Wilder v. Virginia Hospital Association

• Decision Date: 14 June 1990
• Docket Number: No. 88-2043,88-2043
• Citation: 110 S.Ct. 2510,110 L.Ed.2d 455,496 U.S. 498
• Parties: L. Douglas WILDER, Governor of Virginia, et al., Petitioners v. VIRGINIA HOSPITAL ASSOCIATION
• Court: U.S. Supreme Court

496 U.S. 498

110 S.Ct. 2510

110 L.Ed.2d 455

L. Douglas WILDER, Governor of Virginia, et al., Petitioners

v VIRGINIA HOSPITAL ASSOCIATION.

No. 88-2043.

Argued Jan. 9, 1990.

Decided June 14, 1990.

Syllabus

To qualify for federal financial assistance to help defray the cost of furnishing medical care to the needy under the Medicaid Act, States must submit to the Secretary of Health and Human Services for approval a plan which, inter alia, establishes a scheme for reimbursing health care providers. In 1980, Congress passed the Boren Amendment to the Act, which requires provider reimbursement according to rates that the "State finds, and makes assurances satisfactory to the Secretary," are "reasonable and adequate" to meet the costs of "efficiently and economically operated facilities." The State must also assure the Secretary that individuals have "reasonable access" to facilities of "adequate quality." Virginia's plan, under which providers are reimbursed according to a prospective formula, was approved by the Secretary in 1982 and again in 1986 after an amendment. In 1986, respondent, a nonprofit corporation composed of public and private hospitals operating in Virginia, filed suit against petitioner state officials for declaratory and injunctive relief under 42 U.S.C. § 1983, alleging that the state plan violates the Act because its reimbursement rates are not "reasonable and adequate." The District Court denied petitioners' motion to dismiss or for summary judgment, which was based on the claim that § 1983 does not afford respondent a cause of action. The Court of Appeals affirmed, concluding that providers may sue state officials for declaratory and injunctive relief under § 1983 to assure compliance with the Boren Amendment.

Held: The Boren Amendment is enforceable in a § 1983 action for declaratory and injunctive relief brought by health care providers. Pp. 508-524.

(a) Section 1983—which provides a cause of action for the "deprivation of any rights . . . secured by [federal] laws"—is inapplicable if (1) the statute in question does not create enforceable "rights" within § 1983's meaning, or (2) Congress has foreclosed such enforcement of the statute in the enactment itself. Wright v. Roanoke Redevelopment and Housing Authority, 479 U.S. 418, 423, 107 S.Ct. 766, 770, 93 L.Ed.2d 781. P. 508.

(b) The Boren Amendment creates a substantive federal "right," enforceable by providers under § 1983, to the adoption of reasonable and adequate reimbursement rates. There can be little doubt that providers are the intended beneficiaries of the amendment, see Golden State Tran- sit Corp. v. Los Angeles, 493 U.S. 103, 106, 110 S.Ct. 444, 448, 107 L.Ed.2d 420, since the amendment establishes a system for reimbursing such providers and is phrased in terms benefiting them. Moreover, the amendment imposes a "binding obligation" on the States that gives rise to enforceable rights, see Pennhurst State School and Hospital v. Halderman, 451 U.S. 1, 19, 101 S.Ct. 1531, 1541, 67 L.Ed.2d 694, since it is cast in mandatory rather than precatory terms, and since the provision of federal funds is expressly conditioned on compliance with the amendment. Petitioners' contention that Congress did not intend to require States to adopt rates that actually are reasonable and adequate is contrary to the statutory language, which requires the State to find that its rates satisfy these requirements and entitles the Secretary to reject a state plan upon concluding that the assurances given are unsatisfactory, and would render those requirements, and thus the entire reimbursement provision, essentially meaningless. Petitioners' contention is quickly dispelled by a review of the amendment's background and the legislative history, which demonstrate that the amendment was passed to free the States from restrictive reimbursement requirements previously imposed by the Secretary and not to relieve them of their fundamental obligation to pay reasonable rates, and that Congress intended to retain providers' pre-existing right to challenge rates as unreasonable in injunctive suits under § 1983. Furthermore, a State's flexibility to adopt rates that it finds to be reasonable and adequate does not, as petitioners contend, render the obligation imposed by the amendment too "vague and amorphous" to be judicially enforceable. See Golden State, supra, 493 U.S., at 106, 110 S.Ct., at 448. The statute and the Secretary's regulations set out factors which a State must consider in adopting its rates, and the statute requires the State, in making its findings, to judge the rates' reasonableness against the objective benchmark of an "efficiently and economically operated facility" while ensuring "reasonable access" to eligible participants. Although some knowledge of the hospital industry might be required to evaluate a State's findings, such an inquiry is well within the competence of the Judiciary. Pp. 509-520.

(c) Congress has not foreclosed a private judicial remedy for enforcement of the Boren Amendment under § 1983, since there is no express provision to that effect in the Act, see Wright, supra, 479 U.S., at 423, 107 S.Ct., at 770, and since the statute does not create a remedial scheme that is sufficiently comprehensive to demonstrate an intent to preclude the remedy of § 1983 suits, see Middlesex County Sewerage Authority v. National Sea Clammers Assn., 453 U.S. 1, 20, 101 S.Ct. 2615, 2626, 69 L.Ed.2d 435. Because a primary purpose of the amendment was to reduce the Secretary's role in determining rate payment calculation methods, the Secretary's limited oversight function under the Act, which authorizes him to withhold approval of plans or to curtail federal funds in cases of noncompliance, is insufficient to demonstrate an intent to foreclose § 1983 relief. Cf. Wright, supra, 479 U.S., at 428, 107 S.Ct., at 773. Moreover, although a regulation requires States to adopt an appeals procedure by which individual providers may obtain administrative review of reimbursement rates, it also allows States to limit the issues that may be raised on review, and most States, including Virginia, do not allow providers to challenge the overall method by which rates are determined. Such limited state procedures cannot be considered a "comprehensive" scheme that precludes reliance on § 1983. See 479 U.S., at 429, 107 S.Ct., at 773. Pp. 520-523.

868 F.2d 653 (CA4 1989), affirmed.

BRENNAN, J., delivered the opinion of the Court, in which WHITE, MARSHALL, BLACKMUN, and STEVENS, JJ., joined. REHNQUIST, C.J., filed a dissenting opinion, in which O'CONNOR, SCALIA, and KENNEDY, JJ., joined, post, p. 524.

R. Claire Guthrie, Richmond, Va., for petitioners.

John G. Roberts, Jr., for U.S. as amicus curiae, supporting petitioners, by special leave of Court.

Walter Dellinger, for respondent.

Justice BRENNAN delivered the opinion of the Court.

This case requires us to determine whether a health care provider may bring an action under 42 U.S.C. § 1983 (1982 ed.) ¹ to challenge the method by which a State reimburses health care providers under the Medicaid Act (Act), 79 Stat. 343, as amended, 42 U.S.C. § 1396 et seq. (1982 ed. and Supp. V). More specifically, the question presented is whether the Boren Amendment to the Act, which requires reimbursement according to rates that a "State finds, and makes assurances satisfactory to the Secretary, are- rea sonable and adequate to meet the costs which must be incurred by efficiently and economically operated facilities," 42 U.S.C. § 1396a(a)(13)(A) (1982 ed., Supp. V), is enforceable in an action pursuant to § 1983.

I

A.

Medicaid is a cooperative federal-state program through which the Federal Government provides financial assistance to States so that they may furnish medical care to needy individuals. § 1396. Although participation in the program is voluntary, participating States must comply with certain requirements imposed by the Act and regulations promulgated by the Secretary of Health and Human Services (Secretary). To qualify for federal assistance, a State must submit to the Secretary and have approved a "plan for medical assistance," § 1396a(a), that contains a comprehensive statement describing the nature and scope of the State's Medicaid program. 42 CFR § 430.10 (1989). The state plan is required to establish, among other things, a scheme for reimbursing health care providers for the medical services provided to needy individuals.

Section 1902(a)(13) of the Act sets out the requirements for reimbursement of health care providers. As amended in 1980 (Boren Amendment),² the section provides that

"a State plan for medical assistance must—

. . . . .

"provide . . . for payment . . . of the hospital services, nursing facility services, and services in an intermediate care facility for the mentally retarded provided under the plan through the use of rates (determined in accordance with methods and standards developed by the State . . .) which the State finds, and makes assurances satisfactory to the Secretary, are reasonable and adequate to meet the costs which must be incurred by efficiently and economically operated facilities in order to provide care and services in conformity with applicable State and Federal laws, regulations, and quality and safety standards and to assure that individuals eligible for medical assistance have reasonable access . . . to inpatient hospital services of adequate quality." 42 U.S.C. § 1396a(a)(13)(A) (1982 ed., Supp. V) (emphasis added).

The Commonwealth of Virginia's State Plan for Medical Assistance was approved by the Secretary in 1982 and again in 1986 after an amendment was made. Complaint, ¶ 11, App. 11. Under the plan, health care providers are reimbursed for services according to a prospective formula—that is, reimbursement rates for various types of medical services and procedures are fixed in advance. Specifically, providers are divided into "peer groups" based on their...