Legal Advocacy Efforts
January 6, 2023 -
MHPA files amicus urging SCOTUS review of Seventh Circuit decision in Saint Anthony Hospital v. Eagleson
The Medicaid Health Plan of America (MHPA) filed an amicus brief in the U.S. Supreme Court January 6, 2023, in support of a petition filed by the Illinois Department of Healthcare and Family Services, seeking review of a Seventh Circuit decision granting Medicaid providers a novel right to sue state Medicaid agencies in order to challenge reimbursement the providers receive from Medicaid managed care organizations (MCOs).
In Saint Anthony Hospital v. Eagleson, the U.S. Court of Appeals for the Seventh Circuit held that providers dissatisfied with the timeliness of MCO payments can sue states in federal court for failing to enforce the prompt payment provisions codified in section 1932(f) of the Social Security Act, 42 U.S.C. § 1396u-2(f). Section 1932(f) requires that states’ contracts with Medicaid MCOs include prompt payment requirements—that MCOs agree to pay 90% of clean claims within 30 days, and 99% within 90 days—unless MCOs and providers reach a different agreement. But, the Seventh Circuit read into this contracting standard a judicially-enforceable obligation for states to guarantee prompt payment, permitting Medicaid providers to sue states when they are dissatisfied with their MCO payments at least in the case of “systemic” problems.
MHPA’s amicus brief highlights the practical impact of the Seventh Circuit decision, which could destabilize the Medicaid managed care system serving tens of millions of enrollees. The decision undermines cost-effective dispute resolution mechanisms in contracts between MCOs and providers by letting providers bypass their contracts and sue states in federal court. It would impose tremendous burdens on states and federal court by effectively forcing them to micromanage claims processing, which eviscerates efficiencies the managed care system sought to achieve, and which, as even the Seventh Circuit acknowledged, is not an appropriate task for federal courts. The uncertainty engendered by the new right is destabilizing in and of itself because it will invite countless unnecessary lawsuits while courts grapple with what is needed to plead a “systemic” violation, and because there is no limit on remedies. As MHPA’s brief explained to the Supreme Court, the Seventh Circuit’s decision is both legally unsupported and unnecessary, because Medicaid providers have sufficient existing avenues to challenge late payments—and there is no evidence that MCOs routinely pay providers late.
The case is Eagleson v. St. Anthony Hospital, Supreme Court docket no. 22-534. The Supreme Court has not yet acted on the petition. Stephen D. Libowsky, Michael Kolber, and Marina Shvarts of Manatt, Phelps & Phillips, LLP represent MHPA.