Sometimes important legal issues come disguised in a procedurally-intricate and otherwise "small" case. Other times, seemingly minor disputes among Supreme Court justices reflect large jurisprudential differences. A recent Supreme Court case, Douglas v. Independent Living Center of Southern California, features both of these characteristics. In Douglas, the justices disagreed about whether post-certiorari factual developments in a complex case justified a remand to the lower court. That difference masks a substantially bigger issue how open are federal courts to plaintiffs alleging violations of federal law, and how should that question be analyzed?
Douglas is a complex case involving the Medicaid program. Medicaid is a joint federal-state program that involves state implementation of federal program requirements. States are required to ensure the adequate provision of medical services and California's setting of reimbursement rates for medical service providers was questioned. The Douglas plaintiffs alleged that California's decision to reduce some provider reimbursement rates would lead to inadequate provision of medical services, arguing that providers would stop accepting Medicaid patients due to the low reimbursements.
The Court did not consider the merits of the plaintiffs' claim, but rather, whether the plaintiffs had the right to sue and on what basis. Understanding this issue requires recounting some of the case's tangled procedural history. After California reduced the reimbursement rates, as required by the federal Medicaid statute, it submitted the reductions for approval to the relevant federal agency, the Centers for Medicare & Medicaid Services. Before the agency decided California's application, a group of Medicaid providers and Medicaid patients sued the state, making the above allegation of inadequate provision of medical services. While the lower court litigation was pending, the first-level agency reviewer rejected the changes. While California's intra-agency appeal was pending, the Court granted certiorari on the question of whether the plaintiffs could assert a cause of action against the state based on an alleged violation of the Supremacy Clause. But in a final, crucial twist, after the Court heard oral arguments on the case, the agency reversed itself and approved most of California's proposed changes.
Thus, after the procedural dust had settled, the Court faced the following situation: the plaintiffs were challenging changes to the state's reimbursement schedule that were approved by the supervisory federal agency, alleging that the changes conflicted with federal law and were pre-empted. This procedural posture raised an added dimension to the plaintiffs' claims that was absent when the Court granted certiorari; given the agency's approval of the state's changes, the plaintiffs' preemption claim had to account for the fact that the federal agency had approved them. This fact did not necessarily defeat the plaintiffs' claims on the merits; it is always possible to argue that the agency itself misapplied federal law. Indeed, this is a common argument made by parties challenging federal administrative agency action. However, the agency's approval raised questions about the form of the lawsuit. Did the federal agency's approval of the state law transform the lawsuit into a standard federal administrative law case, rather than a constitutional one under the Supremacy Clause?
In Douglas, a five-member majority led by Justice Breyer thought this might be the case. It noted that the agency's approval of the state law changes might make it more appropriate for the plaintiffs to sue the agency under the federal Administrative Procedure Act, rather than the state under the Supremacy Clause. The majority also noted that, as a substantive matter, the agency's approval of the state law could affect the result of the case if the court deferred to the agency's interpretation of federal law (as courts often do). It thus speculated that the answer to the question on which it granted certiorari the availability of a cause of action based on the Supremacy Clause might be influenced by the availability of a separate and distinct administrative law cause of action. But rather than decide that question, the Court vacated the decision of the US Court of Appeals for the Ninth Circuit and remanded the case back to that court, essentially, to decide whether the Court's tentative analysis was in fact correct.
The four-justice minority, with Chief Justice Roberts writing, disagreed with this result. Notably, the dissent did not take issue with much of the majority's analysis of whether a Supremacy Clause right of action should be allowed in this case. Rather, Roberts argued that the Supremacy Clause right of action issue could and, indeed, should have been decided by the Court without a remand to the Ninth Circuit to consider the issue in light of the intervening agency approval of the state law. According to Roberts, allowing plaintiffs to sue under the Supremacy Clause if a state law or action conflicts with a federal law would completely circumvent the Court's intricate jurisprudence when state violations of federal law give rise to a cause of action under 42 USC § 1983. For him, it was enough to decide the case that Congress failed to provide for a private right of action in the particular provision of the Medicaid law at issue. For that reason, he would have decided the cause of action issue without a remand.
It is hard to know who has the better of this dispute since, as the dissent noted, both sides appear to agree that a Supremacy Clause cause of action in this context might be inappropriate. The real issue appears to be when the Court should leave issues to be decided by appellate courts in the first instance if, as here, post-certiorari developments raise a new dimensions to a case. However, more than a mere technical dispute may be lurking behind the majority's preference for letting the appellate process work its way through the issue and the dissent's preference for announcing a general rule without reference to how the causes of action interacted in this case. Instead, one can read this dispute as reflecting a debate on bright-line rules in regards to separation of powers issues here, the availability of a judicial remedy for Supremacy Clause violations and the availability of private rights of action more generally.
Why did Chief Justice Roberts criticize the majority's remand to allow the lower court to consider the Supremacy Clause cause of action in light of an intervening fact? Perhaps he thinks that that intervening fact the ripening of an administrative law cause of action was irrelevant to the issue. If, on remand, the Ninth Circuit finds the Supremacy Clause cause of action survives, it might be because of the unique interplay of the two particular causes of action, perhaps against the backdrop of the case's particular facts. Chief Justice Roberts has led the Court's conservative bloc to frown on such context-specific analysis in separation of powers cases and to focus instead on enforcing bright-line rules. For example, in Free Enterprise Fund v. Public Company Accounting Oversight Board, he distanced the Court's five conservatives from the "all factors considered" approach from Morrison v. Olson when deciding the scope of the president's Article II power over executive officers. In Stern v. Marshall, another opinion for same five-justice majority, Roberts similarly distanced the Court from its previous free-floating balancing test approach (exemplified in Schor v. Commodities Futures Trading Corporation) when considering the constitutionality of non-Article III federal tribunals. In all three of these cases, he called for bright-line rules: no "double immunity" from presidential removal of executive officers (Free Enterprise Fund), reliance on the public-private rights distinction to determine the constitutionality of "Article I courts" (Stern) and a flat ban on private rights of action based on the Supremacy Clause (Douglas).
The only difference is that in Douglas Roberts lost Justice Kennedy's vote. Of course, the Court will have a chance to reconsider the availability of Supremacy Clause-based causes of action when the Ninth Circuit decides the issue on remand and the losing party seeks Supreme Court review. It is anyone's guess whether Justice Kennedy will rejoin the conservative wing at that time. On the one hand, he may feel pressure to rejoin his conservative colleagues as a matter of broad doctrinal consistency on these types of issues. On the other, Justice Kennedy has always considered access to courts a uniquely crucial part of our system witness his decision to join the liberal bloc in the last Guantanamo Bay habeas case, Boumediene v. Bush, as well as his reliance on the importance of judicial review in Legal Services Corporation v. Velazquez, where the Court struck down federal restrictions on the types of legal claims that could be brought by federally-funded legal service organizations. However he decides, he will likely confront a Court that is split along well-established ideological lines, allowing him to play his usual role as the swing vote. More generally, Douglas illustrates that large principles can lurk within seemingly minor, technical disputes.
William Araiza is a Professor of Law at Brooklyn Law School. He teaches constitutional and administrative law. He has served as a board member of the Western Law Center for Disability Rights in Los Angeles, and is a member of the Los Angeles County Bar's Sexual Orientation Bias Committee, and is currently on the Rulemaking Committee of the American Bar Association's Section on Administrative Law.
Suggested citation: William Araiza, Supremacy Clause and Agency Appeal in the Supreme Court, JURIST - Forum, Mar. 3, 2012, http://jurist.org/forum/2012/03/william-araiza-medicaid.php.
This article was prepared for publication by David Mulock, an assistant editor for JURIST's academic commentary service. Please direct any questions or comments to him at firstname.lastname@example.org