Business Law

Polk v. Yee, __ F.4th __, No. 20–55266, 2022 WL 2062316 (9th Cir. June 8, 2022)

Healthcare providers may not enforce the Medicaid Act’s anti-reassignment provision under 42 U.S.C. § 1983.

California’s In-Home Support Services (IHSS) program uses Medicaid funding to provide assistance with daily activities to elderly and disabled beneficiaries, often by family members. Although the beneficiaries are responsible for employing and overseeing their IHSS providers, the providers are paid by the State Controller because California designates them as public employees. The Controller makes standard payroll deductions and, as allowed under California law, deductions for union dues.

Plaintiffs are IHSS service providers from whose pay the Controller deducted public-sector union dues. When the deductions continued after Plaintiffs resigned from the unions outside annual revocation windows, they sued state officials and their former unions in two class actions under 42 U.S.C. § 1983. They alleged that the dues deductions violated the Medicaid Act’s anti-reassignment provision, 42 U.S.C. § 1396a(a)(32), which states “no payment under the plan for any care or service provided to an individual shall be made to anyone other than such individual or the person or institution providing such care or service.” The district court dismissed both cases, ruling Plaintiffs lacked standing because the anti-reassignment provision does not confer a right that is enforceable under § 1983. Plaintiffs appealed.

The Ninth Circuit affirmed, holding that the anti-reassignment provision does not confer a right that Medicaid providers may enforce under § 1983. The court explained that, for a federal statute to confer a right that is enforceable under § 1983, Congress must have “unambiguously” intended to confer a federal right (and not a mere benefit) upon the particular plaintiff. Statutes generally focused on program policies and procedures typically are not intended to aid particular persons and thus do not create an enforceable right. Here, the Ninth Circuit found nothing in the language or legislative history of the anti-reassignment provision reflecting a Congressional concern with the needs of Medicaid providers. Rather, Congress focused on state administrative payment practices and the need to avoid fraud and abuse in the Medicaid program that was closely connected with the factoring of providers’ receivables. Because the statute addresses the state as an administrator in an effort to curb Medicaid fraud and abuse, and only indirectly and incidentally benefits providers, the court concluded that Congress had not “unambiguously” conferred an enforceable right. Accordingly, healthcare providers have no right to enforce Medicaid’s anti-reassignment provision under § 1983.

The bulletin describing this appellate decision was originally prepared for the California Society for Healthcare Attorneys (CSHA) by H. Thomas Watson and Peder K. Batalden, who are partners at the appellate firm Horvitz & Levy LLP, and is republished with permission.

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