Bowen v. Massachusetts Massachusetts v. Bowen

Decision Date29 June 1988
Docket Number87-929,Nos. 87-712,s. 87-712
Citation101 L.Ed.2d 749,487 U.S. 879,108 S.Ct. 2722
PartiesOtis R. BOWEN, Secretary of Health and Human Services, et al., Petitioner v. MASSACHUSETTS. MASSACHUSETTS, Petitioner v. Otis R. BOWEN, Secretary of Health and Human Services, et al
CourtU.S. Supreme Court

The federal contribution (referred to as a "reimbursement") to a State's Medicaid program takes the form of advances based on the State's estimate of its future expenditures for covered services. Overpayments may be withheld from future advances, or, if a disallowance dispute develops, may be retained by the State at its option pending resolution of the dispute. After Massachusetts was reimbursed by the Department of Health and Human Services (HHS) for its expenditures for particular services during two time periods, HHS subsequently disallowed the reimbursements on the ground that the services in question were not covered by the Medicaid statute or HHS regulations. The Departmental Grant Appeals Board (Board) affirmed. Unlike orders in the related compliance proceedings, which are expressly made reviewable by the regional courts of appeals, disallowance orders are not explicitly made judicially reviewable by the Medicaid statute. Nevertheless, the State filed two suits, each with respect to one of the disallowance decisions, in the Federal District Court, seeking declaratory and injunctive relief and specifically asking the court to "set aside" the Board's orders. In one case, the court issued a declaratory judgment agreeing with the State on the merits, and "reversed" the disallowance decision. In the second case, the court issued an order based on its earlier decision. The Court of Appeals agreed with the Secretary of HHS that the District Court lacked jurisdiction to order him to pay money to the State, and therefore reversed the "money judgment" against him. The court also held, however, that the District Court had jurisdiction to review the Board's disallowance decisions and to grant declaratory and injunctive relief having prospective effect, and affirmed the declaratory judgment on the merits. In this Court, the Secretary contends that the United States Claims Court had jurisdiction over the State's claim, since §§ 702 and 704 of the Administrative Procedure Act preclude district court review.


1. The federal district courts, rather than the Claims Court, have jurisdiction to review a final HHS order refusing to reimburse a State for a category of expenditures under its Medicaid program. Pp. 891-912.

(a) Although § 702 denies the district courts review jurisdiction in actions against federal agencies seeking "money damages," the plain meaning of that language does not foreclose review of the Secretary's disallowance decisions in cases such as the present. First, insofar as the State's complaints sought declaratory and injunctive relief, they were not actions for money damages. Second, and most importantly, even the monetary aspects of the relief sought by the State are not "money damages" as that term is used in § 702. The ordinary meaning of the term is compensatory relief for an injury suffered. Here, the State's suits are in the nature of an equitable action for specific relief seeking reimbursement to which the State was allegedly already entitled, rather than money in compensation for losses suffered as a result of the disallowance. Cf. Maryland Dept. of Human Resources v. Department of Health and Human Services, 246 U.S.App.D.C. 180, 763 F.2d 1441 (CADC 1985). Thus, the statutory text is unambiguous and, given the well-settled presumption that Congress understands the state of existing law when it legislates, the Secretary's suggestion that the words "monetary relief" must be substituted for the words "money damages" could be accepted only for the most compelling reasons. In fact, however, the legislative history demonstrates conclusively that § 702's exception for an action seeking "money damages" should not be broadened beyond the meaning of its plain language. Pp. 891-901.

(b) Section 704—which provides for district court review of final agency actions "for which there is no other adequate remedy in any court"—does not bar relief, since the doubtful and limited relief available in the Claims Court under the Tucker Act is not an adequate substitute for district court review. Section 704 was intended to avoid duplication when there are special statutory review procedures relating to specific agencies, whereas the Tucker Act relates broadly to monetary relief against the United States. The Tucker Act remedy available in the Claims Court is deficient for several reasons. That court has no power to grant equitable relief. Such relief may be appropriate in the disallowance context, and it cannot be assumed categorically that a naked money judgment against the United States will always be an adequate substitute for prospective relief. Furthermore, the Claims Court would be unable to entertain any action in a case in which the State retained a disallowed amount pending Board review until the Government recouped the disallowed amount from a future payment, and might be unable to enter a money judgment against the Government, since reimbursements are actually advances against expenses not yet incurred. In addition, disallowance controversies typically involve state governmental activities that a district court would be in a much better position to understand and evaluate than would a single, specialized tribunal headquartered in Washington. It is anomalous to assume that Congress would channel the review of compliance decisions to the regional courts of appeals, but intend that the same kinds of controversies in the disallowance context should be resolved by the Claims Court or the Federal Circuit. Pp. 901-908.

2. The Court of Appeals erred in not affirming the judgments of the District Court in their entirety, for the reasons set forth above. Moreover, neither of the District Court's orders was a "money judgment," as the Court of Appeals held, since the first order (followed in the second) simply "reversed" the Board's decision, and did not order that any amount be paid or purport to be based on a finding that any amount was owed. The District Court had the power to grant the complete relief that it did under 5 U.S.C. § 706. Pp. 909-912.

816 F.2d 796 (CA1 1987), affirmed in part, reversed in part, and remanded.

STEVENS, J., delivered the opinion of the Court, in which BRENNAN, MARSHALL, BLACKMUN, and O'CONNOR, JJ., joined. WHITE, J., filed an opinion concurring in the judgment, post, p. 912. SCALIA, J., filed a dissenting opinion, in which REHNQUIST, C.J., and KENNEDY, J., joined, post, p. 913.

Roy T. Englert, Jr., Washington, D.C., for Otis R. Bowen, Secretary of Health and Human Services, et al.

Thomas A. Barnico, Boston, Mass., for the Com. of Massachusetts.

Justice STEVENS delivered the opinion of the Court.

The principal question presented by these cases is whether a federal district court has jurisdiction to review a final order of the Secretary of Health and Human Services refusing to reimburse a State for a category of expenditures under its Medicaid program. All of the Courts of Appeals that have confronted this precise question have agreed that district courts do have jurisdiction in such cases.1 We implicitly answered the question in the same way when we accepted jurisdiction and decided the merits in Connecticut Dept. of Income Maintenance v. Heckler, 471 U.S. 524, 105 S.Ct. 2210, 85 L.Ed.2d 577 (1985). Moreover, although the Medicaid program was established in 1965, the novel proposition that the Claims Court is the exclusive forum for judicial review of this type of agency action does not appear to have been advocated by the Secretary until this case reached the Court of Appeals. As we shall explain, the conclusion that the District Court had jurisdiction in these cases is supported by the plain language of the relevant statutes, their legislative history, and a practical understanding of their efficient administration. Before turning to the legal arguments, however, it is appropriate to say a few words about the mechanics of the federal financial participation (FFP) in the States' Medicaid programs and the character of the issue decided by the District Court.


In 1965 Congress authorized the Medicaid program by adding Title XIX to the Social Security Act, 79 Stat. 343. The program is "a cooperative endeavor in which the Federal Government provides financial assistance to participating States to aid them in furnishing health care to needy persons." Harris v. McRae, 448 U.S. 297, 308, 100 S.Ct. 2671, 2683, 65 L.Ed.2d 784 (1980). Subject to the federal standards incorporated in the statute and the Secretary's regulations, each participating State must develop its own program describing conditions of eligibility and covered services. At present, 18 different categories of medical assistance are authorized. See Connecticut Dept. of Income Maintenance v. Heckler, 471 U.S., at 528-529, 105 S.Ct., at 2212-2213.

Although the federal contribution to a State's Medicaid program is referred to as a "reimbursement," the stream of revenue is actually a series of huge quarterly advance pay- ments that are based on the State's estimate of its anticipated future expenditures.2 The estimates are periodically adjusted to reflect actual experience. Overpayments may be withheld from future advances or, in the event of a dispute over a disallowance, may be retained by the State at its option pending resolution of the dispute.3 Two procedures are available to the Secretary if he believes that a State's expenditures do not comply with either the Act or his regulations. First: If he concludes that the State's administration of its plan is in "substantial noncompliance" with federal requirements, he may initiate a compliance proceeding pursuant to 42 U.S.C. § 1316(a); in such a proceeding ...

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