- Associated Press - Monday, October 3, 2011

WASHINGTON — The Supreme Court began its new term Monday by weighing who gets to object when a state makes Medicaid cuts and soon is likely to plunge into a far bigger health dispute. That’s the challenge to President Obama’s historic health care overhaul.

For now, patients and providers are squaring off against California and the Obama administration to argue they should have the right to sue in federal court when a state cuts its payment rates in the Medicaid program for poor Americans. The state and federal governments argue the U.S. Health and Human Services Department, not a federal judge, gets to make the call.

There was no consensus apparent among the justices.

Before opening-day arguments began, the court rejected more than 1,800 appeals that had piled up during the justices’ three-month summer break, including one from California jail officials who forced a Muslim woman to remove her head scarf and another from fried-chicken giant KFC Corp. objecting to taxes it has to pay in Iowa.

Chief Justice John G. Roberts Jr. also congratulated Antonin Scalia on 25 years on the court, noting that Justice Scalia listened to his first argument on the court on the first Monday in October in 1986. “The place has not been the same since,” Justice Roberts said.

The term opened with high anticipation because the justices seem likely to take up health care overhaul now that both the administration and opponents of the law have filed Supreme Court appeals. The justices could decide as early as mid-November whether to hear the case, a timetable that probably would mean a high court hearing in the spring and a decision by late June.

Monday’s case does not directly implicate the overhaul, although the expansion of Medicaid is a key element in the law’s aim of extending coverage to more than 30 million Americans who are now without health insurance. Medicaid costs are shared by the federal and state governments.

Faced with large budget deficits, the California legislature passed a law reducing Medicaid reimbursement rates by up to 10 percent. The Medicaid law says states have to maintain reimbursement rates that are sufficient to get providers to take part. States must submit proposed rate reductions to the federal Health and Human Services Department but the law is silent about whether private parties can go to court to keep payments from going down.

In this case, California put some of the lower rates in effect before submitting them to HHS. Multiple lawsuits followed, and federal courts in California stepped in to block the new rates. Eventually, HHS did not approve them, although California asked the department to reconsider the rejection.

Carter Phillips, a veteran Supreme Court lawyer who argued the case on behalf of patients and providers, said that without the federal court orders there was no guarantee that doctors and hospitals would continue treating Medicaid patients.

“My people have a life or death problem,” Mr. Phillips said.

Justice Roberts appeared strongly inclined to vote against Mr. Phillips’ clients, saying the court generally does not allow private parties to sue unless a law expressly says they may. When Congress failed to include such a provision, it “intended to deprive them of the right to sue under the statute,” Justice Roberts said.

Justice Stephen G. Breyer said he was troubled by giving federal judges too much authority to weigh in on the large number of payments made under Medicaid.

But other justices suggested that the lawsuits were appropriate, in part because California put new rates in place before getting federal approval.

Justice Elena Kagan accused the state of an end run around the regulatory process.

Karin Schwartz, a deputy state attorney general, disagreed, saying the state is allowed to put new rates in effect while awaiting HHS review.

“We did not do an end run around anything,” she said.

A decision is expected by spring.



Click to Read More

Click to Hide