Justices to take case on states' cuts to Medicaid

Calif. says providers can't sue

WASHINGTON -- The Supreme Court agreed Tuesday to hear an appeal from California officials and decide whether states are free to reduce how much they pay to doctors, hospitals and other providers under the Medicaid program for poor people.

Medicaid is jointly funded by the federal government and the states, but it is unclear how far states that are facing huge health care costs can go to reduce their spending on their own.

The California Legislature, responding to the state's fiscal emergency, in recent years approved a series of cutbacks in the payments to physicians, hospitals and pharmacies. The aim was to save billions of dollars in Medicaid costs.

But in each case, the providers have sued in federal court and won rulings that blocked the cutbacks on the grounds that they conflicted with the Medicaid law. The providers argued that if the cutbacks were approved, the state would not provide the level of care required under Medicaid.

But lawyers for then-Attorney General Jerry Brown appealed to the Supreme Court, arguing that these private parties had no right to sue the state and no right to a particular reimbursement payment.

This appeal touched a chord in the high court. Chief Justice John G. Roberts Jr., among others, has been skeptical of the notion that providing public money for benefits such as health or education under federal law authorizes suits by those unhappy with the level of spending.

The justices agreed to hear three separate appeals from the state, all of which raise the same issue. The lead case is Maxwell-Jolly v. Independent Living Center of Southern California.

The cases could complicate the already-fractured national debate over health care spending. The court's decision also could please 22 states that have already sided with California.

The Obama administration filed a brief urging the justices to steer clear of California's appeals. Its lawyers agreed that the law did not give health care providers a right to sue in federal court, but it said California's planned spending cutbacks had been rejected in November by Medicaid officials in Washington.

Despite that advice, the justices voted to hear the cases.

McClatchy Newspapers contributed.

First published on January 19, 2011 at 12:00 am