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d/b/a Dartmouth-Hitchcock, et aI., Plaintiff
Nicholas A. Toumpas, in his official capacity as Commissioner of the New Hampshire Department of Health and Human Services, Defendant
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DEFENDANT'S REPLY TO PLAINTIFFS' OBJECTION TO DEFENDANT'S MOTION TO DISMISS COUNTS I, II, III AND IV Defendant, Nicholas A. Toumpas, in his official capacity as Commissioner of the New Hampshire Department of Health and Human Services, by and through counsel, the New Hampshire Office of the Attorney General, replies to Plaintiffs' Objection to Defendant's Motion to Dismiss Count I, II, III and IV, stating as follows. Defendant relies primarily on its previously filed Memorandum of Law in Support of Motion to Dismiss Counts I, II, III, and IV, and files this reply for the limited purpose of responding to Plaintiffs' argument that their Supremacy Clause claims amount to an Ex Parte
Young action. As discussed below, Plaintiffs' reliance on Ex Parte Young, 209 U.S. 123 (1908),
and its progeny is misplaced. I.
Ex Parte Young Does Not Apply To Plaintiffs' Supremacy Clause Claims Ex Parte Young provides an exception to
u" Amendment immunity.
Ex Parte Young,
209 U.S. 123 (1908) (holding that the Eleventh Amendment did not bar an action in the federal courts seeking to enjoin state attorney general from enforcing state statute claimed to violate the
Fourteenth Amendment of the United States Constitution); Asociacion de Subscripcion Conjunta
Del Seguro De Responsabilidad Obligatorio v. Flores Galarza, 484 F.3d 1, 24 (1 st CiT. 2007)
("In Ex Parte Young, the Supreme Court created an exception to Eleventh Amendment immunity for suits challenging the constitutionality of a state official's action, on the theory that since the state cannot authorize such an unconstitutional action, the officer is stripped of his official or representati ve character and ... subjected in his person to the consequences of his individual conduct.") (Quotation marks and citations omitted). In concluding that federal courts have jurisdiction over suits to enjoin state officials from enforcing allegedly unconstitutional laws, the Supreme Court reasoned in Ex Parte Young that "[i]t would be an injury to complainant to harass it with a multiplicity of suits or litigation generally in an endeavor to enforce penalties under an unconstitutional enactment, and to prevent it ought to be within the jurisdiction of a court of equity." Ex Parte Young, 209 U.S. at 160. Here, Defendant does not at this juncture address whether Plaintiffs' action is barred by the Eleventh Amendment or whether this court lacks subject matter jurisdiction; rather, Defendant has raised the preliminary argument that Counts I, II, III and IV of Plaintiffs' Complaint fail to state a claim upon which relief can be granted. Specifically, Defendant argues that the Supremacy Clause does not provide an implied cause of action for the private enforcement of 42 U.S.c. § 1396a(a)(30)(A) (hereinafter "Section 30(A)"). In response, Plaintiffs attempt to characterize their action as an Ex Parte Young action because there is no First Circuit or United States Supreme Court precedent finding an implied cause of action under the Supremacy Clause to enforce Section 30(A).1 The cases and principles of law that Plaintiffs rely on in their Objection can be distinguished as follows.
I It should be noted that Plaintiffs concede that neither Section 30(A) nor 42 U.S.c. § 1396a(b) confer private rights enforceable under § 1983. See Plaintiffs' Memorandum of Law in Support of Objection to Defendant's Motion to
Ex Parte Young only applies where there is actual or threatened enforcement by the State against a plaintiff
First, Plaintiffs argue that no statutory cause of action is necessary to vindicate the primacy of federal law. Plaintiffs' Memorandum at 5-7. Plaintiffs, however, rely entirely on the
theory that they have brought an Ex Parte Young action, which they have not. The cases Plaintiffs cite exemplify the difference between a true Ex Parte Young action (in which a plaintiff seeks to enjoin a state official from enforcing a statute or regulation against a plaintiff) and the type of action Plaintiffs have brought here (a private action seeking to enforce a federal statute against the state). All of the cases Plaintiffs rely on fit the first category; none of them support a private right of action of the type Plaintiffs seek.2 See Aroostook Band orMicmacs Ryan, 404 F.3d 48 (1 Cir. 2005) (Indian Tribe challenged state's authority to enforce state
laws against it, claiming that enforcing the law against Indian Tribe orAm. v. Massachusetts,
violated federal law.); Local Union No. 12004, United Steelworkers 377 F.3d 64,
Cir. 2004) (Labor union and several members brought action seeking to prevent Commission Against Discrimination from adjudicating a charge of
the Massachusetts discrimination
by a supervisor against the Union.); Golden State Transit Corp. v. City of Los
Angeles, 493 U.S. 103 (1989) (Golden State Transit II) (Applicant for renewal of taxicab franchise brought action against city for conditioning renewal on the settlement of a labor dispute, which amounted to improper municipal regulation of labor dispute. See Golden State Transit Corp. v. City orLos Angeles, 475 U.S. 608 (1986) (Golden State /)); Puerto Rico Tele. Co., Inc. v. Municipality of Guayanilla, 450 F.3d 9, 15
2007) (Telephone company
Dismiss Count I, II, III and IV (hereinafter "Plaintiffs' Memorandum) at 5; see also Gonzaga Univ. v. Doe, 536 U.S. 273 (2002).
2 The only case Plaintiffs cite which does not involve enforcement against a plaintiff, Fitzgerald v. Harris, 549 F.3d 46 ( lSICir. 2008), provides Plaintiffs no support because the First Circuit in that case expressly avoided addressing the question "whether a cause of action for preemption is available to these plaintiffs." [d. at 52, n. 1.
brought suit challenging municipal ordinance which imposed monthly charge on telecommunications service providers of five percent of gross revenues for use of its public rights-of-way); SPGGC, LLC v. Ayotte, 488 F.3d 525 (2007) (Plaintiffs brought action in response to receiving notice that the New Hampshire Attorney General intended to file an
enforcement action against them). In contrast to the cases cited above and relied on by Plaintiffs, Plaintiffs here do not face
any enforcement action by the State, nor do they challenge any regulations that have been imposed against them. Plaintiffs' attempt to frame their action as an Ex Parte Young action fails. B. The Supremacy Clause is not itself the source of any federal rights
Second, Plaintiffs argue that the Supremacy Clause supplies them with an affirmative cause of action. See Plaintiffs' Memorandum at 7-13. But again, Plaintiffs rely exclusively on the theory that they have brought an Ex Parte Young action, which they have not. See Section A above. The fact that the First Circuit has recognized federal preemption as an affirmative cause of action in the context of an Ex Parte Young action, see Local Union No. 12004,377 F.3d at
74, provides no support for Plaintiffs' claims seeking to enforce federal statutes against the state. Plaintiffs' reliance on additional Ex Parte Young cases is misplaced. See Planned Parenthood of
Houston & Se. Tex. V. Sanchez, 403 F.3d 324 (5th Cir. 2005) (challenge to state law being enforced against plaintiffs, which added eligibility requirement to receipt of federal funds); Bud Antle, Inc. v. Barbosa, 45 F.3d 1261 (9th CiT. 1994) (employer brought action against members of
a state board, claiming that National Labor Relations Act ousted the state board of jurisdiction to adjudicate unfair labor practice charges that were filed against employer); First Nat'/ Bank ofE.
Ark. v. Tavlor, 907 F.2d 775 (8th CiT. 1990) (action brought after threat of enforcement action
against plaintiff); PhRMA v. Concannon, 249 F.3d 66 (1,t Cir. 2001) (state law imposed rebate requirement on pharmaciesj.' The absurdity of Plaintiffs' argument is apparent in their own attempt to explain how their claims constitute an Ex Parte Young action: Similarly here, Plaintiffs challenge the State's imposition of unlawful reimbursement rates on them. Plaintiffs assert that the Defendant has used unconstitutional statutes to implement reimbursement rates that conflict with Section 30(A). These reimbursement rates are then, for all intents and purposes, 'enforced' against Providers. According, Plaintiffs are simply defending themselves from having to accept these rates by invoking Ex Parte Young and the Supremacy Clause. Plaintiffs' Memorandum at 8. The court should reject this argument. No regulation or law is
being imposed against Plaintiffs, nor do they face any enforcement action. The state is not enforcing any law controlling what the Hospitals can charge the public, rather the state is defining what the state is willing and able to pay for care provided to Medicaid recipients. The
Hospitals are not being forced to be Medicaid providers, they can still "vote with their feet." Plaintiffs' claims bare no resemblance to the circumstances cases cited by Plaintiffs in their memorandum." Moreover, the Court should not be under the illusion that this case involves solely prospective injunctive relief, as Plaintiffs like to make it appear. An injunction enjoining the
Plaintiffs also cite Lankford and Sherman, 451 F.3d 496,509 (8thCir. 2006), and Wilderness Society v. Kane County. Utah, 581 F.3d 1198, 1233-34 (lOthCit. 2009). Notably, the discussions in these two cases regarding preemption claims rely on the following Ex Parte Young cases: Golden State Transit II, 493 U.S. 103 (involving improper municipal regulation of labor dispute); Shaw v. Delta Air Lines. Inc., 463 U.S. 85 (l983) (plaintiff sought injunctive relief from state regulation); Owest Corp. v. City o(Santa Fe, 380 F.3d 1258 (lOthCit. 2004) (telecommunication provider sought declarative and injunctive relief to prevent enforcement of ordinance which established new procedures for telecommunication providers seeking access to city owned rights of way). To the extent Lankford and Wildemess Society allowed a preemption challenge outside of the context of an Ex Parte Young action, those courts simply got it wrong. Likewise, the recent district court decision out of the Southern District of Indiana that Plaintiffs' rely on, Community Pharmacies oflndiana. Inc. v. Indiana Family and Soc. Sen's. Admin., 2011 WL 4102804, is not binding authority and should not be followed by this Court.
3 4 Plaintiffs' argument is further flawed in that it presumes that the state statutes are unconstitutional. Plaintiffs' preemption claims are based solely on claims that the state statutes violate federal laws, not the constitution.
at issue in any of the Ex Parte Young
state actions or budget provisions at issue in this case would raise Medicaid reimbursement
going forward at great cost to the state. Plaintiffs' attempt to characterize this action as an Ex Parte Young action, when they face no enforcement action by the state and the ultimate effect of any injunction is purely monetary, must fail. Finally, Plaintiffs' discussion of Astra USA, Inc. v. Santa Clara County,
S. Ct. 1342 (2011), and the repeal of the Boren Amendment misses the mark. See Plaintiffs' Memorandum at 10-13. Defendant does not argue that Astra "requires the Court to ignore
id. at 10; rather, Defendant asserts that Plaintiffs are
Supremacy Clause jurisprudence,"
misapplying Supremacy Clause jurisprudence
by arguing that Ex Parte Young provides a private
cause of action for any alleged violation of federal law. As discussed above, Ex Parte Young and its progeny provide an exception to Eleventh Amendment immunity for actions seeking to enjoin a state officer from enforcing a state law or regulation against a plaintiff. It does not provide a
private right of action under the Supremacy Clause for a plaintiff to enforce requirements of federal law against the state. Whether such a private cause of action to enforce state compliance exists in a given case depends on the intent of Congress. Amendment supports Defendant's providers or beneficiaries. Here, the repeal of the Boren
claim that Section 30(A) is not privately enforceable by
Plaintiffs' discussion about the Seminole Tribe exception to the Ex Parte Young exception is irrelevant
Third, Plaintiffs argue that the Medicaid Act does not provide a remedial scheme capable of ensuring the state's compliance with the federal laws at issue in this case. Plaintiffs' Memorandum at 13-15. This entire argument is irrelevant and incorrect. If a party has no cause
of action, then the issue of available remedies never arises.
In Seminole Tribe v. Florida, 517 U.S. 44 (1996), the Supreme Court narrowed the Ex
Parte Young exception to Eleventh Amendment immunity by fashioning "an exception to the
exception, applicable to certain cases in which 'Congress has created a remedial scheme for the enforcement of a particular federal right. '" Rosie D. v. Swift, 310 F.3d 230, 234 (1 st Cir. 2002) (quoting Seminole Tribe, 517 U.S. at 74). Plaintiffs' discussion regarding this exception to the Eleventh Amendment exception is misplaced. Plaintiff raises this issue in response to Defendant's argument that allowing private suits by providers to enforce the requirements of Section 30(A) would frustrate congressional intent to centralize enforcement authority in HHS.
See Defendant's Memorandum of Law at 7-8. Plaintiffs incorrectly assert that this issue has
already been rejected by the First Circuit in Rosie D. v. Swift, 310 F.3d 230 (1 st Cir. 2002). See Plaintiffs' Memorandum at 13. The claims in Rosie D., as well as the other cases Plaintiffs cite in support, were brought under 42 U.S.C. § 1983. The issue in those cases was not whether the plaintiffs had a cause of action, but rather whether the state officials were nevertheless immune under the Seminole Tribe exception because the statute at issue created a remedial scheme. See Rosie D., 310 F.3d 230 (Medicaid-eligible children brought § 1983 action, and state officials moved to dismiss based on Eleventh Amendment immunity.); Antrican v. Odom, 290 F.3d 178 (4th Cir. 2002) (Medicaid recipients brought § 1983 action, and state officials moved to dismiss based on Eleventh Amendment immunity.); Westside Mothers v. Haveman, 289 F.3d 852 (6th Cit. 2002) (Welfare rights organization brought § 1983 action, and state officials moved to dismiss based on a number of grounds, including Eleventh Amendment immunity). Thus, in the cases cited by Plaintiffs, the plaintiffs had a cause of action under § 1983, and the state officials argued they were immune under the Seminole Tribe exception to the Ex
Parte Young exception.
In contrast, Defendant here argues that Plaintiffs have no cause of
action. Because Defendant asserts that Ex Parte Young is inapplicable, Defendant has not at this point argued that the Seminole Tribe exception applies, and Plaintiffs' arguments regarding that exception are misplaced.
To the extent courts have permitted preemption challenges with regard to Spending Clause legislation, it has involved federal statutes that do provide a private right of action, or has been in the context of challenges to state laws or regulations being enforced against plaintiffs
Fourth, Plaintiffs argue that "[c]ourts have long permitted litigants to challenge state laws and regulations that are inconsistent with their obligations under federal Spending Clause legislation." Plaintiffs' Memorandum at 15. The cases Plaintiffs rely on, however, are either
brought under § 1983 because they involve a federal statute which does provide a private right of action, or they discuss preemption in the context of a state law or regulation being enforced against a plaintiff. See Pharmaceutical Research & Mfrs. o[Am. v. Walsh, 538 U.S. 644 (2003)
(appeal of Concannon, 249 F.3d 66, which challenged a state law imposing a rebate requirement on pharmacies); King v. Smith, 392 U.S. 309 (1968) (action brought under § 1983); Lankford v. Sherman, 451 F.3d 496 (8th Cir. 2006) (relying on Golden State Transit II, 493 U.S. 103, which involved improper municipal regulation oflabor dispute); Planned Parenthood o(Houston & Se.
Tex., 403 F.3d 324 (challenge to state law being enforced against plaintiffs, adding eligibility requirement to receipt of federal funds); Lawrence County v. Lead Deadwood Sch. Dis!. No. 401, 469 U.S. 256 (1985) (challenge to state law requiring local governments to distribute certain federal payments in a particular manner); Blum v. Bacon, 457 U.S. 132 (1982) (class action brought under § 1983); Townsend v. Swank, 404 U.S. 282 (1971) (action brought under § 1983). In contrast, Plaintiffs here claim that the state is failing to comply with certain obligations under the Medicaid Act and seek to enforce compliance through this action. No state law or
regulation at issue in this lawsuit is being enforced against Plaintiffs; rather, Plaintiffs seek to enforce federal law against the state. Plaintiffs' reliance on the above cited cases is, therefore, misplaced.
The Supreme Court's Opinion in Douglas v. Independent Living Center of Southern California. Inc. may be dispositive of Plaintiffs' claims
Finally, Plaintiffs assert that the Douglas case may not be dispositive and that this Court should not delay determination Plaintiff's Memorandum of Defendant's Motion to Dismiss Counts I, II, III and IV.
at 17-18. Defendant disagrees with Plaintiffs' interpretation of the oral
argument in Douglas, but agrees that the Court should decide this motion to dismiss prior to the January 10,2012 preliminary injunction hearing.i
In conclusion, Plaintiffs' attempt to characterize this action as an Ex Parte Young action
should be rejected.
This is an action seeking to compel the state to comply with its obligations
under certain federal laws, not an attempt by Plaintiffs to protect themselves from the enforcement of a state law or regulation against them. The Supremacy Clause does not supply a cause of action to enforce the federal laws at issue in this lawsuit; therefore, the court should grant Defendant's Motion to Dismiss Counts I, II, III, and IV of Plaintiffs' Complaint for
Declaratory and Injunctive Relief.
5 Defendant also disputes Plaintiffs' statement that "[t]he essence of the State's position in this litigation is that it can do whatever it wants to Medicaid reimbursement rates, its prerogative unrestrained by either CMS or judicial oversight." Plaintiffs' Memorandum at 17. Defendant clearly has not taken that position. As discussed at length in Defendant's Memorandum of Law in Support of Objection to Plaintiffs' Motion for Preliminary Injunction, Defendant has filed state plan amendments when required to do so under federal law, and CMS has been actively involved in overseeing New Hampshire's implementation of the Medicaid program.
Respectfully submitted, NICHOLAS A. TOUMPAS, IN HIS OFFICIAL CAPACITY AS COMMISSIONER OF THE NEW HAMPSHIRE DEPARTMENT OF HEALTH AND HUMAN SERVICES By his attorney, MICHAEL A. DELANEY ATTORNEY GENERAL
November 10, 2011
lsi Laura E. B. Lombardi Nancy J. Smith, Bar No. 9085 Senior Assistant Attorney General Laura E. B. Lombardi, Bar No. 12821 Assistant Attorney General Jeanne P. Herrick, Bar No. 13817 Attorney New Hampshire Attorney General's Office 33 Capitol Street Concord, New Hampshire 03301-6397 Telephone: (603) 271-3650 Email: nancy.smith @doj.nh.gov laura.lombardi @doj.nh.gov firstname.lastname@example.org
CERTIFICA TE OF SERVICE I hereby certify that a copy of the foregoing was served on the following persons on this date and in the manner specified herein: Electronically Served Through ECF upon: Gordon J. MacDonald, Esquire, Scott O'Connell, Esquire and William Chapman, Esquire.
Date: November 10,2011
lsi Laura E. B. Lombardi
Laura E. B. Lombardi Bar No. 12821
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