds (the argument goes), Congress must

not have intended that the ultimate beneficiaries of

those funds be able to sue when states take action

inconsistent with federal law.

That argument turns the purpose of Medicaid on

its head. Medicaid is a federal program “through

which the Federal Government provides financial

assistance to States so that they may furnish medical

care to needy individuals.” Wilder v. Va. Hosp.

Ass'n, 496 U. S. 498, 502 (1990). Withholding federal

funding would make it even less likely that those

“needy individuals” would receive the medical care a

state agreed to provide.

This Court considered a similar situation in

Rosado v. Wyman, where it heard a lawsuit by

individuals who received benefit payments from New

York as part of Congress’s Federal Aid To Families

with Depéndent Children program. 397 U.S. 397

(1970). The petitioner claimed that New York’s

method of distributing the benefits violated the

terms on which the federal government provided the

14

funds to New York. /d. at 399. In holding that the

petitioner had a right to proceed (and prevail),

Justice Harlan wrote for the Court:

We have considered and rejected the

argument 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 statutory

requirements. We are most reluctant to

assume Congress has closed the avenue

of effective judicial] review to those

individuals most directly affected »v the

administration of its program.

Id. at 420 (emphasis added).

So too here. Far from being unnecessary in

Spending Clause cases, allowing ffor private

attorneys general in this context is particularly

usefil to Congress. As the Solicitor General

recognized in opposing certiorari in this case, “[a]

system that relies solely on agency review may often

be less effective in ensuring the supremacy of federal

law than a system of agency review supplemented by

private enforcement.” SG Cert. Br. 19. Allowing for

private enforcement provides a middle ground

between doing nothing and cutting off funding. See

id. (citing Cannon v. Univ. of Chi., 441 U.S. 677, 705

(1979)). It assists executive agencies that may lack

the resources to enforce in every individual case the

obligations Congress imposes. It offers an alternate

15

avenue of relief to the months and even years of

delay between when a state implements cuts and

when the agency completes its review. It provides

some assurance that Congress’s objectives will be

realized even during administrations that may have

different enforcement priorities. And in this case in

particular, it provides impoverished Medicaid

patients and the medical providers who serve them a

means of redress in the court system that they would

often not have in the political battles over budget

cuts.

Put another way, there is no reason to think that

Congress would have limited enforcement of

Medicaid obligations to a remedy that would

terminate those obligations. California has been

accepting more than $20 billion in federal Medicaid

funds per year in exchange for its promise, among

other things, to ensure that needy patients had

access to health care. Congress authorized the

expenditure of those funds because it found that they

would serve important public interests. That

California has failed to adhere to its obligations is a

3 The delays in this case illustrate the problem. California

waited until three months after it began cutting funds to

submit its proposal to HHS. 09-958 Intervenor Resp. Br. 6.

Two months after this submission, HHS requested that

California submit additional information within 90 days. /d.

The Secretary finally disapproved the plan twenty months after

California failed to provide a response. /d Currently,

California is seeking reconsideration of this decision. Jd. at 7.

During this lengthy process, California has continued to

implement the cuts except to the extent that it has been

enjoined from doing so by the federal courts. Jd.

16

reason to compel it do so, not a reason to abandon

those interests by cutting off the program.

C. Congress Intends The Ultimate Beneficiaries

Of Spending Clause Funds To Be Able Tb

Obtain Equitable Relief When A State Fails To

Comply With Its Obligations.

California and the Solicitor General also offer a

cluster of arguments based on the fact that

Respondents are not directly regulated by Section

30A, and instead receive their benefits from the

state. Petr Br. at 46-48; SG Br. 16-24. These

arguments are offered in an apparent attempt to

distinguish this case from the many others allowing

relief under the Supremacy Clause, but they have no

bearing on what Congress should be presumed to

have intended.

The Solicitor General, for example, emphasizes

that Section 30A does not regulate respondents’

“primary conduct,” and that respondents are seeking

a benefit promised by federal law rather than an

“Immunity” from state regulation. SG Br. at 22.

California goes even further and contends that

“[plrinciples of supremacy, and of preemption

generally, have no application to allegations that a

state has failed to satisfy a federal funding

condition.” Pet’r Br. at 46.

But legislation, including Spending Clause

legislation, may bestow benefits or provide

immunities, and in both cases Congress intends that

17

those provisions be followed.4 A state is no more free

to withhold a benefit it agreed to bestow as a

condition of taking a grant of federal funds than it is

to violate the restrictive conditions attached to those

funds.

This Court’s recent decision in PhRMA v. Walsh

is instructive. In PARMA, a drug company trade

association sought injunctive relief against a state

that had imposed certain requirements on drug

companies. The trade association argued that the

state’s program was inconsistent with the obligations

it undertook as a condition of receiving Medicaid

funds, and therefore preempted by federal law. The

Solicitor General filed an amicus brief in favor of

preemption, and only two members of the Court

expressed any doubt that a private cause of action

was permissible in that context.

California does not mention the PARMA case

even though it was central to the reasoning of the

Court of Appeals. 10-283 Pet. App. 77-83. The

Solicitor General acknowledges that PARMA “could

4 For example, California simply does not address and the

Solicitor General has great difficulty in explaining how this

distinction works in light of this Court’s decision in Crosby. See

SG Br. 23 n.8. In attempting to classify Crosby as involving a

“defense,” the Solicitor General construes the deprivation of a

benefit in that case— eligibility to be awarded a state contract —

as a burden — the “exercise of the State’s authority to impose

and enforce what were essentially state regulatory standards.”

Id. But that simply collapses the purported distinction between

denying benefits and imposing burdens, and demonstrates that

the distinction cannot separate permissible Supremacy Clause

claims from impermissible ones.

18

arguably be described as similar” to this case, but

contends that it is distinguishable because “[t]he

question in PARMA was not whether the State had

complied with obligations imposed on it as a

condition of receiving federal Medicaid funds, but

whether the State’s use of Medicaid authority as a

tool to impose [restrictions] on drug manufacturers

... Was consistent with the Medicaid statute.” SG Br.

at 22, 24. But again, there is no reason to think that

Congress would be more inclined to allow a state to

fail to comply with “obligations imposed on it as a

condition of receiving federal funds” than it would to

allow a state to impose restrictions inconsistent with

those obligations.

California and the Solicitor General also advert to

contract analogies and contend that because the

states are the direct recipients of the federal funds,

the respondents in this case are reduced to third-

party beneficiaries who have no right to sue to

enforce compliance with the “contract.” SG Br. at 25-

26.

Amici respectfully disagree with this

characterization. To be sure, the states are critical

partners in providing care under Medicaid. But they

are not the intended beneficiaries of Medicaid.

Medicaid’s purpose is to ensure that poor people also

have access to basic medical care by guaranteeing

payment to medical providers for serving this

vulnerable population. And when a state fails to live

up to its responsibilities to these beneficiaries,

Congress intended to preserve the private cause of

action for injunctive relief under the Supremacy

19

Clause as a limited but critical safeguard for these

beneficiaries.

This Court’s decision in PennAurst State School &

Hospital v. Halderman, 451 U.S. 1 (1981), supports a

cause of action along precisely these lines, contrary

to California’s and the Solicitor General’s reading of

the case. Pet’ Br. 18, 46-48; SG Br. 27. Although

this Court determined that the federal statute at

issue did not create substantive rights to monetary

relief or “appropriate’ treatment in the ‘least

restrictive’ environment,” 451 U.S. at 11, 29, this

Court left open the possibility of injunctive relief.

The majority explained that they would not

“significantly differ” from (dissenting) Justice

White’s proposed remedy if the district court were to

find on remand that the state had failed to comply

with “federally imposed conditions,” id. at 30 n.23.

In turn, Justice White’s dissent made clear that the

only distinctive aspect of private suits under

Spending Clause statutes seeking to vindicate the

Supremacy Clause is the scope of the appropriate

injunctive relief. Jd. at 53-54 (White, J., dissenting).

Justice White explained that such injunctions

“cannot survive the State’s decision to terminate its

participation in the program.” Jd. This distinction

matches the scope of the remedy to the contours of

the preemption in these cases, which stretches orily

as far as the state’s acceptance of federal funding. It

comes into play after a determination on the merits:

it certainly does not serve as a threshold bar to suit.®

° To the extent the majority opinion can be read to limit the

remedy to offering the State a choice between assuming the

20

Nor are California and the Solicitor General

correct to argue that the “broad and non-specific”

nature of the obligations imposed by Section 30A

makes them inappropriate for an action seeking

preemption. In the first place, this critique goes not

to whether a cause of action exists in the first place,

but to the scope of judicial relief available, This

Court expressly limited the question presented in

this case only to the first issue, and thus the second

is not presented here.

Moreover, as the Solicitor General concedes,

Section 30A’s standards are enforceable in a judicial

action where a State disagrees with the Secretary’s

disapproval of a State plan or amendment. See SG

Br. at 31. If they are discernable in that context, it is

difficult to see how they are unenforceable in the

context of a private suit. Any remaining concerns

about the need for agency input should be allayed by

HHS’s commitment “to conducting a rulemaking

proceeding over the next year that will result in an

authoritative interpretation of Section

1396a(a)(30)(A).” See SG Cert. Br. 8. As always, the

agencys own interpretation will trump = an

inconsistent interpretation by a private party. See

id. at 19 (citing Nat7 Cable & Telecomms. Ass'n v.

Brand X Internet Servs., 545 U.S. 967, 983 (2005)).

additional cost of compliance or not using federal] funds, see id.

at 29, that is a question as to the scope of the remedy, not the

right to seek relief in the first place. In any case, the majority's

position is entirely consistent with the dissent’s explanation

that courts can only prospectively compel states to abide by

federal conditions so long as the state continues to accept

funding. See id. at 53-54 (White, J., dissenting).

21

.THE HISTORY OF # SECTION 30A

DEMONSTRATES WITH PARTICULAR

CLARITY THAT CONGRESS DID NOT INTEND

TO FORECLOSE ACTIONS UNDER THE

SUPREMACY CLAUSE.

That Petitioner and the Solicitor General would

argue that Section 30A should be the first statutory

provision ever to be found not to allow an action

under the Supremacy Clause is particularly odd

because the history of that provision demonstrates

that Congress consciously chose not to limit its

means of enforcement.

Section 30A in its current form dates back to

1989, and in the last 15 years it has been the subject

of repeated, but unsuccessful, efforts in Congress to

restrict private rights of action. These efforts

stemmed from an earlier ‘tecision by this Court,

Wilder, 496 U.S. at 509-10, which held that language

similar to Section 30A, known as the “Boren

Amendment” was enforceable under Section 1983.6

6 The Boren Amendment provided that

a State plan for medica] assistance must ... provide

... for payment ... of the hospital services, nursing

facility services, and services in an intermediate

care facility for the mentally retarded provided

under the plan through the use of rates

(determined in accordance with methods and

standard developed by the State ...) 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

22

Congress responded to this holding by considering

whether to bar a// private actions to enforce a state’s

payment rates under Medicaid, including those

under Section 30A. For example, in 1995, the

President vetoed Congress’ attempt to prohibit any

“cause of action” to enforce a state’s payment rates

under Medicaid, H.R. 2491, 104th Cong. § 7002(b)(4)

(1995).7 Congress did not attempt to override this

veto. See Jennifer Suttle, Cong. Research Serv., CRS

Report for Congress: Balanced Budget Act of 1995: A

Legislative History and Brief Summary of H.R. 2491

CRS-8 (1996). In 1996, the Senate initially

attempted to bar private suits again, but Congress

ultimately enacted a statute without any such

provision. Compare S. 1956, 104th Cong. § 1508

(1996) and Personal Responsibility and Work

Opportunity Reconciliation Act of 1996, Pub. L. No.

104-193, 110 Stat. 2105.

Congress ultimately repealed the Boren

Amendment in 1997, Pub. L. No. 105-33, § 4711(a),

111 Stat. 251, but it did mot repeal Section 30A, nor

did it add language restricting causes of action. This

was no oversight. At the same hearing in which

State and Federal laws, regulations, and quality

and safety standards and to assure that individuals

eligible for medical assistance have reasonable

access .. . to inpatient hospital services of adequate

quality.

496 U.S. at 502-03 (emphasis added) (ellipses in

original) (quoting 42 U.S.C. § 1396a(a)(13)(A) (1990)).

7 President Clinton vetoed H.R. 2491 on December 6, 1995. Ann

Devroy & Eric Pianin, Clinton Vetoes GOP's 7-year Balanced

Budget Plan, WASH. POST, Dec. 7, 1995, at Al.

23

Congress heard criticism of the Boren Amendment,

some witnesses also criticized litigation under

Section 30A, which they deemed a “Boren-like”

provision, see Medicaid Reform: The Governors’

View, Hearing of the H. Comm. on Commerce,

Subcomm. on Health and Envt, 105th Cong. 21

(1997) (prepared statement of Govs. Bob Miller and

Michael O. Leavitt); Governors’ Perspective on

Medicaid, Hearing Before the S. Comm. on Fin.,

105th Cong. 37 (1997) (prepared statement of Govs.

Bob Miller and Michael O. Leavitt).

California emphasizes that the accompanying

report of the House Committee on the Budget stated

that “lilt is the Committee’s intention that, following

enactment of this Act, neither this nor any other

provision of Section 1902 [the section containing

Section 30A] 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. 105-149, at 591 (1997). But that

report language does not track the actual text of the

statute, which contains no prohibition of causes of

action, and does not repeal Section 30A. And of

course, it is the text of the statute that must prevail

over a contrary passage of legislative history.

xt

Congress remains free to amend the Medicaid

statute to limit relief, shape relief, or to prohibit

private causes of action altogether as Congress has

done in other contexts when necessary. But there is

nothing about Section 30A that makes it different

from any of the other federal enactments that this

Court has permitted to be enforced under the

Supremacy Clause. California agreed to provide a

certain standard of benefits as a condition of

receiving federal funds, and consistent with this

Court’s precedents, it is subject to equitable action if

24

it fails to comply with those conditions.

For the foregoing reasons, the judgment of the

CONCLUSION

Ninth Circuit should be affirmed.

August 5, 2011

Respectfully submitted,

PAUL M. SMITH

Counsel of Record

MATTHEW S. HELLMAN

CAROLINE D. LOPEZ

JENNER & BLOCK LLP

1099 New York Avenue, NW

Washington, DC 20001

(202) 639-6000

psmith@jenner.com

Attorneys for Amici Curiae