Arizona Hospital & Healthcare Ass'n v. Betlach
862 F. Supp. 2d 978
D. Ariz.2012Background
- Arizona Hospital and Healthcare Association sues Director of AHCCCS and HHS Secretary over Arizona Medicaid rate reductions.
- Plaintiffs allege reductions violate federal Medicaid law, regulations, and state law, and seek APA review.
- Director moves to dismiss first three claims under Rule 12(b)(6); motion fully briefed; oral argument held March 1, 2012.
- Court references a companion order on plaintiffs’ motion for a preliminary injunction for background; will not recount here.
- Court partially grants and partially denies the Director’s motion to dismiss after analysis under Rule 12(b)(6) and Supremacy Clause arguments.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Claim Two: whether SB 1619 preempts rates reductions | SB 1619 obstructs federal objectives of Section 30(A) | Discretionary state action is not preempted by federal law | Preemption analysis reserved; not dismissed at this stage |
| Claim One: whether there is a private § 1983 right for Section 13(A) | Section 13(A) creates rights enforceable under § 1983 | No private right of action for § 13(A) substantive rights | Claim dismissed as to § 1983 under § 13(A) (no private right) |
| Claim Three: notice under 42 C.F.R. § 447.205 | Plaintiffs had insufficient notice under § 447.205 | Notice requirements satisfied; § 447.205 does not require a reasonable opportunity to comment | Claim Three dismissed |
Key Cases Cited
- Orthopaedic Hospital v. Belshe, 103 F.3d 1491 (9th Cir. 1997) (interpretation of § 30(A) requires cost considerations and reliable cost studies)
- California Pharmacists Ass’n v. Maxwell-Jolly, 596 F.3d 1098 (9th Cir. 2010) (cost analysis required when rate reductions mandated; administration must analyze costs)
- Independent Living Ctr. of S. Cal. v. Maxwell-Jolly, 572 F.3d 644 (9th Cir. 2009) (process-focused review of state actions under § 30(A)")
- Gonzaga University v. Doe, 536 U.S. 273 (2002) (unambiguously conferred rights required for § 1983 action)
- Sanchez v. Johnson, 416 F.3d 1051 (9th Cir. 2005) (§ 1983 rights require clear congressional language creating rights)