Courts Split on Whether Private Individuals Can Sue to Challenge States’ Medicaid Defunding Decisions: Considerations for Congress (Part I of II)

Legal Sidebari

Courts Split on Whether Private Individuals
Can Sue to Challenge States’ Medicaid
Defunding Decisions: Considerations for
Congress (Part I of II)
July 3, 2019
Last December, the Supreme Court declined to review two cases, Andersen v. Planned Parenthood of
Kansas and Gee v. Planned Parenthood of Gulf Coast Inc., in which private litigants challenged their
respective states’ decision to exclude specific health care providers—in these cases, Planned Parenthood
affiliates—from participating in the state’s Medicaid program. The plaintiffs argued that the state
defendants had violated what is known as the “free-choice-of-provider” provision of the Medicaid Act.
Under this provision, which is one of more than 80 federal requirements imposed upon a state Medicaid
plan, a state Medicaid plan must ensure that “any individual eligible for medical assistance . . . may obtain
such assistance from any institution . . . or person, qualified to perform the service or services required ...
who undertakes to provide him such services . . .” A threshold question in these suits is whether a private
party has the right to sue to enforce this requirement, or if instead the requirement can be enforced only
by the federal government through the Secretary of Health and Human Services (Secretary). The Supreme
Court’s decision to not review these cases leaves an unresolved division on this question amongst the
lower federal courts. On one side, five circuits (the Fifth, Sixth, Seventh, Ninth, and Tenth Circuits)
concluded that such a private right of action exists under 42 U.S.C. § 1983. On the other side, the Eighth
Circuit concluded, in Does v. Gillespie, that it does not. The Eighth Circuit’s decision is potentially
significant because its reasoning, which turns on the overall structure of the Medicaid Act, could more
broadly preclude the availability of a private right of action to enforce many of the Act’s federal
requirements and beyond.
This two-part Legal Sidebar provides an overview of the relevant context and background for this issue
and an analysis of the circuit split and its importance for Congress. Part I provides an overview of implied
private rights of action in the context of federal-state programs under the Social Security Act generally.
Part II discusses the circuit split regarding the enforceability of the free-choice-of-provider provision
under § 1983 and considers the implications of the split for Congress.
Congressional Research Service
https://crsreports.congress.gov
LSB10320
CRS Legal Sidebar
Prepared for Members and
Committees of Congress

---

Congressional Research Service
2
Overview of Implied Private Rights of Action
During the mid-20th century, Congress enacted a number of programs—including Medicaid—under the
Social Security Act to provide assistance to low-income individuals. These cooperative federal-state
programs, enacted pursuant to Congress’s Spending Clause authority, “offer[] the States a bargain:
Congress provides federal funds in exchange for the States’ agreement to spend them in accordance with
congressionally imposed conditions.” The Medicaid Act in particular was enacted in 1965 to provide
healthcare services to low-income individuals. As enacted, the Act did not include a provision authorizing
a private right of action to enforce its provisions. At the time, however, the Supreme Court “followed a
different approach to recognizing implied causes of action than it follows now . . . . [and] assumed it to be
a proper judicial function to ‘provide such remedies as are necessary to make effective’ a statute’s
purpose.” Under this rights-remedy presumption, the Court inferred causes of action not explicit in the
statutory text “as a routine matter with respect to statutes.”
Consistent with this presumption, courts, for decades, permitted beneficiaries of these federal-state
programs to assert a cause of action to enforce certain program requirements. Historically, such private
rights of action have generally been implied from three sources. First, for some time, private plaintiffs
asserted, and the Supreme Court accepted, the theory that the Supremacy Clause created an implied right
of action to enjoin enforcement of state laws that violate federal law. Second, the Court interpreted 42
U.S.C. § 1983, a civil rights statute from the Reconstruction Era, to provide a cause of action to enforce a
program requirement if the relevant statutory provision evidences a congressional intent to create an
enforceable right. Section 1983 generally makes a state official acting under color of law liable to a party
for depriving her of “any rights . . . secured by the Constitution and laws.” Third, the Court also looked to
the statute allegedly violated by a state official to determine whether a cause of action may be implied
from the statute itself. The analytical framework for determining an implied cause of action under § 1983
versus a statute itself overlaps substantially. One principal difference, as the Court has explained, is that to
demonstrate an implied private right of action from the statute itself, a plaintiff—in addition to
demonstrating that the statute evidences a congressional intent to create an enforceable right— must also
demonstrate an intent to create a private remedy for a violation of that right.
Over time, the Supreme Court began to restrict the availability of private enforcement of federal-state
program requirements. In Armstrong v. Exceptional Child Center, Inc., the Court held that the Supremacy
Clause creates only a rule of decision and not a cause of action, formally rejecting the Clause as a basis
for asserting a private cause of action. Additionally, out of concerns grounded in separation-of-powers
principles, the Court also turned away from the rights-remedy presumption and the practice of implying a
cause of action from statutes. Under the Court’s current view, whether and how to provide a private
remedy is usually a decision best left to Congress because the legislature is in the better position to
consider “the host of considerations that must be weighed and considered,” including “if the public
interest would be served by imposing a new substantive legal liability.” Thus, over time and especially
after Armstrong, § 1983 has emerged as the principal vehicle for private enforcement of federal-state
program requirements like Medicaid.
Medicaid Implied Private Right of Action Under § 1983
The Supreme Court applies a three-prong test for determining whether a particular federal statute creates
an enforceable individual right for purposes of § 1983. The test, formally articulated in Blessing v.
Freestone in 1997, requires that:
1. Congress intended the statutory provision to benefit the plaintiff;
2. the asserted right is not so “vague and amorphous” that its enforcement would strain
judicial competence; and

---

Congressional Research Service
3
3. the provision couch the asserted right in mandatory rather than precatory terms.
Five years later, in Gonzaga University v. Doe, the Supreme Court clarified the first prong of the Blessing
test, holding that the congressional intent to benefit the plaintiff must be “unambiguously conferred”
through, for instance, “individually focused terminology” and statutory language “phrased in terms of the
persons to be benefited.” It is not enough for a plaintiff to be merely within “the general zone of interest”
of the statute. Thus, a statute that focuses on the aggregate or systemwide policies and practices of
regulated entities would not create an enforceable right for individuals subject to the policies for purposes
of § 1983. If a given provision meets the three-prong Blessing-Gonzaga test, then there is a presumption
that this individual right is enforceable under § 1983. The presumption is rebutted, however, if Congress
expressly or impliedly foreclosed enforcement under § 1983. An implied foreclosure occurs if Congress
created “a comprehensive enforcement scheme that is incompatible with individual enforcement.” Thus,
under the § 1983 analysis—particularly in determining the existence of any enforceable right—the key
inquiry is discerning congressional intent. A number of cases and congressional actions are relevant to this
analysis in the Medicaid context.
Wilder v. Virginia Hospital Association
Before Blessing and Gonzaga, in 1990 the Supreme Court first addressed the availability of a private right
of action under the Medicaid Act in Wilder v. Virginia Hospital Association, a 5-4 decision in which the
majority’s and dissent’s various approaches foreshadow the current circuit split. There, health care
providers sued Virginia to challenge the reimbursements it provided pursuant to its Medicaid plan. The
providers argued that Virginia’s reimbursement rates violated a federal requirement that requires a state
Medicaid plan to pay for “hospital services, nursing facility services, and services in an intermediate care
facility” for the cognitively disabled through the use of rates that “the State finds . . . are reasonable and
adequate to meet the costs which must be incurred by efficiently and economically operated
facilities. . . .” The Court held that this provision created an enforceable right under § 1983 for the
providers because “[t]here can be little doubt that health care providers are the intended beneficiaries” of
this provision, given that it “establishes a system for reimbursement of providers and is phrased in terms
benefiting health care providers.” Moreover, this provision, “cast in mandatory rather than precatory
terms,” was viewed to impose “a binding obligation on States participating in the Medicaid program to
adopt reasonable and adequate rates.” The Wilder Court viewed this obligation to be “judicially
enforceable” based on factors defined by statute and regulation, observing that an examination of the
reasonableness of rates, while requiring “some knowledge of the hospital industry,” was “well within the
competence of the Judiciary.” The Wilder Court also concluded that Congress did not foreclose § 1983
enforcement of the Medicaid Act. While the statute authorizes the Secretary to withhold approval of plans
or curtail federal funds to states for noncompliance with the Act and more specifically requires states to
adopt an administrative scheme to review reimbursement rates, these enforcement mechanisms provided
limited oversight by the Secretary. As a result, the majority concluded that the federal enforcement
mechanisms under the Act “cannot be considered sufficiently comprehensive to demonstrate a
congressional intent to withdraw the private remedy of § 1983.”
Rather than focusing on the language of this particular provision, then-Chief Justice Rehnquist’s dissent
in Wilder looked to the structure of the Medicaid Act to conclude that the text and structure of the statute
“does not clearly confer any substantive rights on Medicaid service providers.” In particular, in the then-
Chief Justice’s view, the provision at issue “is simply a part of the thirteenth listed requirement for [a
state] plan” listed within an overall directive to the Secretary to approve compliant state plans. In light of
the provision’s placement “within the structure of the statute,” as well as the absence of any focus “on
providers as a beneficiary class” in the statute, the dissent concluded that this provision “is addressed to
the States and merely establishes one of many conditions for receiving federal Medicaid funds” and does
not confer an enforceable right for providers.

---

Congressional Research Service
4
Suter v. Artist M.
Two years later and after the retirement of two Justices from the Wilder Court, in Suter v. Artist M, the
Supreme Court considered whether private individuals have the right to enforce a provision of the
Adoption Assistance and Child Welfare Act of 1980 (AACWA) either under the statute itself or through
an action under § 1983. Like the Medicaid Act, the AACWA is part of the Social Security Act and
establishes a cooperative federal-state program wherein states agree to administer foster care and adoption
services pursuant to certain federal requirements in exchange for receiving federal funds to support those
services. The AACWA, like the Medicaid Act, directs the Secretary to approve state plans for
administering the relevant benefits, and under one of the conditions of approval, the plan must ensure that
states make “reasonable efforts . . . to prevent or eliminate the need for removal of [a] child from his
home” prior to placing him in foster care.
Then-Chief Justice Rehnquist, this time writing for the Court, distinguished this provision from the
Medicaid provision at issue in Wilder. For the Suter Court, the provision in Wilder created an enforceable
right for providers because the states had a binding obligation to set reasonable reimbursement rates for
them and “the statute and regulations set forth in some detail the factors to be considered in determining
the methods for calculating rates.” The AACWA provision, in contrast, provides “[n]o further statutory
guidance . . . as to how ‘reasonable efforts’ are to be measured.” As a result, “[h]ow the State was to
comply with this directive . . . was, within broad limits, left up to the State.” Thus, under the structure of
the AACWA, the only duty then-Chief Justice Rehnquist viewed the statute to place on the states is a duty
“to ensure that the States have a plan approved by the Secretary which contains the 16 listed features.”
The Court concluded that this “rather generalized duty on the State” is “to be enforced not by private
individuals, but by the Secretary” by reducing or eliminating payments to a noncompliant state.
At the time, the Court had not yet formalized the framework for determining the existence of an
enforceable right under § 1983 into the three-prong test recognized in Blessing. This ambiguity in the
applicable framework led to diverging interpretations of Suter by the lower courts. A number of courts,
picking up on the Court’s structural argument, interpreted Suter broadly and treated the placement of
federal requirements within the state plan sections of the Social Security Act as a basis for precluding a
finding of enforceable rights. Relying on this interpretation, those courts rejected private suits seeking to
enforce a number of federal requirements for the Aid to Families with Dependent Children program,
another federal-state program enacted under the Social Security Act. Other courts adopted a narrower
reading, concluding that Suter turned on the fact that the provision was not judicially administrable,
essentially concluding that the provision did not satisfy what would later be prong two of the three-prong
Blessing/Gonzaga test.
Congressional Action after Suter
Following Suter and a number of subsequent lower court opinions, Congress enacted 42 U.S.C. § 1320a-2
in 1994 in an attempt to clarify the state of the law. Specifically, § 1320a-2 states:
In an action brought to enforce a provision of [the Social Security Act], such provision is not to be
deemed unenforceable because of its inclusion in a section of this chapter requiring a State plan or
specifying the required contents of a State plan. This section is not intended to limit or expand the
grounds for determining the availability of private actions to enforce State plan requirements other
than by overturning any such grounds applied in Suter v. Artist M., 112 S.Ct. 1360 (1992), but not
applied in prior Supreme Court decisions respecting such enforceability; provided, however, that
this section is not intended to alter the holding in Suter v. Artist M. that section 671(a)(15) of this
title is not enforceable in a private right of action.
The conference report for the bill states that “[t]he intent of this provision is to assure that individuals who
have been injured by a State’s failure to comply with the Federal mandates of the State plan titles of the

---

Congressional Research Service
5
Social Security Act are able to seek redress in the federal courts to the extent they were able to prior to the
decision in Suter v. Artist M..” At the same time, the provision “also mak[es] clear there is no intent to
overturn or reject the determination in Suter that the reasonable efforts clause [in the AACWA] does not
provide a basis for a private right of action.” While the Supreme Court has not yet considered the
meaning of § 1320a-2, lower courts that have done so (with one exception that spurred the underlying
circuit split) have generally agreed that it is intended to reject the broader, structural interpretation of
Suter while preserving the narrower reading that focuses on judicial adminstrability.
The Three-Prong Test after Gonzaga v. Doe
A few years after Suter and the enactment of § 1320a-2, the Supreme Court, as noted above, formally
articulated the three-prong test for determining the existence of an enforceable right under § 1983 in
Blessing. Thereafter, in Gonzaga in the context of a federal-state program outside of the Social Security
Act, it clarified the test’s first prong—whether Congress intended the statutory provision to benefit the
plaintiff. In that case, a student sued a private university under § 1983 to enforce a provision of the
Family Educational Rights and Privacy Act of 1974, which prohibits the federal funding of educational
institutions that have “a policy or practice of permitting the release of education records (or personally
identifiable information contained therein ...) of students without the written consent of their parents to
any individual, agency, or organization.” The Court held that this provision did not give rise to individual
rights enforceable by a student under § 1983 because it focused on “institutional policy and practice”
rather than “individual instances of disclosure.” Moreover, rather than using “individually focused
terminology” or any “rights-creating language,” the statute “speak[s] only to the Secretary Education,
directing that ‘[n]o funds shall be made available’ to any ‘educational agency or institution’ which has a
prohibited ‘policy or practice,’” a focus that is “two steps removed from the interests of individual
students and parents.” As such, the students at best fell within a “general zone of interest” that the statute
was intended to protect, which was insufficient to evidence an “unambiguously conferred” individual
right enforceable under § 1983.
Having considered the Supreme Court’s evolving jurisprudence regarding private rights of action
generally in this Part, Part II discusses the relevant case law and circuit split regarding the availability of a
private right of action to enforce Medicaid’s free-choice-of-provider requirement.


Author Information

Wen S. Shen

Legislative Attorney

---

Congressional Research Service
6


Disclaimer
This document was prepared by the Congressional Research Service (CRS). CRS serves as nonpartisan shared staff
to congressional committees and Members of Congress. It operates solely at the behest of and under the direction of
Congress. Information in a CRS Report should not be relied upon for purposes other than public understanding of
information that has been provided by CRS to Members of Congress in connection with CRS’s institutional role.
CRS Reports, as a work of the United States Government, are not subject to copyright protection in the United
States. Any CRS Report may be reproduced and distributed in its entirety without permission from CRS. However,
as a CRS Report may include copyrighted images or material from a third party, you may need to obtain the
permission of the copyright holder if you wish to copy or otherwise use copyrighted material.
LSB10320 · VERSION 1 · NEW

---