On March 31, 2015, the Supreme Court decided in Armstrong v. Exception Child Center, Incorporated , that private parties cannot seek an injunction from a federal court to prevent state Medicaid officials from implementing a state plan that may violate federal law. Background

		Medicaid

Medicaid is a cooperative federal-state program through which the federal government provides financial assistance to states for medical care and other services for poor, elderly, and disabled individuals. Nevertheless, states have considerable discretion in administering their Medicaid programs, which generally includes setting the payment rates at which providers are reimbursed for their services to Medicaid beneficiaries. This provision requires a state Medicaid plan to
provide such methods and procedures relating to the utilization of, and the payment for, care and services available under the plan…as may be necessary to safeguard against unnecessary utilization of such care and services and to assure that payments are consistent with efficiency, economy, and quality of care and are sufficient to enlist enough providers so that care and services are available under the plan at least to the extent that such care and services are available to the general population in the geographic area ....
Medicaid beneficiaries and others have claimed that because of inadequate Medicaid reimbursement rates, the requirements of the equal access provision are not met (e.g., the state did not consider, or the state plan's methods or procedures do not assure, that Medicaid payments are consistent with efficiency, economy, and quality of care, or are sufficient to enlist providers to provide Medicaid services). Four Justices dissented from the majority opinion. Majority Opinion

In answer to that question, a majority of the Court held that the Supremacy Clause did not provide a cause of action for private parties to enforce the Medicaid equal access requirement. Without a private avenue of enforcement directly against states, future litigation will likely focus on federal actions to approve state plans, possibly as actions seeking review of a final agency action under the Administrative Procedure Act. The potential significance of Armstrong beyond the Medicaid program also remains to be seen. The Court's decision could inform future litigation brought by a private party seeking to compel state officials to comply with other federal statutes, particularly where those statutes provide mechanisms for federal agencies to enforce their requirements. Additionally, the decision may inform the drafting and consideration of legislation in Congress, insofar as the opinion clarifies the analysis and presumptions the Court will utilize when considering whether equitable relief has been foreclosed.
On March 31, 2015, the Supreme Court decided in Armstrong v. Exception Child Center, Incorporated, that private parties cannot seek an injunction from a federal court to prevent state Medicaid officials from implementing a state plan that may violate Medicaid's equal access requirement under federal law.
Medicaid is a cooperative federal-state program through which the federal government provides financial assistance to states for medical care and other services for poor, elderly, and disabled individuals. States have considerable discretion in administering their Medicaid program, which generally includes setting the payment rates at which providers are reimbursed for their services to Medicaid beneficiaries, but must comply with certain federal requirements. One such requirement, known as equal access, requires rates to be sufficient to enlist enough providers so that care and services under Medicaid will be at least comparable to those available to the general population.
In Armstrong, providers of certain Medicaid services challenged the state's reimbursement for those services, and sought to enjoin the state from implementing the reduced rates. A majority of the Court held that the Supremacy Clause of the Constitution did not provide a private right of action against state officials that are allegedly violating, or planning to violate, federal law. Further, the existence of an administrative enforcement scheme conducted by the Centers for Medicare and Medicaid Services counseled against allowing an action against the state to proceed in equity. Four Justices dissented, and would have permitted the plaintiffs to seek equitable relief from the courts to enjoin the state.
Without a private avenue of enforcement directly against states, future litigation will likely focus on federal actions to approve state plans, possibly as suits seeking review of a final agency action under the Administrative Procedure Act. The potential significance of Armstrong beyond the Medicaid program remains to be seen, but could inform future litigation brought by a private party seeking to compel state officials to comply with other federal statutes, or the drafting and consideration of legislation in Congress, insofar as the opinion clarifies the analysis and presumptions the Court will utilize when considering whether equitable relief has been foreclosed.