Douglas v. Independent Living Center of Southern California, Inc. et al.

Facts

Medicaid is a cooperative federal-state program providing medical care to needy people. To qualify for federal funds, states must submit their Medicaid Plan (Centers for Medicare & Medicaid Services) that details to a federal agency the nature and scope of the state's Medicaid program. A state is also required to submit any amendments to the plan that it may occasionally make. And a state must receive the agency's approval of the plan and any amendments. The agency reviews the state's plan and amendments to determine whether they comply with the statutory and regulatory requirements governing the Medicaid program. The State (Defendant) passed three statutes changing the State's Medicaid plan reducing payments to Medicaid providers and beneficiaries (Plaintiff). Defendant submitted a series of plan amendments designed to implement the majority of reductions those bills contain to the federal agency. Before the agency completed their review of the amendments, groups of Medicaid providers and beneficiaries (Plaintiff) filed a series of lawsuits seeking to enjoin the rate reductions on the ground that they conflicted with, and were therefore preempted by, federal Medicaid law. Five lawsuits brought by Medicaid providers and beneficiaries (Plaintiff) against State (Defendant) officials are included in the consolidated cases before the Court. Those cases produced seven circuit decisions. The decisions ultimately affirmed or ordered preliminary injunctions that prevented the State (Defendant) from implementing its statutes. They (1) held that the Medicaid providers and beneficiaries could directly bring an action based on the Supremacy Clause; (2) basically accepted the claim that the State (Defendant) had not shown that its Medicaid plan would provide sufficient services; (3) held that the amendments consequently conflicted with provisions in the statute; and (4) held that, given the Constitution's Supremacy Clause, the federal statute must prevail. In other words, the federal statute preempted the State's (Defendant) new laws. In the meantime, the federal agency officials disapproved the amendments after reviewing the same state statutes to determine whether they satisfied the same federal statutory conditions and concluding that they did not. The State (Defendant) then exercised its right to further administrative review within the agency. The cases were in this position when the Supreme Court granted certiorari to decide whether respondents could mount a Supremacy Clause challenge to the State's (Defendant) statutes and obtain a court injunction preventing the State (Defendant) from implementing its statutes. Approximately one month following oral argument, the federal agency reversed course and approved several of the State's (Defendant) statutory amendments to its plan. The State (Defendant), in turn, withdrew its requests for approval of the remaining amendments, basically agreeing (with one exception) that it would not try to implement any unapproved reduction. All parties agreed that the agency's approval of the enjoined rate reductions does not make these cases moot.