Consejo De Salud Playa De Ponce v. Rullan
| Decision Date | 10 October 2008 |
| Docket Number | Civil No. 06-1260(GAG).,Civil No. 06-1524(GAG). |
| Citation | 586 F.Supp.2d 22 |
| Parties | CONSEJO DE SALUD PLAYA DE PONCE, et.al., Plaintiffs v. Johnny RULLAN, Secretary of Health of the Commonwealth of Puerto Rico, Defendant. |
| Court | U.S. District Court — District of Puerto Rico |
Agustin Diaz-Garcia, Ponce, PR, Ignacio Fernandez-De-Lahongr, Fernandez & Alcaraz, PSC, San Juan, PR, PHV James L. Feldesman, PHV Robert A. Graham, Feldesman, Tucker, Leifer, Fidell LLP, Washington, DC, for Plaintiffs.
Arlene R. Perez-Borrero, Eduardo A. Vera-Ramirez, Luis A. Rodriguez-Munoz, Landron & Vera LLP, Guaynabo, PR, Luis F. Zayas-Marxuach, Almeida & Davila, P.S.C., Francisco A. Ojeda-Diez, P.R. Department of Justice-Federal Litigation, Patricia Lorenzi, Delgado & Fernandez, San Juan, PR, for Defendant.
In this case the plaintiffs, three federally qualified health centers, seek injunctive relief from the Court ordering the Secretary of Health of the Commonwealth of Puerto Rico to issue to them prospective Medicaid "wraparound" payments, pursuant to 42 U.S.C. § 1396a(bb)(5). See Plaintiffs' Motion in Compliance .. . and Renewed Motion for Preliminary Injunction (Docket No. 127); see also Consejo de Salud Playa Ponce v. Perez Perdomo, 556 F.Supp.2d 76 (D.P.R.2008) ().
The Secretary of Health, represented by the Attorney General of the Commonwealth, nonetheless contends that the Medicaid "wraparound" statute, as applied to Puerto Rico, is unenforceable. He argues that the statutory provision violates the Constitution's Spending Clause, U.S. Const. Art. I § 8, cl. 1, insofar as the numerous amendments to the Medicaid statute have significantly altered the way the program works. At the time the Commonwealth elected to participate in the Medicaid program it could not have foreseen the devastating economic consequences resulting from statutory directives it is now unable to comply with. See Defendant's Opposition to Plaintiffs' Motion for Renewed Preliminary Injunction (Docket No. 133) at 24-26.
The Secretary further argues that Puerto Rico cannot be treated by Congress in a manner disparate to the States. Following the passage by Congress of Law 600 in 1950, and subsequently Law 447 in 1952, Puerto Rico enacted its own Constitution, thus obtaining the degree of autonomy and independence normally associated with the States of the Union. Consequently, Supreme Court jurisprudence treating Puerto Rico disparately from States premised on the Insular Cases doctrine is anachronistic and, thus, no longer applicable. Id. at 26-28.
The court certified these constitutional challenges to the Attorney General of the United States, noting that the federal government's position would be essential to the court's ruling.1 See 28 U.S.C. § 2403; Fed.R.Civ.P. 51(b). The court also afforded the parties time to further address these issues which are clearly dispositive of the merits of the injunctive relief sought. See Orders of October 2, 2008 (Docket Nos. 135 and 136). The Attorney General duly responded to the Court's certification order (Docket No. 144), as did the plaintiffs (Docket No. 148).2
Before addressing plaintiffs' contentions, however, it is essential to first provide some background on the Medicaid "wraparound" statute as it pertains to Puerto Rico.
The Medicaid program, 42 U.S.C. § 1396 et. seq., begun in 1965, is jointly supported with federal and state funds and directly administered by state governments. Its purpose is to provide medical assistance to indigent families with dependent children, as well as indigent disabled, blind, and aged individuals. Rio Grande Community Health Center, Inc. v. Rullan, 397 F.3d 56, 61 (1st Cir.2005). The Commonwealth of Puerto Rico is a "state" for purposes of the Medicaid statute, 42 U.S.C. § 1301; Rio Grande, 397 F.3d at 61.
A state need not participate in the Medicaid program. However, once it opts to do so, it must comply with all federal requirements. The Commonwealth of Puerto Rico opted to participate in the Medicaid program. Id. at 61-62.
One requirement of the Medicaid program, relevant here, is that participating jurisdictions must provide federally-qualified health center services. 42 U.S.C. §§ 1396a(a)(10)(A); 1396d(a)(2)(C); Rio Grande, 397 F.3d at 61. Plaintiffs here are "federally-qualified health centers" ("FQHCs") operating in Puerto Rico, which receive grants under Section 330 of the Public Health Service Act and serve medically underserved areas. 42 U.S.C. § 254b.
Federal law regulates how FQHCs receive payment of services provided to Medicaid patients. Río Grande, 397 F.3d at 61. Effective January 1, 2001, Congress established a new payment system known as the "Prospective Payment System" ("PPS"). 42 U.S.C. § 1396a(bb)(2)(3); Río Grande, 397 F.3d at 61. Applying a mathematical formula set by the statute, each participating jurisdiction was initially required to make a baseline calculation for Medicaid reimbursement to FQHCs. The initial calculation was to take into account FQHC data from 1999, 2000 and 2001. Each subsequent year each jurisdiction has to prospectively revise its data for that particular year's FQHC Medicaid reimbursements. Id. at 61-62.
In Puerto Rico, as in some other jurisdictions, FQHC reimbursement is greatly complicated. This is so because the Commonwealth employs a managed care approach for the operations of its Medicaid system. Id. at 62. The Commonwealth contracts with managed care organizations (MCOs) to arrange for providing medical services to Medicaid patients. Id. It then pays a monthly fee to each MCO. However, if a MCO does not own hospitals or clinics it must subcontract with FQHCs in order to provide Medicaid services. Id.
The underlying problem leading to the filing of this action arises in the following manner. When the MCO contract with a FQHC gives the FQHC less compensation than it is supposed to receive under the PPS system, the jurisdiction must make a supplemental "wraparound" payment to the FQHC. This "wraparound" payment will make up for the difference the FQHC is owed. 42 U.S.C. § 1396a(bb)(5); Río Grande, 397 F.3d at 62, 74.
Contrary to the States, Puerto Rico receives but a fraction of Medicaid monies from the federal government. See 42 U.S.C. § 1308 (); Consejo de Salud Integral De Loiza, Inc. v. U.S. Department of Health and Human Services, 538 F.Supp.2d 139, 141 (D.D.C.2008). Notwithstanding, the Commonwealth is required by federal law to comply with the statutory wraparound scheme just as if it were a state. The result is that in the case of Puerto Rico's "wraparound" payment obligations, substantial amounts of Medicaid monies granted to the States by the federal government are unavailable. These extra sums, in the millions of dollars, must then necessarily come from the Commonwealth fisc. For example, in a state, Medicaid matching occurs on a fifty-fifty (50-50) basis. In Puerto Rico it is on a twelve-eighty eight (12-88) basis, the Commonwealth having to provide the un-evenly greater amount. Concilio de Salud Integral de Loiza v. Pérez Perdomo, 479 F.Supp.2d 247, 250 (D.P.R.2007).
The unequal and discriminatory fiscal treatment given to Puerto Rico by the Medicaid wraparound scheme is conspicuous and egregious. More so, it is not an isolated incident of the federal government disparately treating Puerto Rico and the nearly four million United States citizens living in or moving to this territory, insofar health and welfare benefits are concerned. See, e.g., Supplemental Security Income Program of the Social Security Act, 42 U.S.C. § 1381 et. seq. (); Aid to Families with Dependent Children Program, 42 U.S.C. § 601 et. seq. ().
Under the Insular Cases doctrine, only fundamental constitutional rights extend to unincorporated United States territories, whereas in incorporated territories all constitutional provisions are in force. Balzac v. Puerto Rico, 258 U.S. 298, 42 S.Ct. 343, 66 L.Ed. 627 (1922). In Balzac, the Court determined that Puerto Rico was an unincorporated territory. Thus, in order for the Spending Clause protections to apply to Puerto Rico, Congress must have subsequently incorporated the territory. Otherwise, the Clause would not apply because it is not the source of any fundamental rights.3 See De Lima v. Bidwell, 182 U.S. 1, 21 S.Ct. 743, 45 L.Ed. 1041 (1900) ().4
In an unincorporated United States territory Congress can also discriminate against the territory and its citizens so long as there exists a rational basis for such disparate treatment. Califano v. Torres, 435 U.S. 1, 98 S.Ct. 906, 55 L.Ed.2d 65 (1984); Harris v. Rosario, 446 U.S. 651, 100 S.Ct. 1929, 64 L.Ed.2d 587 (1980). Contrariwise, in an incorporated territory, just as in a state, heightened constitutional scrutiny will apply.
The Court's analysis of the issues presented, thus, must necessarily commence by determining whether Puerto Rico remains an unincorporated territory, or if Congress, on the other hand, post-Balzac, incorporated the territory.
This case resuscitates the paramount issue of the relationship of Puerto Rico, and the nearly four million United States citizens who reside therein, to the United States Constitution. Following one hundred ten (110) years of uninterrupted United States...
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