Arkansas Medical Society, Inc. v. Reynolds

6 F.3d 519, 1993 U.S. App. LEXIS 23106, 1993 WL 341165
CourtCourt of Appeals for the Eighth Circuit
DecidedSeptember 10, 1993
DocketNos. 92-3146, 93-2352
StatusPublished
Cited by32 cases

This text of 6 F.3d 519 (Arkansas Medical Society, Inc. v. Reynolds) is published on Counsel Stack Legal Research, covering Court of Appeals for the Eighth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Arkansas Medical Society, Inc. v. Reynolds, 6 F.3d 519, 1993 U.S. App. LEXIS 23106, 1993 WL 341165 (8th Cir. 1993).

Opinion

MAGILL, Circuit Judge.

In this 42 U.S.C. § 1983 action, we consider whether the Arkansas Department of Human Services violated 42 U.S.C. § 1396a(a)(30)(A) by failing to consider whether proposed reimbursement rate reductions to Medicaid providers were consistent with efficiency, economy, and quality of care and whether the rate cuts would affect Medicaid recipients’ access to health care services. Concluding that the agency’s action did violate the Medicaid statute, we affirm the decision of the district court.1

I. BACKGROUND

Medicaid is a cooperative federal/state program through which the federal government grants funds to participating states to provide health care services to needy individuals. See 42 U.S.C. § 1396; Wilder v. Virgi[522]*522nia Hosp. Ass’n, 496 U.S. 498, 502, 110 S.Ct. 2510, 2513, 110 L.Ed.2d 455 (1990). State participation in Medicaid is voluntary, but if states choose to participate, they must comply with the requirements outlined in the Medicaid statute. Wilder, 496 U.S. at 502, 110 S.Ct. at 2513. To qualify for federal funds, a state must submit, a plan to the Secretary of Health and Human Services (HHS) which complies with fifty-eight subsections outlined in 42 U.S.C. § 1396a(a). Id. The state plan must include a system of reimbursing costs incurred by health care providers in providing services to Medicaid recipients. Id.

On June 24, 1992, the Arkansas Department of Human Services (DHS) issued an emergency rule cutting reimbursement rates to noninstitutional2 Medicaid providers effective July 1, 1992. The rule mandated a 20% across the board cut in reimbursement rates in order to offset a $60 million shortfall in the state’s Medicaid budget.

The plaintiffs/appellees in this case are three individual Medicaid providers, seven professional associations, two individual Medicaid recipients, and three disability associations who advocate the rights of Medicaid recipients. For ease of identification, they will be collectively called the Medicaid providers. The defendant/appellant in this action is the Director of DHS, the agency which administers Medicaid in Arkansas. The appellant will be referred to as DHS.

The Medicaid providers brought suit in the district court under 42 U.S.C. § 1983 alleging that DHS had deprived them of federal rights by violating the Medicaid statute, specifically, 42 U.S.C. § 1396a(a)(30)(A). This particular section of the Medicaid statute and its corresponding regulation at 42 C.F.R. § 447.204 require states to ensure that Medicaid recipients have access to medical care that is at least equal to that of the general population. This feature of the Medicaid law’ is typically called the equal access provision. The Medicaid providers sought a preliminary. and permanent injunction, declaratory judgment and other relief.

After a hearing on July 20, 1992, the district court issued a verbal order enjoining DHS from implementing the 20% reduction in reimbursement rates with respect to obstetrical and pediatric care, and speech, physical and occupational therapy for children, pending a trial on the merits. The cut in reimbursement rates to noninstitutional providers of other services remained in effect. The district court held a second hearing on August 18-19, 1992, regarding the other services, but declined to extend the injunction. On September 14, 1992, DHS appealed from the preliminary injunction in No. 92-3146.

The district court then held a final hearing from November 30 to December 3, 1992. At the final hearing, DHS announced that it had withdrawn its portion of the plan that attempted to apply the 20% reimbursement rate reduction in obstetrics and pediatrics. DHS asserted that the issue was now moot with respect to those two specialties.

The district court combined the evidence from all three hearings, and on April 20, 1993, the court issued its final order, 819 F.Supp. 816. First, the district court rejected DHS’s contention that the matter was moot with respect to obstetrics and pediatrics. Second, the district court held that DHS’s reimbursement rate scheme was set solely on the basis of budgetary considerations, and without regard to the requirements of the federal Medicaid statute. Therefore, the district court concluded, DHS’s plan was invalid under federal law. Because immediate invalidation of the reimbursement rates would have potentially severe detrimental effects on DHS and Medicaid recipients, the district court allowed DHS 120 days to establish a plan conforming with federal law.

DHS now appeals from that final decision of the district court in No. 93-2352. Because it applies to all services including obstetrics and pediatrics, the April 20, 1993, order ren[523]*523dered moot the preliminary injunction issued July 20, 1992. This court consolidated the appeals and addresses all issues raised.

II. ANALYSIS

A. Section 1983 Enforceability

The Medicaid providers have fashioned this lawsuit as a 42 U.S.C. § 1983 action. This well-known statute allows plaintiffs to sue officials acting under color of state law for alleged deprivations of “rights, privileges, or immunities secured by the Constitution and laws” of the United States. 42 U.S.C. § 1983. As a threshold matter, we must determine whether this statute allows the Medicaid providers to sue in this particular situation.

Plaintiffs may use § 1983 to enforce not only rights contained in the Constitution, but also rights that are defined by federal statutes. Maine v. Thiboutot, 448 U.S. 1, 6-8, 100 S.Ct. 2502, 2505-06, 65 L.Ed.2d 555 (1980). The question of what constitutes a “right,” however, has been the subject of much judicial inquiry.

For example, in Pennhurst State Sch. & Hosp. v. Halderman, 451 U.S. 1, 101 S.Ct. 1531, 67 L.Ed.2d 694 (1981), the Court held that certain purported “rights” defined by Congress in the Developmentally Disabled Assistance and Bill of Rights Act, 42 U.S.C. §§ 6000-6083, were not enforceable because they were not express conditions for the receipt of federal funds.' The Court wrote that “if Congress intends to impose a condition on the grant of fedferal moneys, it must do so unambiguously.”

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Bluebook (online)
6 F.3d 519, 1993 U.S. App. LEXIS 23106, 1993 WL 341165, Counsel Stack Legal Research, https://law.counselstack.com/opinion/arkansas-medical-society-inc-v-reynolds-ca8-1993.