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Supreme Court remands case challenging California Medicaid law

The US Supreme Court [official website] ruled [opinion, PDF] 5-4 on Thursday in Douglas v. Independent Living Center of Southern California [SCOTUSblog backgrounder] that the parties to the suit could return to the US Court of Appeals for the Ninth Circuit [official website] to argue in the first instance whether Medicaid recipients and providers could maintain Supremacy Clause actions challenging a California state law that reduces reimbursement rates. The court initially heard arguments [JURIST report] on whether the Supremacy Clause preempts Medicaid recipients and providers from bringing a suit challenging the California statute. Medicaid providers—doctors, hospitals and pharmacies—were angered by a series of cutbacks by the California legislature reducing reimbursement payments in an attempt to handle the state's financial crisis. A month after the court heard oral arguments in the case, the Centers for Medicare & Medicaid Services (CMS) [official website], the federal agency in charge of administering Medicaid, approved the state statutes as consistent with the federal law. The court indicated that proceeding with a Supremacy Clause action could undermine the review processes delegated to federal administrative agencies under the Administrative Procedure Act (APA) [text].

Chief Justice John Roberts authored a dissenting opinion, in which he was joined by Justices Clarence Thomas, Samuel Alito and Antonin Scalia, saying the Supremacy Clause challenges should have been barred because "[n]othing in the Medicaid Act allows providers or beneficiaries (or anyone else, for that matter) to sue to enforce" the reimbursement provision. The responsibility for enforcing the provision, he concluded, is vested in the CMS. The case is consolidated with Douglas v. Santa Rosa Memorial Hospital and Douglas v. California Pharmacists Association.

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