Saint Anthony Hospital v. Elizabeth M. Whitehorn, 132 F.4th 962

Background

Saint Anthony Hospital is a safety-net hospital heavily dependent on Medicaid payments; Illinois shifted substantial Medicaid administration to private managed-care organizations (MCOs).
Under Medicaid statute, states contract with MCOs; §1396u-2(f) requires a State’s contract to provide that the MCO "shall make payment to health care providers … on a timely basis" consistent with the 30-day/90%-within-90-day schedule in §1396a(a)(37)(A), unless provider and MCO agree otherwise.
Saint Anthony alleges MCOs repeatedly delayed payments (months to years), and sued the State under 42 U.S.C. §1983 seeking declaratory and injunctive relief to force Illinois to cause MCOs to comply with the prompt-payment rule.
The case was dismissed by the district court on the pleadings (Rule 12(b)(6)); a Seventh Circuit panel reversed; the Supreme Court vacated and remanded after Talevski; the en banc Seventh Circuit heard the case.
The en banc court applied the Talevski/Gonzaga framework and held §1396u-2(f) does not unambiguously create a §1983‑enforceable individual right to prompt payment by MCOs; it affirmed dismissal.
The court also affirmed the district court’s denial of Saint Anthony’s motion to supplement the complaint (no abuse of discretion) but noted the hospital may bring a separate action because the State stipulated it would not assert claim preclusion.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether 42 U.S.C. §1396u‑2(f) unambiguously creates an individual right that providers can enforce under 42 U.S.C. §1983 to obtain prompt payment from MCOs	§1396u‑2(f) incorporates the §1396a(a)(37)(A) 30‑day/90% and 90‑day/99% rules and uses mandatory language requiring MCOs to make timely payments to providers, so Congress intended an enforceable provider right	The provision directs States to include prompt‑payment terms in contracts with MCOs (a contractual condition), it lacks rights‑creating, individual‑centric language, and recognizing a private §1983 right would disrupt the Spending‑Clause bargain and federal‑state administration	En banc Seventh Circuit: No. §1396u‑2(f) does not unambiguously confer a §1983‑enforceable right on providers; affirmed dismissal.
Whether the court should reach Talevski step two (whether Congress implicitly or explicitly precluded §1983 enforcement)	N/A (Plaintiff argued for §1983 remedy)	N/A (State argued preclusion among other defenses)	Majority did not reach step two because plaintiff failed step one (no unambiguous rights‑creating language).
Whether the district court abused its discretion in denying Saint Anthony leave to supplement its complaint (Rule 15)	Sought to add due‑process and transparency allegations about fee‑for‑service and MCO payment calculations	District court said supplement would substantially expand the case beyond its managed‑care focus	Court affirmed denial (no abuse of discretion): proposed supplement would materially broaden scope; State stipulated no claim‑preclusion defense so plaintiff may sue separately.

Key Cases Cited

Health & Hospital Corp. of Marion County v. Talevski, 599 U.S. 166 (2023) (articulates Gonzaga‑based two‑step framework for determining when Spending‑Clause statutes unambiguously confer individual rights enforceable under §1983)
Gonzaga Univ. v. Doe, 536 U.S. 273 (2002) (Spending‑Clause statute gives rise to §1983 rights only when statute unambiguously confers individual‑centric, rights‑creating language)
Pennhurst State School & Hospital v. Halderman, 451 U.S. 1 (1981) (Spending‑Clause conditions are contractual; Congress must speak clearly to create privately enforceable rights)
Wilder v. Virginia Hospital Ass’n, 496 U.S. 498 (1990) (Medicaid reimbursement provision recognized as creating provider rights enforceable under §1983)
Maine v. Thiboutot, 448 U.S. 1 (1980) ("Laws" in §1983 includes federal statutes, not only civil‑rights statutes)
Blessing v. Freestone, 520 U.S. 329 (1997) (earlier multifactor test for Spending‑Clause §1983 claims; later narrowed by Gonzaga and Talevski)
Ashcroft v. Iqbal, 556 U.S. 662 (2009) (pleading standard; on a Rule 12(b)(6) motion courts accept complaint allegations as true)