FL Assoc. of Rehab. Fac. v. State of FL Dept. of H

• Court: Court of Appeals for the Eleventh Circuit
• Decided: September 1, 2000
• Docket: 99-12507
• Status: Published

Opinion

[PUBLISH]

IN THE UNITED STATES COURT OF APPEALS

FOR THE ELEVENTH CIRCUIT

________________________ FILED No. 99-12507 U.S. COURT OF APPEALS ________________________ ELEVENTH CIRCUIT 09/01/00 D. C. Docket No. 89-00984-CV-KMM THOMAS K. KAHN CLERK FLORIDA ASSOCIATION OF REHABILITATION FACILITIES, INC., UNITED CEREBRAL PALSY ASSOCIATION OF MIAMI, INC., et al.,

Plaintiffs-Appellees,

versus

STATE OF FLORIDA DEPARTMENT OF HEALTH AND REHABILITATIVE SERVICES, GREGORY COLER, et al.,

Defendants-Appellants.

________________________

Appeal from the United States District Court for the Southern District of Florida _________________________ (September 1, 2000)

Before TJOFLAT, MARCUS, and CUDAHY,* Circuit Judges.

* Honorable Richard D. Cudahy, U.S. Circuit Judge for the Seventh Circuit, sitting by designation. MARCUS, Circuit Judge:

This appeal involves difficult questions of mootness as well as the Eleventh

Amendment. Plaintiffs, providers of Medicaid services to developmentally-

disabled persons, sued various State of Florida officials seeking injunctive and

declaratory relief for alleged violations of the Boren Amendment, which

established federal standards governing state plans for reimbursing Medicaid

providers. In September 1991 the district court entered a preliminary injunction

essentially directing the Defendants to comply with the Boren Amendment. Not

until April 1999, however, did the district court enter its final order concluding that

Defendants had violated the Boren Amendment and directing Defendants to correct

their reimbursement plan prospectively as well as retrospectively to 1991. In the

meantime, Congress repealed the Boren Amendment in 1997, and Defendants

contend that before entry of judgment they had already enacted a new rate plan in

accordance with the requirements of the Boren Amendment’s successor.

Defendants argue on appeal that these developments render some or all of

Plaintiffs’ claims moot, and that in any event the relief ordered by the district court

is barred by the Eleventh Amendment to the extent it effectively requires the State

to pay money to redress pre-judgment violations. Because the Eleventh

Amendment bars retrospective relief affecting the state treasury in this case, we

2 vacate the district court’s judgment to that extent. We remand for determination of

whether Plaintiffs’ entitlement to prospective relief had become moot by the time

of judgment.

I.

Although the facts of this case are relatively straightforward, its procedural

history is anything but. Plaintiffs include the Florida Association of Rehabilitation

Facilities, Inc. and several operators of intermediate care facilities for the

developmentally disabled (“ICF/DDs”). Plaintiffs provide essential developmental

and health care services to low income persons in numerous ICF/DDs throughout

the State of Florida. A number of Plaintiffs operate and provide care in ICF/DDs

located on land owned by the State -- so-called “cluster” facilities. The care

provided in the cluster facilities is the same as that provided in the private

facilities.

Plaintiffs began this lawsuit in 1989, asserting that Defendants -- various

Florida officials responsible for formulating and administering the State’s ICF/DD

Medicaid Program -- violated federal law by failing to reimburse Plaintiffs for

reasonable costs incurred as a result of providing care and treatment to Florida’s

developmentally disabled citizens residing in ICF/DDs.1 The suit alleged as well

1 As originally pled, Plaintiffs’ suit also included claims against the Florida Department of Health and Rehabilitative Services (“HRS”). In an order dated April 16, 1996, the district court

3 that Defendants violated federal law by reimbursing certain cluster providers

inadequately through fixed-rate contracts.2

Plaintiffs’ claims arose under the federal Medicaid program, established by

Title IX of the Social Security Act, 42 U.S.C. § 1396, et seq. This program is a

cooperative federal-state effort to furnish with public assistance people who are

unable to meet the cost of necessary medical services. Unlike major federal

entitlement programs such as Social Security, Supplemental Security Income, and

Medicare, Medicaid is not a federally-administered program with a uniform set of

statutorily-defined benefits; rather, it is a state-administered program where the

costs of services are allocated between the federal government and the states. No

state is obligated to participate in the Medicaid program. If a state opts to

participate in the Medicaid program, however, it must do so in a manner that

complies with federal statutory and regulatory requirements. See 42 U.S.C. §

1396n. Within the general framework of federal law, states that choose to

dismissed on Eleventh Amendment grounds all claims against HRS. Defendants observe that the final judgment nevertheless extends to HRS’s successor, the State of Florida Agency for Health Care Administration. It is not clear that the district court intended that to be so. To avoid any confusion, we emphasize the Agency for Health Care Administration -- like its predecessor -- is plainly entitled to Eleventh Amendment immunity. See infra at 23. Plaintiffs’ original complaint additionally included claims against state officials in their individual capacities; those claims were dismissed pursuant to the parties’ stipulation in the district court’s April 16, 1996 order. 2 Plaintiffs’ suit also included an Equal Protection claim which the district court never reached.

4 participate in the Medicaid program (thus qualifying for federal financial aid

covering the medical assistance costs of eligible individuals) are granted broad

latitude in defining the scope of covered services as well as many other key

characteristics of their programs. Florida, like all other states, participates in the

Medicaid program.

At the time this suit was filed in 1989, and until October 1, 1997, the Boren

Amendment applied to the reimbursement claims at issue. The Boren Amendment

to the Medicaid Act, formerly codified at 42 U.S.C. § 1396(a)(13)(A), authorized a

“state plan to provide . . . for payment . . . of the hospital services . . . through the

use of rates . . . which the State finds, and makes assurances satisfactory to the

Secretary, are reasonable and adequate . . ..” Thus, the Amendment required that

states pay ICF/DD providers under rates “reasonable and adequate to meet the

costs which must be incurred by efficiently and economically operated facilities in

order to provide care and services in conformity with applicable State and federal

laws, regulations and quality and safety standards.” Id. The purpose of the Boren

Amendment was “to give states greater flexibility in calculating reasonable costs

and in containing the continuing escalation of those costs.” Children’s Hospital

and Health Ctr. v. Belshe, 188 F.3d 1090, 1093-94 (9th Cir. 1999) (citation and

internal quotation marks omitted), cert. denied, 120 S. Ct. 2197 (2000).

5 As the Ninth Circuit has summarized:

[T]he Boren Amendment authorizes states to develop their own Medicaid reimbursement standards and methodologies for payment of hospital services, but subjects those standards and methodologies to three general federal requirements. First, states must take into account hospitals serving a disproportionate share of low-income patients. Second, states must make findings that the rates are reasonable and adequate to meet the necessary costs of an efficiently operated hospital. And third, states must assure Medicaid patients reasonable access to inpatient hospital care.

Id. (citations and internal quotation marks omitted). Although the Boren

Amendment was intended to grant states greater freedom “in establishing the

methodology for their reimbursement rates, the amendment was ‘not intended to

encourage arbitrary reductions in payment that would adversely affect the quality

of care.’” Tallahassee Mem’l Reg’l Med. Ctr. v. Cook, 109 F.3d 693, 704 (11th

Cir. 1997) (citing S. Rep. No. 139, 97th Cong., 1st Sess., at 478, reprinted in 1981

U.S.C.C.A.N. 396, 744).

On September 13 1991, the district court entered a preliminary injunction in

Plaintiffs’ favor, finding specifically that Defendants, in violation of the Boren

Amendment, were not adequately reimbursing Plaintiffs for the costs of providing

ICF/DD care. The district court found that Defendants’ use of fixed-rate contracts

for payment of cluster providers (i.e., private providers of ICF/DD care in state-

6 owned facilities) also violated the Medicaid Act. The district court enjoined

Defendants from reimbursing providers at inadequate rates, making that ruling

retroactive to September 4, 1991 (the date of the preliminary injunction hearing).

The court also enjoined Defendants from reimbursing cluster providers “in a

manner other than as provided in a Rate Plan” at the “full Medicaid rate.” The

court further ordered that Defendants file by October 4, 1991 a rate plan complying

with the substantive standards of the Boren Amendment. Defendants filed a rate

plan by the required date and did not appeal the preliminary injunction.

Defendants insist that Plaintiffs never filed any objection to the new rate

plan or the rates paid under it. As best we can tell from the record, Defendants are

correct. Although Plaintiffs filed multiple motions for contempt or sanctions, only

two of those motions implicated the preliminary injunction order, and none

squarely challenged either the lawfulness of the plan or the specific rates.4

4 In January 1993 Plaintiffs moved for contempt based on Defendants’ alleged failure to reimburse certain costs of Plaintiff Ann Storck Center. The motion was based not only on the preliminary injunction, but also on a separate court order entered in November 1991 as well as on the court’s inherent powers. In opposition to the motion, Defendants asserted that they were complying with the preliminary injunction and that the relevant costs were excluded because the Ann Storck Center’s status had changed. The motion was withdrawn in March 1993. In July 1996 Plaintiffs moved for contempt alleging that certain planned enactments by the Florida Legislature regarding the status of private providers would violate the preliminary injunction. Defendants countered, among other things, that the Legislature’s action did not offend the preliminary injunction because it simply changed the status of the providers. The district court denied the motion without prejudice, permitting Plaintiffs to renew the motion or to raise the issue at trial. Plaintiffs never renewed the motion, and the matter was not expressly addressed in the district court’s findings and conclusions after trial.

7 Plaintiffs contend that Defendants were always on notice of their objections to the

plan and to the State’s post-injunction reimbursement practices.

While the case remained pending before the district court (due in part to

repeated continuances sought by Defendants), the Boren Amendment was repealed

effective October 1, 1997. See Balanced Budget Act of 1997, Pub. L. 105-33, §

4711(a)(1), 111 Stat. 251, 507-08 (1997). Congress amended the Medicaid Act to

“eliminate the Boren Amendment and establish instead a [public] notice and

comment provision.” Belshe, 188 F.3d at 1093 (citation and internal quotation

marks omitted). The new provision repeals the substantive limitations of, and the

methodology set forth in, the Boren Amendment, substituting a “public process”

for determining rates.

The successor statute requires that a state plan for medical assistance:

(13) provide –

(A) for a public process for determination of rates of payment under the plan for hospital services . . . under which --

(i) proposed rates, the methodologies under- lying the establishment of such rates, and justifications for the proposed 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,

8 (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 . . . the situation of hospitals which serve a disproportionate number of low-income patients with special needs.

42 U.S.C. § 1396a(a)(13)(A). The legislation explicitly states that the repeal has

only prospective effect and that Boren Amendment rate standards continue to

apply to payment for items and services provided on or before October 1, 1997.

Pub. L. 105-33, § 4711(d) (“This section shall take effect on the date of the

enactment of this Act and the amendments made by subsections (a) and (c) shall

apply to payment for items and services furnished on or after October 1, 1997.”).

Notably, the legislation is silent as to what standards, if any, govern the period

between October 1, 1997 and a state’s adoption of a new post-Boren rate plan

under the successor statute’s notice-and-comment procedure.

Shortly after the Boren Amendment was repealed, in August 1997,

Defendants moved for summary judgment on Plaintiffs’ claims and also to vacate

the preliminary injunction. The district court granted the motion in part, and asked

the parties for advice as to which issues remained to be litigated. Both parties

agreed that three issues remained:

9 1. Whether the method of contractual payment of cluster providers met any federal law requirement to pay them according to a rate plan.

2. What were the minimum requirements for state plans after repeal of the Boren Amendment.

3. Whether cluster providers were currently being paid pursuant to a rate plan that complied with applicable law.

In May 1998, the district court conducted a three-day bench trial on these

issues. Defendants moved in limine to bar introduction of evidence of their prior

non-compliance with the Boren Amendment and to limit the scope of the trial to

their present compliance with federal law. The district court denied the motion but

granted Defendants a standing objection to the introduction of evidence of past

non-compliance with Boren standards.

On April 11, 1999, the district court entered final judgment in favor of

Plaintiffs, stating its findings of fact and conclusions of law in a separate order.

Florida Ass’n of Rehab. Facilities, Inc. v. State of Florida Agency for Health Care

Admin., 47 F. Supp. 2d 1352 (S.D. Fla. 1999). The court ruled “that Plaintiffs

have established that the ICF/DD Rate Plan fails to adequately compensate

Plaintiffs as it is not ‘reasonable and adequate to meet the costs . . . of efficiently

and economically operated facilities,’ in violation of the Boren Amendment and 42

10 U.S.C. § 1983.” Id. at 1360.5 The court noted that “[t]he Boren Amendment was

in effect in 1989 when this lawsuit was filed, and was in effect through October 1,

1997.” Id. at 1357. Significantly, the court also concluded that even though the

Boren Amendment had been repealed effective October 1, 1997, “[t]he standards

governing reimbursement set forth in the Boren Amendment continue to apply to

this case as the State of Florida has not yet promulgated any rules or regulations, or

5 Because Defendants do not challenge the district court’s factual findings, we do not discuss them at length here. It is useful to highlight several of those findings, however, not only to provide further background about the case, but also to underscore the seriousness of the problem created by Defendants’ conduct. Among other things, the district court found that because of inadequate reimbursement by Defendants, the majority of Plaintiffs and ICF/DDs in Florida generally operate at a loss. The court concluded that the state’s “inadequate reimbursement detrimentally affects ICF/DDs and the quality of services received by the residents. ICF/DDs cannot fairly compete in the marketplace in terms of salaries. Thus, ICF/DDs lose valued and skilled employees who are able to obtain higher wages and salaries elsewhere. ICF/DD facilities, therefore, are forced to hire individuals who may be less experienced, but who will work for less than prevailing wages. This has had a direct and negative impact upon the level and quality of care provided to Medicaid eligible clients treated by ICF/DDs.” Id. at 1354-55. The court also determined that “there is a shortage of new ICF/DD beds and there have been no applications to develop new ICF/DD beds in the past five years. There also is a waiting list of individuals requiring ICF/DD services.” Id. at 1355. The court found that “Defendants have not analyzed the adequacy of ICF/DD rates to meet the reasonable and necessary costs of an efficiently operated provider . . .[and] have failed to adequately investigate or determine whether the Rate Plan complies with federal requirements.” Id. It found that “Defendants have admitted that the terms of the Rate Plan have caused providers to not be reimbursed for certain costs, even when the Defendants had no proof or no reason to believe that the provider was operating inefficiently or had incurred costs for items that were unreasonable or unnecessary.” Id. It also found with respect to the cluster providers that “[p]rior to 1991, Defendants did not pay cluster facilities pursuant to the Rate Plan, but instead paid these providers on the basis of non-negotiable, fixed rate contracts that condition reimbursement on appropriations by the State Legislature. Pursuant to these contracts, Plaintiffs are not reimbursed for a substantial portion of their actual costs.” Id.

11 enacted any legislation, replacing the Boren Amendment and continues to

reimburse ICF/DD providers under the Rate Plan.” Id.

The court determined that “[t]he Rate Plan in force in the State of Florida

setting forth the terms, conditions and methodology for reimbursement of the costs

incurred by ICF/DD providers is inadequate and is inherently flawed.” Id.

According to the court:

[T]he Rate Plan formulated and implemented by Defendants fails to substantively comply with the Boren Amendment. Defendants have failed to convincingly rebut or refute evidence introduced by the Plaintiffs establishing that while they operate efficiently and economically, and indeed are required to establish this by submitting cost reports to the State, they are not reimbursed in a manner that is “reasonable and adequate” to allow them to provide care to Florida’s developmentally disabled population in compliance with federal laws and regulations. . . . Defendants have also violated the Medicaid Act because of their failure and refusal to reimburse cluster providers pursuant to the Rate Plan. The Medicaid Act provides that the federally required State Plan must provide for payment of ICF/MR medical services “through the use of rates” set forth in the Plan. . . . Neither the regulations nor the Medicaid Act contains any limitation pursuant to a Rate Plan based on ownership of ICF/DD facilities. Thus, cluster facilities are entitled to sufficient reimbursement. Defendants’ continued refusal to pay cluster facilities pursuant to the Rate Plan, therefore, violates the Boren Amendment.

Id. at 1358-59.

The district court then discussed its preliminary injunction, observing that

“[o]n September 13, 1991, . . . this Court entered a Preliminary Injunction . . . in

favor of Plaintiffs on Counts I and III of their Complaint seeking, respectively,

12 adequate and reasonable reimbursement under the Rate Plan in compliance with

the Medicaid Act, and seeking payment pursuant to the same Rate Plan, on the

same basis as ICF/DDs, to cluster providers.” Id. at 1355. The court “adopt[ed]

the findings and conclusions . . . in the Preliminary Injunction,” id., and found that

the factors of irreparable harm, relative injury to the parties, and the public interest

all continued to favor injunctive relief. Id. at 1359-60.

As a remedy, the district court ordered the following specific changes to the

reimbursement plan retroactive to September 4, 1991 (the compliance date

established retroactively in the September 13, 1991 preliminary injunction):

a. The prospective inflation index shall be the same as the historical (target) rate which Defendants themselves selected, i.e., DRI times 1.786;

b. Three year averaging of cost reports shall be used to calculate rate reductions based on decreases in costs;

c. The cap on rates for new facilities of six beds or less shall be deleted;

d. Settlement of budgeted rates for new providers shall use an average of the relevant rate periods;

e. For providers at small facilities, rates shall be set based on an average (or collectively) for all six bed ICF/DDs operated by that provider;

f. The Defendants shall develop a definable standard for an efficiently operated provider;

13 g. Increased costs related to increased needs of a client due to changed medical, behavioral or therapeutic needs shall be a basis for an interim rate request;

h. Cost allocations between levels of care shall be revised (except where such a revision would reduce reimbursement already paid to a provider);

i. The Defendants shall rebase whenever actual costs exceed actual expenditures for 50% or more of providers in any rate period as shown on KM Schedules of cost reports maintained by Defendants.

Id. at 1360-61, Conclusion ¶ 2. The district court also ordered that “Defendants

shall comply with its published Rate Plan including the immediate rebasing for the

1995 rate setting period where it failed to rebase.” Id. at 1361, Conclusion ¶ 3.

Moreover, ordered the Court, “Defendants are enjoined from violation of the Boren

Amendment from September 13, 1991 until the State adopts regulations,

procedures and standards governing the reimbursement of ICF/DD providers in

place of the standards set forth in the Boren Amendment. Defendants shall amend

the Rate Plan accordingly.” Id., Conclusion ¶ 4.

On April 23, 1999, Defendants moved for reconsideration of the final order.

Defendants pointed out that in 1998, they had amended the state Medicaid rate plan

and taken it through the notice-and-comment process now required by the Boren

Amendment’s successor. The amendments had been approved effective October 1,

1998. Defendants argued that this development mooted Plaintiffs’ claims.

14 Attached to the motion was an affidavit from a state official who described the

amendment process in detail and noted that at least one of the Plaintiffs (Sunrise

Community, Inc.) had unsuccessfully challenged the new plan in the administrative

proceeding.

On July 9, 1999, the district court denied Defendants’ motion, finding that

Defendants had established no good reason for their failure to present the court

evidence of these events prior to its final judgment, and that the new evidence

would not warrant a modification of the final judgment anyway. This appeal

followed.

II.

There is no dispute about the proper standard of review. We review a

district court’s conclusions of law de novo. See Doe v. Chiles, 136 F.3d 709, 713

(11th Cir. 1998). We review a district court’s grant of injunctive relief for abuse of

discretion. See id. (citing Sun America Corp. v. Sun Life Assur. Co. of Canada, 77

F.3d 1325, 1333 (11th Cir. 1996)). We also review the disposition of a motion for

reconsideration under an abuse of discretion standard. See Region 8 Forest Service

Timber Purchasers Council v. Alcock, 993 F.2d 800, 806 (11th Cir. 1993).

III.

15 This case is made complicated by its unusual procedural posture. The

district court after granting Plaintiffs a preliminary injunction in 1991did not

conduct a trial on the merits until 1998 and did not issue a final order of

declaratory and injunctive relief until April 1999. As a result of this long lapse, the

substantive federal law underlying Plaintiffs’ claims, the Boren Amendment, was

repealed prior to trial.6 Defendants make two primary arguments, both of which

are tied to the delay between preliminary injunction and final judgment. First,

Defendants contend that the Boren Amendment’s repeal had mooted Plaintiffs’

claims by the time of final judgment. Second, they assert that the relief awarded by

the district court violates the Eleventh Amendment to the extent that it requires

payment of money from the state treasury for injuries suffered by Plaintiffs prior to

the judgment. Defendants do not appeal the merits of the district court’s factual

6 Prior to the repeal of the Boren Amendment, it was well-settled that health care providers under a state Medicaid program could bring actions pursuant to 42 U.S.C. § 1983 for declaratory and injunctive relief to redress ongoing violations of the Amendment. See Tallahassee Mem’l, 109 F.3d at 702. Because Defendants and the State of Florida participate in the Medicaid Program, which authorizes the payment of federal funds to states to defray expenses incurred in providing medical assistance to low income individuals, and receive matching funds from the federal government, they are obligated to comply with the requirements of the Medicaid Act and corresponding regulations. See id. at 698-700. Accordingly, in Wilder v. Virginia Hospital Ass’n, 496 U.S. 498, 502, 110 S. Ct. 2510, 110 L. Ed. 2d 455 (1990), the Supreme Court held that the Medicaid Act and the Boren Amendment created a substantive right, enforceable by health care providers, to ensure reimbursement at rates that are actually reasonable and adequate to meet the costs of efficiently and economically operated facilities providing care to Medicaid patients. Providers were thus permitted to sue in federal court for injunctive relief to ensure that they were reimbursed according to “reasonable and adequate” rates.

16 findings or conclusions of law with respect to their violation of the Boren

Amendment and federal Medicaid law. We take up Defendants’ mootness and

Eleventh Amendment objections in that order.

A.

Article III of the Constitution limits the jurisdiction of the federal

courts to the consideration of “Cases” and “Controversies.” U.S. Const. art. III, §

2. “The doctrine of mootness is derived from this limitation because an action that

is moot cannot be characterized as an active case or controversy.” Adler v. Duval

County Sch. Bd., 112 F.3d 1475, 1477 (11th Cir. 1997) (citing Church of

Scientology Flag Serv. Org. v. City of Clearwater, 777 F.2d 598, 604 (11th Cir.

1985)).

“[A] case is moot when the issues presented are no longer ‘live’ or the

parties lack a legally cognizable interest in the outcome.” Powell v. McCormack,

395 U.S. 486, 496, 89 S. Ct. 1944, 1951, 23 L. Ed. 2d 491 (1969). Put another

way, “[a] case is moot when it no longer presents a live controversy with respect to

which the court can give meaningful relief.” Ethredge v. Hail, 996 F.2d 1173,

1175 (11th Cir. 1993) (citing United States v. Certain Real & Personal Property,

943 F.2d 1292, 1296 (11th Cir. 1991)). When events subsequent to the

commencement of a lawsuit create a situation in which the court can no longer give

17 the plaintiff meaningful relief, the case is moot and must be dismissed. See Jews

for Jesus, Inc. v. Hillsborough County Aviation Auth., 162 F.3d 627, 629 (11th

Cir. 1998) (citing Pacific Ins. Co. v. General Dev. Corp., 28 F.3d 1093, 1096 (11th

Cir. 1994)). Any decision on the merits of a moot case or issue would be an

impermissible advisory opinion. See, e.g., Hall v. Beals, 396 U.S. 45, 48, 90 S. Ct.

200, 201-02, 24 L. Ed. 2d 214 (1969) (per curiam).

Plaintiffs filed suit primarily to secure reimbursement at the “reasonable and

adequate” rates required by the Boren Amendment. Defendants argue that the

repeal of the Boren Amendment now renders Plaintiffs’ suit moot. They argue that

Congress intended its repeal to prevent just this kind of suit against a state for

alleged inadequate reimbursement procedures. Defendants point to several

portions of legislative history to argue that Congress’s repeal of the Amendment

was intended to eliminate the substantive rate-setting requirements of the

Amendment (and the ample litigation attendant to those requirements) and replace

them with a strictly procedural “notice and comment” method for setting

reimbursement rates.7 Defendants therefore assert that the repeal of the

7 A review of the legislative history makes clear that Congress was indeed concerned with the cost of health care provider suits against states and sought to curb the proliferation of such suits. See, e.g., H.R. Rep. No. 149, 105th Cong., 1st Sess., at 1175-76.

18 Amendment effectively ended the substantive federal requirement on

reimbursement rate-setting by states -- thereby mooting Plaintiffs’ case.

We disagree as to the period prior to the repeal; indeed, Defendants do not

seriously press this point. Congress’s repeal of the Amendment empowered states

to replace their existing Boren-compliant rate plans with new rate plans not subject

to challenge based on the reasonableness and adequacy requirements of the Boren

Amendment. Congress was explicit on how this change was to occur; states were

to promulgate a rate plan and subject it to the “notice and comment” administrative

procedure. Such a new plan, however, would cover only those services and items

provided after October 1, 1997. Pub. L. 105-33, § 4711(d). Congress made clear

that the Boren Amendment still applied to payment for items and services

furnished before October 1, 1997. See id. Consequently, Plaintiffs’ request for

relief regarding services rendered prior to October 1, 1997 had not become moot

by the time the district court entered judgment in April 1999.

To the extent the district court ordered Defendants’ compliance with Boren

standards beyond the date of final judgment, the issue is less clear on this record.

The dispositive question is whether Florida has indeed passed a valid rate plan in

accordance with the requirements of the Boren Amendment’s successor. After the

district court entered final judgment, Defendants filed a motion for reconsideration,

19 asserting that as of October 1, 1998 (after trial, but prior to entry of judgment) the

State of Florida passed a new rate plan under the required “notice and comment”

procedures. On this basis, Defendants argued that the lawsuit had become moot by

the time of entry of judgment, because it would be impossible to grant prospective

relief regarding the State’s administration of the Boren-era rate plan when that plan

had been superseded and the Boren Amendment’s substantive requirements

rendered inapplicable. The district court denied Defendants’ motion, primarily on

the ground that Defendants had produced no good reason for their failure to advise

the Court of the new plan during the over six months that elapsed between the

effective date of the new plan and the entry of final judgment.8

Normally we review a ruling on a motion for reconsideration under a

deferential abuse of discretion standard. See Alcock, 993 F.2d at 806. A court

abuses its discretion, however, when it misapplies the law. See, e.g., SunAmerica,

77 F.3d at 1333 (court necessarily abuses its discretion if it “has applied an

incorrect legal standard”). When a motion for reconsideration raises a fundamental

jurisdictional issue such as mootness, the court is obliged to consider the merits of

the argument regardless of the motion’s relative untimeliness. See, e.g.,

8 Although the district court did say that it was “not convinced that the new evidence offered by Defendants would warrant a modification of the Final Judgment,” there is no indication that the court considered the merits of Defendants’ mootness argument or examined what that argument meant for its jurisdiction to issue a final judgment.

20 Tallahassee Mem’l Reg’l Med. Ctr. v. Bowen, 815 F.2d 1435, 1445 n. 16 (11th

Cir. 1987) (“[q]uestions of jurisdiction” such as mootness “can appropriately be

raised at any time in the litigation”); Carr v. Saucier, 582 F.2d 14, 15-16 (5th Cir.

1978) (per curiam) (“If a controversy becomes moot at any time during the trial or

appellate process, the court involved must dismiss the suit for want of jurisdiction.

. . . Mootness arguments . . . can be pressed by any party at any time[.]”); see also

Barilla v. Ervin, 886 F.2d 1514, 1519 (9th Cir. 1989) (because a court “may not

decide the merits of a moot case, regardless of whether it was mooted before or

after the entry of judgment,” a court “cannot be divested of its obligation to

consider the issue of mootness on the ground that the timing or manner in which a

party has raised the issue is somehow procedurally improper”).

If indeed the State had properly enacted a new post-Boren rate plan by the

time of entry of final judgment, then a final order providing prospective relief with

respect to the State’s Boren-era plan would serve no purpose and that portion of

the case -- if not the entire case -- would be moot.9 Accordingly, while we share

the Plaintiffs’ and the district court’s concern with Defendants’ failure to raise this

issue promptly (a situation Defendants concede was “regrettable”), the district

9 In light of our ruling regarding Plaintiffs’ claims for retroactive relief, see infra Part III.B, the entire case would have to be dismissed if the court lacked subject matter jurisdiction to award prospective relief at the time of judgment.

21 court still was required to address Defendants’ mootness argument, and if that

argument had merit, to dismiss any claim for prospective relief on that ground.

That said, we are unwilling on this record to determine whether the new plan

complies with the requirements of the post-Boren statute. Defendants contend that

in conjunction with their motion for reconsideration they submitted affidavits

confirming that the State has taken the new plan through the notice-and-comment

process and that the plan fully complies with Boren’s successor statute.

Defendants also assert that Plaintiffs did not submit any affidavits of their own to

dispute these claims. Given that Plaintiffs were responding to a motion for

reconsideration, however, we attach little significance to their failure to submit

counter-affidavits. Moreover, Plaintiffs suggest (although they do not state

clearly) that the new plan may not be in compliance with the procedural

requirements of the post-Boren statute. Appellees’ Brief at 24. In these

circumstances, we think, the wisest course is to remand the case to the district court

so that it may determine in the first instance whether the new plan complied with

the requirements of Boren’s successor statute, and if so whether the lawsuit had

become moot prior to the entry of judgment in April 1999. We therefore remand to

the district court on this threshold jurisdictional issue.10

10 Even assuming Plaintiffs are correct that Florida has not validly adopted a post-Boren rate plan, there remains a question as to what standards if any govern the post-Boren era in the

22 B.

We turn next to whether the Eleventh Amendment precluded the district

court from ordering, in essence, that the Defendants rectify improper past

payments to providers such as Plaintiffs. The Eleventh Amendment to the United

States Constitution provides: “The Judicial Power of the United States shall not be

construed to extend to any suit in law or equity, commenced or prosecuted against

one of the United States by Citizens of another State, or by Citizens or Subjects of

absence of such a plan. Defendants, for their part, assert that no federal standards govern the interim period and thus this lawsuit is moot (at least with respect to the post October 1, 1997 period) regardless of whether a valid post-Boren plan was adopted. The district court appears to have assumed that Boren Amendment standards continue to apply even after the Amendment’s repeal unless and until the state adopts a valid post-Boren plan to replace its Boren-era plan. See 47 F. Supp. 2d at 1354 (“until such time as the State amends its Rate Plan in accordance with federal requirements, the Rate Plan in effect on the effective date of repeal of the Boren Amendment continues to apply”); 1361 (enjoining Defendants from “violation of the Boren Amendment . . . until the State adopts regulations, procedures and standards governing the reimbursement of ICF/DD providers in place of the standards set forth in the Boren Amendment”). But the district court did not offer any detailed explanation for its assumption, and we note, without deciding the issue, that courts have suggested different views on the matter. Compare Belshe, 188 F.3d at 1095 (rejecting argument that repeal of Boren Amendment had rendered moot a dispute about application of Boren requirements to Boren-era plan yet to be replaced after the effective date of the repeal) with Hall v. Sullivan, Second Cir., Nos. 97- 7632(L) & 97-7642 (XAP) (Oct. 15, 1997), 129 F.3d 113 (table case) (dismissing appeal based on parties’ agreement that their dispute about application of Boren requirements was mooted as of the effective date of the Boren Amendment’s repeal) and HCMF Corp. v. Gilmore, 26 F. Supp. 2d 873, 878-80 (W.D. Va. 1998), on reh’g, 85 F. Supp. 2d 643 (1999) (ruling that the Boren Amendment’s repeal effectively precluded any claim based on Boren for services rendered after the repeal date, even though the state had not yet passed a new plan of its own). Given our ruling that retrospective relief here is barred by the Eleventh Amendment, see infra Part III.B, resolving what standard applies to the post-Boren era would be unnecessary if the district court on remand found that the Defendants had adopted a valid post-Boren plan prior to the entry of judgment. We therefore need not and do not address now what standards govern in the post-Boren era in the absence of a validly adopted “notice and comment” plan.

23 any Foreign State.” U.S. Const. amend. XI. The Amendment not only bars suits

against a state by citizens of another state, but also bars suits against a state

initiated by that state’s own citizens. See Edelman v. Jordan, 415 U.S. 651, 663,

94 S. Ct. 1347, 1355, 39 L. Ed. 2d 662 (1974).

Under the doctrine of Ex parte Young, 209 U.S. 123, 28 S. Ct. 441, 52 L.

Ed. 714 (1908), there is a long and well-recognized exception to this rule for suits

against state officers seeking prospective equitable relief to end continuing

violations of federal law. See Summit Med. Assocs., P.C. v. Pryor, 180 F.3d 1326,

1336-37 (11th Cir. 1999) (citing Idaho v. Coeur d’Alene Tribe, 521 U.S. 261, 269,

117 S. Ct. 2028, 2034, 138 L. Ed. 2d 438 (1997) (“We do not . . . question the

continuing validity of the Ex parte Young doctrine.”)), cert. denied, 120 S. Ct.

1287, 146 L. Ed. 2d 233 (2000). The availability of this doctrine turns, in the first

place, on whether the plaintiff seeks retrospective or prospective relief.

Ex parte Young has been applied in cases where a violation of federal law by

a state official is ongoing as opposed to cases in which federal law has been

violated at one time or over a period of time in the past. Thus, Ex parte Young

applies to cases in which the relief against the state official directly ends the

violation of federal law, as opposed to cases in which that relief is intended

indirectly to encourage compliance with federal law through deterrence or simply

24 to compensate the victim. “‘Remedies designed to end a continuing violation of

federal law are necessary to vindicate the federal interest in assuring the supremacy

of that law. But compensatory or deterrence interests are insufficient to overcome

the dictates of the Eleventh Amendment.’” Summit Med. Assocs., 180 F.3d at

1337 (quoting Papasan v. Allain, 478 U.S. 265, 277-78, 106 S. Ct. 2932, 2940, 92

L. Ed.2 d 209 (1986)). Therefore, the Eleventh Amendment does not generally

prohibit suits against state officials in federal court seeking only prospective

injunctive or declaratory relief, but bars suits seeking retrospective relief such as

restitution or damages. See Green v. Mansour, 474 U.S. 64, 68, 106 S. Ct. 423,

426, 88 L. Ed. 2d 371 (1985); Sandoval v. Hagan, 197 F.3d 484, 492 (11th Cir.

1999) (“[Individual suits that seek prospective relief for ongoing violations of

federal law . . . may be levied against state officials.”). If the prospective relief

sought is “measured in terms of a monetary loss resulting from a past breach of a

legal duty,” it is the functional equivalent of money damages and Ex parte Young

does not apply. Edelman, 415 U.S. at 669, 94 S. Ct. at 1347.

Plaintiffs’ suit originally fell within the Ex parte Young exception. Their

suit was directed against state officials in their official capacities and asked for

prospective injunctive relief to halt continuing violations of federal law. Plaintiffs

are not barred by the Eleventh Amendment from seeking enforcement, in a federal

25 court, of a federal statute which state agents have violated. Defendants, in fact, do

not argue that Plaintiffs’ suit was barred from the outset. Instead, they make a

more focused argument that much of the relief ordered by the district court is

retrospective rather than prospective. They assert that, to the extent the district

court directed them to make changes to the State’s Boren-era reimbursement plan

retroactive to September 4, 1991, it essentially required them to redress inequities

in their past reimbursement payments from 1991 to the date of final judgment

(April 1999), and potentially to reimburse Plaintiffs for those past deficiencies.

We reluctantly agree.

To begin with, we note that the judgment clearly does contemplate the

payment of state funds to redress prior inadequate reimbursements. Defendants

observe that the final judgment does not expressly require them to pay any money

or arrears in reimbursements. Technically speaking they are right. It is obvious,

however, that the entire purpose and effect of the judgment is to prescribe a set of

standards upon which Defendants are to provide reimbursement for inadequate past

and future payments, and that failure to provide such reimbursement would subject

them to sanctions by the federal district court, which expressly “retain[ed]

jurisdiction to enforce [its] Order.” 47 F. Supp. 2d at 1361. Plaintiffs view the

judgment in those terms. See Appellee’s Brief at 39 (arguing that “the Eleventh

26 Amendment does not preclude the payment of money which Defendants have

withheld improperly”). If the order were read as nothing more than an idle

declaration of Defendants’ past obligations, without any intent or authority on the

part of the district court to enforce its ruling, then the order would be a nullity and

plainly invalid on that basis alone. We decline to adopt such an unrealistic reading

of the district court’s order.

Because some of the relief ordered in the final judgment requires the State in

effect to rectify improper past payments, we see no way to distinguish the holding

of Edelman which prohibits exactly this sort of retroactive award. Edelman itself

illustrates the problem. There, a plaintiff sought declaratory and injunctive relief

against two former directors of the Illinois Department of Public Aid, alleging that

those state officials were administering the federal-state programs of Aid to the

Aged, Blind, or Disabled (AABD) in a manner inconsistent with various federal

regulations and the Fourteenth Amendment to the Constitution. The plaintiff’s

complaint charged that the defendants were improperly authorizing grants to

commence only with the month in which an application was approved and were not

including prior eligibility months for which an applicant was entitled to aid under

federal law. The complaint also alleged that the defendants were not processing

27 the applications within the applicable time requirements of the federal regulations.

The district court granted a permanent injunction requiring compliance with

the federal time limits for processing and paying AABD applicants. It also ordered

the defendants to pay retroactively benefits which would have been awarded if

defendants had complied with federal law. The Seventh Circuit reversed, holding

that this retroactive relief was barred by the Eleventh Amendment, and the

Supreme Court agreed. In this now-famous ruling, the Court articulated the

retrospective/prospective dichotomy for Eleventh Amendment caselaw:

prospective injunctive or declaratory relief can be awarded but retrospective relief

cannot. The Supreme Court explained:

[T]hat portion of the District Court’s decree which petitioner challenges on Eleventh Amendment grounds goes much further than any of the cases cited. It requires payment of state funds, not as a necessary consequence of compliance in the future with a substantive federal-question determination, but as a form of compensation to those whose applications were processed on the slower time schedule at a time when petitioner was under no court-imposed obligation to conform to a different standard. While the Court of Appeals described this retroactive award of monetary relief as a form of ‘equitable restitution,’ it is in practical effect indistinguishable in many aspects from an award of damages against the State. It will to a virtual certainty be paid from state funds, and not from the pockets of the individual state officials who were the defendants in the

28 action. It is measured in terms of a monetary loss resulting from a past breach of a legal duty on the part of the defendant state officials.

415 U.S. at 668, 94 S. Ct. at 1358.

The district court judgment in this case effectively requires Defendants to

redress inadequate past reimbursement payments by recalibrating the rates and

paying Plaintiffs the difference out of the state treasury. But the Eleventh

Amendment bars the award of retroactive relief for violations of federal law. The

fact that harm is ongoing in the sense that Plaintiffs are continuing to suffer the

effects of Defendants’ prior failure to reimburse them adequately does not make

the relief any less retrospective. Quite simply, the Eleventh Amendment’s

immunity is triggered when an declaration or injunction effectively calls for the

payment of state funds as a form of compensation for past breaches of legal duties

by state officials. See id.; Pennhurst State School & Hosp. v. Halderman, 465 U.S.

89, 102-03, 104 S. Ct. 900, 909, 79 L. Ed. 2d 67 (1984). Such is the case here.

The district court tried to avoid this limitation by describing the relief

decreed in its final order as simply enforcing the 1991 preliminary injunction; thus,

reasoned the court, the relief was not retrospective and did not run afoul of the

Eleventh Amendment.11 We are unpersuaded. To begin with, the district court’s

11 The district court explained its relief this way:

29 reasoning cannot be squared with the command of the Eleventh Amendment as it

has been interpreted in Edelman as well as other decisions of the Supreme Court

and this Court. Moreover, even assuming that the district court’s reasoning could

be squared with binding precedent, the 1991 preliminary injunction was not

enforceable on its own terms and thus could not serve as the basis for the district

court’s retroactive relief. Finally, the district court’s judgment imposed

reimbursement obligations starkly different from and more detailed than those

contemplated by the preliminary injunction. For each of these independent

reasons, which we address in sequence below, the retrospective relief ordered by

the district court violates the Eleventh Amendment.

First, we are aware of no federal court that has upheld against Eleventh

Amendment scrutiny a final judgment requiring a state to pay money for illegal

[B]ecause compliance by the Defendants with the Preliminary Injunction entered by this Court required expenditure of State funds, such expenditures are ancillary to preliminary injunctive relief entered. In this case, the Court has, since September 13, 1991, enjoined Defendants from reimbursement at inadequate rates and reimbursing cluster providers “in a manner other than as provided in a Rate Plan” at the “full Medicaid rate.” Defendants’ conduct, therefore, constitutes a continuing violation of the Medicaid Act and Plaintiffs’ statutory rights. Further, the portion of Plaintiffs’ claim relating to inadequate reimbursement occurring since the Preliminary Injunction represents injuries arising after Defendants were ordered to comply with the Medicaid Act and are therefore prospective in nature.

47 F.Supp.2d at 1359-60.

30 conduct which pre-dates the judgment on the theory that the conduct violated an

earlier preliminary injunction and therefore the remedy was prospective. The

requirements imposed by the district court in its April 11, 1999 final judgment with

respect to reimbursement for services rendered prior to that date are undeniably

retrospective, and cannot be justified as merely “relating back” to the date of the

preliminary injunction. If Plaintiffs or the district court felt that Defendants had

violated the preliminary injunction, the remedy would have been to conduct a show

cause hearing and, if appropriate, to pursue civil contempt requiring Defendants to

pay rates or provide reimbursement in accordance with the injunction.12 But the

district court could not, at least in the peculiar circumstances of this case, avoid the

constraints of the Eleventh Amendment by relying on Defendants’ past violations

of the preliminary injunction to justify imposing plainly retroactive relief in its

final judgment. See Kostok v. Thomas, 105 F.3d 65, 69 (2d Cir. 1997) (“Any

claim for retroactive monetary relief, under any name, is barred . . .. When state

funds are awarded to compensate for past wrongs by state officials, the Eleventh

Amendment bars the payment as retrospective.” (citing Edelman and Green)).

12 As discussed above, supra note 4, Plaintiffs’ numerous contempt and sanctions motions never squarely challenged the court-ordered rate plan or the rates paid under it. We offer no opinion as to how the Eleventh Amendment might have impacted such a contempt proceeding.

31 Second, even if we assume that such a “relation back” theory could be used

to avoid the constraints of the Eleventh Amendment in some cases, here there are

more fundamental problems with the district court’s reasoning. The underlying

preliminary injunction lacked the precision and specificity necessary for it to be

enforceable prospectively from the date of its entry in 1991, let alone to serve as

the linchpin of the district court’s “relation back” theory eight years later. Fed. R.

Civ. P. 65(d) requires that a preliminary injunction be “specific in its terms” and

“describe in reasonable detail . . . the act or acts sought to be restrained.” The

district court’s preliminary injunction did not meet these criteria; on the contrary, it

accomplished little more than enjoining Defendants from violating the law. It

stated that Defendants were enjoined from “inadequately reimbursing providers of

care in the ICF/[DD] program,” and from “paying providers for services at

ICF/[DD] cluster facilities in a manner other than as provided for in a rate plan”

that “pay[s] to each provider of ICF/[DD] services at cluster facilities the full

Medicaid rate for that facility” and affords “each provider at cluster facilities all

rights and protections accompanying a rate plan governing ICF/[DD] facilities.”

The injunction order specifically declined to modify the State’s existing plan by

imposing new rates, but rather permitted Defendants themselves to file a new plan

“which complies with the substantive requirements of” the Medicaid Act.

32 This Circuit has held repeatedly that “obey the law” injunctions are

unenforceable. See, e.g., Burton v. City of Belle Glade, 178 F.3d 1175, 1200 (11th

Cir. 1999) (holding that injunction which prohibited municipality from

discriminating on the basis of race in its annexation decisions “would do no more

than instruct the City to ‘obey the law,’” and therefore was invalid); Payne v.

Travenol Labs., Inc., 565 F.2d 895, 899 (5th Cir. 1978) (invalidating injunction

that prohibited defendant from violating Title VII in its employment decisions).

The specificity requirement of Rule 65(d) is no mere technicality; “[the] command

of specificity is a reflection of the seriousness of the consequences which may flow

from a violation of an injunctive order.” Payne, 565 F.2d at 897. An injunction

must be framed so that those enjoined know exactly what conduct the court has

prohibited and what steps they must take to conform their conduct to the law. See

Meyer v. Brown & Root Constr. Co., 661 F.2d 369, 373 (5th Cir. 1981) (citing

International Longshoremen’s Assoc. v. Philadelphia Marine Trade Assoc., 389

U.S. 64, 76, 88 S. Ct. 201, 208, 19 L. Ed. 2d 236 (1967)). The preliminary

injunction in this case differs little from an “obey the law” order because it fails to

identify with adequate detail and precision how Defendants are to perform such

critical obligations as “[]adequately reimbursing providers of care” and

“compl[ying] with the substantive requirements of” the Medicaid Act.

33 Third, even if the preliminary injunction were valid and enforceable, the

injunctive relief awarded by the district court’s final order of April 11, 1999 was

not the same as that ordered by the preliminary injunction. On the contrary, the

final order imposed more expansive, and far more detailed, obligations on

Defendants for the post-September 1991 period than those imposed prospectively

in the preliminary injunction. The preliminary injunction, as noted above,

essentially enjoined the Defendants from violating the law and directed them to

submit a new rate plan that complied with the law. The final judgment went much

further, ordering ten specific alterations to the rate plan, including requirements

that Defendants use “[t]hree year averaging of cost reports . . . to calculate rate

reductions,” delete “[t]he cap on rates for new facilities with six beds or less,” set

rates for providers at small facilities based on “an average (or collectively) for all

six bed ICF/DDs operated by that provider,” and “rebase whenever actual costs

exceed actual expenditures for 50% or more of providers in any rate period as

shown on KM Schedules of cost reports maintained by Defendants.” Regardless of

whether a “relation back” theory comports with current Eleventh Amendment

doctrine, the final judgment plainly cannot relate back to an altogether different

and far less precise injunction.

34 In short, the relief ordered by the district court’s final injunction did not

become validly prospective simply because it was intended to redress past

violations of the earlier preliminary injunction.

For its conclusion the district court relied primarily on Rye Psychiatric

Hospital Center, Inc. v. Surles, 777 F. Supp. 1142 (S.D.N.Y. 1991). The court also

cited Libby v. Marshall, 653 F. Supp. 359 (D. Mass. 1986) and Bennett v. White,

865 F.2d 1395 (3d Cir. 1989). Plaintiffs likewise rely on these opinions, as well as

an unpublished ruling, Kansas Health Care Association, Inc. v. Kansas Department

of Social and Rehabilitation Services, No. 93-4045-RDR (D. Kan. May 31, 2000).

None of these decisions is binding precedent in this Circuit and none alters our

conclusion.

In Rye, the court issued a partial summary judgment ruling finding that the

defendants were providing inadequate reimbursement to the plaintiff Medicaid

provider. The plaintiff later sought a show cause order compelling the defendants

to use the proper formula to reimburse it for services rendered subsequent to the

summary judgment ruling as well as for the four years preceding that ruling. The

court began its analysis of the show cause request by highlighting the longstanding

principles we apply here. 777 F. Supp. at 1146 (“Simply put, the eleventh

amendment bars the award of retroactive relief for violations of federal law which

35 would require the payment of funds from a state treasury. . . . [T]he amendment’s

immunity is triggered when relief amounts to the payment of state funds as a form

of compensation for past breaches of legal duties by state officials.”). The court

held that granting relief for the four years preceding the summary judgment ruling

would be prohibited. Id. at 1147-51. Nevertheless, it concluded, without

elaboration, that “[t]he portion of plaintiff’s action relating to inadequate

reimbursement payments and improper rate methodologies occurring since [the

ruling] represents injuries arising after the court issued its decision. Relief for these

injuries is clearly prospective in nature.” Id. at 1147.

Rye does not help the Plaintiffs in this case. In Rye, the relief granted by the

district court for the post-summary judgment period arguably may be viewed as

prospective because the relief covered a period after a final ruling on the merits of

the plaintiff’s claim had been rendered. Moreover, the relief was granted pursuant

to a show cause application. Here, by contrast, the relief ordered by the district

court for the September 1991-April 1999 period cannot be viewed as enforcing a

prior order finally deciding the merits of Plaintiffs’ claim. At best, it enforced a

non-final determination of Plaintiffs’ claim made in connection with the preliminary

injunction order. Additionally, the district court was not considering a show cause

or contempt application, which would have been the proper vehicle for Plaintiffs to

36 seek relief for any alleged violation of the preliminary injunction. The factual

differences between Rye and this case are significant. In any event, to the extent

Rye may be read to endorse the reasoning applied by the district court in this case, it

is odds with Eleventh Amendment doctrine applied by the Supreme Court.13

In Libby, the district court found that the Eleventh Amendment did not

prohibit it from entering an injunction requiring state officials to spend state funds

to improve prison conditions in order to comply with a prior preliminary injunction

13 Kansas Health Care Association is unhelpful for many of the same reasons as Rye. There, the district court issued a preliminary injunction in a Boren Amendment case enjoining the operation of reimbursement rates in defendants’ Medicaid plan, directing the development of new rates, and directing that an interim rate be paid pending the adoption of the new rates. The injunction directed that funds equivalent to the difference between the interim rates and the old rates be deposited into a court-supervised escrow account (a procedure to which defendants agreed). Three months after entry of the preliminary injunction, the defendants adopted new rates, which the plaintiffs did not challenge. Shortly before trial, Defendants moved to dismiss on Eleventh Amendment grounds, arguing that any final judgment awarding the escrowed funds to the plaintiffs would constitute retrospective relief. The district court (relying on the district court’s decision in the case now before us) rejected that argument, explaining that the funds had already been paid by the defendants and thus the final judgment would not impose any further drain on the state treasury. The court also ruled that the payment of funds was simply ancillary to a valid prospective injunction, and that the funds represented defendants’ “continuing obligation” under the terms of the preliminary injunction.

Kansas Health Care Association is an unpublished opinion and carries little weight. Its application of the retrospective/prospective distinction required by cases such as Edelman is open to substantial debate. A court order requiring the payment of funds from the state treasury to redress prior harm by state actors is barred by the Eleventh Amendment regardless of whether, as an intermediate step, the funds were placed at the court’s direction into an escrow account for the specific purpose of preserving them in order to compensate the plaintiffs. The factual differences between that case and the case at bar also are significant. Among other things, here Defendants did not pay any funds into escrow in compliance with the preliminary injunction, and therefore any payment for prior inadequate reimbursements would undeniably come directly from State coffers. Moreover, as noted above, in this case the preliminary injunction itself was insufficient.

37 imposing a cap on the jail’s population. The court described the additional relief as

ancillary to a “substantive prospective injunction” and necessary to ensure future

compliance with the prior injunction. 653 F. Supp. at 363. Libby concerns a well-

recognized exception to the Eleventh Amendment for ancillary monetary relief.

That exception is inapposite, however, because the 1991 preliminary injunction,

besides being unenforceable, did not simply seek to regulate Defendants’ future

conduct without necessarily requiring the expenditure of funds. On the contrary,

this preliminary injunction plainly contemplated the expenditure of funds by the

State in accordance with required Boren Amendment rates. The relief awarded by

this final judgment with respect to events pre-dating the judgment cannot remotely

be described as an “ancillary” remedy necessary to ensure future compliance with

the terms of the preliminary injunction.

The Third Circuit’s opinion in Bennett v. White is inapposite as well.

Bennett involved a challenge to a state’s administration of a child support benefits

program under the auspices of the Social Security Act. The district court found,

among other things, that the defendants had improperly withheld certain payments

due to the plaintiffs. The district court declined, however, to order defendants to

make those payments. Plaintiffs challenged that ruling on appeal, asserting that

“Edelman v. Jordan should be construed as inapplicable to their suit because they

38 are not seeking the recovery of entitlements to government benefits funded by

general revenues, but only the recovery of their own property.” 865 F.2d at 1407.

The Third Circuit rejected the argument, stating that Edelman “prevents a federal

court from requiring state officers to disgorge from the state treasury even

unlawfully converted property, at least so long as the state pays for the

disgorgement.” Id. at 1408. The court suggested in dicta an exception to this

principle in instances where payments from the state treasury would be offset by

payments into the treasury by the federal government. Id.

Such an exception has not been recognized by this Circuit, and cannot readily

be squared with the Supreme Court’s Eleventh Amendment jurisprudence. But

even assuming that it has any validity, it does not help the Plaintiffs here. Although

Plaintiffs speculate that the State of Florida may “financially benefit from

modifications ordered in the Final Judgment through additional federal funding,”

Plaintiffs’ Supplemental Brief at 2, there is no record evidence for this proposition,

and in any event it is of no legal consequence under the Supreme Court and this

Court’s binding precedent, which focus on whether the “judgment . . . would

implicate the state treasury,” not whether as a bottom line matter the state treasury

would be any worse off. Shands Teaching Hospital and Clinics Inc. v. Beech

Street Corp., 208 F.3d 1308, 1311 (11th Cir. 2000) (emphasis added). And

39 although in Bennett the Third Circuit declined to reverse the district court’s

decision to order back payments for improperly withheld funds in a limited set of

cases, the defendants had conceded that issue and thus no Eleventh Amendment

scrutiny was applied. Bennett does not justify the result here.

Simply put, in this case, as in Edelman, the relief would amount to direct

state reimbursement for past unlawful conduct. Although the retrospective relief

only extends back to the preliminary injunction, because the injunction was entered

almost eight years prior to final judgment, it would plainly amount to an award for

past due benefits in contravention of Edelman. The proper recourse for Plaintiffs

would have been to obtain a contempt order after Defendants failed to comply with

the district court’s preliminary injunction. The relief awarded in the final judgment

is essentially a surrogate for such a civil contempt award. Accordingly, we cannot

characterize Defendants’ reimbursement of past due payments as anything but

impermissibly retroactive. The district court lacked jurisdiction to order that

Defendants recalibrate the rates for the September 1991-April 1999 period and pay

Plaintiffs any arrears, because such relief plainly would require the payment of

money from the state treasury to redress past unlawful conduct toward the

Plaintiffs.14

14 During oral argument, we requested the parties to submit supplemental briefing on two related issues: (1) whether the State of Florida, by accepting federal Medicaid funds, waived its

40 Eleventh Amendment immunity pursuant to the congressional power under the Spending Clause to condition a state’s receipt of federal funds on a knowing waiver of state sovereign immunity; and (2) the effect on this case of the Supreme Court’s decision in Wilder v. Virginia Hospital Ass’n, 496 U.S. 498, 502, 110 S. Ct. 2510, 110 L. Ed. 2d 455 (1990). Defendants contend that the State has not waived its Eleventh Amendment immunity by accepting Medicaid funds because the Medicaid statute does not contain an express and unmistakable statement that Congress intended to condition the receipt of funds on a waiver of immunity. Defendants also contend that Wilder is inapposite because it only addressed the question of whether the Boren Amendment is enforceable in an action by health care providers under section 1983. Plaintiffs do not meaningfully contest either contention.

We agree with Defendants’ view on these issues. Under the Spending Clause waiver theory, a state may waive its sovereign immunity by accepting federal funds. See Atascadero State Hosp. v. Scanlon, 473 U.S. 234, 238 n.1, 105 S. Ct. 3142, 3145 n.1, 87 L. Ed. 2d 171 (1985) (“a State may effectuate a waiver of its constitutional immunity by . . . waiving its immunity to suit in the context of a particular federal program”); Sandoval, 197 F.3d at 492-93. But a Spending Clause waiver requires an “unequivocal indication” by Congress that a State accepting funds thereby waives its claim to immunity -- either “‘by the most express language or by such overwhelming implication from the text as (will) leave no room for any other reasonable construction.’” Edelman, 415 U.S. at 673, 94 S. Ct. at 1347 (quoting Murray v. Wilson Distilling Co., 213 U.S. 151, 171, 29 S. Ct. 458, 464, 53 L. Ed. 742 (1909)).

The Medicaid Act contains no clear statement of intent to condition receipt of Medicaid funds on a waiver of state sovereign immunity. Indeed, Congress has rejected the inclusion of such a statement in the Act. In 1975 Congress amended the Act to require states to waive any Eleventh Amendment immunity from suit for violations of the Act. See Pub. L. 94-182, § 111, 89 Stat. 1054; H.R. Rep. No. 94-1122, at 4. The provision generated tremendous opposition from the states, however, and was repealed during the next session of Congress. Pub. L. 94-522, 90 Stat. 2540. Plaintiffs direct us to no language in the Act that represents an unequivocal indication by Congress that states accepting federal Medicaid funds do so on condition that they have knowingly waived their Eleventh Amendment protection.

The Supreme Court’s 1990 decision in Wilder does not affect that analysis. See Yorktown Med. Lab., Inc. v. Perales, 948 F.2d 84, 88 (2d Cir. 1991) (noting that even after Wilder the Boren Amendment “does not authorize retroactive suits for the recovery of compensation due”). In Wilder, as noted above, the Supreme Court held that “the Boren Amendment imposes a binding obligation on States participating in the Medicaid program to adopt reasonable and adequate rates and that this obligation is enforceable under § 1983 by health care providers.” 496 U.S. at 512, 110 S. Ct. at 2518-19. The Court did not address any Eleventh Amendment issue, and certainly did not hold that by accepting funds under the Medicaid Act a state waives its immunity. Moreover, the plaintiffs in Wilder were only seeking prospective injunctive relief against state officials, see id. at 505, 110 S. Ct. at 2515, and thus no Eleventh Amendment issue was presented (unlike here, where the district court awarded plainly

41 To the extent the district court order contemplates the payment of state funds

to remedy unlawful conduct prior to the date of the final judgment, the judgment is

prohibited by the Eleventh Amendment, and we are constrained to vacate it. This

includes all of the changes to the reimbursement plan required “retroactive to

September 4, 1991” by paragraph 2 of the district court’s Conclusion. See 47 F.

Supp. 2d at 1360. This also includes the requirement in paragraph 3 of the

Conclusion that Defendants conduct an “immediate rebasing for the 1995 rate

setting period where it failed to rebase,” and the portion of paragraph 4 which

enjoins the Defendants from violating the Boren Amendment from September 13,

1991 to the date of judgment. Id. at 1361.

We do not rule at this time on whether the prospective relief ordered by the

district court also is barred by the Eleventh Amendment. Although a federal court

is prohibited by the Eleventh Amendment from ordering a state to provide

retrospective relief, there are very limited circumstances where a court may enter an

order implicating the state treasury if such payments will be nothing more than

ancillary to compliance with a enforceable prospective injunction prohibiting future

retrospective relief). Wilder did not hold that a provider can sue under section 1983 in federal court to obtain an order imposing retrospective relief that otherwise would be barred by the Eleventh Amendment. Accordingly, Wilder does not dictate the outcome here.

42 unlawful conduct by state officials. See, e.g., Milliken v. Bradley, 433 U.S. 267,

289, 97 S. Ct. 2749, 2762, 53 L. Ed. 2d 745 (1977); DeKalb County Sch. Dist. v.

Schrenko, 109 F.3d 680, 690-91 (11th Cir. 1997) (per curiam) (noting Eleventh

Amendment exception that “permits federal courts to enjoin state officials to

conform their conduct to the requirements of federal law, even if there is an

ancillary impact on the state treasury,” but finding that injunction at issue was

barred by the Eleventh Amendment because the obligation to make future payments

was not merely ancillary). How this exception survives more recent

pronouncements of Eleventh Amendment doctrine, and whether some portions of

the district court’s order may conceivably come within this exception, are

potentially difficult questions that need not be answered if on remand the district

court determines that any question of prospective relief had already become moot

by the time it entered final judgment. See supra at 22.15

15 Deferring resolution of this potentially unnecessary issue is consistent with the longstanding rule that constitutional questions should not be resolved unless necessary to the decision. See, e.g., I.A. Durbin, Inc. v. Jefferson Nat’l Bank, 793 F.2d 1541, 1553 (11th Cir. 1986). Moreover, mootness is a jurisdictional issue that must be resolved at the threshold. See North Carolina v. Rice, 404 U.S. 244, 246, 92 S. Ct. 402, 404, 30 L. Ed. 2d 413 (1971) (“The question of mootness is . . . one which a federal court must resolve before it assumes jurisdiction.”). Although this Court has described the issue of Eleventh Amendment immunity as itself one of subject matter jurisdiction, see Seaborn v. State of Florida, Department of Corrections, 143 F.3d 1405, 1407 (11th Cir. 1998), cert. denied, 526 U.S. 1144, 119 S. Ct. 1038, 143 L. Ed. 2d 46 (1999), mootness -- like standing and ripeness -- raises an even more basic question of jurisdiction that cannot be waived and goes to the very heart of the “case or controversy” requirement of Article III. At least in this context, therefore, questions of mootness ought to be resolved first. See Ainsworth Aristocrat Int’l Pty. Ltd. v. Tourism Co. of the

43 We do not reach these results without misgivings. The issues raised in this

case by the Plaintiffs are extremely serious and vitally important to the large group

of developmentally-disabled persons who rely on the fair and proper administration

of the State’s Medicaid program. As we have noted, Defendants do not dispute the

district court’s findings of fact or conclusions of law, which detail at length

Defendants’ violations of the Boren Amendment and federal law. Moreover, we

acknowledge Plaintiffs’ concern that some of the long lapse between the

commencement of this case and the entry of judgment (as a result of which the basis

for the case -- the Boren Amendment -- was repealed) may be attributed to

Defendants’ repeated requests for continuances. Still, we must observe the

commands of the Eleventh Amendment and binding Supreme Court precedent,

which forbid precisely the kind of retrospective relief awarded by the district court.

In light of these circumstances, and given the time and resources that this

litigation has already entailed, we encourage the Defendants to seek a just

resolution of the Plaintiffs’ reimbursement claims. We also stress that, whatever the

relief (if any) available in federal court, our decision does not preclude the Plaintiffs

Commonwealth of Puerto Rico, 693 F. Supp. 1354, 1357 (D.P.R. 1988) (refusing to rule upon Eleventh Amendment question after finding initially that case was moot), aff’d, 899 F.2d 852 (1st Cir. 1989) (table case). Finally, declining to review this issue now permits the district court on remand (if it concludes the case is not moot) to examine the scope of its prospective relief in light of the Eleventh Amendment principles set forth in this opinion.

44 from seeking relief that still may be available to them in the Florida state courts,

where the paramount jurisdictional concerns addressed in this opinion do not apply.

VACATED IN PART AND REMANDED IN PART.