D.D.C.: Providers can't force HHS to enforce Medicaid

The federal district court for the District of Columbia dismissed a suit by Puerto Rico Medicaid providers, who sought to compel the Secretary of Health and Human Services to bring an enforcement action against Puerto Rico regarding allegedly improper Medicaid payment methods. Concilio de Salud Integral de Loiza, Inc. v. US Dep’t of Health and Human Services, --- F.Supp.2d ---, 2008 WL 655756 (D.D.C. Mar. 12, 2008) (No. 07-1034).

The court held that (1) neither the Medicaid Act nor the Administrative Procedures Act waived federal sovereign immunity; (2) Medicaid providers lacked standing to sue the Secretary because their failure to receive proper payments was not caused by federal action and the relief sought would not guarantee redress; and (3) the Secretary’s decision whether to bring an enforcement action against a state or territory under Medicaid is an unreviewable act of agency discretion. 

 

                At the heart of this suit is the “wraparound payments” that states are supposed to make to Medicaid providers to compensate for the difference between the payments obtained from a Medicaid HMO and the payment rates prescribed under Medicaid. The providers sued Puerto Rico in 2003 and obtained an injunction to provide these wraparound payments as prescribed by federal law. Rio Grand Community Health Center v. Rullan, 2004 WL 3202761 (D.P.R. 2004), aff’d, 397 F.3d 56 (1st Cir. 2005). The district court later declined to make the injunction permanent. Concilio de Salud Integral de Loiza v. Perez Perdomo, 479 F.Supp.2d 247 (D.P.R. 2007).

 

The providers then brought the instant suit against the federal government, alleging a variety of violations of federal law and regulations in the contracts between providers and HMOs and between the HMOs and Puerto Rico, and seeking to force the Secretary to withhold Puerto Rico’s Medicaid funds.

 

                The court held that since the Medicaid Act does not provide for suits against the federal government, that Act did not waive federal sovereign immunity for such a suit. It also held that the APA did not waive sovereign immunity because the Secretary’s Medicaid payments to Puerto Rico were not a reviewable “agency action” under the APA.

 

                The court further held that the providers lacked standing to sue the Secretary because “no action caused by the Secretary caused the Plaintiffs’ alleged harms and their requested remedy would not necessarily redress them.” The harms allegedly stemmed from the actions of Puerto Rico ands the HMOs, not from the Secretary’s payments to Puerto Rico. Furthermore, the court found “no necessary connection between HHS withholding [federal funding] and the HMOs releasing Plaintiffs from their onerous contracts,” since “Puerto Rico might react in a variety of ways” to a funding cutoff. “The only certainty from this speculative situation,” the court concluded, “would be that the poorest of the Commonwealth's citizens would have an even more difficult time obtaining health care.”

 

                The court also stated that:

Longstanding case law demonstrates that the decision whether to take an enforcement action against the Commonwealth, which is the remedy Plaintiffs seek, is committed to agency discretion by law and is unreviewable by the Court….When enforcement is committed to an agency's discretion as it is here, neither Plaintiffs nor the Court can require the Secretary to take action; only Congress can require a specific exercise of discretion.

                Finally, the court stated that even if there were federal jurisdiction here, it would deny the Plaintiffs’ claim for partial summary judgment on the claims that the Secretary did not give pre-approval to Puerto Rico’s contracts with the HMOs, since Puerto Rico had submitted uncontradicted evidence that it had, in fact, reviewed and approved the contracts.