Potentially significant Section 1983/ Preemption Medicaid Case Certified to Fifth Circuit
On March 30, the District Court for the Western District of Texas, El Paso Division, ended the first phase of what could turn out to be a significant litigation in the ongoing struggle to redraw the boundaries of individuals’ authority to enforce federal statutory requirements in court, in the wake of the Supreme Court’s decision in Gonzaga University v. Doe, 536 U.S. 273 (2002) and recent changes in the composition of the federal judiciary. The case is Equal Access for El Paso, Inc. v. Hawkins, 428 F.Supp.2d 585 (W.D. Tex). The likelihood that the case will prove of precedential consequence was increased, or at least accelerated, by the decision of District Judge Philip R. Martinez (Bush II) to certify his decision for interlocutory appeal to the Fifth Circuit Court of Appeals.On March 30, the District Court for the Western District of Texas, El Paso Division, ended the first phase of what could turn out to be a significant litigation in the ongoing struggle to redraw the boundaries of individuals’ authority to enforce federal statutory requirements in court, in the wake of the Supreme Court’s decision in Gonzaga University v. Doe, 536 U.S. 273 (2002) and recent changes in the composition of the federal judiciary. The case is Equal Access for El Paso, Inc. v. Hawkins, 2006 WL 897689 (W.D. Tex). The likelihood that the case will prove of precedential consequence was increased, or at least accelerated, by the decision of District Judge Philip R. Martinez (Bush II) to certify his decision for interlocutory appeal to the Fifth Circuit Court of Appeals.
Equal Access of El Paso involves an action by a group of the same name, on behalf of itself and its members, individual Medicaid recipients, and Medicaid providers in El Paso. They alleged that low Medicaid payment rates prescribed by Texas’ Health and Human Services Commission (HHSC) violate various provisions of the Medicaid Act. Plaintiffs alleged that the low payment levels violated six separate provisions of the Medicaid Act, and added claims under the Supremacy Clause (preemption) and the Equal Protection Clause of the Fourteenth Amendment.
The Court subjected each of plaintiffs’ Medicaid Act claims to analysis of private individuals’ authority to enforce the pertinent statutory provisions in light of the Gonzaga command that statutory provisions can only support private actions under 42 U.S.C. §1983, if such provisions contain individually focused “rights-creating language.” The Court held: that the Equal Access Provision of the Act, 42 U.S.C. §1396a(30)(A), includes the requisite rights-creating phraseology, though it oddly forecast that the Fifth Circuit would likely disagree – hence, its decision to certify the case for interlocutory review. The Court also found that the Comparability provision of the Act, §1396a(10)(B), and the Reasonable Promptness provision, §1396a(a)(8), likewise include Gonzaga-proof rights-creating language, whereas the Equity [§1396a(a)(2)], Statewideness [§1396a(a)(1)], and Quality of Care [§1396a(a)(30)(A)] provisions do not. However, the Court also held against the plaintiffs on the merits of each of the claims which it found not to be barred by Gonzaga.
Potentially more significant – and more troubling – than the Court’s treatment of §1983 and the various Medicaid Act provisions at issue was its rejection of plaintiffs’ preemption claim. Judge Martinez summarily dismissed their claim that the state’s low reimbursement rates contravene, and are therefore preempted by Medicaid Act provisions. He argued that this claim was “functionally equivalent” to their §1983 claims – and, hence, equally inactionable under Gonzaga. However, contrary to the judge’s glib rebuff, preemption actions do not require any threshold allegation that individual rights have been violated. Preemption actions assert the supremacy of federal law, in contrast to suits based on 42 U.S.C. §1983, which only purports to protect “rights, privileges, and immunities” secured by – hence, a defined subset of – federal law.
In thus appearing to conflate the two distinct types of suit, Judge Martinez seemed to ignore the Fifth Circuit’s recent emphatic holding that preemption actions must be entertained, and resolved, by federal courts without regard to whether they allege violations of “rights” as required in §1983 suits, Planned Parenthood of Houston & Southeast Texas v. Sanchez, 403 F.3d 324 (5th Cir. 2005). His finessing of Planned Parenthood v. Sanchez does not appear inadvertent; Judge Higginbotham’s Sanchez opinion exhaustively analyzed the relationship between Supremacy Clause preemption and §1983, relied on the Supreme Court’s recent Medicaid preemption decision in Pharmaceutical Research Manufacturers Ass’n v. Walsh, 538 U.S. 644 (2003), and itself involved an appeal that, like Equal Access for El Paso, originated in the Western District of Texas. Moreover, Judge Martinez’ apparent attempt to distinguish Sanchez was not only curt but highly debatable; he asserted that the latter involved a challenge to a state statute, whereas Equal Access for El cite no statutory provision which, if nullified, would redress their grievance. But the state reimbursement rates challenged in El Paso would appear difficult to distinguish from another recent Supreme Court case cited in Sanchez – Verizon Maryland Inc. v. Public Service Comm’n of Maryland, 535 U.S. 635 (2002); Verizon upheld preemption jurisdiction in the case of a state telecommunications rate order similar to the Medicaid rate requirements at issue in the new case. In addition, the El Paso opinion also cited out of context a line from a recent Iowa Law Review article which argues for adjudication of preemption claims against state executive actions, such as the rate-setting policies at issue in this case, that allegedly threaten ongoing violations of federal law. David Sloss, Constitutional Remedies for Statutory Violations, 89 Iowa L. Rev. 355, 358 (2004)
In certifying his decision to the Fifth Circuit, Judge Martinez appears to have triggered a potentially significant test of recent decisions by that Circuit and the Supreme Court (each restaffed with Bush II appointees like himself) delineating the enforceability of Medicaid and other federal statutes under §1983 and preemption pursuant to the Supremacy Clause.