Medicaid Recipients Have No Private Right to Force State to Disburse Funds, Court Says

Developmentally disabled individuals receiving Medicaid funds and their service providers do not have a private right of action against state officials to compel them to enforce a federal law and provide benefits and wages sufficient to allow the recipients to live in a noninstitutional care setting, according to an Aug. 2 federal appeals court ruling (Sanchez v. Johnson, 9th Cir., No. 04-15228, 8/2/05). 

The remedy for state noncompliance with a broad and nonspecific federal spending mandate such as the one at issue is an action by the federal government to terminate funds to the state, not a private lawsuit, O’Scannlain said, citing Pennhurst State School and Hospital v. Halderman, 451 U.S. 1 (1981). 

Underlying Litigation

Sanchez and the providers sought injunctive relief to require Grantland Johnson, in his capacity as secretary of the California Department of Health and Human Services, and other state officials to provide wages and benefits for community-based service providers at substantially the same rate paid in state institutions. They also alleged that lower payments to home and community-based facilities constituted a violation of the Americans with Disabilities Act because it forced a number of developmentally disabled individuals to remain institutionalized. 

As to the discrimination claim, O’Scannlain said courts must allow states some leeway in implementing their plans, and will generally not “tinker” with those, like California‘s–which had been successful in its scheme to “deinstitutionalize” and move individuals to community settings–that are operating effectively. Requiring California to provide more funds to community-based facilities “would require us to disrupt this working plan,” O’Scannlain said.

Full text of the decision is available via http://www.ca9.uscourts.gov/ca9/newopinions.nsf on the Web.