The Court granted certiorari in Douglas to determine whether a cause of action exists under the Supremacy Clause6 for a claim that the federal Medicaid statute preempts an allegedly conflicting state law.7 Medicaid providers and beneficiaries sought to enjoin a California law slashing reimbursement rates. They alleged that the State’s rate reduction conflicted with Medicaid’s requirement to ensure quality of care and sufficient providers.8

Historically, safety-net statutes such as Medicaid were enforced against states through the express cause of action provided by 42 U.S.C. § 1983.9 But in Gonzaga University v. Doe,10 the Court limited the availability of § 1983 actions to statutory provisions that contain “rights-creating terms,”11 i.e., language “phrased in terms of the persons benefited.”12 As a result, the Medicaid provision at issue in Douglas could not be enforced under § 1983, and an alternative remedy was needed.13

In the scantly noticed Astra opinion, however, the Court cast doubt on the possibility of using remedial alternatives. Astra held that the lack of a statutory right of action warrants denial of a totally distinct remedy under third-party beneficiary tort law because an alternative remedy would be “incompatible with the statutory regime.”14 The Astra Court relied heavily on the argument in the amicus brief of the Solicitor General that private enforcement would undermine federal agency authority.15 In Douglas, the Solicitor General went further to contend that Douglas raised “similar considerations” to Astra and advocated dismissal of the Medicaid preemption claims on that basis.16

The Douglas majority explicitly declined to decide whether the Supremacy Clause supplied a cause of action.17 Instead, it focused on the fact that the Centers for Medicare and Medicaid Services (CMS) approved California’s rate cuts shortly after oral argument. In light of the changed circumstances, the Court remanded the case to the Ninth Circuit to consider the impact of the availability of a claim against the federal government under the Administrative Procedure Act (APA).18 By contrast, the dissent in Douglas argued that the agency’s approval of California’s plan has “no impact on the question before this Court,”19 and would have held that “there is no private right of action under the Supremacy Clause to enforce [the federal Medicaid provisions].”20

Douglas elevates ducking the question to a high form of art. Although the dissent berated the majority for dodging the question presented, neither cited a single preemption case in their respective opinions. For at least a century,21 the Court has reached the merits of preemption claims without identifying the source of the cause of action.22 Both scholars and circuit courts have pointed out that the Supreme Court has relied, albeit sub silentio, on an implied cause of action in the context of the Supremacy Clause.23

For example, the Court has reached the merits of two Medicaid preemption cases in just the past decade. A unanimous 2006 decision contained no discussion of the applicable cause of action, simply concluding that a state law that conflicts with Medicaid is “unenforceable.”24 In the 2003 case Pharmaceutical Research & Manufacturers of America v. Walsh,25 seven Justices reached the merits of a Medicaid preemption claim, without acknowledging the concurrences of Justices Scalia and Thomas, which argued that Medicaid preemption claims are not permissible.

While the Douglas dissent reached the same conclusion as the Walsh concurrences, the dissent did not acknowledge the long history of preemption precedents and instead cited Astra. Because all the Justices avoided discussion of the preemption cases, the fate of Medicaid preemption claims in Douglas depended on the prevailing interpretation of Astra.

The majority viewed Astra as possible support for reaching the same result regardless whether the claim was brought under the Supremacy Clause or, following final agency action, the APA.26 Under the majority’s interpretation of Astra, the Douglas Medicaid preemption claims were viable for at least the three-and-a-half years before the agency made a final decision because there would be no “final agency action” that a court could review under the APA. After CMS acted, however, an APA claim might be required.

In contrast, the dissent regarded Astra as a means of eradicating all private enforcement of Medicaid against states. The dissent asserted that prior rulings limiting implied private rights of action and § 1983 claims would “serve no purpose” if a preemption claim is permitted.27 The dissent quoted Astra’s statement that the absence of a statutory right of action “would be rendered meaningless” if a tort remedy is available.28 By citing Astra in this way, the dissenters acknowledge, for the first time, that their goal is to completely eliminate private enforcement of safety-net statutes lacking a private right of action.

The dissenters have strongly supported the preemption claims of business litigants seeking to avoid state consumer-protection law and tort claims in the past.29 Many preemption claims brought by business litigants seek to enforce federal statutory provisions that cannot meet Gonzaga’s requirement of rights-creating language for § 1983 actions.30 Thus, business preemption claims, like Medicaid preemption claims, must rely on the availability of alternative remedies. And the Court has similarly ducked the question of the cause of action for business preemption claims, including a 2002 business preemption case squarely presenting the question of the cause of action.31

The Douglas dissent tried to limit its analysis to Spending Clause statutes, stating that courts should not allow preemption claims “to enforce a statute enacted under the Spending Clause.”32 Although this reasoning could potentially differentiate business from Medicaid preemption claims, the dissent’s interpretation of Astra is equally applicable to business preemption cases, which have sought to enforce statutes lacking a statutory right of action. The reasoning of Astra, which did not mention the Spending Clause, would bar business claims as readily as any others. It remains to be seen whether the dissenters will continue to advocate extending the rationale of Astra in the context of a business preemption claim. If the Court ignores Astra when business litigants seek to uphold the supremacy of federal law, then the Douglas majority’s interpretation of Astra as not precluding preemption claims will gain further support.

Looking to the future, the Patient Protection and Affordable Care Act33 expands Medicaid eligibility in 2014, increasing the number of people who will rely upon Medicaid’s provisions. As Medicaid becomes a more substantial player in the United States health-insurance system, the statute’s enforceability assumes greater importance. The Douglas decision does not prevent court access to enforce Medicaid, but the threat of the dissent’s interpretation of Astra still looms.

Rochelle Bobroff is the Directing Attorney of the Federal Rights Project at the National Senior Citizens Law Center (NSCLC). She was counsel for the Independent Living Center on the briefs in opposition to certiorari in Douglas and counsel of record for the AARP and NSCLC amicus brief in support of Respondents in Astra.

Preferred citation: Rochelle Bobroff, Medicaid Preemption Claims in Douglas Avert the Astra Abyss, 122 Yale L.J. Online 19 (2012), http://yalelawjournal.org/forum/medicaid-preemption-claims-in-douglas-avert-the-astra-abyss.