OPINION AND ORDER
This matter is before the Court on the Cabinet’s motion for summary judgment. For the reasons discussed below, the motion will be granted in part and denied in part.
I. BACKGROUND
The initial background facts of this case are set forth in the Court’s June 20, 2012 Opinion,
ARH’s First Amended Complaint alleged four claims against the Cabinet: (1) ARH is the third-party beneficiary of the contract between the Cabinet and Coventry, and the Cabinet breached the network adequacy and prompt pay provisions; (2) the Cabinet is conspiring with Coventry to effectuate an unconstitutional taking of ARH’s property; (3) the Cabinet is liable for payments for non-emergency services provided to Coventry’s members; and (4) the Cabinet breached a provider agreement. The Claims against Coventry include: (1) breach of contract for failure to meet prompt pay requirements; (2) declaratory and injunctive relief regarding prompt pay requirements; (3) bad faith in performance of the Letter of Agreement between Coventry and ARH; (4) declaratory relief requiring Coventry to pay ARH the reasonable value of its services; (5) violation of Kentucky’s Any Willing Provider Laws; (6) tortious interference with ARH’s existing and prospective contractu
The Cabinet’s motion for summary judgment focuses on the defense of sovereign immunity. DE 57. Coventry did not move to dismiss or seek summary judgment on the First Amended Complaint.
II. ANALYSIS
A. Summary Judgment Standard
Under Rule 56(c) of the Federal Rules of Civil Procedure, summary judgment is proper “if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(c); Redding v. St. Eward,
Once the moving party shows an absence of evidence to support the nonmoving party’s case, the nonmoving party must present “significant probative evidence” to demonstrate that “there is [more than] some metaphysical doubt as to the material facts.” Moore v. Philip Morris Companies, Inc.,
The Cabinet asserts sovereign immunity under the Eleventh Amendment as a defense to all counts of the Amended Complaint. Generally, the Eleventh Amendment bars suits brought in federal court against states and their agencies. Will v. Michigan Dept. of State Police,
B. Litigation Conduct Waiver
ARH claims the Cabinet waived its sovereign immunity defense by its participation in this litigation. In particular,
It is true that a state “appearing without objection and defending on the merits in a case over which the district court otherwise has original jurisdiction is a form of voluntary invocation of the federal court’s jurisdiction that is sufficient to waive a State’s defense of Eleventh Amendment immunity.” Ku v. State of Tennessee,
In Ku, the state initially was brought in involuntarily as a defendant. Rather than asserting its Eleventh Amendment immunity defense, however, it “engaged in extensive discovery and then invited the district court to enter judgment on the merits.” Ku,
In Lapides v. Board of Regents of the University of Georgia,
In the present case, ARH filed its Complaint on April 16 and its Amended Complaint on April 26, 2012. ARH filed its motion for preliminary injunction on May 1, and the matter was set for an expedited hearing on May 4, in light of Coventry’s stated intention to cancel its agreement with ARH on that date. The parties were ordered to negotiate in the interim. The parties agreed on May 4 to extend the contract until June 30 and to negotiate further. The Cabinet agreed that termination of the Coventry-ARH agreement would be a “for cause” basis for members to transfer to another managed care organization. ' DE 28. On May 18, the Cabinet filed its Answer to the Amended Complaint and asserted its sovereign immunity and governmental immunity defenses. DE 34. On June 11, 2012, the Cabinet moved for summary judgment based on immunity. DE 57. It asserted its sovereign immunity at an evidentiary hearing on June 12. DE 60 at 175:20 — 177:5.
The Cabinet did not gain any unfair tactical advantage by briefly defending itself on an emergency basis. Rather, the Cabinet’s arguments merely explained its understanding of the current agreement. The injunctive relief was primarily aimed at Coventry, not the Cabinet. The assertion of sovereign immunity had no impact on the injunctive relief granted. It is the Opinion of this Court that the brief involuntary defense by the Cabinet and its
C. The Ex parte Young Exception
In Mosier v. Kentucky,
Under the doctrine of Ex parte Young,209 U.S. 123 , 159-60,28 S.Ct. 441 ,52 L.Ed. 714 (1908), suits against state officials seeking equitable relief for ongoing violations of federal law are not barred by the Eleventh Amendment. See Michigan Bell Tel. Co. v. Climax Tel. Co.,202 F.3d 862 (6th Cir.2000). The Supreme Court has underscored the importance of the Ex parte Young doctrine, stating it is an “essential part” of Eleventh Amendment jurisprudence, and must be upheld “if the Constitution [i]s to remain the supreme law of the land.” Alden v. Maine,527 U.S. 706 , 747,119 S.Ct. 2240 , 2263,144 L.Ed.2d 636 (1999). “An allegation of an ongoing violation of federal law where , the requested relief is prospective is ordinarily sufficient to invoke the Young fiction.” Idaho v. Coeur d’Alene Tribe of Idaho,521 U.S. 261 , 281,117 S.Ct. 2028 ,138 L.Ed.2d 438 (1997)
Id. at 419.
More recently in Westside Mothers v. Haveman,
Of course, Ex parte Young is a “fiction” to the extent it sharply distinguishes between a state and an officer acting on behalf of the state, but it is a necessary fiction, required to maintain the balance of power between state and federal governments. “The availability of prospective relief of the sort awarded in Ex parte Young gives life to the Supremacy Clause.” Coeur d’Alene,521 U.S. at 293 ,117 S.Ct. 2028 . When a court addresses a claim made under Ex parte Young it should simply ask “whether a complainant alleges an ongoing violation of federal law and seeks relief properly characterized as prospective.” Id. at 296,117 S.Ct. 2028 . On its surface this case fits squarely within Ex parte Young. Plaintiffs allege an ongoing violation of federal law, the Medicaid Act, and seek prospective equitable relief, an injunction ordering the named state officials henceforth to comply with the law.
Id. at 861.
The Sixth Circuit explained the difference between retrospective and prospective relief as follows: “prospective relief merely compels the state officers’ compliance with federal law in the future.” Doe v. Wigginton,
The Cabinet string cites a number of cases that it claims recognize the Cabinet’s
D. Mandamus and Speculation
The Cabinet also asserts that compliance with state law cannot be compelled by mandamus, ARH’s federal claims are highly speculative, and ARH lacks standing to enforce any federal right. DE 109 at 4-8. The Cabinet’s standing argument is addressed separately below. With respect to payments to ARH for non-emergency, out-of-network services, the Cabinet argues that the claims “are entirely speculative and not ripe for adjudication.”
This Court disagrees and decided several months ago that “Coventry will pay ARH the ‘reasonable value’ of non-emergency services provided by ARH to Coventry members, which rate will be determined at a later court proceeding unless an agreement is reached earlier by the parties.” DE 130 at 8.
In response to the Cabinet’s argument that compliance with state law cannot be compelled, ARH relies on Hamblen v. Kentucky Cabinet for Health and Family Services,
Some may argue that sovereign/governmental immunity or qualified official immunity operates as a bar to mandamus relief. This argument simply represents a fundamental misunderstanding of the writ of mandamus.
Id. at 518. “[T]he very essence of the writ of mandamus eludes the defense of immunity.” Id. The court held that the plaintiff had “raised the necessary allegations for mandamus relief.” Id.
The difficulty with ARH’s argument is that in Hamblen, a state court granted mandamus relief for state law claims. Here, ARH is asking a federal court in some instances to compel state officials to enforce state law. In Pennhurst State School and Hospital v. Halderman,
A federal court’s grant of relief against state officials on the basis of state law, whether prospective or retroactive, does not vindicate the supreme authority of federal law. On the contrary, it is diffi*695 cult to think of a greater intrusion on state sovereignty than when a federal court instructs state officials on how to conform their conduct to state law. Such a result conflicts directly with the principles of federalism that underlie the Eleventh Amendment.
Id. at 106,
E. Standing
The Cabinet argues that ARH lacks standing to bring the action. Accordingly, the Cabinet contends that this Court lacks jurisdiction. DE 57-1 at 18-21. The parties agree on the applicable standard, but disagree on its application here.
The three elements of Article III standing are:
First, the plaintiff must have suffered an injury in fact — an invasion of a legally protected interest which is (a) concrete and particularized ... and (b) actual or imminent, not conjectural or hypothetical. Second, there must be a causal connection between the injury and the conduct complained of — the injury has to be fairly ... traceable to the challenged action of the defendant, and not ... the result of the independent action of some third party not before the court. Third, it must be likely, as opposed to merely speculative that the injury will be redressed by a favorable decision.
Lujan v. Defenders of Wildlife,
This Court previously recognized the harm to ARH’s financial interests if it must accept payment of only 90 percent of the Medicaid rates for out-of-network services, as required by the Cabinet in its contract with Coventry. DE 67 at 20-21. ARH also faced the permanent loss of a substantial number of highly skilled employees. Id. at 21. ARH further claims that the Prompt Pay provisions of federal and state law are being violated with impunity and that ARH’s viability is threatened as a result.
In Urban Health Care Coalition v. Sebelius,
The causation element is also satisfied in the present case. The injury to ARH and others is directly caused by the Cabinet’s contract requiring reduced payments to out-of-network providers. A related factor is the Cabinet’s failure to require adequate networks of providers, so that MCOs like Coventry have an incentive to dump pro
The Cabinet was clearly told in the past that it could not solve its budgetary woes on the backs of Kentucky’s Medicaid recipients.
Focusing solely on budgetary concerns simply does not rise to the level of a reasonable standard for determining eligibility for long-term care services and is inconsistent with Medicaid objectives. If the Court accepts Plaintiffs allegations as true, Kentucky has inappropriately chosen to use cost-savings as the sole touchstone in its determination, focusing on how much money it wants to save rather than upon the medical needs of Medicaid recipients or the Medicaid statutory requirements.
Kerr v. Holsinger, No. 03-68-H,
At least part of the financial harm to ARH resulting from Coventry’s attempted abrupt cancellation of its Letter of Agreement has already been redressed by this Court through injunctive relief. Additionally, the Court has held that Coventry must pay ARH the reasonable value of its non-emergency services provided to Coventry members. DE 130. A decision in favor of ARH that the Cabinet can no longer require such reduced rates would further redress ARH’s injury and provide protection with respect to any other MCO that may be obligated to pay for non-emergency services. A decision by this Court that the Cabinet must enforce the Prompt Pay provisions would redress the payment delays that ARH currently suffers. Accordingly, ARH meets all standing requirements.
F. Federal Enforceable Rights
The Cabinet argues that there is no private cause of action under the Medicaid statutes relied upon in ARH’s complaint. DE 109 at 8-14. The test for whether a federal statute creates rights that are privately enforceable against state officers was first described in Blessing v. Freestone,
First, Congress must have intended that the provision in question benefit the plaintiff. Second, the plaintiff must demonstrate that the right assertedly protected by the statute is not so “vague and amorphous” that its enforcement would strain judicial competence. Third, the statute must unambiguously impose a binding obligation on the States. In other words, the provision giving rise to the asserted right must be couched in mandatory rather than precatory terms.
Id. at 340-41,
A number of courts have found the existence of private rights of action for Medicaid recipients, including the Eastern District of Kentucky. In Kerr v. Holsinger, No. 03-68-H,
Similarly, in Michelle P. v. Holsinger,
Although the specific statute at issue (the Boren Amendment) was later repealed, the logic of Wilder v. Virginia Hosp. Ass’n,
We must therefore determine whether the Boren Amendment creates a “federal right” that is enforceable under § 1983. Such an inquiry turns on whether “the provision in question was intend[ed] to benefit the putative plaintiff.” Ibid, (citations and internal quotations omitted). If so, the provision creates an enforceable right unless it reflects merely a “congressional preference” for a certain kind of conduct rather than a binding obligation on the governmental unit, Pennhurst State School and Hospital v. Halderman,451 U.S. 1 , 19,101 S.Ct. 1531 , 1541,67 L.Ed.2d 694 (1981), or unless the interest the plaintiff asserts is “ ‘too vague and amorphous’” such that it is “‘beyond the competence of the judiciary to enforce.’ ” Golden State [Transit Corp.*698 v. Los Angeles ], supra, 493 U.S. [103], at 106, 110 S.Ct. [444], at 448 [107 L.Ed.2d 420 (1989) ] (quoting Wright [v. Roanoke Redevelopment and Housing Authority ], supra, 479 U.S. [418], at 431-432, 107 S.Ct. [766], at 774 [93 L.Ed.2d 781 (1987) ]). Under this test, we conclude that the Act creates a right enforceable by health care providers under § 1983 to the adoption of reimbursement rates that are reasonable and adequate to meet the costs of an efficiently and economically operated facility that provides care to Medicaid patients. The right is not merely a procedural one that rates be accompanied by findings and assurances (however perfunctory) of reasonableness and adequacy; rather the Act provides a substantive right to reasonable and adequate rates as well.
There can be little doubt that health care providers are the intended beneficiaries of the Boren Amendment. The Provision establishes a system for reimbursement of providers and is phrased in terms benefiting health care providers ____
Id. at 509-10,
In the present case, ARH makes claims against Coventry and the Cabinet under the Prompt Pay provisions of federal and state law and seeks declaratory and injunctive relief. Under 42 U.S.C. § 1396a(a)(37), a state plan for medical assistance must:
provide for claims payment procedures which (A) ensure that 90 per centum of claims for payment (for which no further written information or substantiation is required in order to make payment) made for services covered under the plan and furnished by health care, practitioners through individual or group practices or through shared health facilities are paid within 30 days of the date of receipt of such claims and that 99 per centum of such claims are paid within 90 days of the date of the receipt of such claims____
Id. Additionally, section 1396u-2(f) states in part:
A contract ... with a medicaid managed care organization shall provide that the organization shall make payment to health care providers for items and services which are subject to the contract and that are furnished to individuals eligible for medical assistance under the State plan ... on a timely basis consistent with the claims payment procedures described in section 1396a(a)(37)(A) of this title....
42 U.S.C. § 1396u-2(f).
Similar Prompt Pay claims were raised in National Medical Care, Inc. v. Rullan, No. 04-1812(HL),
Likewise in the present case, §§ 1396a(a)(37) and 1396u-2(f) impose specific requirements regarding payment, .of health care providers. First, the beneficiaries of these statutory provisions are expressly named as “health care practitioners” and “health care providers.” Medicaid recipients are not obligated to pay providers for their care, except a possible co-pay or deductible. Prompt payment requirements certainly do not benefit the MCO, which would prefer to keep its money instead of paying it to a provider. Each provider of services would benefit so long as the claim does not require further written information or substantiation. As in Wilder, the focus is on individual claims and providers, rather than an institutional policy or practice, such as the broad Blessing requirement of “substantial compliance ... throughout all programmatic operations.” Blessing,
One of the most significant and troubling concerns centered on whether Kentucky’s rural hospitals could continue to afford to “float” Medicaid related costs. Hospital representatives indicated that rural hospitals are not equipped for the sudden financial stress put upon them by the managed care program. The matters brought to our attention include increasing accounts receivable impacting the hospitals’ cash flow, increased administrative burden for hospitais in trying to file claims to MCOs, below cost reimbursements related to emergency department triage fee policies, and reporting difficulties due to a lack - of information available from MCOs.
http://apps.auditor.ky.gov/Public/Audit_ Reports/Archive/2013MedicaidManaged Carereportpdf (“Auditor’s Report”) at page ii. As noted above, the report also expressed concern regarding network adequacy and adequate access to care.
Second, the prompt payment rights protected by the statute are not so vague and amorphous that enforcement would strain judicial- competence. Every provider is entitled to be paid a specific percentage of claims within a definite period of time. Third, the requirements are mandatory— “must provide,” “shall provide,” and “shall make payment.” Accordingly, all of the requirements of Blessing and Gonzaga are met in the present case, and health care providers have a cause of action to pursue their federal claims.
This Court respectfully disagrees with the decision in Medevac MidAtlantic, LLC v. Keystone Mercy Health Plan,
G. Miscellaneous Other Arguments
The Cabinet cites Prince George’s Hospital Center v. Advantage Health Plan, Inc.,
The Cabinet argues ARH’s unconstitutional taking claims are not yet ripe. Citing DLX, Inc. v. Kentucky,
The Cabinet also relies on the doctrine of exhaustion of administrative remedies as a reason to dismiss ARH’s claims. This case is not a standard administrative appeal, nor a standard breach of contract action. There are no administrative remedies to exhaust. ARH also notes that exhaustion is not required in a § 1983 action. DE 80 at 37. DLX, 381- F.3d at 519 (“exhaustion is never required in § 1983 suits”).
III. CONCLUSION
IT IS ORDERED that the Cabinet’s motion for summary judgment [DE 57] is GRANTED to the extent that ARH seeks mandamus against the Cabinet based only on state law and is otherwise DENIED.
Notes
. The July 2013 Special Report of the Kentucky State Auditor noted an overall 8 percent decline in all provider types, and a 57 percent decline in general hospitals participating since the implementation of Medicaid managed care program. A related concern was "how contractual requirements [for network adequacy] in certain rural areas are met given the challenging geography in many parts of the state.” "A major issue which surfaced during Kentucky’s switch to a managed care environment for the Medicaid program was the adequacy of each MCO’s provider network. ... An inadequate network would make it difficult for Medicaid members to receive proper treatment and healthcare.” http://apps. auditor.ky.gov/Public/Audit_Reports/Archive/ 2013MedicaidManagedCarereport.pdf (‘ 'Auditor’s Report”) at Page iii.