Appeals Court Reverses Westside Mothers; Medicaid Statute Enforceable Against States

• Appeals Court Reverses Westside Mothers The infamous decision of Judge Robert H. Cleland in the federal District Court in Michigan that the Medicaid statute could not be enforced by a private suit has been reversed by the Sixth Circuit Court of Appeals.

Westside Mothers v. Haveman, 133 F. Supp. 2d 549 (E.D. Mich. 2001), rev’d 2002 WL 987291 (6th Cir. May 15, 2002).  The Fourth Circuit, in a case decided May 9, 2002, also rejected the reasoning in Westside Mothers. Antrican v. Odom, 2002 WL 939566 (4th Cir. 2002). This is a particularly heartening result since the Fourth Circuit is considered the most conservative circuit on sovereign immunity issues.

There presently is no conflict among the circuits. None has held that the 11th Amendment bars enforcement of  the Medicaid statute in actions for prospective relief. Both three-judge appellate panels, in Westside Mothers and in Antrican, ruled unanimously.

In Westside Mothers, the claim was failure of the state to provide required services under the EPSDT program for children.  In Antrican, the claims included a violation of the requirement of the Medicaid law that services (there dental) be rendered in a timely fashion.  Both cases appeared to be routine suits under the doctrine of Ex parte Young, 209 U.S. 123 (1908), in which state officials are named defendants in their official capacity and the relief sought is prospective, that is, an injunction applicable to future conduct. As the Sixth Circuit noted, “[t]he Ex parte Young exception to Eleventh Amendment immunity is designed to preserve the constitutional structure established by the Supremacy Clause.” The district court in Michigan dismissed the complaint in Westside Mothers under the 11th Amendment; in Antrican, the district court denied the state’s motion to dismiss.
 

Sixth Circuit’s Decision

• Medicaid is federal law, not a contract

Judge Cleland held that federal Medicaid law is not “supreme law of the land” because, he said, Medicaid is merely a contract between a state and the federal government. 133 F. Supp. 2d at 558. But the Sixth Circuit said:
Contrary to this narrow characterization, the Court in Pennhurst I makes clear that it is using the term “contract” metaphorically, to illuminate certain aspects of the relationship formed between a state and the federal government….It does not say that Medicaid is only a contract….It did not limit the remedies to common law contract remedies or suggested [sic] that normal federal question doctrines do not apply….Binding precedent has put the issue to rest. The Supreme Court has held that the conditions imposed by the federal government pursuant to statute upon states participating in Medicaid and similar programs are not merely contract provisions; they are federal laws.

• Spending power laws are supreme law

Judge Cleland said spending power enactments are not supreme law because “they are not statutory enactments by which States must automatically submit to federal prerogatives.”  133 F. Supp. 2d  at 561. He was undeterred by contrary Supreme Court opinions because in “recent years … the Supreme Court has conducted a more searching analysis of the nature and extent of the Supremacy Clause.” Id. The Sixth Circuit rejected this assertion:
The well established principle that acts passed under Congress’s spending power are supreme law has not been abandoned in recent decisions….We reaffirm well-established precedent holding that laws validly passed by Congress under its spending powers are supreme law of the land.

• Ex parte Young doctrine applies

In addition to holding Ex parte Young inapplicable based on his view that Medicaid is not federal law qualifying for that doctrine, Judge Cleland held that Michigan was the real party in interest and that none of the exceptions to sovereign immunity would allow the case to  proceed.  133 F. Supp. 2d at 559-60. The Sixth Circuit noted that when a court addresses a claim made under Ex parte Young, it should simply  ask “whether the complaint alleges an ongoing violation of federal law and seeks relief properly characterized as prospective.” Under this analysis, the Westside Mothers complaint “fit squarely within Ex parte Young.”
The Fourth Circuit acknowledged that the effect of an injunction may  require expenditures by the state and stated: “While such an order might result in an intrusion on North Carolina’s sovereignty, it would be precisely the type of order that is allowed under Ex parte Young and its progeny.”

• Official conduct not protected as discretionary

Both Circuits agreed that conduct of state officials that violates the Medicaid statute does not constitute discretionary actions protected against judicial review.

• Possibility of terminating federal funding was not intended to preclude Ex parte Young

Both Circuits agreed that the statutory remedy that allows the federal Medicaid agency to withhold all or a part of the federal funds due a state that is not in compliance with the federal statute is not the kind of detailed alternate remedial scheme that reflects a congressional intent to preclude private enforcement.  The Supreme Court decided this issue in Wilder v. Va. Hosp. Ass’n, 496 U.S. 498 (1990).

• No “special sovereignty” interest presented

The Fourth Circuit held that Medicaid is a federally designed welfare program in which the state has no special sovereignty interest once it elects to participate.

• Section 1983 issues

The district court had decided the Westside Mothers case could not proceed under 42 U.S.C. § 1983 because, as third party beneficiaries of the Medicaid contract, Medicaid beneficiaries would not have been able to enforce such a contract when § 1983 was enacted in the 1870s. The Sixth Circuit, having cast aside the contract analysis, held that the Supreme Court had set down three prongs for deciding whether a federal provision is enforceable under § 1983:  (1) whether the plaintiff is the intended beneficiary of the provision (2) whether the provision sets a binding obligation on the state, and (3) whether the interests are so vague as to strain judicial competence to enforce. The panel then applied the test to find the EPSDT provisions to be enforceable.