No Private Right in Medicaid Managed Care case
A federal district court in Indiana held that there is no private right of action under 42 U.S.C. § 1983 to enforce the “freedom of choice” and “methods and procedures” provisions of the Medicaid Act. The case was brought by managed care providers and beneficiaries (who were patients of these providers) challenging the state’s exclusion of these providers from the state’s Medicaid program. The state had reorganized its managed care program, required companies to bid for a share of the contracts, and chosen other managed care providers to participate in the program. The providers who were not chosen and a few of their patients sued the state. The court did not reach the merits, holding that the companies and beneficiaries could not enforce the applicable Medicaid provisions. Molina Healthcare of Indiana, Inc. v. Henderson, 2006 WL 3518269 (S.D. Ind. Dec. 4, 2006).A federal district court in Indiana held that there is no private right of action under 42 U.S.C. § 1983 to enforce the “freedom of choice” and “methods and procedures” provisions of the Medicaid Act. The case was brought by managed care providers and beneficiaries (who were patients of these providers) challenging the state’s exclusion of these providers from the state’s Medicaid program. The state had reorganized its managed care program, required companies to bid for a share of the contracts, and chosen other managed care providers to participate in the program. The providers who were not chosen and a few of their patients sued the state. The court did not reach the merits, holding that the companies and beneficiaries could not enforce the applicable Medicaid provisions. Molina Healthcare of Indiana, Inc. v. Henderson, 2006 WL 3518269 (S.D. Ind. Dec. 4, 2006). The judge, John Daniel Tinder, was nominated by Ronald Reagan.
The providers and beneficiaries alleged that the state’s selection of managed care companies was based on a flawed or biased review process. They alleged that the Medicaid statute protects the rights of beneficiaries to seek treatment from any qualified provider and that the law protects the rights of any qualified provider to supply that treatment, pursuant to 42 U.S.C. § 1396a(a)(23), known as the “freedom of choice” provision. The court noted that the Sixth Circuit had found this provision enforceable, Harris v. Olszewski, 442 F.3d 456 (6th Cir. 2006), but a district court had reached the opposite conclusion, M.A.C. v. Betit, 284 F.Supp.2d 1298, 1307 (D.Utah 2003). The Indiana court did not decide which of these cases was more persuasive. Instead, the court held that the plaintiffs could not enforce 1396a(a)(23), because the state was operating its managed care program under a 1915(b) waiver. The 1915(b) waiver program, codified at 42 U.S.C. § 1396n, authorizes the federal government to waive the statute’s freedom of choice provision.
The plaintiffs also alleged that the state violated 42 U.S.C. § 1396a(a)(30)(A), which requires the state to provider “such methods and procedures…to assure that payments are consistent with efficiency, economy, and quality of care and are sufficient to enlist enough providers so that care and services are available under the plan at least to the extent that such care and services are available to the general population in the geographic area.” The court noted that this provision may be waived as part of a 1915(b) waiver program. The court also stated that two Seventh Circuit decisions prior to Gonzaga Univ. v. Doe, 536 U.S. 273 (2002) holding 1396a(a)(30)(A) enforceable were no longer “persuasive,” based on Bruggerman ex. Re. Bruggerman v. Blagojevich, 324 F.3d 906, 911 (7th Cir. 2003). The court further stated that Plaintiffs could not show that the state awards of contracts would not achieve sufficient access for providers, because any alleged deficiencies in the provider networks might be corrected by the time that the contracts take effect. The court concluded that the Plaintiffs’ complaint with the methods that the State utilized in its bidding process were not actionable under 1396a(a)(30)(A).
The plaintiffs further alleged a violation of the waiver statute, 42 U.S.C. § 1396n(b)(4), which provides that the Secretary may waive requirements of 1396a to restrict the providers from whom a beneficiary can obtain services “if such restriction does not discriminate among classes of providers on grounds unrelated to their demonstrated effectiveness and efficiency.” The court held that this provision does not confer individual rights, since the provision focuses on the Secretary and does not “‘unambiguously confer’ rights upon the Plaintiffs” (quoting Gonzaga).
The court went on to deny the Plaintiffs procedural and substantive due process claims.