Bowen, Secretary of Health and Human Services, et al. v. Massachusetts
487 U.S. 879 (1988)
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Rule of Law:
A claim seeking payment of funds to which a claimant is statutorily entitled is a claim for specific relief, not "money damages," and is therefore reviewable in a federal district court under the Administrative Procedure Act's waiver of sovereign immunity. The availability of a potentially inadequate or doubtful remedy in the U.S. Claims Court does not divest the district court of its jurisdiction to grant complete relief.
Facts:
- Massachusetts participated in the federal Medicaid program, a cooperative federal-state cost-sharing endeavor.
- The Massachusetts program provided medical and rehabilitative services to patients in intermediate care facilities for the mentally retarded (ICF/MR services).
- These services were jointly administered by personnel from the State Departments of Mental Health and Education.
- Because of the Department of Education's involvement, federal auditors for the Secretary of Health and Human Services classified the services as non-reimbursable 'educational services' rather than covered 'rehabilitative services'.
- On August 23, 1982, the Health Care Financing Administration (HCFA), on behalf of the Secretary, formally disallowed over $6.4 million in federal financial participation (FFP) for these services provided between 1978 and 1980.
- Subsequently, HCFA disallowed an additional $4.9 million for the same category of services provided between 1981 and 1982.
- The Departmental Grant Appeals Board, an internal administrative body, affirmed both disallowance decisions, making them final agency actions.
Procedural Posture:
- Massachusetts filed two complaints in the U.S. District Court for the District of Massachusetts, seeking judicial review of two final disallowance decisions by the Secretary.
- The District Court, as the court of first instance, reversed both of the Secretary's decisions, ruling that the disputed services were reimbursable.
- The Secretary, as appellant, appealed the District Court's judgments to the U.S. Court of Appeals for the First Circuit.
- The Court of Appeals affirmed the District Court's jurisdiction to grant declaratory and injunctive relief but vacated what it characterized as the 'money judgment' aspect of the orders, holding that monetary claims belonged in the U.S. Claims Court.
- The Secretary petitioned for a writ of certiorari to the U.S. Supreme Court, arguing the Claims Court had exclusive jurisdiction, and Massachusetts, as cross-petitioner, sought review of the ruling that barred the District Court from granting complete monetary relief.
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Issue:
Does the Administrative Procedure Act's waiver of sovereign immunity, which excludes claims for 'money damages,' permit a federal district court to review a final decision by the Secretary of Health and Human Services to disallow Medicaid reimbursement to a state and order the payment of the withheld funds?
Opinions:
Majority - Justice Stevens
Yes. The Administrative Procedure Act's waiver of sovereign immunity permits a federal district court to review the disallowance and order payment because the State's claim is for specific relief, not 'money damages.' The court distinguished between money damages, which provide monetary compensation for an injury, and an equitable action for specific relief, which seeks to give the plaintiff the very thing to which it was entitled. Here, Massachusetts sought to enforce the statutory mandate for payment, not to receive compensation for a loss. The legislative history of the 1976 amendments to the APA supports this broader reading of the waiver of sovereign immunity, particularly in the context of federal grant-in-aid programs. Furthermore, the APA's bar on review where another 'adequate remedy' exists does not apply, as the U.S. Claims Court is not an adequate forum; it generally cannot grant the prospective declaratory or injunctive relief necessary to manage the complex, ongoing relationship between the state and federal governments in such programs.
Dissenting - Justice Scalia
No. The APA does not permit district court review because the state's claim is for 'money damages' and an adequate remedy exists in the Claims Court. The term 'money damages' has a traditional common-law meaning: reparation for injury. Massachusetts's claim for reimbursement for past expenditures is a classic claim for money damages to compensate for the monetary loss it sustained. The majority's interpretation effectively erases the distinction between specific relief and damages, threatening to render the Claims Court's jurisdiction meaningless by allowing any monetary claim to be reframed as a request for specific relief. The Tucker Act provides an 'adequate remedy in a court' via the Claims Court for such monetary claims, which under APA § 704, precludes judicial review in a district court.
Concurring - Justice White
Yes. The judgment should be affirmed on narrower grounds. The District Court's orders should be construed as simply reversing the agency's decision, not as entering a money judgment, and were therefore permissible. However, it is not clear that the District Court would have had jurisdiction to enter an express money judgment against the United States. Nonetheless, review was proper in the District Court because the Claims Court, which cannot grant the type of declaratory and injunctive relief sought and granted, does not provide an 'adequate remedy' under § 704 for the specific claims presented in this case.
Analysis:
This decision significantly clarified the jurisdictional boundary between federal district courts and the U.S. Claims Court for monetary claims against the government. By narrowly defining 'money damages' under the Administrative Procedure Act, the Court expanded the district courts' power to hear cases involving statutory entitlements to funds, especially within complex grant-in-aid programs. The ruling affirmed that district courts can provide both monetary and equitable relief in a single action, avoiding bifurcated litigation and ensuring that remedies like prospective injunctions are available. This precedent makes it easier for states and other entities to challenge federal agency funding denials directly in district courts rather than being confined to the more limited, and potentially inadequate, remedies of the Claims Court.
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