Douglas v. Independent Living Center

In 2008, the California Assembly passed legislation altering the state’s Medicaid program. Independent Living is a group of pharmacies, health care providers, senior citizens’ groups, and beneficiaries of California’s Medicaid program, Medi-Cal. 

They seek to enjoin the California Department of Health Care Services Director from implementing state legislation reducing payments to certain medical service providers under Medi-Cal by ten percent. In the district court, they argued that the ten percent rate reduction violates title XIX of the federal Social Security Act, otherwise known as the Medicaid Act, and is therefore invalid under the Supremacy Clause.

The District Court for the Central District of California issued a preliminary injunction in favor of Independent Living, and the Director of the California Department of Health Care Service appealed to the Ninth Circuit. The court of appeals upheld the injunction, finding that the district court did not abuse its discretion because the Director failed to rely on responsible cost studies, created by it and others, in determining the effects of the rate cuts on the efficiency, economy, quality, and access to care before implementing the statutorily mandated cuts. The Ninth Circuit had previously found this to be a requirement in Orthopaedic Hospital v. Belshe.

The Director appealed to the Supreme Court and cert. was granted to answer the question whether this private group of Medicaid recipients and providers may maintain a cause of action under the Supremacy Clause to enforce the specific provision of the Medicaid Act at issue in this case – §20(A) – by asserting that the provision preempts a state law that may reduce payments to providers.

Petitioner argued that private parties cannot enforce § 30 (A) because Congress has not created a private cause of action to enforce the statute, and a private right of action should not be read into the statute because to do so would contravene congressional intent.

The Director asserted that, “[t]he Ninth Circuit, along with virtually all of the circuits to have considered the issue since [the Supreme] Court’s decision in Gonzaga University v. Doe, … concluded that this provision is not privately enforceable by providers or beneficiaries … because it does not confer any ‘rights’ on providers or beneficiaries, and because it requires balancing of indeterminate and potentially conflicting policy objectives that are ‘ill-suited’ for judicial enforcement.” Petitioner argued that, although those cases involved claims under § 1983, respondents cannot circumvent the circuit’s past precedent by bringing their claims under the Supremacy Clause, which itself should not support a cause of action.

Respondent’s brief, which nears 70 pages, not including the table of contents and authorities, provides a lengthy host of arguments for the basis of a cause of action arising out of the Supremacy Clause. At one point, respondents even quote from Alexis de Tocqueville’s Democracy in America.

Respondents’ argument begins by highlighting the substantive arguments they won in the lower courts. They also provide a lengthy section detailing the history of the Medicaid Act and litigation relating to § 30(A). They assert that individual claimants have brought litigation relating to § 30(A) in decades past in sufficient numbers that Congress’s silence on the issue amounts to congressional approval of the cause of action. In essence, they claim that their claim does not arise from a theory of enforcement of a right, instead it comes from the threat of an impending injury, namely the harm to the Medicaid system in California that they claim will arise from enforcing the California Assembly’s legislation.

Due to the importance this case has in determining the future of the scope of judicial oversight of the Medicaid system, a sizable number of parties have filed amicus briefs including the Solicitor General’s office, a collection of 31 states, and the National Governorvs Association in support of the petitioner and members of Congress, the Chamber of Commerce, the ACLU, and the AARP in support of the respondent.