Supreme Court Sides with Idaho, Blocks Medicaid Lawsuits

On Tuesday, the Supreme Court issued a ruling in Armstrong v. Exceptional Child Center, holding that Medicaid providers cannot sue states to increase reimbursement rates.

In a 5-4 decision that broke along non-ideological lines, the Court ruled that health care providers serving Idaho Medicaid patients could not ask federal courts to force the Gem State to implement reimbursement rate increases negotiated with the federal government. Instead, the court held, such complaints should be addressed by the U.S. Department of Health and Human Services.

Writing on behalf of the majority, Justice Antonin Scalia reversed a ruling from the Ninth Circuit Court of Appeals, holding that while the Supremacy Clause instructs courts to give priority to federal law, it does not provide the ability to sue the state.

Some contend that as a result of the ruling, and without fear of costly lawsuits, many states facing tight budgetary constraints may be more likely to reduce Medicaid provider payments. For example, a 2011 law to cut Medicaid reimbursement fees in the California was blocked by the courts, though subsequently allowed after further litigation. According to California Attorney General Kamala Harris, similar legal complications have cost the state over $1.5 billion since 2008.

Now that the high court has established that Medicaid providers cannot sue states for increased reimbursement, other states may follow suit.

“Health care advocates acknowledged the decision will tilt the legal landscape in future disputes against the industry,” wrote David Siders for The Sacramento Bee. “Exactly how much is unclear.”