Evergreen Presbyterian Ministries Inc. v. Hood , 235 F.3d 908 ( 2001 )

REVISED, JANUARY 5, 2001
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
_____________________
No. 00-30498
_____________________
EVERGREEN PRESBYTERIAN MINISTRIES INC; HEALTH SERVICE
DISTRICT 1 POINTE COUPEE, doing business as Pointe Coupee
General Hospital; HOSPITAL SERVICE DISTRICT NO 1 AVOYELLES
PARISH, doing business as Bunkie General Hospital; FARLEY
WAYNE LUTTRELL; ROBERT FORD; ET AL; IBERIA COMPREHENSIVE
COMMUNITY HEALTH CENTER INC; NEW ORLEANS PRIMARY HEALTH CARE
HEALTH DEPARTMENT/HEALTH CARE FOR THE HOMELESS INC; DESOTO
COMPREHENSIVE HEALTH CENTER INC; ST HELENA COMMUNITY HEALTH
CENTER INC; DAVID RAINES COMMUNITY HEALTH CENTER INC; BAYOU
COMPREHENSIVE HEALTH FOUNDATION INC; CATAHOULA PARISH
HOSPITAL DISTRICT NO 2 INC; CAPITOL CITY FAMILY HEALTH
CENTER INC; SOUTHWEST LOUISIANA PRIMARY HEALTH CARE CENTER
INC; DELTA RURAL HEALTH SERVICES INC; LEESVILLE RURAL HEALTH
SERVICES INC; NATCHITOCHES OUTPATIENT MEDICAL CENTER INC; ST
GABRIEL HEALTH CLINIC INC; TECHE ACTION BOARD INC, doing business
as Tech Action Clinic; EXCEL INC
Plaintiffs - Appellees
v.
DAVID W HOOD, Secretary Louisiana Department of Health &
Hospitals
Defendant - Appellant
--------------------------------------------------
LOUISIANA NURSING HOME ASSOCIATION; I H S LULING; I H S
SHREVEPORT; I H S GONZALES; I H S LAFAYETTE; ET AL
Plaintiffs - Appellees
v.
DAVID W HOOD, Individually and in his official capacity
as Secretary of the Department of Health & Hospitals
for the State of Louisiana
Defendant - Appellant
--------------------------------------------------
CALCASIEU ASSOCIATION OF RETARDED CITIZENS INC; EVANGELINE
ASSOCIATION OF RETARDED CITIZENS INC; SOUTHERN COMFORT
COMMUNITY HOMES; PREFERRED LIVING INC; IBERIA ASSOCIATION OF
RETARDED CITIZENS INC; MULTI CARE INC; IBERIA COMPREHENSIVE
COMMUNITY HEALTH CENTER INC; NEW ORLEANS PRIMARY HEALTH CARE
HEALTH DEPARTMENT/HEALTH CARE FOR THE HOMELESS INC; DESOTO
COMPREHENSIVE HEALTH CENTER INC; ST HELENA COMMUNITY HEALTH
CENTER INC; DAVID RAINES COMMUNITY HEALTH CENTER INC; BAYOU
COMPREHENSIVE HEALTH FOUNDATION INC; CATAHOULA PARISH
HOSPITAL DISTRICT NO 2 INC; CAPITOL CITY FAMILY HEALTH
CENTER INC; SOUTHWEST LOUISIANA PRIMARY HEALTH CARE CENTER
INC; DELTA RURAL HEALTH SERVICES INC; LEESVILLE RURAL HEALTH
SERVICES INC; NATCHITOCHES OUTPATIENT MEDICAL CENTER INC; ST
GABRIEL HEALTH CLINIC INC; TECHE ACTION BOARD INC, doing
business as Tech Action Clinic; EXCEL INC
Plaintiffs - Appellees
v.
DAVID W HOOD, Secretary of Louisiana Department of Health
& Hospitals
Defendant - Appellant
--------------------------------------------------
DOCTORS HOSPITAL OF OPELOUSAS LIMITED PARTNERSHIP, doing
business as Doctors Hospital of Opelousas; UNIVERSITY
REHABILITATION HOSPITAL INC, doing business as Physicians
Hospital of New Orleans; DIXON MEDICAL CENTER INC; WEST
CARROLL HOSPITAL INC; HOSPITAL SERVICE DISTRICT MOREHOUSE
PARISH, doing business as Morehouse General Hospital; ET AL
Plaintiffs - Appellees
v.
DAVID W HOOD, Secretary of the Louisiana Department of
Health & Hospitals
Defendant - Appellant
________________________________________________________________
Appeal from the United States District Court
2
for the Western District of Louisiana
_________________________________________________________________
December 11, 2000
Before KING, Chief Judge, and REYNALDO G. GARZA and PARKER,
Circuit Judges.
KING, Chief Judge:
Defendant-Appellant David W. Hood, Secretary of the
Louisiana Department of Health and Hospitals, appeals from the
district court’s grant of a preliminary injunction in favor of
Plaintiffs-Appellees Evergreen Presbyterian Ministries, Inc., et
al. For the following reasons, we VACATE the preliminary
injunction and REMAND to the district court for further
proceedings.
I. FACTUAL AND PROCEDURAL BACKGROUND
The Secretary of the Louisiana Department of Health and
Hospitals is before this court seeking relief from the district
court’s preliminary injunction. Due to a budgetary shortfall in
Louisiana’s Medicaid program and an Executive Order by
Louisiana’s Governor to achieve a savings in the state’s general
fund, the Louisiana Department of Health and Hospitals (“LDHH”)
proposed a seven-percent (7%) across-the-board reduction of
Medicaid reimbursement rates paid to private health care
providers and certain targeted cuts1 in Louisiana’s Medicaid
1
Certain pleadings challenge the “payment reductions”
without distinguishing between the 7% reimbursement rate
reduction and the targeted cuts. However, because no evidence or
arguments were offered on the targeted cuts, and because the
3
program. This proposal precipitated a series of suits against
the Secretary of LDHH, brought by intermediate care facilities
for the mentally retarded, rural hospitals, nursing homes, home
health agencies, community homes, hospitals, and Medicaid
recipients, in which the plaintiffs are seeking to prevent the
reimbursement rate reduction from becoming effective.
The focus of these lawsuits is two sections of the Social
Security Act, 42 U.S.C. §§ 1396a(a)(13)(A) and 1396a(a)(30)(A),
which the plaintiffs claim were violated when LDHH attempted to
implement the reimbursement rate reduction. In order for us to
provide the proper background for the resolution of these issues,
we must first undertake a review of the Medicaid program as it
exists in Louisiana.
A. The Medicaid Program
In the Social Security Amendments of 1965, Congress
established Title XIX, commonly referred to as the “Medicaid
Act.” See Pub. L. No. 89-97, 79 Stat. 286 (1965) (codified as
amended at 42 U.S.C. §§ 1396-1396u). The Medicaid Act
established a program that supplies federal funds to states that
agree to maintain a medical assistance program for the benefit of
aged, blind, or permanently disabled individuals and for the
benefit of families with dependent children. See 42 U.S.C.
district court focused on the 7% rate reduction, our sole concern
in this opinion is with the rate reduction.
4
§ 1396 (1992). The Medicaid program is a cooperative program
that is financed jointly by the federal and state governments.
See 42 C.F.R. § 430.0 (1999). Once a state enters the program,
it is charged with the program’s administration within its
borders. See id.
The program is voluntary; however, once a state chooses to
join, it must follow the requirements set forth in the Medicaid
Act and in its implementing regulations. See Wilder v. Va. Hosp.
Ass’n, 496 U.S. 498, 502 (1990). One of these requirements is
that in order for a state to qualify for federal funding, also
known as federal financial participation (“FFP”), it must submit
a state plan2 to the Health Care Financing Administration
(“HCFA”) for approval.3 See 42 C.F.R. § 430.10.
2
A state plan is a “comprehensive written statement”
submitted by the state describing the nature and scope of the
state’s Medicaid program. See 42 C.F.R. § 430.10. The state
plan “contains all information necessary for [the Health Care
Financing Administration] to determine whether the plan can be
approved to serve as a basis for Federal Financial Participation
(FFP) in the State program.” Id. The Medicaid Act sets out a
laundry list of sixty-five items that must be contained within a
valid state plan. See 42 U.S.C. § 1396a(a) (2000). Two of these
items, the “public process provision” and the “equal access
provision,” see id. §§ 1396a(a)(13)(A), (a)(30)(A), are the
primary focus of this case and will be explained in greater
detail infra.
3
HCFA, an arm of the Department of Health and Human
Services (“DHHS”), has been delegated the authority by the
Secretary of DHHS to administer the Medicaid program at the
federal level and to implement the underlying regulations. See
42 U.S.C. § 1302; 49 FED. REG. 35,247, 35,249 (1984).
5
The state of Louisiana has chosen to participate in the
Medicaid program. Under the joint federal-state funding
arrangement for Louisiana’s Medicaid program, Louisiana is
required to pay, or “front,” thirty percent of the funds
necessary to reimburse Medicaid providers. The remaining seventy
percent is provided by the federal government. In implementing
the state program, Louisiana designated LDHH to administer the
plan within the state. David Hood, the Defendant-Appellant, is
the Secretary of LDHH.
As the Secretary of LDHH, Hood is charged with the
responsibility of submitting the state plan and any amendments to
HCFA. See 42 C.F.R. § 430.12. An amendment must be submitted to
HCFA whenever there is a “[m]aterial change[] in State law,
organization, or policy, or in the State’s operation of the
Medicaid program.” Id. § 430.12(c). A proposed amendment to
Louisiana’s state plan is the subject of this suit.
B. The Amendment
In November 1999, Hood was informed of a $153 million
projected budget deficit within LDHH’s Medicaid program for the
1999-2000 fiscal year. On December 3, 1999, Hood reported this
projected shortfall to the state’s Joint Legislative Committee on
the Budget. On December 7, this impending budgetary shortfall
was compounded by an Executive Order from Louisiana’s Governor
6
directing all executive branches of the state government to
achieve a savings of approximately $50 million in the state’s
general fund.4
Hood responded first to the Executive Order by devising an
“Executive Order Reduction,” which was designed to produce
various savings within LDHH while attempting to minimize the
impact on private providers. However, to respond to the $153
million shortfall5 within the Medicaid program, LDHH proposed,
along with the targeted cuts, a 7% across-the-board reduction of
the reimbursements to private providers of services to Medicaid
recipients.
To implement the 7% reimbursement reduction, Hood and
Charles Castille, LDHH’s Undersecretary, devised a Spending
Reduction Plan, the contents of which make up the proposed
amendment to Louisiana’s state plan. The Spending Reduction
4
Specifically, the Executive Order required Hood to
reduce LDHH’s budget requirements by roughly $22.5 million. Of
that $22.5 million, approximately $16 million was to be withheld
from LDHH’s Medicaid program.
5
Deposition testimony from Charles Castille, the
Undersecretary for LDHH, shows that at some time during the
implementation of the reimbursement reduction, the projected
budget deficit was reduced to approximately $126 million. Once
the reductions were applied to the shortfall, a $67 million
deficit remained. LDHH proposed covering the remaining shortfall
by eliminating the optional component of LDHH’s pharmacy program.
Considering this cut to be “devastating,” LDHH and the Joint
Legislative Committee on the Budget used roughly $20 million of
the state’s general funds, which, combined with federal funds,
bridged the remaining budget gap.
7
Plan, if implemented, would reduce funding for the Medicaid
program in Louisiana by a total of $180 million.6
On January 24, 2000, Hood presented the Spending Reduction
Plan in a memorandum to the Joint Legislative Committee on the
Budget. Hood decided that the proposed plan would be implemented
by an assortment of emergency rules pursuant to the procedures in
the then-approved state plan.7 On January 25, to inform the
6
This total includes FFP and comprises approximately five
percent of the entire Louisiana Medicaid budget, which was then
$3.365 billion.
7
The procedures contained in the state plan were a
product of section 4711 of the Balanced Budget Act of 1997, in
which Congress repealed the so-called “Boren Amendment” to the
Medicaid Act and replaced it with the current section 13(A). See
Pub. L. No. 105-33, § 4711, 111 Stat. 251, 507-08 (1997); see
also Wilder v. Va. Hosp. Ass’n, 496 U.S. 498 (1990). As a
result, on December 10, 1997, HCFA informed LDHH (and all state
Medicaid directors) by letter that it must amend its state plan
to comply with the new “public process” procedures of section
13(A) and included a list of public process options. In response
to this letter, LDHH submitted a state plan amendment on December
29, 1997, which HCFA approved on February 5, 1998.
Although it had already approved the amendment to the state
plan, on April 9, 1998, HCFA further requested by letter that all
state agencies describe the specific public process procedures
that each state chose to implement. LDHH responded to this
letter on June 26, 1998, and informed HCFA that it used three
methods to conform to the public process requirements: the
Louisiana Administrative Procedures Act (APA), the legislative
appropriations process, and a modified emergency rule process.
More specifically, LDHH informed HCFA that the Louisiana APA
constituted part of the public process procedures that it would
follow in implementing a state plan or amendment. Furthermore,
in the case of an emergency rule, LDHH would use a “modified
emergency rule process,” which is codified at LA. REV. STAT. ANN.
§ 49:953(B) (West 2000), and allows for a comment period of
thirty days.
Section 49:953(B) provides in relevant part:
(1) If an agency finds that an imminent peril to the
8
public about the proposed amendment to the state plan, Hood began
publishing a series of public notices in eight newspapers
circulated within Louisiana. Separate notices were published for
each category of provider, including private nursing facilities,
long-term hospitals, and intermediate care facilities for the
mentally retarded (“ICF/MRs”). In addition to other information,
the notices indicated that LDHH was making a 7% reduction in
private provider reimbursement rates due to the budgetary
shortfall. The emergency rules implementing the reductions were
published in the February 20, 2000 edition of the Louisiana
Register. The effective date for the cuts in certain optional
public health, safety, or welfare requires adoption of
a rule upon shorter notice than that provided in
Subsection A of this Section [governing “regular” rule
making procedures] and within five days of adoption
states in writing to the governor of the state of
Louisiana, the attorney general of Louisiana, the
speaker of the House of Representatives, the president
of the Senate, and the Department of the State
Register, its reasons for that finding, it may proceed
without prior notice or hearing or upon any abbreviated
notice and hearing that it finds practicable, to adopt
an emergency rule. The provisions of this Paragraph
also shall apply to the extent necessary to avoid
sanctions or penalties from the United States, or to
avoid a budget deficit in the case of medical
assistance programs or to secure new or enhanced
federal funding in medical assistance programs. The
agency statement of its reason for finding it necessary
to adopt an emergency rule shall include specific
reasons why the failure to adopt the rule on an
emergency basis would result in imminent peril to the
public health, safety, or welfare, or specific reasons
why the emergency rule meets other criteria provided in
this Paragraph for adoption of an emergency rule.
LA. REV. STAT. ANN. § 49:953(B)(1).
9
programs was February 1, and the effective date for the across-
the-board reduction was March 1, over thirty days after the
publication of the notices in the newspapers.
In response to the proposed amendment to the state plan, the
plaintiffs brought suit to enjoin Hood from implementing the 7%
reimbursement rate reduction and to have the proposed state plan
amendment declared invalid.8
C. The Preliminary Injunction9
8
The plaintiffs have alleged various violations of the
Medicaid Act and federal and state constitutions. However,
because our review is limited to whether the district court
abused its discretion and because the district court focused
solely on two particular sections of the Medicaid Act, 42 U.S.C.
§§ 1396a(a)(13)(A) and 1396a(a)(30)(A), our inquiry begins and
ends with these sections.
9
We note that during the time of these proceedings in the
district court and on appeal, an administrative process has been
progressing, which is independent of these judicial proceedings.
Hood filed LDHH’s proposed amendment with HCFA on March 27, 2000.
10
In March 2000, the district court granted temporary
restraining orders in favor of the plaintiffs, enjoining Hood
from implementing the proposed reimbursement rate cuts. On May
4, the district court granted the plaintiffs’ motion for a
preliminary injunction. The next day, this court granted Hood’s
motion for a stay pending appeal and, on May 12, clarified that
our May 5 order applied to all restraining orders and injunctions
issued by the district court.10
Normally, HCFA has ninety days to approve or disapprove the
proposed amendment, see 42 C.F.R. § 430.16(a)(1); however, as
authorized under the regulations, HCFA mailed to LDHH several
“stop-the-clock” letters. A stop-the-clock letter is a request
by HCFA for additional information, which tolls the ninety-day
deadline by which HCFA must approve the amendment. See 42 C.F.R.
§ 430.16(a)(2). Once HCFA receives the requested information,
the ninety-day approval period begins anew. See id.
Supplemental filings with this court reflect that the status as
of September 2000 was that HCFA had tolled the ninety-day period
by advising Hood that additional information is necessary and the
requested information had not yet been furnished. Should HCFA
ultimately disapprove the amendment, however, LDHH would be
considered in noncompliance, and FFP would be at risk. See id.
§ 430.35.
10
The plaintiffs have asserted that when the district
court entered the preliminary injunction on May 4, 2000, the
temporary restraining orders previously entered became moot. The
plaintiffs also argue that the preliminary injunction is not
properly before this court because Hood did not timely appeal its
issuance. For these reasons, the plaintiffs contend that the
appeal should be dismissed because without the temporary
restraining orders, there is nothing to appeal.
We find, however, that Hood timely appealed the issuance of
the preliminary injunction and that the preliminary injunction is
part of this appeal. As this court clarified on May 12, our May
5 order granting Hood’s motion to stay the preliminary injunction
and his motion to expedite the appeal applied “to all restraining
orders and injunctions granted by the District Court in this case
through the date of our said order.” Because we conclude the
preliminary injunction is part of this appeal, the question of
11
II. STANDARD OF REVIEW
A preliminary injunction is considered “an extraordinary and
drastic remedy, not to be granted routinely, but only when the
movant, by a clear showing, carries the burden of persuasion.”
White v. Carlucci, 862 F.2d 1209, 1211 (5th Cir. 1989) (internal
quotations omitted) (quoting Holland Am. Ins. Co. v. Succession
of Roy, 777 F.2d 992, 997 (5th Cir. 1985)); see also Harris
County, Tex. v. CarMax Auto Superstores, Inc., 177 F.3d 306, 312
(5th Cir. 1999). In order for a district court to grant a
preliminary injunction, four requirements must be met:
First, the movant must establish a substantial
likelihood of success on the merits. Second, there
must be a substantial threat of irreparable injury if
the injunction is not granted. Third, the threatened
injury to the plaintiff must outweigh the threatened
injury to the defendant. Fourth, the granting of the
preliminary injunction must not disserve the public
interest.
CarMax Auto Superstores, 177 F.3d at 312 (internal quotations
omitted) (quoting Cherokee Pump & Equip., Inc. v. Aurora Pump, 38
F.3d 246, 249 (5th Cir. 1994)). “The ultimate issue . . . is
whether the district court abused its discretion in granting the
preliminary injunction.” Id. Additionally, questions of
statutory interpretation are reviewed de novo. See Lara v.
Cinemark USA, Inc., 207 F.3d 783, 786 (5th Cir. 2000); Whitehead
v. Food Max, Inc., 163 F.3d 265, 279 (5th Cir. 1998).
the appealibility of the temporary restraining orders is
essentially moot as they are subsumed in the district court’s
preliminary injunction.
12
III. THE PROPRIETY OF THE PRELIMINARY INJUNCTION
The district court granted the plaintiffs’ requested
preliminary injunction, finding that they had satisfied their
burden on each of the four preliminary injunction factors. The
district court focused its analysis on two sections of the
Medicaid Act, 42 U.S.C. § 1396a(a)(13)(A) (“section 13(A)”) and
42 U.S.C. § 1396a(a)(30)(A) (“section 30(A)”), and concluded that
the plaintiffs provided sufficient evidence to “support a
substantial likelihood of a violation” of each section.
Evergreen Presbyterian Ministries, Inc. v. Hood, 116 F. Supp. 2d
745, 751, 754 (W.D. La. 2000). We address these sections in turn
to determine whether the plaintiffs did in fact prove they had a
substantial likelihood of success on the merits.11
A. Substantial Likelihood of Success on the Merits
Under Section 13(A)
1. Availability of a Right of Action Under § 1983 to Redress
Violations of Section 13(A)
11
Because we find that the plaintiffs failed in their
burden of proving a substantial likelihood of success on the
merits, we need not address the remaining preliminary injunction
factors.
13
In order to find that the plaintiffs have a substantial
likelihood of success in proving violations of section 13(A), the
plaintiffs must first demonstrate that they have a right of
action under 42 U.S.C. § 1983. The district court found that the
plaintiffs do have such a right of action under § 1983 to enforce
procedural violations of section 13(A).
On appeal, Hood makes no argument in his briefs to this
court regarding whether a right of action exists under § 1983 to
enforce the procedural requirements of this section; he argues
only that the plaintiffs are precluded from challenging the
reasonableness of the resulting reimbursement rates through
section 13(A), a contention that the plaintiffs do not challenge.
Therefore, Hood has abandoned any argument regarding whether a
right of action exists under § 1983 to enforce the public process
procedures of section 13(A). See Johnson v. Sawyer, 120 F.3d
1307, 1315-16 (5th Cir. 1997) (“We have held repeatedly that we
will not consider issues not briefed by the parties.”); McKethan
v. Tex. Farm Bureau, 996 F.2d 734, 739 n.9 (5th Cir. 1993)
(failure to sufficiently brief issue constitutes waiver of that
issue). Accordingly, we assume without deciding that the
plaintiffs have a right of action to enforce a violation of
section 13(A) under § 1983, and we turn to the merits.
2. Hood’s Compliance with the Requirements of Section 13(A)
14
In order to satisfy their burden for a preliminary
injunction, the plaintiffs must show that they have a substantial
likelihood of success in demonstrating that Hood did not comply
with the mandates of section 13(A). See Doe v. Duncanville
Indep. Sch. Dist., 994 F.2d 160, 163 (5th Cir. 1993) (“To obtain
a preliminary injunction, a movant has the burden of proving
. . . a substantial likelihood of success on the merits[.]”).
Section 13(A) provides in relevant part:
A State plan for medical assistance must . . . provide
. . . for a public process for determination of rates
of payment under the plan for hospital services,
nursing facility services, and services of intermediate
care facilities for the mentally retarded under which —
(i) proposed rates, the methodologies underlying the
establishment of such rates, and justifications for the
proposed rates are published,
(ii) providers, beneficiaries and their representatives, and
other concerned State residents are given a reasonable
opportunity for review and comment on the proposed
rates, methodologies, and justifications,
(iii)final rates, the methodologies underlying the
establishment of such rates, and justifications
for such final rates are published, and
(iv) in the case of hospitals, such rates take into
account (in a manner consistent with section 1923)
the situation of hospitals which serve a
disproportionate number of low-income patients
with special needs[.]
42 U.S.C. § 1396a(a)(13)(A) (2000). In essence, section 13(A)
provides a public process mechanism with which the state must
comply before it can modify reimbursement rates to institutional
providers.12
12
The present section 13(A) is the product of a 1997
amendment to the Medicaid Act, which repealed the Boren
Amendment. See Pub. L. No. 105-33, § 4711, 11 Stat. 251, 507-08
15
(1997). The Boren Amendment provided in relevant part:
A State plan for medical assistance must . . . provide
. . . for payment . . . of the hospital services,
nursing facility services, and services in an
intermediate care facility for the mentally retarded
. . . through the use of rates . . . which the State
finds, and makes assurances satisfactory to the
Secretary, are reasonable and adequate to meet the
costs which must be incurred by efficiently and
economically operated facilities . . . to assure that
individuals eligible for medical assistance have
reasonable access . . . to inpatient hospital services
of adequate quality[.]
42 U.S.C. § 1396a(a)(13)(A) (1992).
One of the primary purposes for passing the Boren Amendment
was to provide states with flexibility in setting reimbursement
rates and thereby reduce Medicaid costs. See Wilder, 496 U.S. at
505-06. However, because of the litigation that was generated
after the Boren Amendment’s enactment, Congress recognized that
the Amendment had the opposite effect on Medicaid costs than it
had intended. See 141 CONG. REC. S18693 (1995) (statement of Sen.
Roth) (“The Boren amendment . . . has been used to actually bid
the price of nursing home care up higher.”). Accordingly, with
the continued rise in Medicaid costs, Congress repealed the Boren
Amendment in the Balanced Budget Act of 1997. See H.R. REP. NO.
105-149, at 1230 (1997). According to the legislative history,
Congress’s intent in repealing the Boren Amendment was “to
provide States with greater flexibility in setting provider
reimbursement rates under the Medicaid Program.” 143 CONG. REC.
S4000 (1997) (statement of Sen. Hutchison).
Congress replaced the Boren Amendment with the more limited
requirement that states provide for a public notice-and-comment
process in their reimbursement ratemaking decisions. See 42
U.S.C. § 1396a(a)(13)(A) (2000). Again according to the
legislative history, Congress intended to free the states from
federal regulation and increased rates and to eliminate a basis
for causes of action by providers to challenge reimbursement
rates. See H.R. REP. NO. 105-149, at 1230 (1997) (“A number of
Federal courts have ruled that State systems failed to meet the
test of ‘reasonableness’ and some States have had to increase
payments to these providers as a result of these judicial
interpretations.”); see also id. (“It is the Committee’s
intention that, following the enactment of [the Balanced Budget
Act of 1997], neither this nor any other provision of [§ 1396a]
will be interpreted as establishing a cause of action for
16
a. The Notice Requirements
The district court observed that section 13(A) required Hood
to publish “the proposed and final rates, along with the
methodologies underlying such and the justification for such.”
Evergreen, 116 F. Supp. 2d at 753. The district court concluded
that the notices placed in the newspapers did not satisfy these
requirements. In support of this conclusion, the district court
relied on deposition testimony to the effect that the newspaper
notices, as interpreted by the court, did not contain the
proposed rates required by section 13(A).
On appeal, Hood argues that the notices did comply with the
requirements of section 13(A). Specifically, Hood contends that
LDHH placed notices in eight Louisiana newspapers with the
largest statewide circulations. Hood maintains that these
notices announced: (1) the 7% reimbursement rate reduction, (2)
the location of the existing methodology in the Louisiana
Register,13 and (3) the justification of avoiding a budget
deficit in Louisiana’s medical assistance program. Hood argues
hospitals and nursing facilities relative to the adequacy of the
rates they receive.”).
13
The Louisiana Register contains the published
reimbursement framework or methodology, consisting of rules and
formulas, for each category of provider. The newspaper notices
referenced this methodology, citing to the specific volume and
number of the Louisiana Register, for each provider category that
was affected by the reimbursement rate reduction.
17
that the plaintiffs’ sole argument is that because Hood published
the proposed rate as a percentage and not as a dollar figure, he
violated the mandates of the section. Hood contends that such an
argument “flies in the face” of the section’s goal of “maximum
possible flexibility” and that the “7%” language was “best
calculated to inform interested persons of what action [LDHH]
intended to take.”
The plaintiffs respond by arguing that they provided “ample
evidence” demonstrating that Hood violated section 13(A). First,
the plaintiffs point to the deposition of Sandra Victor, Chief of
the Policy Development and Implementation Section in the Bureau
of Health Services Financing, in which she stated that the
notices did not contain the proposed rates. The plaintiffs also
refer to Castille’s deposition, in which he testified that the
notices did not contain the proposed rates or the methodology
behind those rates.
The plaintiffs also argue that the methodology referenced in
the notices was that of the state’s approved methodology adopted
June 20, 1994, and not the methodology underlying the proposed
rates. Because the 2000 reimbursement rate reduction was made
without regard to a new methodology, the plaintiffs argue that
the state failed to comply with section 13(A)’s requirement that
the methodology underlying the proposed rates be published. The
plaintiffs find support for this assertion in the deposition
testimony of Jerry Barnard, a Rate Determination Specialist for
18
LDHH. Barnard testified that the 7% reduction was independent of
the state’s approved methodology14 and did not “fit into that
methodology at all.”
With this information, the district court determined that
“it is virtually impossible to conclude at this time that a
reasonable opportunity for review or comment on the new rates was
given to the interested parties.” Evergreen, 116 F. Supp. 2d at
753. We disagree.
As quoted above, section 13(A) requires a state, when
proposing an amendment to its state plan, to publish (1) the
proposed rates, (2) the methodology behind those rates, and (3)
the justification for such, in order to afford “providers,
beneficiaries and their representatives, and other concerned
State residents” a “reasonable opportunity for review and comment
on the proposed rates, methodologies, and justifications.” 42
U.S.C. § 1396a(a)(13)(A). We conclude that Hood’s notices
“outlined the substance of the plan in sufficient detail to allow
interested parties to decide how and whether to seek more
information on the plan’s particular aspects.” Miss. Hosp. Ass’n
v. Heckler, 701 F.2d 511, 520 (5th Cir. 1983) (discussing the
public process procedures of 42 C.F.R. § 447.205).
Addressing the rate, methodology, and justification
requirements of section 13(A) in order, we find that the 7%
14
See supra note 13.
19
reduction language was sufficient to satisfy the first
requirement of providing interested persons with a “reasonable
opportunity to review” the proposed rates. As Castille stated in
his deposition, indicating the new rate by a percentage was
intended “to be the most understandable way in as plain English
as possible [to demonstrate] what the impact of the changes would
be.” We agree with Hood that the use of a percentage, rather
than a dollar figure, in the notice was an acceptable way to
inform interested persons of what action LDHH intended to take.
Moreover, LDHH sent rate letters to all ICF/MRs and nursing
facilities, in which these providers were informed of their
respective new rates.
The district court relied on the testimony of Sandra Victor
in finding that the notices did not contain the required “rate”
language. However, Victor’s deposition testimony also revealed
that the notices described the proposed change in reimbursement
rates and that it would have been “unusual” to publish the
proposed rates in the notices. As Castille acknowledged, LDHH
could have published notices that were several pages in length in
which LDHH described each provider’s new rate. We conclude,
however, that such a notice may not have as readily furnished
recipients or providers with the proper tools to understand the
impact of the rate reduction. By stating that there would be a
7% reduction, recipients and providers could understand the
import of the changes, making them better equipped to comment on
20
the proposed change. We find this notice of the proposed rates
to be satisfactory. See Indep. Acceptance Co. v. State of Cal.,
204 F.3d 1247, 1253 (9th Cir. 2000) (“Notice provisions are
designed to outline[] the substance of the plan in sufficient
detail to allow interested parties to decide how and whether to
seek more information on the plan’s particular aspects.”
(internal quotations omitted) (alteration in original) (quoting
Visiting Nurse Ass’n v. Bullen, 93 F.3d 997, 1010 (1st Cir.
1996)); Visiting Nurse Ass’n v. Bullen, 93 F.3d 997, 1010 (1st
Cir. 1996) (“As their name suggests, . . . ‘notice’ provisions
are neither invariably nor primarily designed to afford
exhaustive disclosure[.]”).
Regarding the publication of the methodology underlying the
proposed rates, Hood argues that it was referenced in the
notices. The plaintiffs contend that the 7% reduction was simply
an across-the-board cut that was made “without regard to the
approved methodology.” The plaintiffs argue further that because
there is deposition testimony demonstrating that the methodology
underlying the proposed rates was “independent” of the existing
methodology, the methodology underlying these particular proposed
rates was not actually published. Aside from its blanket
statement that “[t]he notices in question did not provide the
required information,” the district court did not specifically
address this issue; however, we find that the combination of the
reference to the existing methodology in the published notices
21
plus the announcement that the current rates would be reduced by
7% was sufficient to provide those interested with reasonable
notice of the methodology underlying the proposed rates. See
Heckler, 701 F.2d at 520; see also Indep. Acceptance Co., 204
F.3d at 1253; Bullen, 93 F.3d at 1010.
The district court also did not speak specifically to the
requirement of publication of the justification for the proposed
rates. Hood argues that LDHH did supply the justification for
the rate change, namely that the “action [was] being taken in
order to avoid a budget deficit in the medical assistance
program.” We find this justification sufficient to satisfy this
specific mandate of section 13(A).
We also disagree with the district court that the notices
did not provide an opportunity for review and comment. The
district court determined that because the notices did not
provide the required information, it was “virtually impossible to
conclude . . . that a reasonable opportunity for review or
comment on the new rates was given to the interested parties.”
Evergreen, 116 F. Supp. 2d at 753. From a full review of the
record, however, we conclude that the plaintiffs were provided
with more than adequate notice and opportunity for review and
comment. Specifically, on January 25, 2000, Hood published a
series of notices in the newspapers of widest circulation. These
notices appeared more than thirty days before the effective date
of the reimbursement rate reduction, which was March 1, 2000. As
22
we have just clarified, the notices adequately satisfied the
guidelines regarding their content: the notices informed the
public that a 7% reduction in payment to certain private
providers would occur; they referenced the methodology behind the
existing rates with an indication that those rates would be
reduced by 7%; and they explained that the reimbursement rate
reduction was occurring due to a budget deficit. Moreover, the
record reveals that, along with sending rate letters to various
health care providers, Hood and Castille met with several
interested provider groups, including the Rural Hospital
Coalition, Louisiana Nursing Home Association, community service
providers, the medical society, and the medical association. On
February 10, 2000, the Medical Care Advisory Committee convened
to discuss the reimbursement rate reduction, and several
interested groups were in attendance.15 Finally, the published
notices invited written comment by interested parties and
provided the name of a person to whom those parties could send
their concerns or comments, along with that person’s contact
information.
Therefore, we find that the district court abused its
discretion in determining that Hood failed to comply with these
procedures of section 13(A). The current section 13(A) was
enacted to provide states with flexibility in setting its
15
At that meeting, the Medical Care Advisory Committee
adopted a motion approving the reimbursement rate reduction.
23
reimbursement rates.16 Moreover, the overall purpose of section
13(A)’s criteria is to provide interested parties notice and an
opportunity for review and comment. See Heckler, 701 F.2d at 520
(discussing the requirements of 42 C.F.R. § 447.205 and finding
that “[t]he agency was not required to publish every minute
detail of the plan”); accord Bullen, 93 F.3d at 1010 (“As their
name suggests, . . . ‘notice’ provisions are . . . to alert
interested parties that their substantive rights may be affected
in a forthcoming public proceeding.”). We find Hood’s notices
satisfied this purpose and conclude that interested parties were
“given a reasonable opportunity for review and comment on the
16
See supra note 12.
24
proposed rates, methodologies, and justifications.”17 42 U.S.C.
§ 1396a(a)(13)(A)(ii).18
17
We recognize that HCFA sent LDHH certain stop-the-clock
letters after LDHH submitted its proposed amendment to HCFA on
March 27, 2000. LDHH received these letters on June 21, 2000.
The letters requested additional information and clarification on
various issues. One letter provides:
The language [in the proposed amendment] states
“private hospitals are reimbursed at ninety three
percent (93%) of the per diem rates in effect as of
March 7, 2000”. Is this intended to eliminate the
current payment methodology and set a fixed payment
rate for services or to set the payment rate at 93% of
[the] payment rate as determined by the methodology set
forth in the State plan? Will rates continue to be
adjusted annually for inflation and then apply the 93%
calculation? Please revise the plan language to
clearly indicate how the rates will be determined.
This request suggests that there may be an ambiguity or a
structural defect in the state plan amendment. Any such problem
is not before us. A challenge under section 13(A) to the
adequacy of the notice of the proposed rates and of the
methodologies underlying the establishment of such rates is not
an appropriate vehicle for raising substantive defects in the
rates or the methodologies for establishing them.
18
The district court also based its holding upon the fact
that “perhaps ‘emergency rules’ would not have been necessary had
the issue of the predicted budget shortfall been addressed
earlier.” Evergreen, 116 F. Supp. 2d at 753. However, we find
that this is not an appropriate inquiry. As we explained in note
12, supra, with the repeal of the Boren Amendment in 1997 and the
establishment of the present section 13(A), HCFA informed LDHH by
letter that it must amend its state plan in order to provide for
a public process in compliance with the new section. The letter
contained “Public Process Options” that HCFA found “acceptable”
and that would still “allow[] states the flexibility to design
their public process.” LDHH adopted one of those options for its
state plan and employed that option during the process now in
dispute. Therefore, because Hood complied with one of the public
process options approved by HCFA, which provided a thirty-day
comment period, we conclude that Hood was within his authority to
propose the new rates using the modified rulemaking process.
25
b. The Situation of Disproportionate Share Hospitals
In addition to finding that the notices did not contain the
required information to provide interested parties with notice
and an opportunity for review and comment, the district court
concluded that deposition testimony existed which demonstrated
that Hood did not consider the situation of hospitals that serve
a disproportionate number of low-income patients with special
needs (“DSHs”) when he formulated the reimbursement rate
reduction.19 The court points to the deposition of Tom Collins,
Louisiana’s Medicaid Director, in which he testified that he did
not “recall considering” the needs of these hospitals.
Hood argues that the situation of DSHs was considered by
LDHH and that LDHH “decided to make no reductions to the separate
budget that Louisiana has for DSH hospital payments.” Therefore,
Hood contends that no changes were made in the amount of, or the
methodology for, DSH payments.20 The plaintiffs reply that Hood
19
The final subsection of section 13(A) provides that
“[i]n the case of hospitals, such rates take into account . . .
the situation of hospitals which serve a disproportionate number
of low-income patients with special needs.” 42 U.S.C.
§ 1396a(a)(13)(A)(iv).
20
During oral argument in this court, there was a
discussion over the distinction between “rates” and “payments.”
Hood argued that because the uncompensated cost “payment”
percentage of seventy percent remained the same, LDHH need not
have been concerned about the situation of these hospitals when
their “rates” were reduced by 7%. Hood’s counsel revealed that
while the “reimbursements” to DSHs were included in the cut, the
other “payments” to DSHs were not. In the March 2, 2000 hearing
on the temporary restraining order, LDHH’s general counsel
explained this concept:
26
“admitted” that in adopting the rate reduction, he failed to
consider the situation of DSHs.
To ascertain whether Hood complied with the last subsection
of section 13(A), we must pay special attention to the language
of that subsection. Under a plain reading of section 13(A), the
“rates” are required to take into account the situation of DSHs.
Therefore, if the rates, as amended, take into account the
situation of DSHs, then the question whether Hood himself, or
LDHH, “considered” the situation of the hospitals before
implementing the rate reduction need not be addressed.
DSHs receive a separate payment as a reimbursement for
uncompensated costs, equal to seventy percent of those
uncompensated costs. The separate DSH payment of seventy percent
of uncompensated costs was not altered with the rate reduction.
We conclude that because the DSH payments were not altered, the
reduced rates necessarily take into account the situation of
DSHs. This is because the 7% rate reduction will be considered
an uncompensated cost, and therefore, DSHs would still recover
seventy percent of that 7% rate reduction as a “payment” due to
[O]ne of the points here was made that we had not
considered the disproportionate share hospitals’
impact, rural hospitals. They will get 70 percent of
the cuts back to them because they are — they get an
in-kind match — the rural hospitals are set up in such
a way in [the] statute to where they can get an in-kind
return of 70 percent uncompensated costs. And this
rate cut for them would be an uncompensated cost so
they would get 70 percent of that back.
27
their special status. Therefore, inasmuch as the 7% reduction
qualifies as an uncompensated cost, the reduced rates would
continue to account for the special situation of DSHs. The
district court’s conclusion to the contrary was error.
In summary, we conclude that the district court abused its
discretion in finding that, due to Hood’s presumed failure to
publish the proposed rates, methodology, and justifications
behind the rate reduction, the plaintiffs have a substantial
likelihood of success in demonstrating that Hood failed to give
interested individuals “a reasonable opportunity for review and
comment.” Furthermore, we conclude that the district court
misinterpreted section 13(A)’s requirement that the rates take
into account the situation of DSHs and, therefore, abused its
discretion in finding that the plaintiffs have a substantial
likelihood of success in proving a violation of section 13(A)’s
final subsection.
B. Substantial Likelihood of Success on the Merits
Under Section 30(A)
1. Availability of a Right of Action Under § 1983 to Redress
Violations of Section 30(A)
As with our analysis of section 13(A), to determine if the
plaintiffs have a substantial likelihood of success on the
28
merits, we must begin by addressing whether the plaintiffs may
maintain a right of action under 42 U.S.C. § 1983 to remedy
violations of section 30(A). The district court concluded that
both the provider plaintiffs and the recipient plaintiffs have a
right of action under § 1983 to redress violations of section
30(A).
We agree that under the controlling test fashioned by the
Supreme Court, which we will discuss infra, recipients have that
right of action. However, we find that the district court erred
as a matter of law in finding that providers also have a right to
bring suit under § 1983 to remedy violations of section 30(A).
We begin our analysis by examining the test that the Supreme
Court has created to guide courts in determining whether Congress
intended a federal statute to provide plaintiffs with a right of
action under § 1983. Next, we consider whether section 30(A), in
fact, provides such a right to the individual plaintiffs in this
particular suit. Finally, once we have decided which plaintiffs
have a right of action under § 1983, we must evaluate whether
those plaintiffs have satisfied the evidentiary burden necessary
to demonstrate a substantial likelihood of success in proving
violations of section 30(A).
a. The Wilder/Blessing Test for Rights of Action Under
§ 1983 to Remedy Violations of a Federal Statute
29
Section 1983 affords a cause of action to a plaintiff
against anyone who, under color of state law, deprives a person
“of any rights, privileges, or immunities secured by the
Constitution and laws” of the United States. 42 U.S.C. § 1983;
see also Blessing v. Freestone, 520 U.S. 329, 340 (1997); Wilder
v. Va. Hosp. Ass’n, 496 U.S. 498, 508 (1990). Section 1983
provides redress for violations of federal statutes, as long as
the plaintiff is asserting a “violation of a federal right, not
merely a violation of federal law.” Blessing, 520 U.S. at 340.
Two leading Supreme Court decisions, Wilder v. Virginia
Hospital Ass’n, 496 U.S. 498 (1990), and Blessing v. Freestone,
520 U.S. 329 (1997), have recognized the “traditional” three-part
test employed to determine whether a plaintiff is advancing a
violation of a “federal right,” and not merely one of federal
law:
First, Congress must have intended that the provision
in question benefit the plaintiff. Second, the
plaintiff must demonstrate that the right assertedly
protected by the statute is not so “vague and
amorphous” that its enforcement would strain judicial
competence. Third, the statute must unambiguously
impose a binding obligation on the States. In other
words, the provision giving rise to the asserted right
must be couched in mandatory, rather than precatory,
terms.
Blessing, 520 U.S. at 340-41 (citations omitted); see also
Wilder, 496 U.S. at 509. However, under this test, even if a
plaintiff establishes that the federal statute at issue creates a
federal right, “there is only a rebuttable presumption that the
30
right is enforceable under § 1983,” Blessing, 520 U.S. at 341;
Congress may have expressly or impliedly foreclosed such a
remedy. See id.
Our analysis of the Wilder/Blessing test is facilitated by
Wilder itself, in which the Supreme Court addressed whether a
particular provision of the Medicaid Act created a “federal
right” for the plaintiffs in that case. In Wilder, the Supreme
Court considered whether the Boren Amendment — the precursor to
the current section 13(A)21 — was enforceable in an action
brought pursuant to § 1983. See 496 U.S. at 501-02. The Boren
Amendment required that payments to providers be “reasonable and
adequate to meet the costs which must be incurred by efficiently
and economically operated facilities[.]” 42 U.S.C.
§ 1396a(a)(13)(A) (1992).
The Wilder Court addressed whether health care providers
could bring suit to challenge the method by which a state
reimbursed those providers under the Medicaid Act. See Wilder,
496 U.S. at 501. In finding that health care providers could
bring such a suit, the Court employed the three-part test set out
above.
First, the Court concluded that there was “little doubt”
that the providers were the intended beneficiaries of the Boren
Amendment because it “establishe[d] a system for reimbursement of
21
For a discussion on the Boren Amendment, see note 12
supra.
31
providers and [was] phrased in terms benefiting health care
providers,” in that it required a state plan to provide for their
payment. Id. at 510. Next, the Court determined that the Boren
Amendment imposed a “binding obligation” on the states because
the provision was “cast in mandatory rather than precatory
terms.” Id. at 512. Persuasive to the Wilder Court in analyzing
this factor was that the section was prefaced with the language
that a “State plan must” provide for payment to health care
providers. See id. (emphasis and internal quotations omitted).
Moreover, the Court noted that receipt of FFP was “expressly
conditioned on compliance with the amendment and the Secretary is
authorized to withhold funds for non-compliance with this
provision.” Id. (citing 42 U.S.C. § 1396c and 42 C.F.R.
§ 430.35). Finally, the Court found that even though “the Boren
Amendment [gave] a State flexibility” in adopting rates, “the
obligation imposed by the amendment [was not] too ‘vague and
amorphous’ to be judicially enforceable.” Id. at 519. The Court
was persuaded by the fact that the section and its implementing
regulations provided factors that a state must consider in
adopting rates and by the fact that the provision afforded states
an “objective benchmark” of an “efficiently and economically
operated facilit[y]” against which states may measure the
reasonableness of their rates. See id. (alteration in original).
After establishing that the health care providers were
asserting a violation of a federal right, the Court concluded its
32
analysis by finding that Congress had neither expressly nor
impliedly “foreclosed enforcement of the Medicaid Act under
§ 1983.” Id. at 520-23. Recognizing that the state had conceded
that Congress had not expressly foreclosed resort to § 1983, the
Court determined that the administrative scheme underlying the
Medicaid Act “cannot be considered sufficiently comprehensive to
demonstrate a congressional intent to withdraw the private remedy
of § 1983.” Id. at 522.
In their analyses regarding whether the plaintiffs may bring
suit under § 1983 to remedy a violation of section 30(A), neither
Hood nor the district court reference Wilder. We recognize that
later cases have affected the Wilder analysis. See Suter v.
Artist M., 503 U.S. 347 (1992)22; see also Blessing, 520 U.S.
329.23 However, because these decisions did not overturn Wilder,
22
In Suter, the Court answered the question whether
certain children who were wards of the state had the right to
enforce a provision of the Adoption Assistance and Child Welfare
Act of 1980 (the “Adoption Act”) pursuant to a suit brought under
§ 1983. The Adoption Act required a state plan to contain a
provision that the state make “reasonable efforts” to “eliminate
the need for removal” of a child from his or her home and to
reunite the child with his or her family. See Suter, 503 U.S. at
350-51. The Suter Court held that the provision did not create a
cause of action for the children to enforce under § 1983 because
“the ‘reasonable efforts’ language d[id] not unambiguously confer
an enforceable right upon the Act’s beneficiaries.” Id. at 363
(emphasis added). Suter teaches us, then, that Congress must
unambiguously confer a benefit upon a plaintiff in order for that
plaintiff to enforce a federal statutory right under § 1983.
23
In Blessing, the Court confirmed the requirement that
in order for a plaintiff to state a claim under § 1983 for
violation of a federal statute, Congress must unambiguously
confer in that statute an “individual entitlement” upon the
33
plaintiff. The procedural protections of Title IV-D of the
Social Security Act came before the Court in Blessing, where the
Court faced a challenge by five mothers in Arizona, whose
children were eligible to receive child support services from the
state. See 520 U.S. at 332. The mothers sued pursuant to Title
IV-D of the Social Security Act to enforce a statutory provision
requiring “substantial compliance” with Title IV-D’s procedures.
See id. The Blessing Court, overturning the Court of Appeals for
the Ninth Circuit’s decision, held that this provision did not
create an enforceable right under § 1983. See id. at 342.
After setting out the “traditional” test for determining
whether a statutory provision creates an enforceable federal
right, the Court turned to whether the plaintiffs established
that Title IV-D provided them with such a right. The Blessing
Court found that the Ninth Circuit erred in broadly holding that
Title IV-D created a federal right of “substantial compliance”
with the Act. See id. at 342. The Court concluded that the
plaintiffs had not pled their case with enough specificity and
then went on to determine whether specific rights existed under
the statute. The Court distinguished among provisions of Title
IV-D that were “designed only to guide the State in structuring
its systemwide efforts at enforcing support obligations” and
those that were intended to benefit the plaintiffs. See id. at
344. First, the Court found that
the requirement that a State operate its child support
program in “substantial compliance” with Title IV-D was
not intended to benefit individual children and
custodial parents, and therefore it does not constitute
a federal right. Far from creating an individual
entitlement to services, the standard is simply a
yardstick for the Secretary to measure the systemwide
performance of a State’s Title IV-D program.
Id. at 343 (emphasis omitted). Accordingly, the requirement of
“substantial compliance” did not “fit [the] traditional three
criteria for identifying statutory rights” and, therefore, did
not create an enforceable federal right under § 1983. Id. at
344.
The Court pointed out that other similar provisions within
the Act also did not “fit” the criteria because they were
“designed only to guide the State in structuring its systemwide
efforts at enforcing support obligations.” Id. For example, the
Court explained that Title IV-D’s requirements for a data
processing system did not give rise to individualized rights to
computer services. See id. at 344-45. The Court acknowledged
that such provisions did “ultimately” benefit the recipients of
34
we conclude that Wilder is alive and well, albeit narrowed by the
commands of Suter and Blessing that Congress must unambiguously
confer through section 30(A) an “individual entitlement” upon
each of the plaintiffs in this case. See Blessing, 520 U.S. at
343-45 (providing examples of statutory provisions in Title IV-D
of the Social Security Act that “do not give rise to
individualized rights”); Suter, 503 U.S. at 357 (concluding that
Congress must “unambiguously confer” a right upon the particular
plaintiffs in that case). As a consequence of this conclusion,
we look first to whether the statute confers a federal right on
each of the plaintiffs in this case.
b. Section 30(A) Creates a “Federal Right” in Favor of the
Recipient Plaintiffs Enforceable Under § 1983
Section 30(A) provides in relevant part:
A State plan for medical assistance must . . . provide
such methods and procedures relating to the utilization
of, and the payment for, care and services available
under the plan . . . as may be necessary to safeguard
against unnecessary utilization of such care and
services and 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 services, “but only indirectly,” and thus did not give rise
to enforceable individual rights. See id.
35
42 U.S.C. § 1396a(a)(30)(A) (2000).24 With the Wilder/Blessing
framework in mind, we now analyze whether section 30(A) conveys a
federal right on the plaintiffs, distinguishing between the
interests of the recipient plaintiffs and those of the provider
plaintiffs.
(1) Intended Beneficiaries
(i) The Recipient Plaintiffs
The district court found that section 30(A) protected the
recipient plaintiffs and “their access to medicaid care.”
Evergreen, 116 F. Supp. 2d at 750. Hood asserts that because the
provision focuses on cost containment and furnishes goals and
general guidelines for states in setting their reimbursement
rates, section 30(A) was “never intended to create an individual
entitlement to specific reimbursement rates or services for
particular providers or beneficiaries.” The plaintiffs respond
that due to “the overwhelming case law” in other circuits, which
has found a right of action in favor of both recipients and
providers, “the district court was certainly correct in finding
that Congress intended the equal access mandate of [section]
30(A) to benefit Medicaid beneficiaries and providers.”
24
Because the district court’s injunction did not rest on
the provision of section 30(A) relating to quality of care, we do
not address the enforceability of that provision here.
36
We agree with our sister circuits which have held that
recipients are the intended beneficiaries of section 30(A). See
Ark. Med. Soc’y, Inc. v. Reynolds, 6 F.3d 519, 526 (8th Cir.
1993) (“The equal access provision is indisputably intended to
benefit the recipients by allowing them equivalent access to
health care services.”); accord Visiting Nurse Ass’n v. Bullen,
93 F.3d 997, 1004 n.7 (1st Cir. 1996) (acknowledging that
Medicaid recipients “are intended beneficiaries under the ‘equal
access’ requirement as it affects the availability of their
medical care”).
Under the rationale of Wilder, we conclude that recipients
are intended beneficiaries of section 30(A) because the provision
is “phrased in terms” benefitting recipients in that it directly
focuses on their access to medical care. See Wilder, 496 U.S. at
510. Indeed, section 30(A) speaks clearly in terms of the
recipients because “care and services are [to be] available under
the [state] plan at least to the extent that such care and
services are available to the general population in the
geographic area.” 42 U.S.C. § 1396a(a)(30)(A). As such, we
agree with the district court that section 30(A) “protects
beneficiaries and their access to medicaid care,” Evergreen, 116
F. Supp. 2d at 750, and find that the recipient plaintiffs have
an “individual entitlement” to the equal access guarantee of
section 30(A). See Blessing, 520 U.S. at 343.
37
(ii) The Provider Plaintiffs
The more difficult question here is whether the health care
providers are also intended beneficiaries of section 30(A). The
district court agreed “with those decisions which have found
providers to be ‘beneficiaries’ under the equal access portion of
the statute,” Evergreen, 116 F. Supp. 2d at 750, and thus
concluded that Congress intended section 30(A) to benefit the
provider plaintiffs in this case.
We recognize that other circuits have answered this question
affirmatively, finding that Congress intended section 30(A) to
benefit health care providers. See Ark. Med. Soc’y, Inc., 6 F.3d
at 526 (“The providers here are beneficiaries for the same reason
that the providers in Wilder were beneficiaries.”); accord
Bullen, 93 F.3d at 1004 (finding that “providers are
appropriately considered intended beneficiaries” of section
30(A)); Methodist Hosps., Inc. v. Sullivan, 91 F.3d 1026, 1029
(7th Cir. 1996) (“We therefore follow Arkansas Medical Society
and hold that providers of medical care have a private right of
action, derived through § 1983, to enforce [section 30(A)].”);
Moody Emergency Med. Serv., Inc. v. City of Millbrook, 967 F.
Supp. 488, 494 (M.D. Ala. 1997) (finding the provider plaintiff
to be an intended beneficiary of section 30(A)). However, these
courts have compared section 30(A) to the Boren Amendment and
have reasoned that a right of action exists in favor of health
38
care providers simply because section 30(A) speaks in terms of
payment to these providers. See Ark. Med. Soc’y, Inc., 6 F.3d at
526 (concluding that providers are intended beneficiaries of
section 30(A) because it “addresses payment for ‘care and
services’ provided by noninstitutional providers”); see also
Bullen, 93 F.3d at 1004 (“As long as [the Boren Amendment and
section 30(A)] evince a congressional concern for preserving
financial incentives to providers[,] . . . providers are
appropriately considered intended beneficiaries.”); Moody
Emergency Med. Serv., Inc., 967 F. Supp. at 494 (citing Bullen
for the proposition that providers are intended beneficiaries of
section 30(A) because the provision “evince[s] a congressional
concern for preserving financial incentives to encourage health
care providers to provide services to Medicaid recipients”).
We think reliance on the Boren Amendment is insufficient to
resolve this issue. Blessing and Suter demand that we focus our
inquiry on whether Congress intended to create an “individual
entitlement” for each plaintiff. As we illustrate below, in
contrast to the Boren Amendment, section 30(A) does not create an
“individual entitlement” for individual providers to a particular
level of payment because it does not directly address those
providers. Instead, section 30(A) speaks directly to individual
recipients, conferring upon them an “individual entitlement” to
equal access to medical care.
39
The Wilder Court held that the Boren Amendment
“establishe[d] a system for reimbursement of providers,” 496 U.S.
at 510, in that it was directly keyed to their financial
interests by requiring “reasonable and adequate” payments to
those providers. See 42 U.S.C. § 1396a(a)(13)(A) (1992).
Therefore, the Boren Amendment directly addressed providers.
Section 30(A), as we discussed in the prior section, focuses on
recipients in that it is directly keyed to the recipients’ access
to medical care, and as a result, the recipients are the direct
intended beneficiaries of the section.
However, in contrast to the Boren Amendment, section 30(A)
does not create an individual entitlement in favor of any
provider. The section benefits recipients by ensuring there is
an adequate number of providers in the marketplace. Therefore,
it may be true that health care providers as a group are
indirectly benefitted by section 30(A) because the section
requires that the payments to providers be sufficient to ensure
that Medicaid recipients have equal access to medical care. But
it cannot be said that section 30(A) necessarily confers upon
each provider an individual right to a particular payment because
the section does not focus directly on providers.
One example will suffice: Assume we have a nursing home in
Baton Rouge with 150 residents, which, following the 7%
reduction, is forced into bankruptcy and then liquidation.
Assume further that the district court decides that the relevant
40
geographic market to measure the access of recipients is the
Baton Rouge market for nursing home care and also that the
district court concludes that the recipients are entitled to the
same access to nursing home care in Baton Rouge as that of non-
Medicaid residents.25 Finally, assume that, once the nursing
home closes, all 150 residents are able to fill vacant beds in
other facilities in Baton Rouge. Under this scenario, there is
no violation of the recipients’ equal access rights, despite the
fact that the bankrupt nursing home was put out of business.
From this example, it is apparent that while recipients have
an individual entitlement to equal access to medical care, any
benefit to health care providers is indirect at best. The
statute does not confer any direct right upon the individual
provider because, as the above example illustrates, even if an
individual provider is forced to liquidate, the recipients’ right
to access is not necessarily violated. That the provider
plaintiffs may receive an indirect benefit under section 30(A) is
not sufficient to support a claim that they are its intended
beneficiaries. See Blessing, 520 U.S. at 344. Accordingly, we
25
This assumption is derived from the express requirements
of the equal access provision and from guidance provided by the
House Report accompanying the codification of the equal access
portion of section 30(A). See 42 U.S.C. § 1396a(a)(30)(A); H.R.
REP. NO. 101-247 (1989), reprinted in 1989 U.S.C.C.A.N. 1906
(“The question which the Secretary must ask is whether Medicaid
beneficiaries have access to provider services that is at least
as great as that of others in the area[.]”).
41
find that providers are not intended beneficiaries of section
30(A).26
We recognize that if the reimbursement rate reduction should
result in the widespread demise of providers or discharge of
Medicaid patients for fiscal reasons, the access of Medicaid
recipients to care and services may be adversely affected,
potentially to a degree that would violate section 30(A)’s
command of equal access. For this reason, evidence of financial
distress to providers resulting from the rate reduction is
clearly relevant to the question whether the equal access right
provided by section 30(A) to Medicaid recipients has been
violated. For the reasons we have indicated, however, the fact
that evidence of financial distress is relevant in a suit brought
by Medicaid recipients does not amount to an individual
entitlement on the part of any provider under the statute.
26
While we recognize the statutory maxim that “[t]he views
of a subsequent Congress form a hazardous basis for inferring the
intent of an earlier one,” Firestone Tire & Rubber Co. v. Bruch,
489 U.S. 101, 114 (1989) (internal quotations omitted) (quoting
United States v. Price, 361 U.S. 304, 313 (1960)) — a maxim that
has special force when the later Congress is amending a section
of the statute different from the one under consideration — we
note that our conclusion that providers are not intended
beneficiaries of section 30(A) is consistent with Congress’s
concern in its repeal of the Boren Amendment to preclude further
lawsuits by providers to contest the adequacy of their
reimbursement rates. See H.R. REP. NO. 105-149, at 1230 (1997)
(“It is the Committee’s intention that, following the enactment
of [the Balanced Budget Act of 1997], neither this nor any other
provision of [§ 1396a] will be interpreted as establishing a
cause of action for hospitals and nursing facilities relative to
the adequacy of the rates they receive.”).
42
(2) Vague and Amorphous
Having found that only the recipient plaintiffs are intended
beneficiaries of section 30(A), we turn to the second factor of
the Wilder/Blessing test.27 We agree with the district court and
the many other courts that have addressed the equal access
provision that it is not too vague and amorphous to be beyond the
competence of the judiciary to enforce. However, we reach this
conclusion employing a different analysis than that used by the
district court.28
27
Because we have concluded that health care providers are
not intended beneficiaries of the equal access provision, we
continue our analysis focusing only on the recipient plaintiffs.
28
The district court and the plaintiffs incorrectly
analyzed this prong of the Wilder/Blessing test. The district
court found that the equal access provision was not too vague and
amorphous to enforce because the
[p]laintiffs set forth a detailed and specific claim
that their federal rights under . . . the equal access
. . . section[] of the Medicaid statute were violated
through the defendants [sic] promulgation of the
proposed rates in an emergency rule without adequately
assuring the rates would not affect access to medical
care[.]
Evergreen, 116 F. Supp. 2d at 750-51. It is apparent that the
district court borrowed language from Blessing to analyze this
factor, see Blessing, 520 U.S. at 342; however, such reliance is
misplaced. In the first instance, the Court never reached the
vague-and-amorphous question because it found that the plaintiffs
had not “identified with particularity the rights they claimed.”
Id. The Court found that the plaintiffs had presented violations
of Title IV-D as an “undifferentiated whole” and did not
distinguish among the rights they were attempting to enforce.
See id. The Blessing Court advised that the complaint must be
“broken down into manageable analytic bites” before a court can
“ascertain whether each separate claim satisfies the various
criteria we have set forth for determining whether a federal
43
Hood asserts that section 30(A) “lack[s] sufficient
specificity and detail to create an enforceable right under
§ 1983.” Additionally, Hood contends that neither the statute
nor its underlying regulations provide any guidance to measure
equal access. Hood acknowledges that “[a] number of earlier
decisions” have found section 30(A) to be sufficiently definite
for courts to enforce; however, Hood argues that these cases were
decided “without the benefit of the Supreme Court’s reasoning in
Blessing.”
The plaintiffs respond by arguing that “the equal access
mandate was a regulation for 24 years and a statute now for the
last 11 years.” Therefore, the plaintiffs contend that “[a] body
of well established case law [from] multiple circuit courts
supports [the plaintiffs’] rights to enforce the equal access
mandate.”
We agree with those courts that have held that the equal
access mandate of section 30(A) is sufficiently definite to
enforce. See Bullen, 93 F.3d at 1005; Ark. Med. Soc’y, 6 F.3d at
527; Moody Emergency Med. Serv., Inc., 967 F. Supp. at 495.
First, in Wilder, the Supreme Court found that the idea of
“reasonable access” to medical care was not so vague and
amorphous to render the Boren Amendment unenforceable by the
statute creates rights.” Id. Because the Blessing Court did not
engage this analysis in determining whether the plaintiffs were
asserting a federal right, it is inapposite to our vague-and-
amorphous analysis.
44
courts. See Wilder, 496 U.S. at 519. Here, we are evaluating
recipients’ “equal access” to care and services. As with the
“reasonable access” requirement in the Boren Amendment, section
30(A)’s “equal access” mandate is also undefined by the statute
and its implementing regulations. See id. at 507. Still, the
Wilder Court found the provision sufficiently definite to
enforce, see id. at 519, as we do the “equal access” language of
section 30(A). Indeed, the equal access provision provides the
state and courts with a much less ambiguous “measuring rod” by
which to evaluate recipients’ access to care. See Ark. Med.
Soc’y, 6 F.3d at 527; see also Bullen, 93 F.3d at 1005 (“[T]he
term ‘equal access,’ as employed in section [30(A)], arguably
provides a more concrete standard [than ‘reasonable access’],
objectively measurable against the health care access afforded
among the general population[.]”).
Second, we understand that the phrase “geographic area”
could have many definitions depending upon the type of service or
the needs of recipients in a particular area. See Methodist
Hosps., Inc., 91 F.3d at 1029. However, courts are familiar with
the concept and are able to assess its meaning in a particular
case. See id. (recognizing that courts have “wrestled with the
concept of the ‘geographic market’ in antitrust law without
producing a mechanical definition” and concluding that
“[d]efining geographic markets for medical care has proven no
more tractable than geographic markets in general, but courts
45
soldier on”). Furthermore, the Boren Amendment required states
to “tak[e] into account geographic location and reasonable travel
time” in determining “reasonable access,” 42 U.S.C.
§ 1396a(a)(13)(A) (1992), and the Wilder Court upheld its
enforceablity. See 496 U.S. at 519-20. We follow Wilder and
conclude that the phrase “geographic area” is not too vague and
amorphous to be beyond the competence of the judiciary to
enforce.
Above all, the equal access provision affords the “objective
benchmark” of access to medical care equal to that of the general
population in the same geographic area. Cf. Wilder, 496 U.S. at
519; see also Bullen, 93 F.3d at 1005 (concluding that the equal
access provision is “objectively measurable against the health
care access afforded among the general population”); Ark. Med.
Soc’y, 6 F.3d at 527 (“The equal access provision . . . actually
gives a measuring rod for accessibility which . . . is
sufficiently specific.”). This finding of an “objective
benchmark” was critical in Wilder, and we conclude that it is
satisfied with respect to section 30(A).
(3) Binding Obligation
Finally, we agree with the district court that section 30(A)
“‘unambiguously impose[s] a binding obligation on the States.’”
Evergreen, 16 F. Supp. 2d at 751 (quoting Blessing, 520 U.S. at
341). As was the Boren Amendment, section 30(A) “is cast in
46
mandatory rather than precatory terms,” Wilder, 496 U.S. at 512,
in that it provides that a state plan “must” have methods and
procedures in place to assure payments are sufficient to maintain
equal access to medical care for Medicaid recipients. Also,
under the Medicaid Act, HCFA has the authority to withhold funds
for noncompliance with section 30(A). See 42 U.S.C. § 1396c; 42
C.F.R. § 430.35 (providing the bases for which HCFA may withhold
FFP); see also Wilder, 496 U.S. at 512.29 The Supreme Court in
Wilder found these factors persuasive when considering the Boren
Amendment, see Wilder, 496 U.S. at 512, as do we in our
consideration of section 30(A).
(4) Conclusion
We therefore find that recipients are intended beneficiaries
of section 30(A) because it directly addresses their access to
medical care. However, we conclude that because section 30(A)
did not confer upon providers an “individual entitlement” to a
particular level of payment, the district court erred as a matter
29
As further evidence of the mandatory nature of the
provision, in 1989, Congress, concerned that the equal access
regulation was receiving inadequate enforcement, codified the
“equal access” language of section 30(A). See Pub. L. No. 101-
239, § 6402, 103 Stat. 2260 (1989) (codifying 42 C.F.R.
§ 447.204, which provides that “[t]he agency’s payments must be
sufficient to enlist enough providers so that services under the
plan are available to recipients at least to the extent that
those services are available to the general population”). This
codification is clear evidence that Congress intended the equal
access provision to be mandatory on the states. See Ark. Med.
Soc’y, 6 F.3d at 526.
47
of law in holding that they are intended beneficiaries of the
section. Furthermore, we find that section 30(A) is sufficiently
definite for the judiciary to enforce and that Congress intended
to impose a binding obligation on states when it enacted the
section. As such, the recipient plaintiffs may maintain a suit
under § 1983 to redress violations of the federal rights
conferred upon them by section 30(A).30
2. The Insufficiency of the Plaintiffs’ Evidence
Concluding that recipients may bring a cause of action under
§ 1983 to redress violations of section 30(A) does not end our
examination into whether the recipient plaintiffs have
established a substantial likelihood of success in proving
violations of section 30(A). The question we must now consider
is, in the case of these recipient plaintiffs, whether evidence
exists in the record that supports a finding that after the
reimbursement rate reduction, recipients will not have access to
medical care equal to that of the non-Medicaid population in the
30
We agree with the district court that Congress did not
foreclose a remedy under § 1983 for violations of section 30(A).
As the Supreme Court held in Wilder, the administrative scheme
underlying the Medicaid Act “cannot be considered sufficiently
comprehensive to demonstrate a congressional intent to withdraw
the private remedy of § 1983.” 496 U.S. at 522.
48
same geographic area.31 See 42 U.S.C. § 1396a(a)(30)(A). The
district court held that Hood’s primary reason for the rate
reduction was budgetary and that “[t]here was no evidence of a
determination of the impact the seven percent . . . reduction
would have on providers.” Evergreen, 116 F. Supp. 2d at 752. We
conclude, however, that this was the wrong inquiry.
In order to succeed on a motion for preliminary injunctive
relief, the plaintiffs must, “by a clear showing, carr[y] the
burden of persuasion.” White v. Carlucci, 862 F.2d 1209, 1211
(5th Cir. 1989); see also Doe v. Duncanville Indep. Sch. Dist.,
994 F.2d 160, 163 (5th Cir. 1993) (“To obtain a preliminary
injunction, a movant has the burden of proving . . . a
substantial likelihood of success on the merits[.]”). The
plaintiffs have proffered affidavits and other documentary
evidence attempting to demonstrate a negative impact to Medicaid
recipients’ equal access to care and services. Most of the
affidavits submitted were by providers, in which they asserted
that should the 7% reimbursement rate reduction be implemented,
they may be forced into bankruptcy and will be unable to continue
to care for the recipients. The evidence also offers predictions
31
We note that the statute in section 30(A) speaks in
terms of “payments,” rather than “rates.” While a reimbursement
rate is a form of payment, there are other types of payment to
providers, such as those to DSHs and, possibly, co-payments made
by recipients. These additional payments must also be taken into
account in assessing whether the payments in the aggregate will
be adequate.
49
that providers may be compelled to discharge some recipients or
at least limit their access.
Regarding the actual impact on recipients, the record
reveals evidence on only two of the recipient plaintiffs — Donna
Methvien, mother of Victor Lee Methvien, Jr., and Farley Wayne
Luttrell. Donna Methvien, in her “affidavit,”32 attests that
should the reimbursement rate reduction go into effect, there
will be a severe “impact on [her] son’s life and others at the
community home in need of these special Medicaid funds.”
Furthermore, the record contains an affidavit by John Taylor,
Vice President of Program Operations for Evergreen Presbyterian
Ministries, Inc., in which he states that “[i]t is likely if the
budget cuts are implemented that we will not be able to provide
the services required or find an alternative treatment site for
Mr. Luttrell and other severely disabled patients who therefore
will lose access to needed medical care.”
The plaintiffs argue further that “[s]tate institutions
cannot absorb the number of residents if nursing facilities
cannot continue to accept Medicaid recipients.” However, aside
from deposition testimony from Jerry Barnard that “predicts that
Medicaid recipients may no longer be accepted by facilities if
32
We note that several of these “affidavits” were not
notarized or witnessed, and the district court recognized this
deficiency at a motions hearing on March 27, 2000. Ms.
Methvien’s “affidavit” was deficient in this manner.
50
their costs are not covered,” the plaintiffs point to no evidence
to support this contention.
In our evaluation of the plaintiffs’ evidence and of the
district court’s opinion, we find two problems with the district
court’s disposition of the evidence. First, the district court
failed to address whether the access of individual Medicaid
recipients will remain equal to that of the non-Medicaid
population in the same geographic area after the proposed 7% rate
reduction. Instead, as we stated above, the court found only
that LDHH had failed to conduct studies33 and failed to determine
the impact of the rate reduction on providers. Thus, there were
no findings on whether the plaintiffs carried their burden of
demonstrating on the evidence that these individual recipients
will be denied equal access to medical care.
Second, the plaintiffs failed to adduce evidence to support
any such findings. In order for the recipient plaintiffs to
establish a substantial likelihood on the merits, they must
present evidence which demonstrates that if the 7% rate reduction
is made effective, the recipients in a particular geographic area
will not receive access to medical care equal to that of the non-
33
The district court based its holding upon the fact that
there was no evidence that LDHH conducted studies before
implementing the rate reduction. While we do not reach the
merits of this conclusion, we note that studies, while helpful,
are not required by the language of section 30(A). Accord
Methodist Hosps., Inc., 91 F.3d at 1030 (“Nothing in the language
of [section 30(A)], or any implementing regulation, requires a
state to conduct studies in advance of every modification.”).
51
Medicaid population in that area. Instead of producing such
evidence, the plaintiffs put in evidence which predicted that the
providers would experience financial distress. While we agree
that the evidence presented by the plaintiffs is certainly
relevant, it provides us with no information on the actual impact
on the comparability to the general population of the recipients’
access to medical care. Instead, it focuses solely on the impact
on providers.
Moreover, there is no evidence from the plaintiffs that
focuses on geographic areas and on the access to the different
types of provider services available in those areas. In order
for courts to make a determination whether recipients are
receiving equal access to health care, there must be evidence in
the record regarding the relevant geographic area, the services
offered in the area, and the recipient’s relationship to that
area. As the Court of Appeals for the Seventh Circuit has
recognized, the phrase “geographic area” may have several
meanings, depending upon the type of access or the type of care.
See Methodist Hosps., Inc., 91 F.3d at 1029. However, there is
no evidence in the record addressing this concern; there are only
allegations of general state-wide access problems, which is not
sufficient for the district court to determine whether a
recipient’s access will actually be affected.
Against the plaintiffs’ failure to put on such evidence,
Hood advances some evidence that would tend to suggest that, at
52
least in the case of nursing home facilities, there is an excess
of available beds. A March 17, 2000 nursing home census shows
that there are many more certified beds34 for Medicaid recipients
than there are recipients to occupy them. A February 19, 1999
letter from the Louisiana Nursing Home Association, one of the
plaintiffs in this case, to Stephen Perry, the Governor’s Chief
of Staff, acknowledges this oversupply of beds in nursing
facilities. Castille testified in his deposition that this
oversupply of beds led to a moratorium though the year 2005 on
the issuance of new-facility need certificates, which are
required to construct new nursing home facilities.35 The
plaintiffs do not counter this evidence, and they had the burden
of both production and persuasion in the first instance.
We conclude that because the district court and the
plaintiffs’ evidence focused almost exclusively on the impact of
the reimbursement rate reduction on health care providers, the
question whether recipients’ access will be impaired was not
34
As Lisa Deaton, the Director of the Health Standards
Section of LDHH, states in her affidavit, a bed must be
“certified” in order to be occupied by a Medicaid recipient.
35
Moreover, Castille stated in his deposition that he had
meetings with the program directors within LDHH’s Medicaid
program, in which he received “no indiction . . . from any of the
program directors that there had been any exodus, large-scale or
otherwise, of providers to the Medicaid program.” Hood directs
our attention to the deposition testimony of Sally Thiel, a
Program Director for the Mental Health Rehabilitation Program at
LDHH, in which she states that there has been “a continuing
increase in the number of providers who want to become [mental
health rehabilitation] Medicaid providers.”
53
properly addressed. As we have stated, the focus of the
challenge must be on the recipients’ access and how it compares
to the non-Medicaid population in the same geographic area.36 We
therefore find that there is an inadequate evidentiary base for a
conclusion by the district court that the plaintiffs have a
substantial likelihood of success in proving a violation of
recipients’ right to equal access to medical care. Because there
are no findings, and inadequate evidence had there been such
findings, we conclude that the district court abused its
discretion in holding that the plaintiffs had a substantial
likelihood of success in proving violations of section 30(A).37
36
In addition, the plaintiffs provide very little
information on the twenty-three recipients who are plaintiffs in
this case, and except for a few recipients, we are given no
indication of where these recipients reside in the state or of
the type of Medicaid services necessary for their care.
Therefore, we recognize that a court could abuse its discretion
in entering state-wide injunctive relief on such a meager showing
by the plaintiffs.
37
One of the unresolved issues is the appropriate standard
of review by which a district court is to evaluate the actions of
a state agency. In Wilder, the Court recognized that a state’s
“substantial discretion in choosing among reasonable methods of
calculating rates may affect the standard under which a court
reviews whether the rates comply with the [Boren Amendment].”
496 U.S. at 519. The Court noted further that “the Courts of
Appeals generally agree that when the State has complied with the
procedural requirements imposed by the amendment and regulations,
a federal court employs a deferential standard of review to
evaluate whether the rates comply with the substantive
requirements of the amendment.” Id. at 520 n.18. However, the
Court “express[ed] no opinion as to which of the cases contains
the correct articulation of the appropriate standard of review.”
Id.
We note that courts, including our own, have employed the
arbitrary and capricious standard in evaluating the actions of a
54
IV. CONCLUSION
For the foregoing reasons, we VACATE the preliminary
injunction,38 VACATE the stay pending appeal, and REMAND to the
district court for further proceedings consistent with this
opinion.
state agency. See Abbeville Gen. Hosp. v. Ramsey, 3 F.3d 797,
804 (5th Cir. 1993); Miss. Hosp. Ass’n v. Heckler, 701 F.2d 511,
516 (5th Cir. 1983); see also Ark. Med. Soc’y, 6 F.3d at 529;
AMISUB (PSL), Inc. v. Colo. Dep’t of Soc. Servs., 879 F.2d 789,
795-96 (10th Cir. 1989); Neb. Health Care Ass’n v. Dunning, 778
F.2d 1291, 1294 (8th Cir. 1985).
The district court did not address the appropriate standard
of review and appears to have used a de novo standard. Using the
standard employed by the district court, we have concluded that
the court erred in its evaluation of the evidence. We do not,
however, mean to suggest that the de novo standard apparently
used by the district court is the correct standard either for the
district court or for this court. A more deferential standard is
more likely appropriate.
38
We recognize that plaintiffs have alleged several other
statutory, constitutional, and state law violations. In its
opinion, the district court stated that these claims were “so
intertwined” that “[s]hould plaintiffs be successful in their
[sections 13(A) and 30(A)] claims, it is likely that some
Constitutional and state law violations were also committed.”
Evergreen, 116 F. Supp. 2d at 754. Because the district court
found that the plaintiffs’ success on the merits regarding their
sections 13(A) and 30(A) claims was a predicate for their success
on the remaining claims, these additional claims also fail as a
basis for preliminary injunctive relief.
55