Boston Medical Center Corp. v. Secretary of the Executive Office of Health & Human Services
463 Mass. 447
Mass.2012Background
- MassHealth hospitals and a managed care organization sue the Secretary for allegedly unpaid or underpaid MassHealth reimbursements for enrollees, challenging rate-setting for 2009 under G. L. c. 118G, §11 and related contracts.
- Disproportionate-share hospitals (BMC, Holyoke plaintiffs) argue 2009 rates do not equal their financial requirements and violate §11(a).
- Health Plan alleges §122 hold-harmless funding requirements were not met by capitation rate adjustments in fiscal year 2009.
- Contracts set mass health payment rates via an annual rate-setting process; SPAD and PAPE are flat-rate payments contingent on casemix indices.
- Secretary amended RFA and contracts in 2009, including reductions in rates after initial higher proposals; some plaintiffs signed amended contracts while BMC did not.
- Court reviews pleadings de novo, accepts allegations as true, and considers whether the claims plausibly state a recognized cause of action or relief.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether §11(a) creates a private right of action against the Commonwealth. | Hospitals argue private enforcement implied by §11(a). | Legislature did not waive sovereign immunity or create private action. | No private right of action or sovereign immunity waiver implied. |
| Whether the contract-based claims survive given sovereign immunity and lack of implied private remedy. | Secretary violated contractual obligation to follow §11(a). | No private remedy exists; contract claims fail without waiver. | Contractual/conflict claims fail; no waiver of sovereign immunity. |
| Whether the suit is barred by preemption under the Supremacy Clause for §1396a(a)(30)(A). | Rate reductions preempt state law as an undue restriction. | No private federal enforcement right; Supremacy Clause cannot create one. | Supremacy Clause does not create a private right of action; sovereign immunity bars the claim. |
| Whether the effectuated rates constitute taking without lawful compensation. | Rates below reasonable cost taking without just compensation. | Participation in MassHealth is voluntary; no taking when rates are contractually set. | No taking; participation is voluntary and customary takings doctrine does not apply. |
| Whether the Health Plan's hold-harmless funding claim under §122 is actionable. | §122 hold-harmless mandate is enforceable to ensure funding parity. | No private right of action to enforce hold-harmless provisions. | No private right of action; §122 claims fail for lack of enforceable remedy. |
Key Cases Cited
- Lopes v. Commonwealth, 442 Mass. 170 (2004) (sovereign immunity requires consent or abrogation for private action)
- Salvas v. Wal-Mart Stores, Inc., 452 Mass. 337 (2008) (private remedy not implied without statutory support)
- Woodbridge v. Worcester State Hosp., 384 Mass. 38 (1981) (sovereign-immunity waivers must be explicit or implied by statute)
- Todino v. Wellfleet, 448 Mass. 234 (2007) (private right of action not implied when statute does not provide explicit waiver)
- Bates v. Director of Office of Campaign & Political Fin., 436 Mass. 144 (2002) (public-funds certification cases; no sovereign-immunity waiver implied here)
- Douglas v. Independent Living Ctr. of S. Cal., 132 S. Ct. 1204 (2012) (Supremacy Clause action not necessarily available; agency action review may apply)