Legacy Commty Hlth Svc, Inc. v. Charles Smith

Case: 16-20691 Document: 00514331345 Page: 1 Date Filed: 02/01/2018
REVISED February 1, 2018
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
United States Court of Appeals
Fifth Circuit
No. 16-20691 FILED
January 31, 2018
Lyle W. Cayce
Clerk
LEGACY COMMUNITY HEALTH SERVICES, INCORPORATED,
Plaintiff–Appellee,
versus
CHARLES SMITH, in His Official Capacity as
Executive Commissioner of Health and Human Services Commission,
Defendant–Appellant.
Appeal from the United States District Court
for the Southern District of Texas
Before JONES, SMITH, and PRADO, Circuit Judges.
JERRY E. SMITH, Circuit Judge:
Legacy Community Health Services (“Legacy”)—a Federally Qualified
Health Center (“FQHC”)—sued the Texas Health and Human Services Com-
mission (the “Commission”), through its Executive Commissioner, alleging
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that Texas’s reimbursement scheme violated the Medicaid Act (1) by requiring
Managed Care Organizations (“MCOs”) fully to reimburse FQHCs,
(2) by failing to ensure that Texas itself would reimburse an FQHC if an MCO
does not reimburse the FQHC in the first place, and (3) by withholding pay-
ments for certain non-emergency services that Legacy has been providing to
the enrollees of an MCO with which Legacy has no contract. The district court
granted Legacy summary judgment on all of its claims. We reverse and
remand, concluding that (1) the Commission’s requirement that MCOs fully
reimburse FQHCs does not violate the Medicaid Act; (2) Legacy lacks standing
to challenge the Commission’s lack of a policy that the state directly reimburse
an FQHC if it is not fully reimbursed by the MCO; and (3) Legacy is not entitled
to reimbursement for the non-emergency, out-of-network services about which
it complains.
I.
A.
FQHCs are designed to provide care to medically underserved popula-
tions. 42 U.S.C. § 254b(a), (e), (k). FQHCs have two sources of compensation:
federal grants under § 330 of the Public Health Service Act (“PHSA”),
42 U.S.C. § 254b, for medically underserved communities and state reimburse-
ments for Medicaid services, id. § 1396a(bb). MCOs are private organizations
that arrange for the delivery of healthcare services to individuals who enroll
with them. See id. §§ 1396u-2(a)(1)(A), 1396b(m). As relevant here, they act
as intermediaries between the state and FQHCs. The state disburses funds to
an MCO, which then contracts with FQHCs and reimburses them for the ser-
vices they provide to the MCO’s enrollees. See id. § 1396b(m)(2)(A)(ix);
42 C.F.R. § 438.2. The Medicaid Act is managed by the Centers for Medicare
and Medicaid Services (“CMS”).
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States are required to reimburse FQHCs for their covered Medicaid
services. 42 U.S.C. § 1396a(bb). They may either reimburse the FQHCs
directly or use MCOs to reimburse the FQHCs. Id. § 1396u-2(a). Before 1997,
the law allowed either the state or the MCO fully to assume this reimburse-
ment requirement. The Balanced Budget Act of 1997, however, changed that
and provided the statutory provisions relevant here: 42 U.S.C. §§ 1396a(bb)
and 1396b(m).
Section 1396a(bb) provides that the state is obligated to ensure that
FQHCs are reimbursed for covered Medicaid services. It generally requires
that “the State plan shall provide for payment for services described in section
1396d(a)(2)(C) . . . furnished by [FQHCs].” § 1396a(bb)(1). That section also
sets forth the framework for assessing reimbursement amounts: the Prospec-
tive Payment System (“PPS”). § 1396a(bb)(1)–(4).
Section 1396b(m) contains the requirements for contracts between states
and MCOs. If the state elects to use MCOs to pay the FQHCs, then the Medi-
caid Act mostly leaves the MCOs free to negotiate and contract with FQHCs.
But § 1396b(m) requires the MCO to “provide payment that is not less than
the level and amount of payment which the [FQHC] would make” if it were not
an FQHC—i.e., the MCO must pay the FQHC at least competitive market
rates. § 1396b(m)(2)(A)(ix). 1
This can lead to shortfalls for the FQHC, which may be entitled under
§ 1396a(bb) to a PPS amount greater than what the MCO pays. In that event,
§ 1396a(bb) requires the state to “provide for payment to the [FQHC] by the
State of a supplemental payment equal to the amount (if any)” of the difference
1 When the Balanced Budget Act was passed, CMS issued a State Medicaid Director
Letter (“SMDL”) that took the position that states cannot impose any requirements other
than those within § 1396b(m)—i.e., CMS claimed that states cannot require an MCO to pay
more than a competitive market rate. For reasons we will explain, we reject that position.
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between the MCO’s payment and the required PPS amount. § 1396a(bb)(5)(A).
These are sometimes called “wraparound” payments. The parties dispute,
however, whether a state can require the MCO to pay the full PPS amount in
the first instance, thereby obviating the need for such supplemental “wrap-
around” payments.
Furthermore, § 1396a(bb) provides for “[a]lternative payment methodol-
ogies” (“APM”). Id. § 1396a(bb)(6). Under these APMs, a state may “provide
for payment” under any kind of mechanism that is both “agreed to by the State
and [FQHC and] . . . results in payment to the [FQHC] of an amount” at least
equal to the PPS. Id.
Finally, § 1396b(m) addresses situations in which a patient, enrolled
with a certain MCO, goes to an FQHC that has not contracted with that MCO.
These “out-of-network” claims are treated slightly differently from “in-
network” claims (i.e., where the MCO has a contract with the FQHC). Gen-
erally, the MCO has no reimbursement obligations to the FQHC for out-of-
network claims. But § 1396b(m)(2)(A)(vii) requires that all state-MCO con-
tracts address out-of-network services that “were immediately required due to
an unforeseen illness, injury, or condition.” The state-MCO contract must des-
ignate whether the state or the MCO will reimburse the FQHC for such out-of-
network emergency services. Id. The parties also dispute whether the state
must independently reimburse the FQHC for other, non-emergency out-of-
network services, not covered by § 1396b(m)(2)(A)(vii). See also id.
§ 1396a(bb).
B.
The Commission manages Texas’s Medicaid program (“the program”),
TEX. GOV’T CODE § 531.021(a), and has elected to contract with MCOs to pro-
vide Medicaid services, id. § 533.002. One such MCO is the Texas Children’s
4
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Health Plan (“TCHP”). Legacy—designated an FQHC for purposes of Medicaid
reimbursement and Section 330 grants—formed a contract with TCHP in 2009
that specified that Legacy would provide medical care to TCHP’s members and
that TCHP would pay Legacy $67 per-patient visit, below Legacy’s PPS rate.
In 2011, the Commission amended its contract with TCHP, requiring
TCHP to pay FQHCs their full PPS rate instead of the rates that TCHP had
negotiated with its FQHCs. Legacy and TCHP amended their contract to mir-
ror that change: TCHP would pay Legacy its full PPS rate of about $270 per
visit. Furthermore, the Commission gave FQHCs the option to keep the tradi-
tional PPS or calculate its rates using an alternative PPS (“APPS”); Legacy
elected to use the APPS. At that time, Texas still provided that it would make
supplemental payments if the MCO’s payment was less than the required PPS
amount. Cf. § 1396a(bb).
From 2011 to 2014, Legacy’s Medicaid encounters and costs skyrocketed.
For instance, its Medicaid encounters increased by 246%, and its claims
expenses per month increased by 283%. For the 2014 fiscal year, TCHP paid
about $20 million to all FQHCs with which it had contracted. Of that amount,
it paid Legacy over $12 million, even though only 2.7% of TCHP’s office visits
occurred at Legacy, and less than 2% of TCHP’s Medicaid enrollees selected
Legacy as their primary care provider. Though TCHP maintained contracts
with numerous other FQHCs and accused Legacy of effectively gaming the
Medicaid system, TCHP indicated to Legacy that it wanted the state to re-
initiate supplemental “wraparound” payments to allow TCHP to give lower
initial reimbursements. But because Legacy’s utilization trend exceeded the
Medicaid premium trend and other FQHC trends, TCHP ultimately termin-
ated its contract with Legacy effective February 2015.
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Since Legacy’s contract was terminated with TCHP, Legacy has contin-
ued to provide services to patients who have TCHP as their provider. Accord-
ingly, Legacy submitted approximately 6,000 “out-of-network” claims to TCHP
between February and August 2015. TCHP denied nearly half of those claims
as (1) lacking prior authorization and (2) not relating to emergency services.
Legacy appealed those denials to the Commission, but Texas has similarly
refused to reimburse Legacy for those claims, contending that the Medicaid Act
does not entitle Legacy to receive payment for such out-of-network services.
After Legacy filed this suit, Texas changed its Medicaid policies. In Jan-
uary 2016, the Commission submitted to the CMS a state plan amendment
(“SPA 16-02”) that eliminates the requirement that Texas make supplemental
“wraparound” payments to FQHCs in the event that the MCOs fail fully to
reimburse the FQHCs at their PPS rate. Furthermore, SPA 16-02 specified
that MCOs would fully reimburse FQHCs. CMS approved the amendment.
C.
In January 2015, Legacy sued the Commission under 42 U.S.C. § 1983,
alleging that it had violated its rights under 42 U.S.C. § 1396a(bb). Legacy
offered two theories.
First, Legacy contended that the Commission had unlawfully delegated
its FQHC reimbursement obligations to MCOs by requiring them to reimburse
FQHCs fully. Legacy’s underlying theory is that the purpose of §§ 1396a(bb)
and 1396b(m)(2)(A) is to allow FQHCs to negotiate freely with MCOs for above-
market, but below-PPS, rates and thereby encourage FQHC-MCO contracts.
The Commission countered that nothing in the text of either § 1396a(bb) or
§ 1396b(m)(2)(A) prevented the state from requiring MCOs to reimburse
FQHCs fully.
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Second, Legacy asserted that the Commission had failed to ensure
payment for certain out-of-network services, in violation of 42 U.S.C. § 1396b-
(m)(2)(A)(vii). Texas replied that the Commission had ensured reimbursement
for the kind of emergency out-of-network services contemplated by § 1396b(m)-
(2)(A)(vii) and that the Medicaid Act did not require reimbursement for any
other out-of-network services.
Texas moved to dismiss, averring that Legacy lacked standing and a
cause of action under § 1983. The district court denied the motion. Legacy and
Texas then cross-moved for summary judgment. After those motions were
filed, SPA 16-02 was enacted and approved. The court ordered supplemental
briefing on the effect of CMS’s approval of SPA 16-02 on the pending litigation;
Legacy’s brief and Texas’s reply were framed in terms of whether Chevron
deference should be accorded to that approval.
The district court then issued two opinions on the cross-motions for sum-
mary judgment. In the first, the court held that the Commission’s policy vio-
lated § 1396a(bb) (1) by eliminating its requirement to make supplemental
“wraparound” payments, thereby failing to ensure reimbursement of FQHCs
and (2) by requiring MCOs to fully reimburse FQHCs.
CMS then issued a “statement of interest,” clarifying its position on
§ 1396a(bb) as follows: (1) States may not “simply do away with their obliga-
tion to make supplemental payments”; (2) the state may eliminate the need for
supplemental payments through an APM under § 1396a(bb)(6); (3) CMS ap-
proved SPA 16-02 as an APM but had not determined whether the FQHCs had
given the requisite consent to make SPA 16-02 a valid APM, so SPA 16-02
would be valid only if there were proper FQHC consent; and (4) the state is
similarly obligated to ensure that FQHCs are fully reimbursed for out-of-
network emergency services.
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Reviewing that statement, the district court issued its second opinion,
holding that the Commission’s out-of-network policy violated § 1396a(bb) be-
cause it failed to reimburse Legacy for non-emergency out-of-network services.
The court then enjoined the Commission.
II.
We first decide whether the district court had Article III jurisdiction.
Federal courts have jurisdiction only over a “case” or “controversy.” See U.S.
CONST. ART. III, § 2, cl. 1. To establish a “case or controversy,” a plaintiff must
establish that it has standing. Lujan v. Defs. of Wildlife, 504 U.S. 555, 560–61
(1992). Accordingly, Legacy must demonstrate that (1) it has suffered an
“injury in fact,” which is “an invasion of a legally protected interest” that is
“concrete and particularized” and “actual and imminent” rather than “con-
jectural or hypothetical,” (2) there is a “causal connection between the injury
and the conduct complained of” such that the injury is “fairly traceable to the
challenged action of the defendant, and not the result of the independent action
of some third party not before the court,” and (3) the injury will likely “be
redressed by a favorable decision.” Id. (internal quotations, brackets, ellipses,
and citations omitted).
If, as here, a plaintiff seeks injunctive relief, it must also show that “there
is a real and immediate threat of repeated injury.” City of Los Angeles v. Lyons,
461 U.S. 95, 102 (1983) (citation omitted). 2 Past injury alone is insufficient;
the plaintiff must show a “real or immediate threat that the plaintiff will be
wronged again.” Id. at 111. Moreover, “each element of Article III standing
‘must be supported in the same way as any other matter on which the plaintiff
2Neither party briefed the requirements of injunctive relief or discussed the issue of
Legacy’s standing to challenge SPA 16-02, discussed infra. But standing is jurisdictional and
should be addressed “when there exists a significant question about it.” K.P. v. LeBlanc,
627 F.3d 115, 122 (5th Cir. 2010) (addressing standing sua sponte).
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bears the burden of proof,’” with the same evidentiary requirements of that
stage of litigation. Bennett v. Spear, 520 U.S. 154, 167–68 (1997) (quoting
Lujan, 504 U.S. at 561). Thus, at the summary judgment stage, Legacy must
“‘set forth’ by affidavit or other evidence ‘specific facts’ to survive a motion for
summary judgment.” Id. at 168 (quoting Fed. R. Civ. P. 56(c)).
“[S]tanding is not dispensed in gross”; a party must have standing to
challenge each “particular inadequacy in government administration.” Lewis
v. Casey, 518 U.S. 343, 357–58 & n.6 (1996). Thus, Legacy must show standing
to challenge each alleged deficiency in Texas’s remedial scheme. As we explain
below, Legacy has established standing to challenge both Texas’s requirement
that MCOs fully reimburse FQHCs and the state’s refusal to reimburse Legacy
for non-emergency out-of-network services. But Legacy has not established
standing to challenge SPA 16-02’s lack of a requirement that Texas provide
supplemental “wraparound” payments.
A.
Legacy has standing to challenge the Commission’s in-network policy of
requiring MCOs fully to reimburse FQHCs. It has shown injury in fact, causa-
tion, and redressability (as well as a threat of future injury).
1.
Legacy’s first and primary alleged injury is the loss of its contract with
TCHP, which Legacy traces to the Commission’s policy of requiring MCOs
fully to reimburse FQHCs. As Legacy notes, its contract with TCHP yielded
about $14 million for Legacy, and the termination of that contract has resulted
in some lost revenue and patients. Second, Legacy maintains that the Com-
mission’s policy remains a barrier to any future contractual relationship
between Legacy and TCHP (or other MCOs, which are all subject to the same
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policy).
Texas disputes that this injury can establish standing, maintaining that
Legacy has not shown a true “injury in fact” because it has been paid its full
PPS rate and has no right to a contract with TCHP. This overstates what is
required for an injury in fact. Legacy has suffered a “‘direct pecuniary injury’
that generally is sufficient to establish injury-in-fact.” K.P. v. LeBlanc,
627 F.3d 115, 122 (5th Cir. 2010). Moreover, the fact that Legacy did not have
a right to contract with TCHP is immaterial; there can be injury-in-fact where
a governmental entity erects barriers to private contracting or deprives a party
of its rightful bargaining position. 3
Legacy’s alleged injury is analogous to that in Clinton, 524 U.S. at 432–
33. There, the Court held that plaintiffs who sought to acquire processing
plants had standing to challenge the cancellation of a tax benefit for acquiring
such plants. Id. The reason was that the tax benefit was “the equivalent of a
statutory ‘bargaining chip’ . . . [to] purchase . . . such assets,” and the loss of
that bargaining chip “inflicted a sufficient likelihood of economic injury.” Id.
at 432. Legacy stands in a materially similar situation to the circumstance
those plaintiffs. According to Legacy, the Medicaid Act confers on it a right
freely to negotiate with MCOs for contracts (at least with a market-rate floor)
in a way that is meant to incentivize MCO-FQHC contracts. 4 Thus, even if
incorrect, Legacy is suing to recover this “bargaining chip” in its negotiations
3 See, e.g., Clinton v. City of N.Y., 524 U.S. 417, 432–33 (1998) (finding standing where
the President had canceled a tax benefit to facilitate the acquisition of processing plants);
Vill. of Arlington Heights v. Metro. Hous. Dev. Corp., 429 U.S. 252, 261–63 (1977) (finding
standing where a zoning board had refused to rezone so that a developer could build houses).
4See 42 U.S.C. §§ 1396a(bb)(5), 1396b(m)(2)(A)(ix); cf. Cmty. Health Care Ass’n of N.Y.
v. Shah, 770 F.3d 129, 150 (2d Cir. 2014) (stating that the purpose of the provision is to
incentivize “MCOs to contract with FQHCs”).
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with the MCOs. 5 Therefore, Legacy has alleged a proper injury in fact as to
this MCO reimbursement policy.
2.
Legacy’s injury is traceable to the Commission’s policy. Texas maintains
that the loss of Legacy’s contract with TCHP was a result of Legacy’s mis-
conduct and thus was not caused by the policy. Admittedly, Legacy would not
have standing if it were purely speculative as to whether the policy made
TCHP more likely to terminate the TCHP-Legacy contract. See Simon v. E. Ky.
Welfare Rights Org., 426 U.S. 26, 43–46 (1976). But that is not the situation.
Legacy has provided e-mails from TCHP indicating that TCHP wanted Texas
to re-initiate wraparound payments. Thus, although TCHP ultimately termin-
ated because of Legacy’s high PPS rates, it is far from speculative to say that
the Commission’s policy impacted that decision. 6 Indeed, TCHP objected to
Legacy’s rates only after the Commission had changed its policy to require
TCHP to cover Legacy’s full PPS amount.
Additionally, Legacy’s loss of its proper bargaining position is obviously
the result of the Commission’s policies. According to Legacy’s theory of the
merits, the Commission’s policies directly undermine Legacy’s ability to
negotiate freely with MCOs and therefore deprive Legacy of its rightful
“bargaining chip.” 7 That injury is directly traceable to the Commission insofar
5See Grant ex rel. Family Eldercare v. Gilbert, 324 F.3d 383, 387 (5th Cir. 2003) (stat-
ing that standing should be considered separately from the merits).
6 See K.P., 627 F.3d at 123 (explaining that government actions that pose barriers to
negotiation and “significantly contributed to the” plaintiff’s injuries are considered causes of
those injuries); see also Bennett, 520 U.S. at 168–71 (finding that an opinion by the Fish and
Wildlife Service that would have a “powerful coercive effect” on an agency’s action to harm
the plaintiffs fairly caused their injury).
7 Cf. Clinton, 524 U.S. at 432–33 (reasoning that a tax benefit can be “the equivalent
of a statutory ‘bargaining chip’ . . . [to] purchase . . . such assets”).
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as the injury and policy are merely different sides of the same coin. See
Clinton, 524 U.S. at 432–33.
3.
Legacy has shown redressability and a threat of future injury, but not as
to its contract with TCHP. Legacy rightly notes that in certain situations the
removal of a substantial barrier to forming a contract will satisfy redressa-
bility. See, e.g., Bennett, 520 U.S. at 169–71; Vill. of Arlington Heights, 429
U.S. at 261–62. But Legacy must also show that, if the barrier is removed, the
injury is likely to be redressed—in this case, that the contract is likely to be
restored. This Legacy has not done. There is nothing in the record to indicate
ongoing contractual negotiations between Legacy and TCHP or anything to
establish that Legacy is likely to regain its contract with TCHP.
But there is Legacy’s second alleged injury: the loss of its statutory “bar-
gaining chip” with TCHP and the many other MCOs with whom Legacy has or
may one day have contracts. See Clinton, 524 U.S. at 432–33. As to that injury,
Legacy has certainly established redressability. A favorable court ruling would
return to it that “bargaining chip” and would redress that injury. Moreover,
because Legacy has already traced one lost contract to the Commission’s policy,
the loss of this “bargaining chip” has “inflicted a sufficient likelihood of econ-
omic injury.” Id. at 432. And because this injury is ongoing and will relate to
Legacy’s future contractual dealings, it has shown the kind of “real and imme-
diate threat of repeated injury” for injunctive relief. Lyons, 461 U.S. at 102
(citation omitted). 8 Accordingly, Legacy has standing to bring its “in-network”
challenge to the policy of requiring MCOs to reimburse FQHCs fully.
8Indeed, Legacy maintains that the Commission’s policy will stand as a barrier to any
future contractual relationship with other MCOs. And the record indicates that Legacy has
been expanding and hopes to continue expansion in the future. As an FQHC, Legacy thus
undoubtedly will have future dealings with MCOs.
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B.
Legacy has established standing as to the Commission’s out-of-network
policy of reimbursing FQHCs only for emergency services covered by § 1396b-
(m)(2)(A)(vii) instead of for a wider range of services. Legacy easily meets the
injury-in-fact requirement: If its theory is correct, then it has not received
payment to which it is entitled. Texas’s response to this injury—that Legacy
has not identified any claims to which it is entitled and for which it was not
reimbursed—conflates the merits of the case with standing. 9
Furthermore, there is plainly causation and redressability. The lack of
payment stems from Texas’s refusal to issue these reimbursements. And if we
grant Legacy the injunctive relief it seeks, Texas will be required to issue those
payments. Finally, the injury is ongoing; Legacy seems to be providing these
services currently without reimbursement. Accordingly, there is a clear threat
of future injury warranting injunctive relief should Legacy prevail on the
merits. Therefore, it has standing to challenge the Commission’s out-of-
network policy of reimbursing FQHCs only for emergency Medicaid services.
C.
Consequently, Legacy has established standing to challenge the Com-
mission’s out-of-network policy and its requirement that MCOs fully reimburse
FQHCs. Yet we must independently examine whether Legacy has standing to
challenge the Commission’s refusal to reimburse FQHCs with supplemental
“wraparound” payments if an MCO fails to reimburse the FQHC fully. This
policy, which was enacted as part of SPA 16-02, was gratuitously enjoined by
the district court even though SPA 16-02 was enacted after Legacy initiated
this litigation. Although Legacy had standing to bring its initial challenges to
9See Grant ex rel. Family Eldercare, 324 F.3d at 387 (stating that standing should be
considered separately from the merits).
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the requirement that MCOs fully reimburse FQHCs and to the lack of re-
imbursement for non-emergency out-of-network services, Legacy lacks
standing to challenge this portion of SPA 16-02.
A plaintiff that has “demonstrated harm from one particular inadequacy
in government administration” does not automatically have the right to
challenge the entirety of the government’s administrative scheme. Casey,
518 U.S. at 357–58 & n.6. Put another way, “a plaintiff who has been subject
to injurious conduct of one kind [does not] possess by virtue of that injury the
necessary stake in litigating conduct of another kind, although similar, to
which he has not been subject.” Blum v. Yaretsky, 457 U.S. 991, 999 (1982). 10
Accordingly, in Yaretsky the Court found that the plaintiffs had standing
to challenge the procedural adequacy of their nursing homes’ discharges or
transfers to lower levels of care—but lacked standing to challenge those pro-
cedures with respect to discharges or transfers to higher levels of care. Id.
at 1000–01. “[T]he threat of transfers to higher levels of care” lacked “suffici-
ent immediacy and reality” because “[n]othing in the record . . . suggest[ed]
that any of the individual [plaintiffs] have been either transferred to more in-
tensive care or threatened with such transfers.” Id. at 1001. Although it was
“not inconceivable that [plaintiffs would] one day confront this eventuality,”
“assessing the possibility now would ‘tak[e] us into the area of speculation and
conjecture.’” Id. (citation omitted).
10 See also Davis v. Fed. Election Comm’n, 554 U.S. 724, 733–34 (2008) (explaining
that “[t]he fact that [plaintiff] has standing to challenge § 319(b) does not necessarily mean
that he also has standing to challenge the scheme of contribution limitations that applies
when § 319(a) comes into play”); DaimlerChrysler Corp. v. Cuno, 547 U.S. 332, 350–53 (2006)
(rejecting an attempt to challenge state taxes on the basis of taxpayer standing); Friends of
the Earth, Inc. v. Laidlaw Envtl. Servs. (TOC), Inc., 528 U.S. 167, 185 (2000) (noting that “a
plaintiff must demonstrate standing separately for each form of relief sought”); Nat’l Fed’n
of the Blind of Tex., Inc. v. Abbott, 647 F.3d 202, 209 (5th Cir. 2011) (holding that plaintiffs
had standing to challenge a flat-fee provision but lacked standing to contest a materially
identical percentage provision).
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Legacy’s position is similar to that of the Yaretsky plaintiffs. The harm
that Legacy suffers from the policy of requiring MCOs to reimburse FQHCs
fully is quite distinct from any harm it might suffer from the Commission’s
declining to require supplemental payment. As explained above, Legacy can
establish standing to challenge the former policy because it has lost a statutory
“bargaining chip,” i.e., the ability to negotiate freely with MCOs for below-PPS
but above-market rates. And Legacy has shown that this “bargaining chip”
may affect it because it already lost one contract—the TCHP contract—par-
tially because of the policy of limited reimbursement.
But that injury is wholly unrelated to any requirement (or lack thereof)
that Texas reimburse FQHCs if the MCO fails to do so. This latter policy does
not affect Legacy’s bargaining position with TCHP or any other MCO; nor could
it relate in any way to TCHP’s decision to terminate Legacy’s contract, given
that SPA 16-02 was enacted after the contract was terminated. Finally, the
policies are “sufficiently different” such that standing for each must be in-
dependently established. Id. One policy deals with how MCOs are to re-
imburse FQHCs in the first instance; the other addresses Texas’s supple-
mental-reimbursement obligations. It is obvious that any injuries flowing from
one policy would be different from those arising from the other.
Thus, Legacy must independently demonstrate standing to challenge
Texas’s lack of a supplemental reimbursement policy. This it cannot do. The
only possible injury Legacy could assert would be that it now is at risk of not
receiving full reimbursement. Yet “[a]bstract injury,” such as risk alone, is
insufficient to confer standing. Lyons, 461 U.S. at 101. Instead, Legacy must
show that it “has sustained or is immediately in danger of sustaining some
direct injury.” Id. at 102. But as Texas points out repeatedly, Legacy has failed
to identify a single instance in which it was not reimbursed at its full PPS rate
15
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from TCHP. 11 As in Yaretsky, it is “not inconceivable that [Legacy] will one
day confront [the] eventuality” of failing to receive full reimbursement, but
“assessing [that] possibility now would ‘tak[e] us into the area of speculation
and conjecture.’” Yaretsky, 457 U.S. at 1001 (citation omitted).
Therefore, Legacy is without standing to challenge the Commission’s
lack of a requirement that Texas reimburse FQHCs with supplemental “wrap-
around” payments if the MCO fails to reimburse the FQHC at the full PPS
rate. The district court should not have enjoined Texas as to this policy.
III.
On the merits, we agree with the district court that Legacy may sue
under 42 U.S.C. § 1983, which confers a private right of action on those who
suffer deprivations of “any rights, privileges, or immunities secured by” federal
law. Not every federal law is actionable under § 1983, however. A plaintiff
must “assert the violation of a federal right, not merely a violation of federal
law.” Gonzaga Univ. v. Doe, 536 U.S. 273, 282 (2002) (citation omitted). Thus,
the particular statute must provide “an unambiguously conferred right” with
an “unmistakable focus on the benefitted class.” Id. at 283–84. To determine
whether a particular statute gives rise to a federal right, the Court has
enunciated three factors: (1) “Congress must have intended that the provision
in question benefit the plaintiff”; (2) “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”; and (3) “the statute must
unambiguously impose a binding obligation on the States.” 12
11 Cf. Yaretsky, 457 U.S. at 1001 (explaining that a mere possibility that lacks “suffi-
cient immediacy and reality” is insufficient where “[n]othing in the record” shows a concrete
threat).
12 Blessings v. Freestone, 520 U.S. 329, 340–41 (1997) (citations omitted). There is a
second step to this inquiry. Once the plaintiff establishes “that a statute confers an individ-
ual right, the right is presumptively enforceable by § 1983.” Gonzaga, 536 U.S. at 284.
16
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Whether § 1396a(bb) meets these requirements is a question of first im-
pression in this court, although at least five other circuits have found that
§ 1396a(bb) is enforceable via § 1983. 13 Moreover, our circuit has held that a
similar provision in the Medicaid Act creates rights enforceable under § 1983. 14
Although these cases are not binding here, they inform our analysis.
A first glance at § 1396a(bb) shows the potential “rights-creating
language” that Gonzaga calls for. For instance, look to § 1396a(bb)(5)(A):
“[T]he State plan shall provide for payment to the center or clinic by the State
of a supplemental payment . . . .” Similarly, § 1396a(bb)(1) states that “the
State plan shall provide for payment for services . . . furnished by a [FQHC] . .
. in accordance with the provisions of this subsection.” As other circuits have
noted, this language seems to be “rights-creating . . . because it is mandatory
and has a clear focus on the benefitted FQHCs.” E.g., Rio Grande, 397 F.3d at
74. But admittedly, this is not as clear as the “rights-creating language” that
Defendants “may rebut this presumption by showing that Congress ‘specifically foreclosed a
remedy under § 1983,’” such as by providing for “a comprehensive enforcement scheme that
is incompatible with individual enforcement under § 1983.” Id. at 284 n.4 (citations omitted).
But Texas has offered nothing to rebut this presumption, nor do we find anything in § 1396
to constitute such a comprehensive remedial scheme. Rather, the only case Texas cites, Arm-
strong v. Exceptional Child Ctr., Inc., 135 S. Ct. 1378, 1385 (2015), involved an implied right
of action—a situation lacking the presumption that § 1983 itself provides the private right of
action. Accordingly, our analysis hinges on whether there is a federal right to enforce in §
1396a(bb).
13 See Cal. Ass’n of Rural Health Clinics v. Douglas, 738 F.3d 1007, 1013 (9th Cir.
2013); N.J. Primary Care Ass’n v. N.J. Dep’t of Human Servs., 722 F.3d 527, 539 (3d Cir.
2013); Concilio de Salud Integral de Loiza, Inc. v. Pérez–Perdomo, 551 F.3d 10, 17–18 (1st
Cir. 2008); Pee Dee Health Care, P.A. v. Sanford, 509 F.3d 204, 212 (4th Cir. 2007); Rio
Grande Cmty. Health Ctr., Inc. v. Rullan, 397 F.3d 56, 74 (1st Cir. 2005). Furthermore, other
circuits have permitted suits to enforce § 1396a(bb) under § 1983 but did not discuss the
issue. See also, e.g., Cmty. Health Care Ass’n of N.Y. v. Shah, 770 F.3d 129, 157 (2d Cir.
2014).
14 See Romano v. Greenstein, 721 F.3d 373, 377–79 (5th Cir. 2013) (finding 42 U.S.C.
§ 1396a(a)(8) enforceable under § 1983). Section 1396a(a)(8) requires state plans to “provide
that all individuals wishing to make application for medical assistance under the plan shall
have [the] opportunity to do so, and that such assistance shall be furnished with reasonable
promptness.”
17
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Gonzaga specifically referenced. 15 Hence we turn to the Blessings factors.
The three Blessings factors show that § 1396a(bb) provides enforceable
rights. First, by requiring states to ensure that FQHCs are fully paid, the
subsection indicates that FQHCs are its intended beneficiaries. See Rio
Grande, 397 F.3d at 74. Second, the subsection provides for judicially adminis-
trable standards. Specific requirements that states reimburse FQHCs for
certain services, at definite amounts, are far from overly vague or amorphous.
See Pee Dee Health Care, 509 F.3d at 212. Third, the statute imposes “a binding
obligation on the States.” Blessings, 520 U.S. at 341. The language “the State
plan shall provide” is precisely the same language that this court has said is
binding. 16 Thus, the Blessings factors establish that § 1396a(bb) confers a pri-
vate right enforceable through § 1983. 17
Texas offers two counterarguments, but they are unavailing. First, the
state posits that we should consider the plurality opinion in Armstrong, 135 S.
Ct. at 1387 (Scalia J., plurality opinion). Specifically, Texas points to the
plurality’s statement that the Medicaid Act may have been intended to benefit
the infirm rather than health care providers such as FQHCs. But in the first
15 For example, Gonzaga, 536 U.S. at 287, referenced Titles VI and IX, which state
that “[n]o person . . . shall . . . be subjected to discrimination.” Although that language may
be the paradigm of “rights-creating,” the paradigm of non-rights-creating language would be
the statute at issue in Gonzaga: “‘[N]o funds shall be made available’ to any ‘educational
agency or institution’ which has a prohibited ‘policy or practice.’” Id. (citing FERPA,
20 U.S.C. § 1232g(b)(1)). The language at issue here is somewhere in between Title IX and
FERPA.
16 See S.D. ex rel. Dickson v. Hood, 391 F.3d 581, 603 (5th Cir. 2004) (holding that
42 U.S.C. § 1396a(a)(10)(A)(i) was enforceable under § 1983 in part because of the language
“[a] State Plan must provide”).
17 Texas notes that the district court only analyzed § 1396a(bb)(5) and that the other
provisions only set forth a payment methodology. Fair enough; this suit involves § 1396a-
(bb)(1) as well. But our analysis applies equally to § 1396a(bb)(1): “[T]he State shall provide
for payment for services . . . furnished by a [FQHC] . . . in accordance with the provisions of
this subsection.”
18
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place, this language is distinguishable. As stated above, § 1396a(bb) issues a
command to benefit FQHCs by ensuring that they are fully reimbursed. Con-
versely, the provision at issue in Armstrong had no such focus on beneficiaries,
as that provision dealt with procedures to make efficient payments. See
Armstrong, 135 S. Ct. at 1382, 1385. 18 In the second place, the plurality’s
statement, if taken to the conclusion urged by Texas, would likely overrule
cases such as Wilder v. Virginia Hospital Association, 496 U.S. 498, 512 (1990),
in which the Court found other provisions of the Medicaid Act to be enforceable
by health care providers through § 1983—thus Texas’s contention goes too far.
Second, Texas contends that § 1396a(bb) could only confer the right to be
paid at its full PPS rate, as distinguished from the right to be paid in a partic-
ular way. Yet Texas again conflates Legacy’s winning on the merits with its
having a cause of action. Texas may be correct that § 1396a(bb) does not give
Legacy a right to be paid in full by the state rather than by MCOs. But Legacy
can have a right to sue under § 1983 and still lose on the merits. 19 Accordingly,
Legacy has a private right of action, under § 1983, to enforce § 1396a(bb).
IV.
Given that Legacy has standing to bring two of its claims and has a cause
of action under § 1983, we turn to the merits of those claims. We conclude that
18 In Armstrong, 135 S. Ct. at 1382, the Court considered 42 U.S.C. § 1369a(a)(30)(A),
which requires state plans to “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.”
19See, e.g., Cal. Ass’n of Rural Health Clinics v. Douglas, 738 F.3d 1007, 1011–17 (9th
Cir. 2013) (taking this approach); Three Lower Ctys. Cmty. Health Servs., Inc. v. Maryland,
498 F.3d 294, 305 (4th Cir. 2007) (rejecting a challenge under § 1396a(bb)(5) for improper
delegations to MCOs instead of dismissing for want of a cause of action).
19
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summary judgment should have been granted to Texas, not Legacy.
A.
Regarding Legacy’s “in-network” claim that the Commission may not
require MCOs fully to reimburse FQHCs in the first instance, the district court
reasoned that the text and purposes behind § 1396a(bb)(5) require imposing
an implied limit on Texas’s disbursement of Medicaid funds. 20 We disagree.
For “all issues of statutory interpretation, the appropriate place to begin
. . . is with the text itself.” Hamilton v. United Healthcare of La., Inc., 310 F.3d
385, 391 (5th Cir. 2002) (citation omitted). The main provision, § 1396a-
(bb)(5)(A), says that “the State plan shall provide for payment to the center or
clinic by the State of a supplemental payment equal to the amount (if any) by
which the amount determined under . . . this subsection exceeds the amount of
the payments provided under the contract.” The plain meaning is that the
state must provide for supplemental payments only if there is a shortfall
between the PPS rate and the MCO reimbursement rate. Nothing in this sub-
section prohibits states from requiring MCOs to pay the full PPS rate, thereby
obviating the need for supplemental payments in the first place.
This reading is buttressed by the inclusion of “if any,” which
20The district court accorded Chevron deference to CMS’s approval of SPA 16-02. On
appeal, Texas maintains that the approval should receive Chevron deference, reading the
approval as buttressing the idea that Texas’s plan is permissible (and, although Legacy lacks
standing to challenge SPA 16-02 as such, that approval could still be relevant inasmuch as
SPA 16-02 codified Texas’s practice of requiring MCOs fully to reimburse FQHCs). To the
contrary, CMS’s approval of SPA 16-02 has no bearing on this case.
As CMS explained in its statement of interest to the district court, it did so only as an
APM under § 1396a(bb)(6)—not under § 1396a(bb)(5). Given that the initial approval did not
specify under which subsection CMS approved SPA 16-02, we see no reason not to credit this
explanation of the approval. Cf. Auer v. Robbins, 519 U.S. 452, 460–63 (1997). Accordingly,
the approval has no bearing on whether Texas’s policy is permissible under § 1396a(bb)(5).
Because, as explained below, we do not reach the question of whether Texas’s policy would
be a valid APM, we have nothing about which to give Chevron deference to CMS.
20
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demonstrates that there may not be a shortfall between the PPS rate and MCO
reimbursements. Legacy responds that the words “if any” have meaning only
in the event that an MCO in its discretion just happens to contract with an
FQHC to reimburse it at the full PPS rate. But nothing in the text supports
such a conclusion. The statute merely says there must be supplemental
payments if there is “any” shortfall—nothing prevents the state from
attempting to eliminate such shortfalls or requires the amount of the shortfall
to be determined entirely by the MCO.
The district court also examined the reference to “the contract” at the
end of § 1396a(bb)(5)(A)—i.e., the statement that the shortfall amount is deter-
mined by the PPS amount less the amount provided under “the contract.” The
court reasoned that “the contract” must refer to the MCO-FQHC contract. We
agree. Section 1396a(bb)(5)(A) would make little sense otherwise.
But the district court then erred in deducing that this reference to the
MCO-FQHC contract compels reading § 1396a(bb)(5)(A) to require unfettered
discretion in MCO-FQHC contracts. The reference says nothing about whether
the state may impose conditions on the MCO-FQHC contract. Instead, the
subsection merely points to what the terms of the contract are, without regard
to how those terms came into being. Thus, it is fully consistent with § 1396a-
(bb)(5)(A) for the state to require the contract to reimburse the FQHCs fully.
In that situation, there just would not be “any” supplemental payment to be
made, because the PPS rate would not exceed the amount “provided under the
[MCO-FQHC] contract.” 42 U.S.C. § 1396a(bb)(5)(A).
Without any aid from the text of § 1396a(bb)(5), Legacy turns to § 1396b-
(m)(2)(A)(ix). Section 1396b(m)(2)(A) imposes certain obligations on the states
that must be established in the state-MCO contracts. As relevant here,
§ 1396b(m)(2)(A)(ix) requires that all state-MCO contracts “provide[], in the
21
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case of an [FQHC-MCO contract] . . . that the [MCO] shall provide payment
that is not less than the level and amount of payment which the [MCO] would
make for the services if the services were furnished by a provider which is not
[an FQHC].” Essentially, MCOs must contract with FQHCs at a rate “not less
than” the going market rate for services.
The plain meaning of this text only sets a floor—the market rate—for
MCO-FQHC contracts. Legacy contends, however, that the statute also pro-
hibits states from imposing any other floors on MCO-FQHC contracts. That
is, Legacy declares that § 1396b(m)(2)(A)(ix)’s floor is the only floor allowed and
sets an implied ceiling for what is required of MCO-FQHC contracts. 21
We are loath to read such implied limits into statutes. “We have stated
time and again that courts must presume that a legislature says in a statute
what it means and means in a statute what is says there.” Barnhart v. Sigmon
Coal Co., 534 U.S. 438, 461–62 (2002). 22 If the statute is unambiguous, then
the “judicial inquiry is complete.” Id. at 462. Our reading of the text reflects
no ambiguity, and Legacy offers nothing to the contrary.
21 The only other court squarely to address this issue found that § 1396b(m)(2)(A)(ix)
did not impose any ceiling on what states may require in an MCO-FQHC contract. See Three
Lower Ctys., 498 F.3d at 304–305. Although the district court relied on cases from other
circuits, those decisions are not on point insofar as they merely state that MCOs have to
reimburse FQHCs at a minimum market rate and that states have to make supplemental
wraparound payments if needed. See, e.g., N.J. Primary Care, 722 F.3d at 539–40; Cmty.
Health Care, 770 F.3d at 153–58; Rio Grande, 397 F.3d at 75–76.
22 It is for this reason that we do not adhere to CMS’s position, articulated in its guid-
ance letters (such as its 1998 SMDL letter), that states are not permitted to impose any re-
quirements on MCO-FQHC contracts other than those in § 1396b(m)(2)(A)(ix). Though CMS
undoubtedly has carefully considered this position, its letter is not entitled to Chevron defer-
ence insofar as it was not “promulgated in the exercise” of CMS’s law-making powers. United
States v. Mead Corp., 533 U.S. 218, 226–27 (2001); see also Christensen v. Harris Cty.,
529 U.S. 576, 587 (2000) (finding that “an interpretation contained in an opinion letter” does
not warrant Chevron deference). Accordingly, we look to the agency’s views in this regard
only “for guidance” or persuasion. Skidmore v. Swift & Co., 323 U.S. 134, 140 (1944); see also
Greathouse v. JHS Sec. Inc., 784 F.3d 105, 114 (2d Cir. 2015).
22
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The provisions, in combination, provide that MCOs must contract with
FQHCs at a rate “not less than” the market rate. 23 If, and only if, the MCO-
FQHC contract is less than the PPS rate, then the state must make supple-
mental wraparound payments. Because the plain text of §§ 1396b(m)(2)(A)(ix)
and 1396a(bb)(5) is unambiguous and does not forbid states from requiring
MCOs to reimburse FQHCs fully, we will not read such a prohibition into what
Congress wrote. 24 Therefore, Texas may require MCOs to reimburse FQHCs
fully in the first instance. 25
B.
Legacy claims that the Commission violated § 1396a(bb)(1)–(2) by failing
to reimburse it for services that it has been providing to TCHP’s Medicaid
enrollees. As explained above, Legacy has continued to provide all of the
Medicaid services to TCHP’s Medicaid patients even after the contract was
23 Instead of pointing to any statutory ambiguity, Legacy makes bare policy arguments
about § 1396a(bb)(5). But it is not our job to decide what policies Congress should have
enacted. Sigmon Coal Co., 534 U.S. at 462. Even addressing Legacy’s policy arguments, it
is far from certain that the parade of horribles it posits will ever come to pass. Although
Legacy insists that MCOs will never contract with FQHCs under Texas’s policy, the record
shows that TCHP still has contracts with approximately seventeen FQHCs. And although
Legacy is correct that the Medicaid Act itself, before to 1997, required MCOs to reimburse
FQHCs fully, that does not mean that states are now barred from requiring MCOs to re-
imburse FQHCs fully. Given that Congress did not impose such a prohibition on the states,
we cannot infer one where Congress may well have wanted to leave that decision up to each
respective state. Cf. Three Lower Ctys., 498 F.3d at 305.
24At oral argument, Legacy suggested that even if the Medicaid Act does not prohibit
Texas from requiring MCOs fully to reimburse FQHCs, Texas somehow consented to CMS’s
1998 SMDLs in a way that bound itself to CMS’s position articulated above. Yet we see no
authority for the idea that a state may somehow legally bind itself to an agency’s guidance
documents. Indeed, the notion that a state might consent to an agency’s interpretation and
thereafter be forever bound to it is wholly inconsistent with the fact that agencies are per-
mitted to change their own interpretation of statutes. See Nat’l Cable & Telecomm. Ass’n v.
Brand X Internet Servs., 545 U.S. 967, 981–82 (2005).
25Because the Medicaid Act does not bar Texas from requiring MCOs fully to re-
imburse FQHCs in the first place, we need not address Texas’s alternative argument that its
MCO reimbursement requirement is permissible as an APM under § 1396a(bb)(6).
23
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terminated. The Commission requires MCOs to reimburse FQHCs for emer-
gency “out-of-network” services such as these but not for non-emergency out-
of-network services unless the FQHC received prior authorization for the
service. Because Legacy did not receive prior authorization for many of these
non-emergency services, its claims were denied by TCHP and the Commission.
Legacy insists that the Commission is required by § 1396a(bb) to reimburse it
for non-emergency out-of-network services. 26 The district court agreed with
Legacy. 27 We reverse.
The starting point is the plain text of § 1396a(bb)(1), which requires
states to “provide for payment for services described in section 1396d(a)(2)(C)
of this title furnished by a [FQHC] . . . in accordance with the provisions of this
subsection,” i.e., the PPS rate. In turn, § 1396d(a)(2)(C) refers to “care and
services . . . for individuals [within an enumerated list] . . . whose income and
resources are insufficient to meet all of such cost . . . [of FQHC] services.” Yet
§ 1396d(a)(2)(C) does not explain what the relevant FQHC services are.
Texas points to § 1396b(m)(2)(A), which provides definitions and require-
ments for MCOs. Specifically, § 1396b(m)(2)(A)(vii) requires state-MCO con-
tracts to specify whether the state or MCO will reimburse healthcare providers
for emergency out-of-network services. Thus, Texas reasons, § 1396b(m)-
(2)(A)(vii) specifies which out-of-network services the state is responsible for.
26In the district court, Legacy claimed that the Commission also was failing to re-
imburse it for certain emergency out-of-network services. The court rejected that contention,
and Legacy does not raise it on appeal.
27 The district court again cited New Jersey Primary Care, 722 F.3d at 539–40, and
Community Health Care, 770 F.3d at 153–158, to support its decision. Those cases are
inapposite; although they held that states are required to reimburse FQHCs for all covered
services, those courts did not have occasion to decide what “covered” services are. Instead,
they turned on the fact that the defendant-states had made reimbursements contingent on
prior MCO payment. See N.J. Primary Care, 722 F.3d at 540; Cmty. Health Care, 770 F.3d
at 156–57. Thus, the courts were concerned with FQHCs’ performing covered services and
not being reimbursed by the state merely because the MCO denied payment.
24
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We agree. If states had to reimburse FQHCs for all out-of-network ser-
vices to Medicaid enrollees, then FQHCs would have little or no incentive to
contract with MCOs. Indeed, this case is exemplary—if the district court were
affirmed, Legacy would have lost its contract with TCHP with almost no pen-
alty, continuing to provide services to TCHP’s enrollees while receiving full
reimbursement from the state.
It follows that using § 1396b(m)(2)(A)(vii) as the limit for what out-of-
network services the FQHC may provide makes paramount sense. The statute
requires reimbursement only for emergency services, for which patients need
to find the nearest clinic and get quick care, without concern for whether the
clinic is in or out of their network. For non-emergency services, though,
FQHCs should have to contract with those MCOs to provide services when the
state uses MCOs to manage its Medicaid services. And finally, the entire struc-
ture of the Medicaid Act contemplates states’ using MCOs as intermediaries
and MCO-FQHC contracts. 28 It would be wholly inconsistent with that struc-
ture to eliminate the distinction between in-network and out-of-network care
for FQHCs, thereby effectively removing MCOs from the equation and obvi-
ating the need for MCO-FQHC contracts. Congress did not order that absurd
result. 29
The closest Legacy comes to an opposing consideration is its claim that,
28 See, e.g., §§ 1396a(a)(23), 1396a(bb), 1396b(k), 1396b(m), 1396u-2(a)(1); see gener-
ally Yates v. United States, 135 S. Ct. 1074 (2015) (using context to ascertain the meaning of
a statutory provision).
29 CMS’s statement of interest fully accords with our reading. Although Legacy pur-
ports to rely on CMS’s statement that FQHCs must be paid “the full PPS amount for any
covered out-of-network services,” context indicates that statement is consistent with our con-
clusion. The critical question is what “covered” serves are. And while citing § 1396b-
(m)(2)(A)(vii), CMS expressly framed the requirement as “out-of-network health centers
[must] be reimbursed for ‘medically necessary services which were provided . . . because the
services were immediately required due to unforeseen illness, injury, or condition,” i.e.,
emergency services.
25
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No. 16-20691
as an FQHC, it is required to assure that patients are treated despite inability
to pay. See 42 U.S.C. § 254b(k)(3)(G)(iii). But that requirement is part of the
responsibilities that attach to Section 330 grants. As Legacy acknowledges,
one of the main points of the relevant Medicaid Act provisions is to ensure that
Section 330 funds are not used to subsidize Medicaid services. See Cmty.
Health Care, 770 F.3d at 150; Three Lower Ctys., 498 F.3d at 297–98. It thus
makes little sense to create a situation in which Medicaid funds would be used
to fulfill a Section 330 obligation. Accordingly, Texas is not required to re-
imburse Legacy for the non-emergency out-of-network services about which it
complains.
For the reasons explained, the judgment is REVERSED and
REMANDED with instruction that Legacy’s claim as to SPA 16-02’s lack of a
requirement to make supplemental “wraparound” payments be DISMISSED
for want of standing and that judgment be entered for the Commission as to
the remaining claims.
26
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No. 16-20691
EDITH H. JONES, Circuit Judge, dissenting in part:
With respect, I would dismiss Legacy’s complaint regarding the
Commission’s rule that MCOs must fully reimburse FQHCs because Legacy
has failed to establish standing to raise this issue. “The party invoking federal
jurisdiction bears the burden” of establishing standing. Lujan v. Defs. of
Wildlife, 504 U.S. 555, 561, 112 S. Ct. 2130, 2136 (1992). At the summary
judgment stage, the party invoking federal jurisdiction “can no longer rest on .
. . ‘mere allegations,’ but must ‘set forth’ by affidavit or other evidence ‘specific
facts.’” Id. at 561, 112 S. Ct. at 2137. Legacy has failed to present any
evidence, or even argued, that it has been injured because it “undoubtedly will
have future dealings with MCOs.” And Clinton cannot save Legacy from its
failure to do so. Clinton v. City of N.Y., 524 U.S. 417, 118 S. Ct. 2091 (1998).
In Clinton, the farmer’s cooperative plaintiff presented evidence that it was
“actively searching for other processing facilities for possible future purchase
if the President's cancellation [were] reversed; and there [were] ample
processing facilities in the State that [the cooperative might have been] able to
purchase.” Clinton, 524 U.S. at 432, 118 S. Ct. at 2100. 1
Here, in contrast, Legacy has contended from the outset that it has
standing simply because of its terminated contract with TCHP. Legacy
improperly relied on Planned Parenthood v. Gee, a case that was altered on
rehearing due to Supreme Court case law. 2 Legacy admits it was never denied
a dime of reimbursement under its contract with TCHP. Regardless whether
1The majority relies on the “bargaining chip” language in Clinton, which has never
been referenced in the Supreme Court in nearly twenty years since it was decided.
2 Compare Planned Parenthood of the Gulf Coast, Inc. v. Gee, 837 F.3d 477, 487 & n.14
(5th Cir. 2016), with Planned Parenthood of the Gulf Coast, Inc. v. Gee, 862 F.3d 445, 455 &
n.14 (5th Cir. 2017) (quoting Spokeo, Inc. v. Robins, 136 S. Ct. 1540, 1549 (2016)).
27
Case: 16-20691 Document: 00514331345 Page: 28 Date Filed: 02/01/2018
No. 16-20691
I agree with the opinion’s resolution of the merits, we do not have jurisdiction
to decide this claim because Legacy does not have standing to pursue this
claim. I respectfully dissent from this piece of an otherwise excellent opinion.
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