712 F.3d 461
9th Cir.2013Background
- NEMS and La Clínica allege California misapplied Part D funds and seek retroactive monetary relief and prospective relief.
- Section 330 grants require centers to make reasonable efforts to collect reimbursements for Medicaid costs, tying grant funds to state Medicaid payments.
- California shifted dual-eligible prescription drug costs to Medicare Part D, creating dispute over how per-visit rates should reflect those costs.
- California offered two options: (1) reduce per-visit Medicaid payments for all pharmacy costs or (2) keep per-visit rate and remit Part D payments to California at year end.
- NEMS initially chose Option 2 for 2006–2007 and later switched to Option 1 in 2009; La Clínica remains under Option 2.
- The district court dismissed the centers’ claims as barred by the Eleventh Amendment; the court did not reach state-law or exhaustion issues.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does the Eleventh Amendment bar retroactive monetary relief? | Centers seek funds retroactively from California treasury. | Eleventh Amendment immunity bars monetary relief against state. | Yes, retroactive monetary relief barred. |
| Can a federal-interest theory overcome Eleventh Amendment immunity? | Center argues federal interest in federal funds creates an exception. | No standalone federal-interest exception; abrogation lacking clear statement. | No, federal-interest theory does not defeat immunity. |
| Do Suever and Taylor permit recovery of funds held by the state under escheat/unclaimed-property theories? | Disputed funds resemble seized property held in trust. | No custodial trust or escheat framework; funds are not state-held property for private use. | Not controlling; does not fit these exceptions; retroactive relief barred. |
| Does Ex parte Young allow prospective relief in these circumstances? | Centers seek ongoing relief to prevent future collection under Option 2. | Prospective relief may be available where proper, but not as retroactive monetary damages. | Some claims may proceed as genuine prospective relief; remand for Ex parte Young analysis. |
| Was there error in dismissing the case in part and remanding for Ex parte Young analysis? | District court failed to assess ongoing harms and Ex parte Young applicability. | Dismissal appropriate for retroactive claims; court should address remaining claims on remand. | Reversed in part and remanded for Ex parte Young assessment. |
Key Cases Cited
- Edelman v. Jordan, 415 U.S. 651 (U.S. (1974)) (retroactive monetary relief against state barred; prospective relief only)
- Ford Motor Co. v. Dep’t of Treasury of Ind., 323 U.S. 459 (U.S. (1945)) (abrogation issue clarified; later abrogation by Lapides discussed)
- Ex parte Young, 209 U.S. 123 (U.S. (1908)) (prospective relief against state officers avoids Eleventh Amendment bar)
- Suever v. Connell, 439 F.3d 1142 (9th Cir. 2006) (unclaimed property trust; escheat cases as a potential exception)
- Taylor v. Westly, 402 F.3d 924 (9th Cir. 2005) (distinguishes property claims from monetary relief against state)
- Hans v. Louisiana, 134 U.S. 1 (U.S. (1890)) (federal-interest arguments limited; Eleventh Amendment scope explained)
- McCulloch v. Maryland, 17 U.S. (4 Wheat) 316 (U.S. (1819)) (Supremacy Clause principles; not a basis for standalone federal-interest exception)