Plaintiffs lack standing to bring Medicaid reimbursement suit

Plaintiffs lacked standing to challenge changes to Virginia’s Medicaid reimbursement rates and their applicability to emergency rooms and hospital readmissions via a declaratory judgment action.

Background

This suit involves the Commonwealth of Virginia’s Medicaid reimbursement rates and their applicability to emergency rooms and hospital readmissions. The plaintiffs filed suit in this court, seeking to enjoin Karen Kimsey, acting in her official capacity, from enforcing legislation newly enacted by the Virginia General Assembly. Plaintiffs’ motion for preliminary injunction soon followed, and defendant filed her motion to dismiss for failure to state a claim and for lack of jurisdiction.

Count One

In Count One, plaintiffs claim that the budget items violate the Takings Clause of the Fifth Amendment. Plaintiffs seek injunctive relief to prevent an unconstitutional taking of the economic value of hospitals’ and doctors’ services and supplies for the public’s own use and benefit without paying just compensation.

Plaintiffs are foreclosed from seeking injunctive relief under Count One because they may bring an action seeking just compensation, as has been an available remedy for nearly 150 years. Plaintiffs therefore lack standing to bring their takings claim under Count One because they state no claim that can be “redressed by a favorable decision.”

Counts Two and Three

Plaintiffs allege in Count Two that the budget items are preempted by 42 U.S.C. § 1396a(a)(30)(A) and in Count Three that the downcoding provision is preempted by 42 U.S.C. § 1396u-2(b)(2) and 42 C.F.R. § 438.114(c)(1). Plaintiffs’ complaint invokes the Supremacy Clause under Counts Two and Three, and claims that the budget items are preempted by the cited federal statutes. Plaintiffs also argue in their briefs that these statutes confer rights upon plaintiffs that are enforceable under § 1983. However, neither the Supremacy Clause nor § 1983 alone creates a private cause of action.

Although plaintiffs are unable to rely on either the Supremacy Clause or § 1983 to create a private cause of action, federal courts have the power, “subject to express and implied statutory limitations,” to enjoin “unlawful executive action.” At issue then, is whether the statutory underpinnings of Counts Two and Three confer any individual rights on plaintiffs enforceable via the Supremacy Clause or § 1983.

First, the Supreme Court has specifically held that § 1396a(a)(30)(A) precludes the availability of equitable relief. Accordingly, Count Two fails to state an actionable claim and will be dismissed for lack of standing.

Similarly, the language of § 1396u-2(b)(2) demonstrates the legislature’s intent to foreclose equitable relief because it does not provide any individual rights to support a cause of action for plaintiffs here. Section 1396u-2(b)(2) is not written to benefit plaintiffs. Its language “is akin to the type of institutional policy and practice language” that the Supreme Court held does not create any individual rights. Therefore, any right claimed by plaintiffs under this section is necessarily so vague and amorphous so as to strain this court’s competence. Section u-2 is phrased as a directive for a contractual provision regarding emergency medical services, not as a right to reimbursement rates for health care providers.

Third  § 438.114(c)(1) likewise does not contain any rights-creating language needed to imply a private right of action. The text of the regulation is focused on access to emergency services for enrollees. No part of the text creates a right for providers in the provision of or reimbursement for such services. Moreover, § 438.114(c)(1) alone cannot be the basis for a § 1983 claim because administrative regulations cannot create enforceable § 1983 interests not already implicit in the enforcing statute.

Defendants motion to dismiss granted. Plaintiffs’ motion for preliminary injunction denied.

Virginia Hospital and Healthcare Association v. Kimsey, Case No. 20-cv-587, Oct. 7, 2020. EDVA at Richmond (Hudson). VLW 020-3-513. 15 pp.