Wilder v. Virginia Hosp. Ass’n, 496 U.S. 498 (1990)

Wilder v. Virginia Hospital Association

No. 88-2043

Argued Jan. 9, 1990
Decided June 14, 1990
496 U.S. 498

CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR

THE FOURTH CIRCUIT

Syllabus

To qualify for federal financial assistance to help defray the cost of furnishing medical care to the needy under the Medicaid Act, States must submit to the Secretary of Health and Human Services for approval a plan which, inter alia, establishes a scheme for reimbursing health care providers. In 1980, Congress passed the Boren Amendment to the Act, which requires provider reimbursement according to rates that the "State finds, and makes assurances satisfactory to the Secretary," are "reasonable and adequate" to meet the costs of "efficiently and economically operated facilities." The State must also assure the Secretary that individuals have "reasonable access" to facilities of "adequate quality." Virginia’s Plan, under which providers are reimbursed according to a prospective formula, was approved by the Secretary in 1982 and again in 1986 after an amendment. In 1986, respondent, a nonprofit corporation composed of public and private hospitals operating in Virginia, filed suit against petitioner state officials for declaratory and injunctive relief under 42 U.S.C. § 1983, alleging that the State Plan violates the Act because its reimbursement rates are not "reasonable and adequate." The District Court denied petitioners’ motion to dismiss or for summary judgment, which was based on the claim that § 1983 does not afford respondent a cause of action. The Court of Appeals affirmed, concluding that providers may sue state official for declaratory and injunctive relief under § 1983 to assure compliance with the Boren Amendment.

Held: The Boren Amendment is enforceable in a § 1983 action for declaratory and injunctive relief brought by health care providers. Pp. 508-524.

(a) Section 1983 -- which provides a cause of action for the "deprivation of any rights . . . secured by [federal] laws" -- is inapplicable if (1) the statute in question does not create enforceable "rights" within § 1983’s meaning, or (2) Congress has foreclosed such enforcement of the statute in the enactment itself. Wright v. Roanoke Redevelopment and Housing Authority, 479 U.S. 418, 423. P. 508.

(b) The Boren Amendment creates a substantive federal "right," enforceable by providers under § 1983, to the adoption of reasonable and adequate reimbursement rates. There can be little doubt that providers are the intended beneficiaries of the Amendment, see Golden State TransitCorp. v. Los Angeles, 493 U.S. 103, 106, since the Amendment establishes a system for reimbursing such providers and is phrased in terms benefiting them. Moreover, the Amendment imposes a "binding obligation" on the States that gives rise to enforceable rights, see Pennhurst State School and Hospital v. Halderman, 451 U.S. 1, 19, since it is cast in mandatory rather than precatory terms, and since the provision of federal funds is expressly conditioned on compliance with the Amendment. Petitioners’ contention that Congress did not intend to require States to adopt rates that actually are reasonable and adequate is contrary to the statutory language, which requires the State to find that its rates satisfy these requirements and entitles the Secretary to reject a state plan upon concluding that the assurances given are unsatisfactory, and would render those requirements, and thus the entire reimbursement provision, essentially meaningless. Petitioners’ contention is quickly dispelled by a review of the Amendment’s background and the legislative history, which demonstrate that the Amendment was passed to free the States from restrictive reimbursement requirements previously imposed by the Secretary, and not to relieve them of their fundamental obligation to pay reasonable rates, and that Congress intended to retain providers’ preexisting right to challenge rates as unreasonable in injunctive suits under § 1983. Furthermore, a State’s flexibility to adopt rates that it finds to be reasonable and adequate does not, as petitioners contend, render the obligation imposed by the Amendment too "vague and amorphous" to be judicially enforceable. See Golden State, supra, 493 U.S. at 106. The statute and the Secretary’s regulations set out factors which a State must consider in adopting its rates, and the statute requires the State, in making its findings, to judge the rates’ reasonableness against the objective benchmark of an "efficiently and economically operated facility" while ensuring "reasonable access" to eligible participants. Although some knowledge of the hospital industry might be required to evaluate a State’s findings, such an inquiry is well within the competence of the Judiciary. Pp. 509-520.

(c) Congress has not foreclosed a private judicial remedy for enforcement of the Boren Amendment under § 1983, since there is no express provision to that effect in the Act, see Wright, supra, 479 U.S. at 423, and since the statute does not create a remedial scheme that is sufficiently comprehensive to demonstrate an intent to preclude the remedy of § 1983 suits, see Middlesex County Sewerage Authority v. National Sea Clammers Assn., 453 U.S. 1, 20. Because a primary purpose of the Amendment was to reduce the Secretary’s role in determining rate payment calculation methods, the Secretary’s limited oversight function under the Act, which authorizes him to withhold approval of plans or to curtail federal funds in cases of noncompliance, is insufficient to demonstrate an intent to foreclose § 1983 relief. Cf. Wright, supra, 479 U.S. at 428. Moreover, although a regulation requires States to adopt an appeals procedure by which individual providers may obtain administrative review of reimbursement rates, it also allows States to limit the issues that may be raised on review, and most States, including Virginia, do not allow providers to challenge the overall method by which rates are determined. Such limited state procedures cannot be considered a "comprehensive" scheme that precludes reliance on § 1983. See id. at 429. Pp. 520-523.

868 F.2d 653 (CA4 1989), affirmed.

BRENNAN, J., delivered the opinion of the Court, in which WHITE, MARSHALL, BLACKMUN, and STEVENS, JJ., joined. REHNQUIST, C.J., filed a dissenting opinion, in which O’CONNOR, SCALIA, and KENNEDY, JJ., joined, post, p. 524.