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Armstrong v. Exceptional Child Center, Inc. (U.S. Sup. Ct.)

In Armstrong v. Exceptional Child Center, Inc., the Court considered whether the Supremacy Clause gives Medicaid providers a right to sue to enjoin state action that they contend is preempted by federal law, in this case the equal access provision of the Medicaid Act.  That provision, Section 1396a(a)(30)(A) of the Medicaid Act, provides that participating states must provide methods and procedures that assure “payments [to providers of care] are consistent with efficiency, economy, and quality of care and are sufficient to enlist enough providers.”  Idaho set artificially low reimbursement rates for Medicaid providers, and, despite cost studies establishing that these rates were too low, the Idaho legislature refused to increase rates to bring them into compliance with federal law.  

Exceptional Child Center, a provider of Medicaid services, filed suit against Armstrong, the Director of Idaho’s Department of Health and Welfare, alleging that Idaho’s artificially low rates were preempted by the Medicaid Act.  The Ninth Circuit agreed, and Armstrong petitioned the Supreme Court for a writ of certiorari on July 2, 2014, which was granted on October 2, 2014.  Petitioner and his amici argued that Exceptional Child Center had no right to bring its claim.  

On December 23, 2014, Constitutional Accountability Center filed an amicus curiae brief in support of Exceptional Child Center, arguing that when a state law conflicts with federal law, including a federal law enacted by Congress pursuant to its Spending Clause Authority, the Supremacy Clause requires federal courts to step in to prevent unlawful state action.  Our Constitution’s Framers recognized that access to courts was essential to protect individual liberty, prevent abuse by the government, and maintain the rule of law.  Consistent with the Constitution’s text and history, the judicial branch for more than two centuries has permitted lawsuits, including those brought by private parties, to challenge state laws that violate federal law and requirements.  Our brief argued that the Ninth Circuit correctly held that Exceptional Child Center could invoke the Supremacy Clause to prevent Idaho from contravening the Medicaid Act’s requirements for reimbursement rates, and that its decision should be affirmed. 

On March 31, 2015, the Court held – by a 5-4 vote – that Medicaid providers may not sue to enjoin state action that they contend is preempted by the equal access provision of the Medicaid Act, overturning the decision of the Ninth Circuit.  In an opinion by Justice Scalia, the Court recognized that there is a long history of judicial review of unlawful state action, but nonetheless held that the statute at issue established Congress’s intent to foreclose equitable relief, thereby reducing the ability of aggrieved parties to seek redress through the federal courts.  While the outcome in this case will have far reaching negative consequences for providers seeking fair reimbursement under Medicaid as well as Americans on Medicaid struggling to find health care providers, the Court’s opinion was, in certain respects, surprisingly narrow.  Notably, the Court did not hold that the federal courts enjoy no general equitable power to prevent unconstitutional state action (as four Justices seemed prepared to do in 2012 when the Court took up, but ultimately declined to reach, this same question in another case).  Given the narrowness of the Court’s opinion and its recognition of the long history of judicial review, there is reason to hope that in future cases involving other statutes lacking an express private right of action, aggrieved parties will be able to sue to enjoin state action that violates federal law.