Supreme Court Looks to Review California Rate Case

The Supreme Court of the United States has asked for the views of the Executive Branch in the case of Maxwell-Jolly v. Independent Living Center of Southern California. The Supreme Court has asked for the views of the federal government, including HHS, about a case in which the Ninth Circuit held that California could not reduce Medicaid payment rates for purely budgetary reasons, without consideration of the impact the reductions would have on Medicaid recipients’ access to care and quality of care.

ANCOR is working with other national organizations to ensure that HHS is aware of the significant policy implications that a reversal of this decision would have on providers and individuals with disabilities and their ability to access supports and services.

There are two questions presented in the case.  The first has broad-ranging, serious implications for access to the courts to enforce federal laws, and thus for the supremacy of federal law over contrary state enactments.  A conservative ruling by the Supreme Court would harm poor people and working people most directly, but also impede the federal government’s and businesses’ authority to enforce federal mandates.  The second is critical to preserving Medicaid programs in these difficult budgetary times.

First, California has sought certiorari on the question whether people who are injured by a state law that is contrary to federal mandates may sue to enjoin that law in federal court.  Over the past two decades, as the Supreme Court has moved to the right, the Court has demanded specific “rights-creating” language to be in a federal statute before it can be enforced under 42 U.S.C. 1983.  However, the courts have remained open to litigants seeking to enjoin state laws that are contrary to federal law under the Constitution’s Supremacy Clause.  California seeks to close that door.

The second question in the case asks whether the Medicaid Act requires states to consider the impact upon access and quality before reducing Medicaid rates paid to providers.  California asserts that Medicaid rates can be cut for purely budgetary reasons. 

In the cases at issue, courts found that the rate cuts would have resulted in severe problems of access for Medicaid beneficiaries, because rates would have fallen to levels that would drive pharmacies, doctors, and other providers out of the Medicaid program.  California takes the position that the Medicaid statute does not stand as an obstacle to this.  If California prevails on this theory, states across the country facing budget problems will be free to cut Medicaid rates, regardless of the impact on Medicaid beneficiaries.