Supremacy Clause Cause of Action to Enforce Medicaid

The District of Minnesota has held that plaintiffs stated a claim under the Supremacy Clause that state administrative orders conflicted with Medicaid rules and regulations.

Association of Residential Resources et al. v. Minnesota Comm’r of Human Svcs., 2004 WL 2066822 (D. Minn. Aug. 18, 2004). 

Minnesota provides Medicaid services to disabled individuals through its Home and Community Based Services waiver program.  Plaintiffs--providers of waiver services as well as Medicaid recipients and their families--challenged a cost-savings plan (the “rebase program”) that impacted the way the state distributed waiver funds. 

The plaintiffs’ complaint alleged that the state “’elevated a state administrative order over federal statutory and regulatory requirements thereby violating the Supremacy Clause of the United States Constitution’….  Plaintiffs suggest that the DHS rebase program conflicts with various Medicaid rules and regulations, and that therefore the rebase violates the Supremacy Clause.  This is adequate to state a claim” (original emphasis).  The court did not explain which Medicaid rules and regulations were involved or how they conflicted with the rebase program. 

The court cited as authority Missouri Child Care Ass’n v. Cross, 294 F.3d 1034, 1040-41 (8th Cir. 2002) (citing cases to showthat “the Supreme Court has specifically held that, under the Supremacy Clause, federal Spending Clause legislation trumps conflicting state statutes or regulations”); Pharm. Research & Mfr. v. Walsh, 538 U.S. 644 (2003) (in which the Court reached the merits of a claim that the state’s pharmaceutical rebate program was preempted), and Pharm. Research and Mfrs. v. Thompson, 362 F.3d 817, 819 n.3 (D.C. Cir. 2004) (noting that “[b]y addressing the merits of the parties' arguments without mention of any jurisdictional flaw, the remaining seven Justices [other than Scalia and Thomas] appear to have sub silentio found no flaw”). 

This case once again points up the importance of preemption claims under the Supremacy Clause as an alternative to causes of action under 42 U.S.C. section 1983, which has been under increasing attack.  A preemption claim can provide a cause of action  to attack a state law that conflicts with federal law when the federal statute does not create a “right” enforceable through section 1983.  It can also be used to enforce federal regulations, which after Alexander v. Sandoval, 121 S.Ct. 1511 (2001), are not independently enforceable through section 1983 or an implied right of action unless they merely interpret or flesh out a right or cause of action that the statute creates.  Of course, the major flaw of a Supremacy Clause claim is that it does not allow for damages or attorneys’ fees.