Armstrong v. Exceptional Child Ctr., Inc. – March 2015 (Summary)

MEDICAID

Armstrong v. Exceptional Child Ctr., Inc., No. 14-15 (U.S. Mar. 31, 2015)

The Supreme Court reversed a ruling by the Ninth Circuit that allowed the providers of residential habilitation services (“providers”) to sue the director of Idaho’s Department of Health and Welfare (“Department”). The providers alleged that the Department reimbursed them at rates lower than those permitted by the federal Medicaid Act.

A crucial dispute in the case centered on whether or not the Supremacy Clause of the Constitution granted the providers the power to sue the Department for its violation of the Medicaid Act. At the trial level, the district court had entered summary judgment in favor of the providers. The Ninth Circuit affirmed this decision, concluding that the Supremacy Clause implied a private right of action that allowed the providers to sue under these circumstances.

Reversing the Ninth Circuit, the Supreme Court held that the Supremacy Clause does not confer a private right of action because it is not the source of any federal rights. Instead, the Supreme Court held that the Supremacy Clause only instructs the courts on how to resolve clashes between federal and state law – it does not specify who may enforce laws in court. To support this conclusion, the Supreme Court pointed to the context of the Constitution as a whole, noting that Article I vests Congress with broad discretion over how to implement its enumerated powers. It interpreted this to mean that Congress wields the discretion to decide who is permitted to enforce federal laws, and can limit enforcement of federal law to federal actors.

Under the Medicaid Act, the sole remedy provided for a state’s failure to comply with Medicaid requirements is the withholding of Medicaid funds by the Secretary of Health and Human Services. The Supreme Court concluded that the express provision of this remedy suggested that Congress intended to preclude other remedies, and added that the Medicaid Act did not contain the kind of rights-creating language needed for the providers to sue the Department. It reversed the judgment of the Ninth Circuit.