defendant's reply to plaintiff's objection to mtd

8/3/2019 Defendant's Reply to Plaintiff's Objection to MTD

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UNITED STATES DISTRICT COURTDISTRICT OF NEW HAMPSHIRE* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * *

Dartmouth-Hitchcock Clinic and MaryHitchcock Memorial Hospitald/b/a Dartmouth-Hitchcock, et aI.,Plaintiff************

* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * *

v.Nicholas A. Toumpas, in his official capacityas Commissioner of the New HampshireDepartment of Health and Human Services,Defendant

ll-cv-358-SM

DEFENDANT'S REPLY TO PLAINTIFFS' OBJECTION TO DEFENDANT'S MOTIONTO DISMISS COUNTS I, II, III AND IVDefendant, Nicholas A. Toumpas, in his official capacity as Commissioner of the New

Hampshire Department of Health and Human Services, by and through counsel, the NewHampshire Office of the Attorney General, replies to Plaintiffs' Objection to Defendant's Motionto Dismiss Count I, II, III and IV, stating as follows.

Defendant relies primarily on its previously filed Memorandum of Law in Support ofMotion to Dismiss Counts I, II, III, and IV, and files this reply for the limited purpose ofresponding to Plaintiffs' argument that their Supremacy Clause claims amount to an Ex ParteYoung 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 federalcourts seeking to enjoin state attorney general from enforcing state statute claimed to violate the


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Fourteenth Amendment of the United States Constitution); Asociacion de Subscripcion ConjuntaDel Seguro De Responsabilidad Obligatorio v. Flores Galarza, 484 F.3d 1, 24 (1st CiT. 2007)("In Ex Parte Young, the Supreme Court created an exception to Eleventh Amendment immunityfor suits challenging the constitutionality of a state official's action, on the theory that since thestate cannot authorize such an unconstitutional action, the officer is stripped of his official orrepresentati ve character and ... subjected in his person to the consequences of his individualconduct.") (Quotation marks and citations omitted). In concluding that federal courts havejurisdiction over suits to enjoin state officials from enforcing allegedly unconstitutional laws, theSupreme Court reasoned in Ex Parte Young that "[i]t would be an injury to complainant to harassit with a multiplicity of suits or litigation generally in an endeavor to enforce penalties under anunconstitutional enactment, and to prevent it ought to be within the jurisdiction of a court ofequity." Ex Parte Young, 209 U.S. at 160.

Here, Defendant does not at this juncture address whether Plaintiffs' action is barred bythe 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 arguesthat the Supremacy Clause does not provide an implied cause of action for the privateenforcement 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 noFirst Circuit or United States Supreme Court precedent finding an implied cause of action underthe Supremacy Clause to enforce Section 30(A).1 The cases and principles of law that Plaintiffsrely on in their Objection can be distinguished as follows.

IIt should be noted that Plaintiffs concede that neither Section 30(A) nor 42 U.S.c. 1396a(b) confer private rightsenforceable under 1983. See Plaintiffs' Memorandum of Law in Support of Objection to Defendant's Motion to

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A. Ex Parte Young only applies where there is actual or threatened enforcementby the State against a plaintiffFirst, 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 thetheory that they have brought an Ex Parte Young action, which they have not. The casesPlaintiffs cite exemplify the difference between a true Ex Parte Young action (in which aplaintiff 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 federalstatute against the state). All of the cases Plaintiffs rely on fit the first category; none of themsupport a private right of action of the type Plaintiffs seek.2 See Aroostook Band orMicmacs v.Ryan, 404 F.3d 48 (1s( Cir. 2005) (Indian Tribe challenged state's authority to enforce stateemployment discrimination laws against it, claiming that enforcing the law against Indian Tribeviolated federal law.); Local Union No. 12004, United Steelworkers orAm. v. Massachusetts,377 F.3d 64, (lS! Cir. 2004) (Labor union and several members brought action seeking to preventthe Massachusetts Commission Against Discrimination from adjudicating a charge ofdiscrimination by a supervisor against the Union.); Golden State Transit Corp. v. City of LosAngeles, 493 U.S. 103 (1989) (Golden State Transit II) (Applicant for renewal of taxicabfranchise brought action against city for conditioning renewal on the settlement of a labordispute, which amounted to improper municipal regulation of labor dispute. See Golden StateTransit 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 (1s!Cir. 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.3d46 (lSICir. 2008), provides Plaintiffs no support because the First Circuit in that case expressly avoided addressingthe question "whether a cause of action for preemption is available to these plaintiffs." [d. at 52, n. 1.

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brought suit challenging municipal ordinance which imposed monthly charge ontelecommunications service providers of five percent of gross revenues for use of its publicrights-of-way); SPGGC, LLC v. Ayotte, 488 F.3d 525 (2007) (Plaintiffs brought action inresponse to receiving notice that the New Hampshire Attorney General intended to file anenforcement action against them).

Incontrast to the cases cited above and relied on by Plaintiffs, Plaintiffs here do not faceany enforcement action by the State, nor do they challenge any regulations that have beenimposed 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 rightsSecond, 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 onthe theory that they have brought an Ex Parte Young action, which they have not. See Section Aabove. The fact that the First Circuit has recognized federal preemption as an affirmative causeof action in the context of an Ex Parte Young action, see Local Union No. 12004,377 F.3d at74, 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 ofHouston & Se. Tex. V. Sanchez, 403 F.3d 324 (5th Cir. 2005) (challenge to state law beingenforced against plaintiffs, which added eligibility requirement to receipt of federal funds); BudAntle, Inc. v. Barbosa, 45 F.3d 1261 (9th CiT. 1994) (employer brought action against members ofa state board, claiming that National Labor Relations Act ousted the state board of jurisdiction toadjudicate 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

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against plaintiff); PhRMA v. Concannon, 249 F.3d 66 (1,t Cir. 2001) (state law imposed rebaterequirement on pharmaciesj.'

The absurdity of Plaintiffs' argument is apparent in their own attempt to explain howtheir claims constitute an Ex Parte Young action:

Similarly here, Plaintiffs challenge the State's imposition of unlawfulreimbursement rates on them. Plaintiffs assert that the Defendant has usedunconstitutional statutes to implement reimbursement rates that conflict withSection 30(A). These reimbursement rates are then, for all intents and purposes,'enforced' against Providers. According, Plaintiffs are simply defendingthemselves from having to accept these rates by invoking Ex Parte Young and theSupremacy Clause.

Plaintiffs' Memorandum at 8. The court should reject this argument. No regulation or law isbeing imposed against Plaintiffs, nor do they face any enforcement action. The state is notenforcing any law controlling what the Hospitals can charge the public, rather the state isdefining what the state is willing and able to pay for care provided to Medicaid recipients. TheHospitals are not being forced to be Medicaid providers, they can still "vote with their feet."Plaintiffs' claims bare no resemblance to the circumstances at issue in any of the Ex Parte Youngcases cited by Plaintiffs in their memorandum."

Moreover, the Court should not be under the illusion that this case involves solelyprospective injunctive relief, as Plaintiffs like to make it appear. An injunction enjoining the3 Plaintiffs also cite Lankford and Sherman, 451 F.3d 496,509 (8thCir. 2006), and Wilderness Society v. KaneCounty. Utah, 581 F.3d 1198, 1233-34 (lOthCit. 2009). Notably, the discussions in these two cases regardingpreemption claims rely on the following Ex Parte Young cases: Golden State Transit II, 493 U.S. 103 (involvingimproper municipal regulation of labor dispute); Shaw v. Delta Air Lines. Inc., 463 U.S. 85 (l983) (plaintiff soughtinjunctive 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 whichestablished new procedures for telecommunication providers seeking access to city owned rights of way). To theextent Lankford and Wildemess Society allowed a preemption challenge outside of the context of an Ex Parte Youngaction, those courts simply got it wrong. Likewise, the recent district court decision out of the Southern District ofIndiana 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.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.

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state actions or budget provisions at issue in this case would raise Medicaid reimbursement ratesgoing 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 ofany injunction is purely monetary, must fail.

Finally, Plaintiffs' discussion of Astra USA, Inc. v. Santa Clara County, u.s. ,131S. 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 ignoreSupremacy Clause jurisprudence," id. at 10; rather, Defendant asserts that Plaintiffs aremisapplying Supremacy Clause jurisprudence by arguing that Ex Parte Young provides a privatecause of action for any alleged violation of federal law. As discussed above, Ex Parte Young andits progeny provide an exception to Eleventh Amendment immunity for actions seeking to enjoina state officer from enforcing a state law or regulation against a plaintiff. It does not provide aprivate right of action under the Supremacy Clause for a plaintiff to enforce requirements offederal law against the state. Whether such a private cause of action to enforce state complianceexists in a given case depends on the intent of Congress. Here, the repeal of the BorenAmendment supports Defendant's claim that Section 30(A) is not privately enforceable byproviders or beneficiaries.

C. Plaintiffs' discussion about the Seminole Tribe exception to the Ex ParteYoung exception is irrelevant

Third, Plaintiffs argue that the Medicaid Act does not provide a remedial scheme capableof 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 causeof action, then the issue of available remedies never arises.

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In Seminole Tribe v. Florida, 517 U.S. 44 (1996), the Supreme Court narrowed the ExParte Young exception to Eleventh Amendment immunity by fashioning "an exception to theexception, applicable to certain cases in which 'Congress has created a remedial scheme for theenforcement of a particular federal right.'" Rosie D. v. Swift, 310 F.3d 230, 234 (1st Cir. 2002)(quoting Seminole Tribe, 517 U.S. at 74). Plaintiffs' discussion regarding this exception to theEleventh Amendment exception is misplaced. Plaintiff raises this issue in response toDefendant's argument that allowing private suits by providers to enforce the requirements ofSection 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 hasalready been rejected by the First Circuit inRosie D. v. Swift, 310 F.3d 230 (1st Cir. 2002). SeePlaintiffs' Memorandum at 13.

The claims inRosie D., as well as the other cases Plaintiffs cite in support, were broughtunder 42 U.S.C. 1983. The issue in those cases was not whether the plaintiffs had a cause ofaction, but rather whether the state officials were nevertheless immune under the Seminole Tribeexception 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 onEleventh Amendment immunity.); Antrican v. Odom, 290 F.3d 178 (4th Cir. 2002) (Medicaidrecipients brought 1983 action, and state officials moved to dismiss based on EleventhAmendment immunity.); Westside Mothers v. Haveman, 289 F.3d 852 (6th Cit. 2002) (Welfarerights organization brought 1983 action, and state officials moved to dismiss based on anumber 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

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Parte Young exception. In contrast, Defendant here argues that Plaintiffs have no cause ofaction. 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 thatexception are misplaced.

D. To the extent courts have permitted preemption challenges with regard toSpending Clause legislation, it has involved federal statutes that do provide aprivate right of action, or has been in the context of challenges to state lawsor regulations being enforced against plaintiffsFourth, Plaintiffs argue that "[c]ourts have long permitted litigants to challenge state laws

and regulations that are inconsistent with their obligations under federal Spending Clauselegislation." Plaintiffs' Memorandum at 15. The cases Plaintiffs rely on, however, are eitherbrought under 1983 because they involve a federal statute which does provide a private right ofaction, or they discuss preemption in the context of a state law or regulation being enforcedagainst 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 requirementon pharmacies); K ing 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, whichinvolved improper municipal regulation oflabor dispute); Planned Parenthood o(Houston & Se.Tex., 403 F.3d 324 (challenge to state law being enforced against plaintiffs, adding eligibilityrequirement to receipt of federal funds); Lawrence County v. Lead Deadwood Sch. Dis!. No. 40-1, 469 U.S. 256 (1985) (challenge to state law requiring local governments to distribute certainfederal payments in a particular manner); Blum v. Bacon, 457 U.S. 132 (1982) (class actionbrought 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 obligationsunder the Medicaid Act and seek to enforce compliance through this action. No state law or

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regulation at issue in this lawsuit is being enforced against Plaintiffs; rather, Plaintiffs seek toenforce federal law against the state. Plaintiffs' reliance on the above cited cases is, therefore,misplaced.

E. The Supreme Court's Opinion in Douglas v. Independent Living Center ofSouthern California. Inc. may be dispositive of Plaintiffs' claims

Finally, Plaintiffs assert that the Douglas case may not be dispositive and that this Courtshould not delay determination of Defendant's Motion to Dismiss Counts I, II, III and IV.Plaintiff's Memorandum at 17-18. Defendant disagrees with Plaintiffs' interpretation of the oralargument in Douglas, but agrees that the Court should decide this motion to dismiss prior to theJanuary 10,2012 preliminary injunction hearing.iII. Conclusion

In conclusion, Plaintiffs' attempt to characterize this action as an Ex Parte Young actionshould be rejected. This is an action seeking to compel the state to comply with its obligationsunder certain federal laws, not an attempt by Plaintiffs to protect themselves from theenforcement of a state law or regulation against them. The Supremacy Clause does not supply acause of action to enforce the federal laws at issue in this lawsuit; therefore, the court shouldgrant Defendant's Motion to Dismiss Counts I, II, III, and IV of Plaintiffs' Complaint forDeclaratory and Injunctive Relief.

5 Defendant also disputes Plaintiffs' statement that "[t]he essence of the State's position in this litigation is that it cando whatever it wants to Medicaid reimbursement rates, its prerogative unrestrained by either CMS or judicialoversight." Plaintiffs' Memorandum at 17. Defendant clearly has not taken that position. As discussed at length inDefendant'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 activelyinvolved in overseeing New Hampshire's implementation of the Medicaid program.

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Respectfully submitted,NICHOLAS A. TOUMPAS, IN HIS OFFICIALCAPACITY AS COMMISSIONER OF THE NEWHAMPSHIRE DEPARTMENT OF HEALTH ANDHUMAN SERVICESBy his attorney,MICHAEL A. DELANEYATTORNEY GENERAL

Date: November 10, 2011 lsi Laura E. B. LombardiNancy J. Smith, Bar No. 9085Senior Assistant Attorney GeneralLaura E. B. Lombardi, Bar No. 12821Assistant Attorney GeneralJeanne P. Herrick, Bar No. 13817AttorneyNew Hampshire Attorney General's Office33 Capitol StreetConcord, New Hampshire 03301-6397Telephone: (603) 271-3650Email: nancy.smith @doj.nh.gov

laura.lombardi @[email protected]

CERTIFICA TE OF SERVICEI 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. LombardiLaura E. B. LombardiBar No. 12821

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defendant's reply to plaintiff's objection to mtd

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