After the Supreme Court heard oral arguments in Douglas v. ILC, the Secretary of HHS approved some of California’s deep cuts in Medicaid reimbursement. The Court requested additional briefing regarding the impact of the rate reduction approval, and the United States responded that the case was not moot because the grant of certiorari was based upon the Supremacy Clause question, not a determination as to the actual sufficiency of the state’s Medicaid payment rates. As soon as the rate reductions were approved by HHS, the California Hospital Association, the California Medical Association, and other Medi-Cal providers filed additional claims for injunctive relief.
Yesterday, U.S. District Court Judge Christina Snyder issued an injunction against California preventing the implementation of the HHS-approved rate reductions because they would cause irreparable harm to hospitals’ skilled nursing units (among other problems). The new injunction keeps the issues in Douglas alive, whether as a matter of payment rate adequacy or as a matter of private enforcement of state violations of the Supremacy Clause. Thus, even though HHS approved Medi-Cal rate reductions, the conflicts in Douglas have not been resolved.
There is also a fascinating real-time separation of powers quandry in this case, which is highlighted by the injunction that was just issued. Federal courts perceive states’ failure to abide by the mandate of the Equal Access provision, but HHS, whose job it is to ensure state compliance, turns a blind eye to state decisions that will limit access to medical care. In the meantime, Congress does not modify the Equal Access provision to contain stronger language or a clearer private right of action, it merely relies on implied private enforcement actions (see the amicus brief of Members of Congress). And HHS has issued paltry draft regulations to facilitate enforcement of the Equal Access provision, but the draft regulations do not guide CMS’s enforcement efforts so much as they provide some standards for states to self-report with little federal oversight. It seems that federal courts are acting because the legislative branch either can’t or won’t, and because the executive branch either can’t or won’t ensure that this federal law is followed. This makes the Obama Adminstration’s deference to state decisions all the stranger in Douglas, and courts’ patience with Equal Access litigation a bit more understandable. It also helps to explain the sort of underlying tone of confusion at oral arguments. The Court is left with the unenviable task of cutting this Gordian knot of inter-branch disfunction.