(Reuters) – The U.S. Supreme Court on Tuesday ruled in a case from Idaho that private medical providers that deliver residential care services cannot sue a state in try to raise Medicaid reimbursement rates to deal with rising medical costs.
The justices, on a 5-4 vote, ruled in favor of the state of Idaho, which asserted that medical providers have no legal recourse to sue. The ruling is a loss for the healthcare industry, with trade groups and the U.S. Chamber of Commerce backing the providers in the case.
Medicaid is a federal health insurance program for lower-income people that is administered by the states. Idaho’s lawyers said that in order to receive Medicaid funding, they are required only to comply with the Medicaid Act and related regulations.
The case focused on rates for certain residential services.
State officials recommended increases in reimbursement rates in the late 2000s but they were never implemented because the Idaho legislature declined to appropriate funds, according to court papers.
The providers sued the state in 2009, accusing it of maintaining reimbursement rates that were too low and did not keep up with their rising costs for delivering medical care.
Writing on behalf of the majority, Justice Antonin Scalia said that providers have no right to sue the state under what is known as the Supremacy Clause of the U.S. Constitution, which holds that federal law generally trumps state law.
The clause “instructs courts what to do when state and federal law clash, but is silent regarding who may enforce federal laws in court,” Scalia wrote.
Scalia noted that the providers have another option: they can ask the federal government to intervene on their behalf.
In a dissenting opinion, Justice Sonia Sotomayor said the ruling would have “real consequences” because previously when a state set rates too low, it could be held accountable by the providers directly affected.
The federal government’s only real recourse is “through the drastic and often counterproductive measure of withholding the funds that pay for such services,” Sotomayor added.
The medical providers had noted that similar litigation in other states, including Illinois and Oklahoma, has been allowed ever since Medicaid was introduced in 1965.
The 9th U.S. Circuit Court of Appeals ruled in 2013 that the providers could sue.
The high court split along non-ideological lines. Liberal Justice Stephen Breyer joined four conservatives in the majority. Conservative Anthony Kennedy joined the other liberals in dissent.