Court says groups can't sue states over Medicaid access

Medicaid beneficiaries and the physicians who care for them do not have the right as a group to sue to enforce equal access standards under the federal Medicaid law, a federal appellate court ruled in August.

Advocates for Medicaid recipients say the ruling by a three-judge panel of the 9th U.S. Circuit Court of Appeals in San Francisco sets a dangerous precedent that will likely result in fewer care options for disabled, poor and senior patients.

They also say the decision will lead to lower reimbursement rates for physicians who care for those patients. The ruling, by saying the law did not clearly allow a group to enforce a federal law against a state, effectively gives state agencies the sole ability to set reimbursement levels.

"No one would have the authority to challenge the level of reimbursement rates," said Craig Cannizzo, a San Francisco attorney representing the California Medical Assn. and other medical societies in one of several cases challenging the reimbursement rates set by Medi-Cal, California's Medicaid program. "The consequence of that is it renders the equal access standard unenforceable."

The court ruled on three separate cases. The first, Sanchez et al. v. Johnson, involved a group of disabled residents who challenged wage levels Medi-Cal set for health care professionals. The court applied its decision in that case to California Medical Assn. et al. v. Bonta, which pitted a coalition of organized medicine groups against the state. A third case, Clayworth et al. v. Bonta, involved a California pharmacist and two Medicaid recipients who also challenged the state's compliance with federal law.

"This is a disastrous decision for recipients if it survives," said Michael Churchill, an attorney with the Public Interest Law Center of Philadelphia, who represented the disabled Medicaid recipients in Sanchez.

The AMA/State Medical Societies Litigation Center and the American Academy of Pediatrics filed a joint friend-of-the-court brief, concerned that low reimbursement rates could negatively impact patient care. The organizations argued that if there was no recourse available to compel states to comply with a federal mandate, it could harm low-income children and other groups with very little power.

"Unless affected parties can ensure that federal law is obeyed, the costs of such noncompliance will fall disproportionately on one of the most defenseless segments of society," the organizations said. "The millions of poor children relying on Medicaid for basic health care require an effective mechanism to enforce the requirements of federal law."

A representative of the California Dept. of Health Services, which runs the Medi-Cal program, did not return calls for comment.

Asking for the full court to reconsider

Attorneys representing the physicians and Medicaid recipients filed requests to have the full panel of judges on the 9th Circuit review the panel's August decision.

The court's decision was guided by a 2002 U.S. Supreme Court decision, Gonzaga v. Doe, in which a student charged Gonzaga University with violating the federal Family Educational Rights and Privacy Act of 1974 when it reported the student's alleged sexual misconduct to a state agency. The high court ruled that the law did not allow for a personal right to enforce the act because Congress did not include explicit, rights-creating language in the statute.

Based on that ruling, the text and structure of the Medicaid law "do not persuade us that Congress has, with a clear voice, intended to create an individual right that either Medicaid recipients or providers would be able to enforce" under a provision in civil rights law, the 9th Circuit wrote.

The ruling applies to states in the 9th Circuit: Alaska, Arizona, California, Hawaii, Idaho, Montana, Nevada, Oregon and Washington. But Cannizzo said the decision was inconsistent with other federal court opinions.

The 6th U.S. Circuit Court of Appeals in 2002 said pediatricians and a Michigan children's welfare organization had standing to sue the state because children were not getting services that Medicaid mandates for those younger than 21. Also, earlier this year, a federal judge found the Oklahoma Medicaid program in violation of federal law because reimbursement rates were not high enough to compel enough doctors to participate.