WILDER, GOVERNOR OF VIRGINIA, ET AL. v. VIRGINIA HOSPITAL ASSOCIATION
496 U.S. 498 (1990)
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Rule of Law:
The Boren Amendment to the Medicaid Act, which requires states to establish reimbursement rates that are 'reasonable and adequate,' creates a substantive right enforceable by health care providers under 42 U.S.C. § 1983.
Facts:
- The Medicaid program is a cooperative federal-state arrangement where the federal government provides financial assistance to states to furnish medical care to needy individuals, conditioned on the state's compliance with federal requirements.
- The Boren Amendment to the Medicaid Act requires that a state's plan must provide for payment of hospital services at rates 'which the State finds, and makes assurances satisfactory to the Secretary, are reasonable and adequate to meet the costs which must be incurred by efficiently and economically operated facilities.'
- The Commonwealth of Virginia established a State Plan for Medical Assistance that reimbursed hospitals using a prospective formula, dividing providers into 'peer groups' based on size and location and setting rates based on the median cost of care for each group.
- Virginia's formula used 1982 as a baseline for costs and adjusted annually for inflation, initially using the Consumer Price Index (CPI) and later an index tied to medical care costs.
- The Virginia Hospital Association (VHA), a non-profit corporation representing hospitals in Virginia, contended that the state's reimbursement rates were not reasonable or adequate because they were based on outdated data and flawed inflation adjustments, resulting in significant underpayment.
Procedural Posture:
- The Virginia Hospital Association (VHA) filed suit against several Virginia state officials in the United States District Court for the Eastern District of Virginia.
- VHA sought declaratory and injunctive relief, alleging that Virginia's Medicaid reimbursement plan violated the Boren Amendment.
- The state officials, as defendants, filed a motion to dismiss on the ground that § 1983 does not afford a cause of action to challenge the Commonwealth's compliance with the Medicaid Act.
- The District Court denied the defendants' motion.
- The state officials, as appellants, appealed the District Court's denial to the U.S. Court of Appeals for the Fourth Circuit.
- The Fourth Circuit affirmed the trial court's decision, holding that health care providers may sue state officials under § 1983.
- The U.S. Supreme Court granted certiorari to review the judgment of the Court of Appeals.
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Issue:
Does the Boren Amendment to the Medicaid Act, which requires state reimbursement rates for health care services to be 'reasonable and adequate to meet the costs which must be incurred by efficiently and economically operated facilities,' create a federal right that is enforceable by health care providers in a private cause of action under 42 U.S.C. § 1983?
Opinions:
Majority - Justice Brennan
Yes, the Boren Amendment creates a federal right enforceable by health care providers under § 1983. The amendment's language is mandatory, not merely precatory, as it states the plan 'must' provide for payment at reasonable and adequate rates. Health care providers are the intended beneficiaries of this provision. The right is not too 'vague and amorphous' for judicial enforcement because the statute provides an objective benchmark—the costs of an 'efficiently and economically operated facility.' Furthermore, Congress did not foreclose a § 1983 remedy, as the administrative scheme for secretarial oversight and state-level claims review is not sufficiently comprehensive to indicate an intent to displace private enforcement.
Dissenting - Chief Justice Rehnquist
No, the Boren Amendment does not create a right enforceable by health care providers under § 1983. The statutory language is directed at the states as a condition for receiving federal funds and outlines a procedural process—the State makes findings and provides assurances to the Secretary—not a substantive guarantee of a particular rate for providers. The only discernible right is to have the state follow this process. Allowing providers to sue under § 1983 permits courts to substitute their own judgment for that of the state agency, undermining the very flexibility and state-level control that the Boren Amendment was designed to promote.
Analysis:
This decision significantly affirmed the power of § 1983 as a vehicle for enforcing rights created by federal spending clause legislation. It established that even when a statute grants states substantial discretion in implementation, it can still create a judicially enforceable 'right' if the statutory language is mandatory and intended to benefit a particular class. This holding broadened the scope of § 1983 litigation, enabling beneficiaries of cooperative federal-state programs to sue states in federal court to compel compliance with federal standards, even where the standards are procedural or somewhat open-ended.
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