Lead Opinion
OPINION
Plaintiffs-appellants, Medicaid recipients with tobacco-related illnesses, appeal the dismissal of their actions seeking injunctions against two states, Kentucky and Tennessee (the States). Plaintiffs seek to intercept tobacco settlement money due to the States under the Master Settlement Agreement between a number of settling states and tobacco manufacturers. We affirm the dismissal of Plaintiffs’ claims, because actions seeking money damages from a state contravene the Eleventh Amendment of the United States Constitution. We also hold that Plaintiffs’ suits fail because, they have not. asserted a valid claim.
I
Plaintiffs seek to represent Kentucky and Tennessee Medicaid recipients with tobacco-related illnesses, for whom the States paid medical bills. Under the November 1998 Tobacco Master Settlement Agreement (MSA) between 45 states and many tobacco manufacturers, both Kentucky and Tennessee will receive large payments in settlement of their claims. The monies to be paid were placed in escrow, pending the time that a specified percentage of the signatory states achieved “finality” under the terms of the agreement. Now that finality has been achieved, payments are being made from escrow to the States.
In order to implement the national settlement, the M.S.A. required states that did not have a pending lawsuit to institute proceedings in the appropriate state courts. Both of the States filed, and then settled, their MSA-required suits. Plaintiffs, claiming that the States’ recoveries were in the form of subrogation actions (ie., that the States were actually suing on Plaintiffs’ behalf), have brought this 42 U.S.C. § 1983 action. Plaintiffs claim that federal law entitles them to any excess money the States will receive over the actual state outlay for Plaintiffs’ treatment. Plaintiffs also argue that because they have sued state officials in their official capacities, their action is not barred by state sovereign immunity.
This suit is part of a nationwide series of suits in which Medicaid recipients are seeking to recoup “overage” amounts from a number of settling states. All but one of the Medicaid recipient suits, including the two instant cases, have been dismissed for failure to state a claim upon which relief could be granted or for Eleventh Amendment immunity. See Strawser v. Atkins,
II
A. The Eleventh Amendment Bars Suits Seeking to Intercept Future Payments to the States.
This case poses the question of whether Plaintiffs can escape the Eleventh Amendment bar blocking suits for money damages against the states by phrasing their requests for monetary relief as requests for future payments. We hold that they cannot.
Whether an action is barred by the Eleventh Amendment is a question of law, and is reviewed de novo. Timmer v. Michigan Dep’t of Commerce,
The Judicial Power of the United States shall not be construed to extend to any suit in law or equity, commenced or prosecuted against one of the United States by Citizens of another State, or by Citizens or Subjects of any Foreign State.
U.S. Const, amend. XI. Although the amendment does not address the possibility of suit against a state by one of its own citizens, unassailable case law has interpreted the amendment in such a way as to close that gap. Hans v. Louisiana,
States are, therefore, immune from private suit in both federal and state courts. There are three generally recognized exceptions to this rule. First, a state may consent to suit. Alden v. Maine,
The third exception is the one at issue here. Ex Parte Young,
“[Wjhen the action is in essence one for the recovery of money from the state, the state is the real, substantial party in interest and is entitled to invoke its sovereign immunity from suit even though individual officials are nominal defendants.” Ford Motor Co. v. Dept. of Treasury of the State of Indiana,
As a result, even though the formal requirements of Ex Parte Young may be met by naming officials (rather than the state) as defendants, and seeking injunctive relief, relief should not be granted if “the relief is tantamount to an award of damages for á past violation of federal law, even though styled as something else.” Papasan v. Allain,
There is an exception to the exception, of course. If the injunctive relief sought by the plaintiff is truly prospective non-monetary relief, sovereign immunity will not bar the suit simply because the state may be required to make incidental expenditures in complying with the injunction. Milliken v. Bradley,
Plaintiffs have couched their claim in prospective language: in essence, they seek an order forcing the States to turn over portions of future installments of the monies due under the States’ settlement agreement with the tobacco manufacturers. Plaintiffs claim that these monies are not yet sufficiently the property of the States for such an order to be an order for monetary relief. Plaintiffs thereby hope to escape the Eleventh Amendment bar on suits for monetary relief against states.
■ Plaintiffs argue that their action is, in fact, merely one to force the States to comply with the. federal distribution scheme for Medicaid recoupments, under 42 U.S.C. § 1396. They argue that each failure to turn over the money constitutes a future failure to comply with federal law. This, they say, was the root of the district court’s error: Plaintiffs consider their demands to receive money in the future to be prospective relief. Plaintiffs assert that retroactive monetary relief must apply to a loss that they have already suffered. Plaintiffs argue that they have not yet suffered a loss, since they only claim future payments, rather than payments that have already been made to the state.
However, attempts to seize upon a state’s “continuing income” by means of a prospective injunction have been held by the Supreme Court to be attempts to obtain compensation for an “accrued monetary liability.” Papasan,
[CJontinuing payment of the income from the lost corpus is essentially equivalent in economic terms to a one-time restoration of the lost corpus itself: It is in substance the award, as continuing*950 income rather than as a lump sum, of an accrued monetary liability.
Ibid, (internal citations omitted). The attempt to seize on the settlement monies awarded to the States is an attempt to recover money damages and is barred by the Eleventh Amendment.
The case law does not support an argument that the requested relief has a purely “ancillary” effect on the' States’ treasuries. A court may enter a prospective injunction that costs the state money, but only if the monetary impact is ancillary, i.e., not the primary purpose of the suit. Edelman,
However, in Kelley v. Metropolitan County Bd. of Educ.,
Plaintiffs’ reliance on the Tenth Circuit’s decisions in Elephant Butte Irrigation Dist. v. Dep’t of the Interior,
For similar reasons, therefore, Plaintiffs cannot rely on Harris v. Owens,
The Harris court disagreed with those courts “that have found it ‘wholly irrelevant that payments [under the Master Settlement Agreement] will be made in fixed future installments rather than a lump sum.’ ” Id. at 1291. Although the Harris court conceded that “[f]rom a purely economic perspective, it may be irrelevant that the settlement funds are to be paid
There is a final layer of sovereign immunity analysis that also blocks Plaintiffs’ suit. The Supreme Court in Idaho v. Coeur d’Alene Tribe,
As appellees here point out, the Sixth Circuit noted in Kelley that the interest of a sovereign in allocating state funds is a “very serious” one. Kelley,
Because Plaintiffs attempt to recover money damages from the States, their claims are barred by the Eleventh Amendment.
B. Plaintiffs Lack a Valid Claim.
We need go no further. However, we note that even were Plaintiffs able to pass the Eleventh Amendment bar on suits for monetary damages against a state, Plaintiffs have not asserted a valid claim. First, Plaintiffs’ characterization of the States’ recovery as a subrogation action is incorrect. Second, Plaintiffs do not have a private right of action to enforce federal rights under 42 U.S.C. § 1983.
Federal law requires states or local administering agencies to take “all reasonable measures to ascertain the legal liability of third parties” for costs incurred under state Medicaid plans. 42 U.S.C. § 1396a(a)(25)(A). In cases where legal liability is found to exist for monies paid out under Medicaid plans, states are required to “seek reimbursement for such assistance to the extent of such legal liability”. 42 U.S.C. § 1396(a)(25)(B). The purpose of this requirement is straightforward: when reasonably feasible, states are required to attempt to recover medical costs incurred under Medicaid programs from responsible third parties, rather than
If a state pursues an assigned claim, 42 U.S.C. § 1396k(b) provides a framework for distribution. The section provides:
Such part of any amount collected by the State under an assignment made under the provisions of this section shall be retained by the State as is necessary to reimburse it for medical assistance payments made on behalf of an individual with respect to whom such assignment was executed (with appropriate reimbursement to the Federal Government to the extent of its participation in the financing of such medical assistance) and the remainder of such amount collected shall be paid to such individual.
42 U.S.C. § 1396k(b). The C.F.R. section addressing this issue notes that the state’s Medicaid agency must, when proceeding on assigned claims, “distribute collections as follows — (a) To itself, an amount equal to State Medicaid expenditures for the individual on whose right the collection was based, (b) To the Federal Government, the Federal Share of the State Medicaid expenditures .... (c) To the recipient, any remaining amount.” 42 C.F.R. § 433.154.
Plaintiffs have sued under 42 U.S.C. § 1983, claiming a violation of rights created by federal law, ie., 42 U.S.C. § 1396k(b) and 42 C.F.R. § 433.154. Plaintiffs claim that Kentucky and Tennessee were assignees of Plaintiffs’ claims, once the States paid their medical bills. Plaintiffs then suggest that the lawsuits brought by the States against the tobacco manufacturers were in fact suits to recover the money paid out by the state on Plaintiffs’ claims. And finally, Plaintiffs therefore suggest, they are entitled to the amount of money received by the states above the costs incurred by the states in paying for Plaintiffs’ medical bills.
Even if the States had sued as assignees, the alleged “overage” amounts could not have come from Plaintiffs’ assigned claims. Under the assignment and third-party recovery provisions upon which Plaintiffs rely, the States are only assignees to the degree that they have paid out for services, and' no more. 42 C.F.R. § 433.145(c) (“A State plan must provide that the assignment of rights to benefits obtained from an applicant or recipient is effective only for services that are reimbursed by Medicaid.”). Under the same federal law upon which Plaintiffs rely, it is clear that the States cannot be the assignees of more of Plaintiffs’ claims than the amount paid for services. Therefore, the precise amount that Plaintiffs seek to recover (ie., any amount beyond the costs to the Medicaid program in treating their illnesses) as a matter of federal law cannot be a part of their claim, which they assigned to the States.
This point alone was sufficient for the Seventh Circuit to dismiss its Medicaid-recipient suit, Floyd v. Thompson,
Moreover, the M.S.A. itself does not mention or allocate funds paid for restitution of Medicaid expenses. On the contrary, the M.S.A. states that the funds are paid “[i]n settlement of the Settling States’ antitrust, consumer protection, common law negligence, statutory, common law and equitable claims for monetary, restitution-ary, equitable and injunctive relief alleged by the Settling States.” (MSA § XVI-11(d)).
Plaintiffs’ claims must also fail because the provisions of the Medicaid Act that they rely on do not create a private cause of action for violation of their terms. The Supreme Court, in Wilder v. Virginia Hospital Ass’n,
The first inquiry (whether an enforceable federal right was created) requires a three-step analysis. First, courts ask whether the aspiring § 1983 plaintiff was the intended (or “especial”) beneficiary of the statute. Second, the court seeks to determine “enforceability” by asking whether the statute created a binding obligation upon the state. Third, the right sought to be enforced may not be vague or amorphous. Wilder,
42 U.S.C. § 1983 allows enforcement of federal rights, not federal law in general. The first step, therefore, in determining whether a private right of action exists under 42 U.S.C. § 1983 is to determine whether the federal statute at issue grants a right to the person seeking to enforce the cause of action. The relevant inquiry is whether the potential § 1983 plaintiff was the intended beneficiary of the statute.
The intended beneficiary of the Medicaid recoupment statutes is the federal government. The provisions require states to pursue remedies against responsible third parties, instead of relying on the federal government’s assistance in paying citizens’ medical bills. When a recovery against a responsible third party is made on an assigned claim, the federal government receives a share equal to its outlay. The “overage” provisions simply exist to prevent states from pocketing excess monies received, should they recover an amount in excess of their costs (which they are not, under the statute, allowed to do). The focus of the statute therefore is facilitating federal recoupment of Medicaid costs, not providing a windfall to Plaintiffs, whose medical needs have been covered by the States.
The second step in a Wilder analysis is to determine whether the statute imposes a binding requirement on the States. Wilder,
The third Wilder step requires that the rights sought to be enforced not be vague or amorphous. Wilder,
What Plaintiffs fail to realize is that the States are only required to undertake “reasonable measures” in pursuing assigned claims (for which Plaintiffs could recover overage amounts), and that, under Suter, Plaintiffs have no private right of action to sue to enforce reasonable compliance with these federal statutes. If, as the States claim, bringing an action based on each individual assigned claim from a smoking case would be very complicated and time-consuming (in short, unreasonable), and the States have chosen to refrain from doing so, Plaintiffs have no private cause of action under 42 U.S.C. § 1983.
The Sixth Circuit has previously found that 42 U.S.C. § 1983 creates an implied right of action under certain Medicaid Act statutes. For example, in Boatman v. Hammons,
However, the Sixth Circuit has only recognized a private right of action to enforce Medicaid Act provisions when the putative plaintiffs were very clearly the intended beneficiaries of the law in question. See, e.g., Boatman,
Even were we to determine that there is a valid, unambiguous and enforceable federal right granted to Plaintiffs by 42 U.S.C. § 1396k(b) and 42 C.F.R. § 433.154, we must also determine whether that right has been foreclosed by Congress. Congress may foreclose enforcement of a federal right either explicitly (by stating that § 1983 is not an available method of enforcement) or (as is much more commonly argued) by articulating such a comprehensive enforcement scheme that private enforcement is clearly contra
Congress has amended the Medicaid Act to state that M.S.A. funds are not considered recoupments under federal Medicaid law, but are the States’ money to allocate as the States see fit. In May 1999, Congress amended 42 U.S.C. § 1396b(d) and instructed the Health Care Financing Administration (HCFA) that the settlement funds were not overpayments under the Medicaid laws and that HCFA was not entitled to share in the proceeds of the states’ settlements. The amendment reads:
(B)(i) Subparagraph (A) and paragraph 2(B) [requiring states to recoup overpay-ments and reimburse HCFA for the federal share] shall not apply to any amount recovered or paid to a State as part of the comprehensive settlement of November 1998 between manufacturers of tobacco products ... and State Attorneys General .... (ii) Except as provided in subsection (i)(19)[referring to costs incurred in pursuing the lawsuits] a State may use amounts recovered or paid to the State as part of a comprehensive or individual settlement, or a judgment, described in clause (i) for any expenditures determined appropriate by the State.
42 U.S.C. § 1396b(d)(3) (emphasis added).
By this amendment, Congress clarified that the states were to be able to allocate the monies received under the M.S.A. as they “determined appropriate.” The States certainly were not to be forced to allocate the money to Medicaid recipients who, having received treatment paid for by the government, now seek the monies intended for treating future patients. If the States wish to allocate all of the funds they receive under the M.S.A. to future treatment of tobacco-related illness, under 42 U.S.C. § 1396b(d)(3) they may do so. This is a clear-cut Congressional statement that forecloses the existence of an implied private right of action, under 42 U.S.C. § 1983, seeking to divert the tobacco settlement money.
Ill
For the foregoing reasons, the district courts’ judgments are AFFIRMED.
Concurrence Opinion
CONCURRING IN PART, DISSENTING IN PART
concurring in part and dissenting in part.
Because I am not convinced that the plaintiffs’ claims are barred by the Eleventh Amendment of the United States Constitution, I decline to join Part 11(A) of the lead opinion.
I do agree, however, for the reasons so well expressed in Part 11(B) of my brother’s opinion, that the plaintiffs have not made out an actionable claim for relief under 42 U.S.C. § 1983. Consequently, I join only Part 11(B) of Judge Boggs’s opinion.