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Before the Supreme Court tackles the really big health care issue — the constitutionality of the health reform law — the Court will hear another big set of cases involving health care, or more specifically Medicaid. The three consolidated cases, Douglas v. Independent Living of Southern California, Douglas v. California Pharmacists Association, and Douglas v. Santa Rosa Memorial Hospital, will be the first cases argued in the fall term, on Oct. 3. The litigation has produced some unusual twists and turns, including a surprise stance from the Obama administration, and some interesting briefing. At issue is whether providers and beneficiaries of Medicaid — the federal-state health care program for the poor — can sue states for the changes they make in their Medicaid programs that appear to violate federal “equal access” requirements. The dispute comes against the backdrop of more than 30 budget-strapped states enacting laws aimed at reducing the benefits and costs of their Medicaid programs. When California enacted a 10% cut in 2008, beneficiaries and service providers including pharmacies and medical centers sued, claiming the cuts were pre-empted by the federal Medicaid law. The U.S. Court of Appeals for the 9th Circuit agreed, ruling that challengers had a private cause of action under the Constitution’s Supremacy Clause. California appealed to the Supreme Court. “And that’s when the political intrigue begins,” says American University Washington College of Law professor Stephen Vladeck, who ended up writing a brief in the case on behalf of his father, former Medicaid administrator Bruce Vladeck, among others. The high court asked the U.S. solicitor general’s office for its views. It filed a brief urging the justices to deny certiorari — leaving the 9th Circuit ruling in place — in part because California’s law was expiring, and the Department of Health and Human Services was on the verge of issuing new rules that would clarify the issue. The brief also spoke of “the important role private parties can and often do play in vindicating federal law,” which implied sympathy with the position of the Medicaid beneficiaries and providers who had sued California and won at the 9th Circuit. But the high court granted review anyway, and the solicitor general’s office filed another brief, this time fully supporting California in its appeal. Now, it was telling the Court that private litigation against the states was not available under the Supremacy Clause, arguing that such suits are in “considerable tension” with federal enforcement and the intent of Congress, and would result in uneven standards in different states. The government’s new position mystified many and placed the administration on the opposite side of advocates for the poor, as well as service providers, joined by the Chamber of Commerce and others, who also wanted the right to challenge state deviations from federal Medicaid standards. Democratic members of Congress have also filed a brief in part to counter the SG’s position. One clue to what happened may be the fact that the earlier brief, which was more sympathetic to private lawsuits, was signed not only by lawyers from the solicitor general’s office but also officials from HHS. The new brief bore the names of SG lawyers exclusively. Vladeck has heard reports of a “nasty fight” that broke out between HHS and the Justice Department over the issue. “It’s speculation, but it may be that some high-up lawyers [at Justice] are just not big fans of private enforcement,” and they carried the day. Former acting solicitor general Neal Katyal, who was counsel of record on both briefs, could not be reached for comment. Sidley Austin’s Supreme Court veteran Carter Phillips, who will be arguing the case in October for providers and beneficiaries, declined to speculate on the reasons for the SG’s new position, but said, “Having the SG on the other side is never a happy development.” Vladeck’s response to the government brief, which he found “surprisingly aggressive,” was to prepare a brief that would give the traditional HHS view that private enforcement through lawsuits against states is a necessary and useful complement to federal enforcement. HHS and Medicaid administrators, he argues, don’t have the resources to provide “comprehensive oversight of state-by-state compliance with the equal access provision.” In preparing the brief, Vladeck did not have to go far to find former HHS officials who would make that argument. He called his father Bruce Vladeck, who ran Medicaid from 1993 to 1997. “My dad has always been interested in how Medicaid was enforced.” He also got support from former HHS secretary Donna Shalala and Joseph Califano Jr. who was secretary of the predecessor Department of Health, Education and Welfare, among others. (To round out the family, David Vladeck, the longtime Georgetown University Law Center professor and current head of the Federal Trade Commission’s Bureau of Consumer Protection, is Bruce’s brother and Stephen’s uncle.) Said Stephen Vladeck, “Since the HHS could not speak for itself, we felt that someone should speak for them. This is one of the most important cases in the history of Medicaid.” Tony Mauro can be contacted at [email protected].

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