Vol 23, 2014 Annals of Health Law 52
THE ACA AND PEOPLE LIVING WITH HIV/AIDS
These Medicaid reimbursement rate cuts resulted in a rash of lawsuits
across the country, both by the insured lacking necessary medical services
and medical service providers seeking reasonable reimbursement rates.196
These lawsuits challenged such rates as a violation of the rights of program
participants under the Social Security Act.197 Eventually, courts foreclosed
this legal theory, however, by concluding that the Social Security Act does
not create a private cause of action.198 In response, plaintiffs began suing
under a different theory, alleging that the reimbursement rates themselves
conflicted with and were pre-empted by the Social Security Act.199
This approach was taken by the plaintiffs in Douglas v. Independent
Living Center of Southern California, Inc., where they argued that
California’s low reimbursement rates conflicted with the Social Security
Act’s requirement that “Medicaid ‘care and services’ [be] sufficiently
available.”200 The plaintiffs argued that the state’s low reimbursement rates
conflicted with the Social Security Act’s availability requirement because
before adopting the rate cuts the state failed to study whether they would
draw enough medical service providers into the program.201 Even without a
private right of action, the plaintiffs argued, the Social Security Act preempts California’s rate cuts in the face of this conflict.202 Although the
Supreme Court granted certiorari to resolve the validity of this argument,
the Court ultimately remanded the question to the Ninth Circuit, finding the
case in a different procedural posture.203 Similar lawsuits challenging
Medicaid reimbursement rate cuts and cuts to services have been filed by
medical service providers after Douglas as well.204 The controversy is
196. See, e.g., Pashby v. Delia, 709 F.3d 307 (4th Cir. 2013); Indep. Living Ctr. of S.
Cal., Inc. v. Maxwell-Jolly, 572 F.3d 644 (9th Cir. 2009), vacated and remanded sub nom.,
Douglas v. Indep. Living Ctr. of S. Cal., Inc., 132 S. Ct. 1204 (2012); United Hosp. Med.
Ctr. v. State, 793 A.2d 1 (N.J. Sup. Ct. App. Div. 2002); see also Sara Rosenbaum, Medicaid
Payment Rate Lawsuits: Evolving Court Views Mean Uncertain Future for Medi-Cal 1, 6,
13–14 (Oct. 2009), http://www.chcf.org/~/media/MEDIA%20LIBRARY%20Files/PDF/
197. See, e.g., Clark v. Kizer, 758 F. Supp. 572 (E. D. Cal. 1990); aff’d in part, rev’d in
part, Clark v. Coye, 967 F.2d 585 (9th Cir. 1992); see also Clark, supra note 191, at 800–01,
198. Sanchez v. Johnson, 416 F.3d 1051 (9th Cir. 2005); see also Rosenbaum, supra
note 196, at 1–2, 9.
199. See, e.g., Douglas v. Indep. Living Ctr. of S. Cal., Inc., 132 S. Ct. 1204, 1208
(2012) (explaining the plaintiffs’ pre-emption claim based on the Social Security Act); see
also Clark, supra note 191, at 823–25; Rosenbaum, supra note 196, at 1–2.
200. Douglas, 132 S. Ct. at 1208.
203. Id. at 1210.
204. See Cal. Ass’n of Rural Health Clinics v. Douglas, 10-17574, 2013 WL 5184355,