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U.S. Court In New York Holds Plaintiffs Have No Enforceable Rights Under Medicaid Act


HLD, v. 32, n. 7 (July 2004)

U.S. Court In New York Holds Plaintiffs Have No Enforceable Rights Under Medicaid Act

Plaintiff New York Association of Homes and Services for the Aging, Inc., a non-profit organization of Medicaid provider members, sued the state of New York and various state agencies (defendants) claiming that cost control measures enacted by New York as part of the state's annual budget violated healthcare providers' rights under the Medicaid Act, 42 U.S.C. �� 1396 et seq. Plaintiffs also argued the cost control measures violated their substantive due process, procedural due process, and equal protection rights.

The U.S. District Court for the Northern District of New York held under 42 U.S.C. � 1983 that all of plaintiff's claims against defendants were unenforceable. Plaintiff first argued that defendants failed to comply with the requirements of the Boren Amendment and its successor requirements. The Boren Amendment was enacted in 1980 and gave healthcare providers a right to reasonable and adequate reimbursement rates under Medicaid. The Boren Amendment was repealed in 1997, but there is still a statutory requirement that states provide a public process for Medicaid reimbursement rate determinations, and an appeals process is also required. The court observed that it is well established that a state cannot be sued under � 1983 unless it is for injunctive relief to prevent an ongoing violation of federal law, and does not extend to retrospective relief. The court determined that Eleventh Amendment immunity applies to plaintiff's claims because they seek a declaration that the Boren Amendment was violated in the past, for which they cannot obtain any relief. Plaintiff argues the Boren Amendment continues to be violated because of New York's failure to comply with the Boren Amendment's successor statute. The court rejected plaintiff's claims and held the claims had to be dismissed because plaintiff was not entitled to prospective relief.

Plaintiff also argued that defendants violated several sections of the Medicaid Act by enacting certain measures in the state's annual budget process. Section 1983 itself does not create enforceable federal rights, explained the court, and a plaintiff can only bring a cause of action under � 1983 if the action is based on an enforceable right in another statute. Here plaintiff argued that the state's budget measures violated 42 U.S.C. � 1396a(a)(13), the successor to the Boren Amendment. The court determined that � 1396a(a)(13) establishes that the states must provide certain public processes for the determination of rates, but that � 1396a(a)(13) does not create any rights plaintiff could enforce. Congress intended � 1396a(a)(13) to benefit Medicaid beneficiaries and not healthcare providers by providing a process by which Medicaid rates would remain reasonable. Thus plaintiff had no enforceable rights under � 1396a(a)(13), and the court dismissed the Medicaid statutory claims. For the same reasons the court dismissed plaintiff's claims based on violations of rights that were allegedly conferred by Medicaid regulations.

The court then turned to plaintiff's constitutional claims alleging violations of the due process and equal protection clauses. The court dismissed plaintiffs' procedural due process claim because plaintiffs did not have a property interest in the reimbursements. The court also rejected plaintiff's substantive due process claims because such a claim can only be brought if the official conduct is egregious, and in this case the state's purpose in enacting the budget provisions was to balance the state budget, which is not egregious behavior. Plaintiff also claimed violations of its equal protection rights because the budget provisions impacted some providers differently. The court determined that the different classifications of providers served the legitimate state interest of preserving the financial integrity of the state's welfare programs. Therefore, the court dismissed the constitutional claims. Accordingly, the court denied plaintiff's motion for summary judgment and granted defendants' motion for summary judgment.

In re NYAHSA Litig., Nos. 95-CV-1504, et al., 2004 WL 1126348 (N.D.N.Y. May 20, 2004).        

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