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Rural health care providers who serve the poor have the right to sue state officials using civil rights law to challenge limited reimbursement of certain costs, the 4th U.S. Circuit Court of Appeals has held. This is the first time that private right of action has been recognized by any circuit in this particular section of the law. The 1st Circuit, however, in 2005 presumed such a right without finding it specifically in the same Medicaid Act section, in Rio Grande Cmty. Health Ctr. Inc, v. Rullan, 397 F.3d 56 (1st Cir.). The recent 4th Circuit opinion by Judge Allyson K. Duncan did provide an out for the states. The ruling held that health care providers can waive their right to sue in contract terms with the state, without violating federal law. ‘All over the place’ “This is exactly the kind of case where the circuits go all over the place,” said Ken Woodington of Davidson, Morrison & Lindemann in Columbia, S.C. He represented South Carolina in the 4th Circuit case, Pee Dee Health Care v. Sanford, No. 06-2108. “It’s the first of its kind, but there are 65 subsection provisions of the Medicaid Act and circuits will look at each one and decide individually if they create a right of action � and circuits split,” he said. The dispute began in 2005 when a coalition of rural health care providers sued over plans by South Carolina Governor Mark Sanford to curtail the state’s Medicaid program by reducing some coverage in a way that the providers argued violated federal Medicaid regulations. State Representative Todd Rutherford, D-Columbia, was one of three lawyers who sued in state court on behalf of Pee Dee Health Care to block the proposed changes. He did not respond by press time to calls and an e-mail seeking comment. Sanford wanted to move 1 million Medicaid recipients from state-administered, fee-for-service health care to managed health care, administered by private insurance companies, eventually creating self-directed care. But that would have required federal approval of the changes and a waiver of rules to allow implementation. The case was removed to federal court by the state. At that point, claims expanded to include a challenge to amounts paid to reimburse the health care providers for Medicaid expenses dating back to 2001. The reimbursement issue was appealed to the 4th Circuit by Pee Dee Health. The 4th Circuit also held that Pee Dee had waived its right to challenge the state-court forum in its contract with South Carolina. If there is no appeal, it would go back to the state court for resolution, Woodington said.

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