Consent Decree Legislation Would Have Far-Reaching Negative Effects

The “Federal Consent Decree Fairness Act” represents a startling assault upon protections traditionally available to Medicaid beneficiaries under the law. The “Federal Consent Decree Fairness Act” represents a startling assault upon protections traditionally available to Medicaid beneficiaries under the law. Introduced by Sen. Lamar Alexander (R-TN), S.B. 489 is an attempt to enable Tennessee to effectuate massive Medicaid cuts that would terminate coverage or reduce benefits of more than 700,000 Medicaid beneficiaries. In recent years, Tennessee entered into consent decrees to resolve two different class action lawsuits concerning Tennessee’s state Medicaid program, TennCare. Those consent decrees now are inconvenient, standing in the way of the state’s desire to cut Medicaid benefits.

A consent decree allows parties to avoid protracted litigation by developing  their own agreement as to actions to be taken, with assurance that the settlement agreement will be carried out. A consent decree is the imprimatur of a court, so the court’s own credibility is invested. A party’s violation of the consent decree does not merely constitute a breach of contract but also contempt of court. Thus, courts scrupulously enforce such decrees. See, e.g., Frew v. Hawkins, 540 U.S. 431 (2004).

Under S.B. 489, once a new governor is elected or four years have passed, whichever is sooner, a state may depart from the terms of a consent decree without fear of being held in contempt. Plaintiffs attempting to block such changes would have to prove that the consent decree is still necessary. If the court is not able to rule  whether the decree is still necessary within 90 days, the state could simply move forward with the change. The bill therefore would render all Medicaid beneficiaries who have benefitted in some fashion from consent decrees vulnerable. It would also discourage future Medicaid plaintiffs from entering consent decrees, forcing protracted litigation that would be helpful to neither side in a Medicaid suit in which a settlement is possible.

Although inspired by a Medicaid suit, the bill’s reach actually would extend well beyond such suits. Save for certain school desegregation cases, the bill would encompass all suits in which injunctive relief has been issued against states or state officials. Even businesses that have attained such relief in suits against states or state officials stand to lose what they gained.