WHAT’YA GONNA DO, SUE ME?

Recently, the United States Court of Appeal for the Third Circuit – the federal appellate court that handles appeals in federal cases for New Jersey and Pennsylvania – recently decided a case that could have a significant impact on the provision of Medicaid services to needy individuals. The case involves a lawsuit against the commonwealth of Pennsylvania, but the impact of the case is likely to be heard throughout the nation.

There are thirteen federal “circuits,” and circuit courts are immediately below the Supreme Court of the United States. So, an opinion from a circuit court carries great weight. Moreover, the Third Circuit is not known for being a liberal circuit – unlike, for instance, the Ninth Circuit, which encompasses California.

The case is entitled Sabree versus Richman. Sabree is a person of limited financial resources who is in need of medical assistance. Richman is the commissioner of the Pennsylvania department that administers the Medicaid program for that state.

In a nutshell, what the Sabree case concerns is the ability of a Medicaid beneficiary to sue a State in order to compel that State to provide required Medicaid services. In any given case, the answer to that question – Can an individual sue a State based upon a federal statute? – is both important and difficult to ascertain. In the Sabree case, the Third Circuit answered the question in the affirmative, holding that a Medicaid beneficiary can sue a State in order to compel the State to provide Medicaid services.

Medicaid is a welfare program. It is a health insurance program. Participation in the Medicaid program is voluntary, that is, a State does not have to participate in the Medicaid program.

If a State does choose to participate in the program, the State will receive federal matching dollars for the services that it pays for on behalf of Medicaid recipients. In order to participate, a State must submit a Medicaid plan to the federal government and that plan must include certain services and rules for receiving those services. The plan is commonly known as the “State plan.”

Once the State has agreed to participate in the Medicaid program and it submits its State plan to the federal government, the State risks a loss of federal funding if it fails to comply with its State plan.

The concept is easy enough to understand: The federal government says, “If you agree to participate in the Medicaid program, you must live by certain rules, and if you live by those rules, we’ll match every dollar you spend for health care under the program in your state.”

Now detractors of the Medicaid program often decry the supposed “out-of-control” spending on the program. Truth be known, the Medicaid program often accounts for 20 to 25% of a given State’s budget.

What the detractors don’t tell you is that every dollar the Medicaid program spends on health care increases revenues in the State, thereby increasing the State’s tax base. The Medicaid program keeps doctors, nurses, hospitals, nursing homes, assisted living residences, adult day care centers, home health aides, durable medical equipment providers, pharmacies – in business. If it weren’t for the Medicaid program, many of these businesses wouldn’t exist, then who’d by crying?

Well, quite often, a State tries to renege on its promise to provide required services, services that it agreed to provide in its State plan. Pennsylvania, for instance, doesn’t provide Intermediate Care Facility (IFC) services, which its State plan (like all State plans) requires.

What the Sabree case says is, If a State fails to provide a required service, the individual Medicaid beneficiary can sue the State to compel the State to provide that service. The alternative – that is, if an individual could not sue the State – would be to hope that the federal government cuts or eliminates funding for that State’s Medicaid program. Realistically, it’s almost always better to be able to do things yourself than to have to wait for the government to do something for you.

And that is at the heart of this victory. The decision puts the power in the hands of the people who are most affected by the deprivation of benefits.