ACS Blog: Gloves Off: Justices Ask Pointed Questions in Opening Day Case on Court Access

(October 4, 2011) Rochelle Bobroff writes on the Douglas v. ILC oral argument.

The Supreme Court justices started the new court term with piercing questions to all the attorneys arguing the opening case, which presents an important court access issue.  In Douglas v. Independent Living Center, Medicaid beneficiaries challenged a California law which slashed reimbursement rates, arguing that the state law was preempted or invalidated by federal law requiring rates to be sufficient to ensure access to care. Due to the reimbursement rates being below the cost of filling prescriptions, low-income individuals were unable to get their prescriptions filled. Beneficiaries and medical providers sued the state, arguing that the state law was invalid, because it is preempted by federal law.

Businesses regularly bring preemption cases, and California is not trying to stop wealthy corporations from getting their claims heard in court. Instead, California seeks to carve out poor people from the protection of the Constitution’s Supremacy Clause, which states that federal law is the “supreme law of the land.” The Justice Department supported California in the oral argument, arguing that this is a matter purely between the federal and state governments.  The Medicaid statute enables the federal government to sanction states that do not comply with federal rules, by cutting off federal Medicaid funds.

Karin Schwartz, Supervising Deputy Attorney for California, immediately faced tough questions from two Democratic appointed justices.  Justice Ginsburg stated that the remedy of the federal government cutting off all funds is “a very drastic remedy that’s going to hurt the people that Medicaid was meant to benefit.”  And Justice Kagan accused the state of doing an “end run” around the “administrative process” by putting the rate cut into effect before asking for federal approval and continuing the rate cut even following federal disapproval.

But Schwartz also got tough questions from two Republican appointed Justices, including Justice Kennedy, who is sometimes a swing vote.  Kennedy reframed Schwartz’s argument that the Medicaid statute was too vague and suggested that the issue was better viewed in light of what is “administratively workable.”  Kennedy then referenced a friend-of-the-court brief from former Department of Health & Human Services officials, which pointed out that agency staff administering $400 billion in federal funds “don’t have time” to enforce every violation of federal law and therefore “it’s much more efficient” to have cases brought to federal court by beneficiaries.  When Schwartz responded that “700 district court judges” are not efficient, Kennedy was not convinced.  He stated “I don’t think that the ‘sky is falling’ argument really works.”

Justice Alito fired the next question, asking if California was seeking “a rule that is good for this case only.”  Schwartz answered “yes.”  Alito then dismissed the state’s broad theories regarding separation of powers and carving out Spending Clause cases, such as Medicaid.  He added that he didn’t understand how the Medicaid Act “affirmatively precludes” court access in this case.

Up next was Edwin Kneedler, the Deputy Solicitor General, arguing on behalf of the federal government.  He faced his toughest inquisition from Obama nominee Justice Kagan, the former Solicitor General and his former boss.  She pointed out the inconsistency between the brief filed by the Solicitor General when Supreme Court review was requested and the brief filed by the Solicitor General after review was granted.  And she hammered Kneedler for his theory of the case being inconsistent with numerous Supreme Court cases.  Kneedler responded that he was not challenging all the cases that don’t fit his theory and suggested that the Court does not need “an all-encompassing theory” to resolve the case.

Carter Phillips, arguing on behalf of Medicaid beneficiaries and providers, did not have an easy time at the podium either.  His most challenging questioners were Chief Justice Roberts, a Republican nominee, and Justice Breyer, a Democratic nominee.  Roberts inquired whether Phillips’ position would “constitute a complete end run around” prior cases shutting court house doors on enforcement of federal rights.  Indeed, before his appointment to the Court, Roberts had argued one such case, Gonzaga v. Doe, successfully closing off private enforcement in that case.  And Roberts did not appear satisfied with Phillips’ explanation that preemption is different from other remedies.

Justice Breyer, who is very deferential to the position of the federal government, appeared very troubled by the beneficiaries’ position.  He expressed “the real fear of far reaching,” if beneficiaries stop federal regulators from “doing their business.”  He questioned whether Congress wanted numerous federal judges “reaching different views” about what is sufficient access to care under federal law.  Justice Sotomayor, an Obama nominee, then jumped into the discussion, noting that the judicial process could be available until the federal government made a decision about the validity of the state law.  Phillips agreed with Sotomayor’s suggestion, but Breyer continued to express a desire to limit preemption claims against state governments.

The case appeared to come down to the issue of what is the “default” interpretation of Congress’s intent, when the statute neither confers a private right nor takes away a preemption claim.  Phillips argued that, when Congress enacted Medicaid in 1968, Congress understood that a preemption claim was available.  Therefore, he contended, the default must be that a preemption claim can be brought under Medicaid.  With just four minutes of rebuttal time, this was a key point for Schwartz’s final words.  With just seconds left to speak, she countered that Phillips’ proposal for a default rule was wrong and did not apply in the Spending Clause context.

While the justices’ questions gave some insight into their views of the case, equally important are the questions that they did not ask.  None of the Justices asked Phillips any questions regarding either Schwartz’s suggestion that Spending Clause statutes are not enforceable under the Constitution or Kneedler’s proposition that Medicaid be likened to a contract between the federal and state government.  While they pushed Phillips to define a limit to preemption claims for beneficiaries, they did not openly attack the basic principle that a Medicaid preemption claim is similar to preemption claims in other contexts.  In contrast, several justices expressed concern that the approaches espoused by Schwartz and Kneedler are contrary to Supreme Court precedent.

Nevertheless, lively exchanges at the Supreme Court are almost a sport, to be enjoyed for its own sake, and not a guarantee of votes.  While some of the justices appeared to be clearly leaning toward one side or the other, there are several justices who could swing either way.  A decision is expected this winter or spring.  Hopefully, the Court will rule that court house doors are open not only to claims by big business but also to disadvantaged individuals.

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