881 F.3d 358
5th Cir.2018Background
- Legacy Community Health Services is a Federally Qualified Health Center (FQHC) that contracted with a Texas MCO (Texas Children’s Health Plan, TCHP); the contract was later terminated after the state required MCOs to pay FQHCs full PPS rates.
- Under the Medicaid Act, states must provide for payment to FQHCs (PPS) and may use MCOs to disburse funds; if an MCO pays less than PPS, the state must provide a supplemental ("wraparound") payment unless an Alternative Payment Method (APM) is adopted with FQHC assent.
- Texas’s Medicaid Commission amended contracts to require MCOs to reimburse FQHCs at full PPS and later submitted SPA 16-02 eliminating the state’s explicit obligation to make wraparound payments (CMS approved SPA 16-02 as an APM).
- Legacy sued under §1983 claiming: (1) Texas unlawfully delegated reimbursement obligations by requiring MCOs to pay full PPS, (2) Texas failed to ensure state wraparound payments if MCOs do not pay full PPS, and (3) Texas wrongly refused payment for certain non-emergency out-of-network services Legacy provided after TCHP contract termination.
- The district court granted Legacy summary judgment on all claims; the Fifth Circuit reversed in part and remanded, holding Texas may require MCOs to pay full PPS, Legacy lacks standing to challenge the absence of a state wraparound policy, and Legacy is not entitled to reimbursement for the non-emergency out-of-network services at issue.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Texas may require MCOs to reimburse FQHCs fully (in-network reimbursement rule) | Legacy: statute precludes state-imposed requirement that MCOs pay full PPS because Congress meant MCO-FQHC contracts to set payment terms and to incentivize contracting | Texas: statutes permit states to require MCOs to pay full PPS; §1396b(m)(2)(A)(ix) sets a floor (market rate) but does not forbid state-imposed higher requirements | Court: Texas may require MCOs to reimburse FQHCs fully; statutory text is unambiguous and contains no prohibition on state-imposed requirements |
| Standing to challenge state’s elimination of wraparound supplemental payments (SPA 16-02) | Legacy: ongoing risk of not receiving full reimbursement gives standing to challenge state’s change | Texas: Legacy lacks concrete injury from loss of supplemental-payment obligation because no instance shown of being denied PPS by state | Held: Legacy lacks Article III standing to challenge the absence of a state wraparound requirement; speculative future risk is insufficient |
| Whether the state must reimburse FQHCs for non-emergency out-of-network services (after MCO contract termination) | Legacy: §1396a(bb) requires state payment for covered FQHC services regardless of network status; state’s refusal violates the statute | Texas: §1396b(m)(2)(A)(vii) limits state’s out-of-network reimbursement obligation to emergency services; non-emergency out-of-network claims are governed by MCO-FQHC contracting/authorization rules | Held: State not required to reimburse Legacy for non-emergency out-of-network services without prior authorization; statute’s structure and §1396b(m)(2)(A)(vii) limit state obligation to emergency out-of-network services |
| Whether §1396a(bb) creates a private right enforceable under §1983 | Legacy: §1396a(bb) contains mandatory, beneficiary-focused language and judicially administrable standards, so it creates enforceable rights | Texas: (argued) the provision is not clearly rights-creating or is limited in remedy | Held: §1396a(bb) confers enforceable rights under §1983 (Blessing/Gonzaga test satisfied), so Legacy may sue though it may lose on merits |
Key Cases Cited
- Lujan v. Defenders of Wildlife, 504 U.S. 555 (standing requires concrete, particularized injury)
- City of Los Angeles v. Lyons, 461 U.S. 95 (injunctive relief requires real and immediate threat of repeated injury)
- Clinton v. City of New York, 524 U.S. 417 (loss of a statutory "bargaining chip" can establish standing for economic injury)
- Gonzaga Univ. v. Doe, 536 U.S. 273 (statutory language must unambiguously confer individual rights for §1983 enforcement)
- Blessing v. Freestone, 520 U.S. 329 (three-factor test for whether a statute creates enforceable rights under §1983)
- Armstrong v. Exceptional Child Ctr., Inc., 575 U.S. 320 (analysis of when Medicaid provisions create enforceable rights or indicate remedial scheme)
- Blum v. Yaretsky, 457 U.S. 991 (standing must be shown separately for different administrative inadequacies)