Pennsylvania Pharmacists Ass'n v. Houstoun

Opinions of the United
2002 Decisions States Court of Appeals
for the Third Circuit

3-13-2002

PA Pharmacists Assoc v. Houstoun
Precedential or Non-Precedential:

Docket 0-1898

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PRECEDENTIAL

Filed March 13, 2002

UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT

No. 00-1898

PENNSYLVANIA PHARMACISTS ASSOCIATION; BELL
EDGE PHARMACY; BROAD STREET APOTHECARY;
BURNS PHARMACY; CAMBRIA PHARMACY #3;
CHRISTIAN STREET PHARMACY; ELWYN PHARMACY;
ESTERSON PHARMACY; FOSTERS PHARMACY; GETWELL
PHARMACY; MCKEAN STREET PHARMACY; ROSICA
PHARMACY; S&S COMMUNITY DRUG, INC.; SILVERMAN
PHARMACY; TIOGA DRUG COMPANY; WELDON
PHARMACY, and other Similarly Situated Pharmacies;
TIRELLI, INC., dba BROAD STREET APOTHECARY;
ROBERT SCHREIBER, dba BURNS' PHARMACY;
CAMBRIA PHARMACIES, INC.; BARRY JACOBS, dba
ELWYN PHARMACY; 2401 EAST YORK STREET, INC., dba
ESTERSON'S PHARMACY; RIAZ U. RAHMAN, dba
GETWELL PHARMACY; FOSTER PHARMACY, INC.;
HAUSSMANN'S PHARMACY; MCKEAN STREET
PHARMACY, INC.; THOMAS BETTERIDGE, dba ROSICA
PHARMACY; WELDON PHARMACY, INC,

Appellants

v.

FEATHER O. HOUSTOUN

ON APPEAL FROM THE
UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF PENNSYLVANIA

(Dist. Court No. 99-cv-00491)
District Court Judge: Ronald L. Buckwalter
Argued April 20, 2001

Before: ALITO, McKEE, and ALARCON, Circuit Jud ges.

Argued En Banc November 28, 2001

Before: BECKER, Chief Judge, MANSMANN, SCIRICA,
NYGAARD, ALITO, ROTH, McKEE, RENDELL, BARRY,
AMBRO, and FUENTES, Circuit Judges

(Opinion Filed: March 13, 2002)

Gregory L. Liacouras (Argued)
Leslie H. Smith
Joseph W. Marshall, III
Liacouras & Smith, LLP
1515 Market Street, 9th Floor
Philadelphia, PA 19102

Attorneys for Appellants

Joseph McHale
Kimberley A. Hendrix
Stradley, Ronon, Stevens &
Young, LLP
2600 One Commerce Square
Philadelphia, PA 19103-7098

John A. Kane (Argued)
Commonwealth of PA
Office of Legal Counsel
Department of Public Welfare
P.O. Box 2675
Health & Welfare Building
Harrisburg, PA 17120

Attorneys for Appellee

2
OPINION OF THE COURT

ALITO, Circuit Judge, with whom Judges NYGAARD, ROTH,
BARRY, AMBRO and FUENTES join:

The Pennsylvania Pharmacists' Association1 and 16
pharmacies operating in southeastern Pennsylvania
brought this action under 42 U.S.C. S 1983 against Feather
O. Houstoun, the Secretary of the Pennsylvania Department
of Public Welfare (the "Department"), to challenge the
reimbursement rates paid to pharmacies under
Pennsylvania's Medicaid program. The plaintiffs claimed
that the Department, in administering its HealthChoices
Southeast program ("HealthChoices"), was violating
provisions of Title XIX of the Social Security Act (the
"Medicaid Act"), 42 U.S.C. SS 1396a(a)- 1396v. The
plaintiffs' principal claim was based on 42 U.S.C.
S 1396a(30)(A) ("Section 30(A)"). In accordance with its
interpretation of prior circuit precedent, the District Court
held that the plaintiffs could assert their Section 30(A)
claim under S 1983, but the District Court nevertheless
granted summary judgment against the plaintiffs. We now
hold that the plaintiffs, as Medicaid providers, may not
assert their claims under S 1983, and we therefore affirm
the order of the District Court on this alternative ground.

I.

Medicaid is a cooperative federal-state program under
which the federal government furnishes funding to states
for the purpose of providing medical assistance to eligible
low-income persons. See 42 U.S.C. S 1396; Rite Aid of
Pennsylvania, Inc. v. Houstoun, 171 F.3d 842, 845 (3d Cir.
1999). If a state chooses to participate in the program, it
must comply with the Medicaid Act and implementing
regulations promulgated by the Secretary of Health and
Human Services ("HHS"). See Wilder v. Virginia Hosp.
_________________________________________________________________

1. The Pennsylvania Pharmacists' Association is a non-profit corporation
representing over 440 independent pharmacies and over 1,000
pharmacists employed at these pharmacies.

3
Ass'n., 496 U.S. 498, 502 (1990). In order to participate, a
state must submit a medical assistance plan to the
Secretary of HHS and obtain approval of the plan. See 42
U.S.C. S 1396; 42 C.F.R. S 430.10 (2001). With further
administrative approval, a state may amend a previously
approved plan. See 42 C.F.R. S 430.12 (2001).

Under the Medicaid Act, a state is required to pay for
certain enumerated services and may choose to pay for
certain additional services. 42 U.S.C. S 1396a(a)(10)(A); 42
C.F.R. S 440.210 (2001). Pennsylvania includes prescription
drugs among its optional services. See 42 U.S.C.
S 1396d(a)(12); 42 C.F.R. S 440.120(a) (2001).

Until 1997, Pennsylvania compensated participating
pharmacists directly under a "fee-for-service" program.
Payments to these pharmacies generally consisted of two
components: (1) ingredient cost reimbursement and (2) a
dispensing fee. Pharmacies were compensated for brand-
name drugs based on the "estimated acquisition cost" of the
drugs2 plus a "reasonable" dispensing fee. See 42 U.S.C.
S 1396(a)(30)(A); 42 C.F.R. S 447.300 et seq. Pharmacists
were compensated for generic drugs using acquisition cost
limits established by HHS plus a reasonable dispensing fee.

In 1997, the Pennsylvania Department of Public Welfare
began to implement its HealthChoices program, a
mandatory managed care program operated in five counties
in the southeastern part of the state pursuant to an HFCA
waiver from certain provisions of the Medicaid Act. 3 The
Department contracted with four health management
organizations ("HMOs") to administer HealthChoices. Three
of the four HMOs administer pharmacy benefits through
contracts with pharmacy benefits managers. When an HMO
contracts with a pharmacy benefits manager, the HMO and
the pharmacy benefits manager set the rates at which
_________________________________________________________________

2. The "estimated acquisition cost" is the"agency's best estimate of the
price generally and currently paid by providers for a drug marketed or
sold by a particular manufacturer or labeler in the package size of drug
most frequently purchased by providers." 42 C.F.R. S 447.301 (2001).

3. The waiver applies to 42 U.S.C. S 1396a(a)(1)(statewide scope),
S 1396a(a)(10)(B)(comparability of services), and S 1396a(a)(23)(freedom
of
choice).

4
pharmacies are reimbursed. The pharmacy benefits
manager then contracts directly with the participating
pharmacies to provide outpatient pharmacy services to
eligible beneficiaries.

In order to participate in HealthChoices, the named
pharmacy plaintiffs entered into standardized Medical
Assistance Provider Agreements with the Department. The
Agreements cover the provision of brand-name and generic
prescription drugs to eligible beneficiaries and obligate the
Department to reimburse the contracting pharmacies in
accordance with state and federal law.

In January 1999, the plaintiffs commenced this action in
the United States District Court for the Eastern District of
Pennsylvania and requested declaratory and injunctive
relief. The plaintiffs' principal claim was that the new
payment rates violate Section 30(A), which requires a state
Medicaid plan to assure that payments "are consistent with
efficiency, economy, and quality of care" and"are sufficient
to enlist enough providers so that care and services are
available under the plan at least to the extent that such
care and services are available to the general population in
the geographic area." The plaintiffs alleged that the
pharmacy benefits managers, without oversight from the
Department, had decreased the outpatient pharmacy
benefit rates so much that they were below the cost of
acquiring and dispensing the drugs.

The District Court certified a class of pharmacy plaintiffs
and denied the Department's motion to dismiss the
complaint, holding that the plaintiffs had "a private right to
enforce [Section 30(A)]." Pennsylvania Pharmacists Ass'n v.
Houstoun, No. CIV.A. 99-491 (E.D. Pa. October 21, 1999).
As support for its holding on this point, the Court cited a
footnote in a prior panel opinion of this Court. See Rite Aid
of Pennsylvania, Inc. v. Houstoun, 171 F.3d 842, 850 n. 7
(3d Cir. 1999).

The District Court subsequently granted the defendant's
motion for summary judgment. Pennsylvania Pharmacists
Ass'n v. Houstoun, No. CIV.A. 99-491, 2000 WL 730344, at
* 1 (E.D. Pa. June 7, 2000). The Court held that the
Department, in implementing its new program, had

5
properly considered efficiency, economy, and access to
quality pharmacy services, that its procedures were neither
arbitrary nor capricious, and that the resulting payment
rates did not violate Section 30(A). Pennsylvania
Pharmacists Ass'n, 2000 WL 730344, at * 3-5.

The Plaintiffs appealed, and their arguments were heard
before a regular panel. Under a longstanding practice of our
Court, a panel may not overrule another panel decision. A
footnote in the panel opinion in Rite Aid appeared to hold
that a provider may assert a Section 30(A) claim under
S 1983, but the footnote provided no elaboration.4 By the
time of the panel argument in this case, the other courts of
appeals were divided on this issue. Prior to the issuance of
a panel decision, we granted rehearing en banc primarily
for the purpose of considering the S 1983 issue.

II.

The threshold issue that we must consider is whether the
plaintiffs, as Medicaid providers (as opposed to Medicaid
recipients), may assert a Section 30(A) claim under 28
U.S.C. S 1983. Section 1983 provides a private right of
action against any person who, acting under the color of
state or territorial law, abridges "rights, privileges, or
immunities secured by the Constitution and laws" of the
United States. See also Maine v. Thiboutot, 448 U.S. 1, 4
(1980). In order to seek redress under S 1983, a plaintiff
"must assert the violation of a federal right," and not merely
a violation of federal law. Golden State Transit Corp. v. City
of Los Angeles, 493 U.S. 103, 106 (1989). Thus, a plaintiff
alleging a violation of a federal statute may not proceed
under S 1983 unless 1) the statute creates"enforceable
_________________________________________________________________

4. The Rite Aid panel wrote as follows in footnote 7 of the opinion:

The Department argues at least in part that Rite Aid and the PPA
[Pennsylvania Pharmacists Association] may not sue to enforce
[certain] Medicaid regulations as section 30(A) "does not support a
private cause of action." Brief at 27. The district court rejected
this
argument and we agree with this result. Rite Aid , 998 F. Supp. at
525-26.

171 F.3d at 850.

6
rights, privileges, or immunities within the meaning of
S 1983" and 2) Congress has not "foreclosed such
enforcement of the statute in the enactment itself." Wright
v. Roanoke Redevelopment and Housing Auth., 479 U.S.
418, 423 (1987).

In considering the first of these requirements -- that the
statute must create an enforceable right, privilege, or
immunity -- we must determine whether the three
conditions identified by the Supreme Court in Wilder and
Blessing v. Freestone, 520 U.S. 329 (1997), are satisfied.
First, the provision in question must have been"intend[ed]
to benefit the putative plaintiff." Wilder , 496 U.S. at 509
(quoting Golden State Transit Corp., 493 U.S. at
106)(brackets added in Wilder); see also Blessing, 520 U.S.
at 340. Second, the right allegedly protected by the statute
must not be so "vague and amorphous" that its
enforcement would strain judicial competence. Blessing,
520 U.S. at 340-41; Wilder, 496 U.S. at 509. Finally, the
statute must unambiguously impose a binding obligation
on the states, id., and thus the provision giving rise to the
asserted right must be couched in "mandatory, rather than
precatory, terms." Blessing, 520 U.S. at 341.

Once these requirements are satisfied -- and the
existence of a federal right is established -- a rebuttable
presumption arises that the right is enforceable under
S 1983. Blessing, 520 U.S. at 341. This presumption may
be rebutted by showing that Congress expressly or
impliedly foreclosed an action under S 1983. Id.; see also
Livadas v. Bradshaw, 512 U.S. 107, 133 (1994).

III.

A.

In the present case, the focus of our inquiry is the
requirement that the provision in question must have been
intended to benefit the plaintiffs. Blessing, 520 U.S. at 340;
Wilder, 496 U.S. at 509; Golden State Transit Corp., 493
U.S. at 106; Wright, 479 U.S. at 430. It is important to keep
in mind that the question whether a statute is intended to
benefit particular plaintiffs is quite different from the

7
question whether the statute in fact benefits those plaintiffs5
or even whether Congress knew that the statute would
benefit those plaintiffs. In the present case, it may well be
that Section 30(A) in fact benefits pharmacies in some
states and that Congress realized this in enacting that
provision. For example, if Section 30(A) were not on the
books, a state plan might provide lesser access to
pharmacy services than Section 30(A) requires. In any such
state, Section 30(A) presumably has the effect of increasing
drug sales, and these increased drug sales presumably
benefit pharmacies -- as well as drug wholesalers, drug
manufacturers, many other businesses (e.g., lessors of
pharmacy premises, cleaning service firms retained by
pharmacies, trash collection companies retained by
pharmacies, private security firms retained by pharmacies),
employees of all of these businesses, etc. Congress
undoubtedly realizes that federal subsidies have such ripple
effects, but it would be outlandish to argue that the
Wilder/Blessing intended-to-benefit requirement permits all
of these businesses and individuals to assert Section 30(A)
claims in federal court. Our inquiry, consequently, is quite
narrow: did Congress, in enacting Section 30(A), intend to
benefit providers?

In attempting to answer this question, the Supreme
Court has instructed us to pay careful attention to the way
in which the statutory provision at issue is framed. In
Cannon v. University of Chicago, 441 U.S. 677, 689 (1979),
the Court wrote that the question whether a statute is
enacted for the benefit of a particular class of plaintiffs "is
_________________________________________________________________

5. If the intended-to-benefit requirement could be satisfied simply by
showing that a plaintiff in fact benefits from the law in question, the
requirement would be superfluous. No plaintiff may assert a claim in
federal court without establishing Article III standing, and this demands,
among other things, that the plaintiff demonstrate"injury in fact." See,
e.g., Lujan v. Defenders of Wildlife, 504 U.S. 555, 560 (1992). A
plaintiff
asserting a claim based on an alleged violation of a federal law cannot
demonstrate injury in fact unless proper enforcement of the law would
benefit the plaintiff. Therefore, if the intended-to-benefit requirement
could be met simply by showing that the plaintiff would benefit by
proper enforcement, that requirement would add nothing to the injury-
in-fact test.

8
answered by looking to the language of the statute itself."
The Court noted the importance of any "right- or duty-
creating language" in the statute. Id. at 690 n.13. Moreover,
in holding that the statute in that case was intended to
benefit the plaintiffs, the Court observed that the statute
was "phrased in terms of the persons benefited" and was
"draft[ed] . . . with an unmistakable focus on the benefited
class." Id. at 691, 692 n.13. More recently, in Alexander v.
Sandoval, 121 S.Ct. 1511, 1520 (2001), the Court again
commented on the importance of the particular phrasing of
a statute in this regard.

While Cannon and Alexander concerned the implication
of a private right of action under a statute, rather than the
assertion of a statutory claim under S 1983, the tests
applied in these contexts partially overlap,6 and both tests
ask whether the statute at issue was intended to benefit the
putative plaintiff or plaintiffs. See Wright, 479 U.S. at 432-
33 (O'Connor, J., dissenting). Thus, in cases applying the
Wilder/Blessing test, the Court has also relied on the terms
in which the statute is drafted.

Wilder itself is illustrative. In Wilder , a hospital filed a
S 1983 action asserting a violation of the now-repealed
Boren Amendment to the Medicaid Act, 42 U.S.C.
S 1396a(a)(13) (1994) (repealed 1997). The Boren
Amendment required a state Medicaid plan to provide a
class of providers7 with payments that were "reasonable
_________________________________________________________________

6. In determining whether a statute creates an implied right of action,
the Supreme Court uses the four-part test of Cort v. Ash, 422 U.S. 66
(1975), to determine whether Congress intended to create a private
remedy. Under this test, the Court considers (1) whether the plaintiff is
within the class " `for whose especial benefit' the statute was enacted,"
(2) whether "there is any indication of legislative intent, explicit or
implicit, either to create such a remedy or to deny one," (3) whether a
private remedy would be "consistent with the underlying purposes of the
legislative scheme," and (4) whether "the cause of action [is] one
traditionally relegated to state law, in an area basically the concern of
the States." Id. at 78 (citations omitted). A S 1983 plaintiff need not
prove
that Congress specifically intended that a particular statutory right be
enforceable under S 1983 but instead need only meet the three-part test
outlined above. Wilder, 496 U.S. at 509 n. 9.

7. Namely, hospitals and nursing and intermediate care facilities. See
Wilder, 496 U.S. at 502 n.2.

9
and adequate to meet the costs which must be incurred by
efficiently and economically operated facilities" that comply
with applicable state and federal laws and standards. Id.
Holding that there was "little doubt" that the Boren
Amendment was intended to benefit these providers, the
Supreme Court stressed the Boren Amendment's cost-
reimbursement language, 496 U.S. at 503, and noted that
the Amendment "establishe[d] a system for reimbursement
of providers and [was] phrased in terms benefitting health
care providers." Wilder, 496 U.S. at 510 (emphasis added).
Thus, the Court relied on language in the Boren
Amendment that measured the adequacy of payments in
relation to the economics of providers, i.e., their need to
cover their reasonable costs. As the Court later emphasized
in Suter v. Artist M., 503 U.S. 347, 357 (1992), Wilder "took
pains to analyze the statutory provisions in detail."

B.

With these standards in mind, we focus on the language
of Section 30(A). Section 30(A) provides that a state plan for
medical assistance must:

[P]rovide such methods and procedures relating to the
utilization of, and the payment for, care and services
available under the plan . . . as may be necessary to
safeguard against unnecessary utilization of such care
and services and to assure that payments are
consistent with efficiency, economy, and quality of care
and are sufficient to enlist enough providers so that
care and services are available under the plan at least
to the extent that such care and services are available
to the general population in the geographic area.

Because this language is -- to put it mildly-- complex, it
is helpful to break it down. Under Section 30(A), a state
must provide "methods and procedures." These"methods
and procedures" must assure that payments to providers
produce four outcomes: (1) "efficiency," (2)"economy," (3)
"quality of care," and (4) adequate access to providers by
Medicaid beneficiaries.8
_________________________________________________________________

8. We use the phrase "adequate access" simply as shorthand for the
statutory requirement that providers be "available under the plan at

10
It seems clear to us that the first two required outcomes
-- "efficiency" and "economy" -- relate to the state program,
not providers, i.e., Section 30(A) requires that a state
program set payments at levels that make the program
efficient and economical.9 What sort of payments would
make a program inefficient and uneconomical? Payments
that are too high. Accordingly, the directive to achieve
"efficiency" and "economy" was obviously not intended to
benefit providers.

That leaves the directives to provide "quality of care" and
adequate access. These directives are "draft[ed] . . . with an
unmistakable focus on" Medicaid beneficiaries, not
providers. Cannon, 441 U.S. at 691. They are"phrased in
terms benefiting" Medicaid recipients, Wilder , 496 U.S. at
510, and these are the persons that Congress intended to
benefit. If Congress had wanted to look after pharmacies, it
would hardly have framed Section 30(A) in the terms it
chose.

The language of Section 30(A) contrasts sharply with that
of the Boren Amendment, which was interpreted in Wilder
as intended to benefit the relevant providers. As previously
noted, the Boren Amendment required a state Medicaid
plan to provide payments to providers that were
"reasonable and adequate to meet the costs which must be
incurred by efficiently and economically operated facilities"
that comply with applicable state and federal laws and
standards. Pub. L. No. 96-499, S 962(a), 94 Stat. 2650
(1980). It was thus "phrased in terms benefitting" providers
_________________________________________________________________

least to the extent that such care and services are available to the
general population in the geographic area." We do not suggest that
"adequate access" in the lay sense of the term will or will not meet this
statutory requirement.

9. Although the plaintiffs argue that these terms refer to the operation
of
pharmacies, this does not make sense. Suppose payments to pharmacies
were set far above cost. That would not make them inefficient or
uneconomical, i.e., "wasteful." Webster's Third New International
Dictionary (1971). It would simply make them very profitable.
Conversely, suppose payments to pharmacies were set well below costs.
That also would not make them inefficient or uneconomical. It would
simply make participation in the Medicaid program unprofitable and
might lead them to withdraw.

11
and measured the sufficiency of payments by reference to
the economics of providers. It plainly manifested concern
for the economic well-being of providers. Section 30(A),
unlike the Boren Amendment, does not demand that
payments be set at levels that are sufficient to cover
provider costs. Unlike the Boren Amendment, it evinces no
direct concern for the economic situation of providers.
Instead, it demands that payments be set at levels that are
sufficient to meet recipients' needs. It is "phrased in terms
benefitting" recipients, and the adequacy of payments is
measured in relation to the health needs of recipients. It
manifests concern solely for the well-being of recipients. It
is therefore apparent from the statutory language that the
intended beneficiaries of Section 30(A) are recipients, not
providers.

The principal dissent disagrees with this analysis and
maintains that the Boren Amendment and Section 30(A)
"confer nearly identical rights on providers." Principal
Dissent at 23. The principal dissent makes two principal
points. First, it dismisses the significance of the presence in
the Boren Amendment and the absence from Section 30(A)
of language focusing on provider costs. Second, it argues
that quality of care played essentially the same role in the
Boren Amendment as it does in Section 30(A). Neither point
is well taken.

The language in the Boren Amendment focusing on
provider costs is telling because it manifests a clear
congressional concern for the economic plight of providers
and an intent to benefit them. We are convinced that this
statutory language was the basis for the Wilder Court's
statement that the Boren Amendment was "phrased in
terms benefitting" providers. 496 U.S. at 510. The principal
dissent interprets this statement to mean simply that the
Boren Amendment "required states to establish a scheme
for provider reimbursement." See Principal Dissent at 24.
But if this interpretation were correct, the Supreme Court's
full sentence ("The provision establishes a system for
reimbursement of providers and is phrased in terms
benefitting health care providers") would say exactly the
same thing twice ("The provision establishes a system for
reimbursement of providers," 496 U.S. at 510, and

12
"require[s] states to establish a scheme for provider
reimbursement," Principal Dissent at 23). We therefore
disagree with the principal dissent and believe that the
reference to phrasing pertains to the Boren Amendment's
cost-reimbursement language.

This cost-reimbursement language is also of particular
significance in, to use the principal dissent's phrase, "the
dynamic of the real world of healthcare."10 Principal Dissent
at 24. Cost reimbursement schemes11 are generally
favorable to providers and greatly disliked by those required
to do the reimbursing.12 The House Committee Report
recommending repeal of the Boren Amendment cited a
Congressional Budget Office estimate that its elimination
would save $1.2 billion over four years,13 and the National
Governors Association provided even higher estimates.14 We
_________________________________________________________________

10. In its description of the "real world""context" of this case, the
principal dissent (at 24, 25-26) summarizes the plaintiffs' (but not the
defendant's) evidence about the effect of the new rates on access to
pharmacies. But (1) the plaintiffs' position is disputed, (2) the District
Court, which reached the merits of the access issue, held that the
plaintiffs had not adduced sufficient evidence to show that the access
requirement was not being met, Pennsylvania Pharmacists Ass'n, 2000
WL 730344, at * 6-8, and (3) the principal dissent does not purport to
have examined or to reach the merits of this issue. We express no view
whatsoever on the merits of this question.

11. Before the Boren Amendment, states, as a practical matter, tended to
pay for "the actual costs incurred by hospitals in providing care to
Medicaid recipients, regardless of disparities in costs or efficiencies
among hospitals." New Jersey Hosp. Ass'n v. Waldman, 73 F.3d 509,
511 (3d Cir. 1995). The Boren Amendment replaced this actual-cost-
reimbursement scheme with a reasonable-cost-reimbursement scheme.
See id. at 514-15.

12. The National Governors Association unanimously recommended
repeal of the Boren Amendment. See 1997 WL 8219815 (March 11,
1997) (Testimony of Govs. Miller and Leavitt before Sen. Fin. Comm.);
1996 WL 7135617 (Feb. 21, 1996)(Statement of Govs. Thompson, Miller,
Chiles, Engler, Leavitt, and Romer before House Commerce Comm.)("The
Boren amendment and other Boren-like statutory provisions must be
repealed. `One hundred percent reasonable cost reimbursement' must be
phased out . . . .").
13. H.R. Rep. 149, 105th Cong., 1st Sess. 547 (1997).

14. See 1997 WL 8219815 (March 11, 1997) (Testimony of Govs. Miller
and Leavitt before Sen. Fin. Comm.).

13
take no side in the policy debate about cost reimbursement,
but we think that it is highly unrealistic to minimize the
significance of the presence in the Boren Amendment of
cost-reimbursement language. This language was plainly a
boon for providers, Congress surely understood its
implications, and its inclusion in the Boren Amendment
was an unmistakable sign of a congressional desire to
benefit providers.

The principal dissent also misinterprets the Boren
Amendment as containing a quality-of-care requirement
similar to that in Section 30(A). See Principal Dissent at 24
(Boren Amendment "mandates minimum reimbursement
rates defined by reference to quality of care . . . .") id. at 33
(rates must be "sufficient to ensure quality of care"); id. at
33 (same). In fact, however, quality of care played a
decidedly secondary role in the Boren Amendment.
Whereas quality of care is a primary benchmark for setting
payments in Section 30(A), the Boren Amendment simply
provided that reimbursements were to be calculated by
reference to the reasonable costs of providers that were
operating in compliance with other applicable legal
requirements -- in the precise language of the Amendment,
"with applicable State and Federal laws, regulations, and
quality and safety standards . . . ." 42 U.S.C. Section
1396a(a)(13)(A) (repealed 1997). Thus, for example, in
determining the reasonable costs of a nursing home, the
Boren Amendment looked to nursing homes that were
complying with state fire safety laws rather than those that
cut costs by doing without fire escapes, smoke detectors,
etc. (The principal dissent obscures this point by repeatedly
eliding the reference to "State and Federal laws[and]
regulations" and referring only to "quality and safety
standards." See Principal Dissent at 31, 33, 35.)15
_________________________________________________________________

15. We also disagree with Judge Rendell's view that Section 30(A)
manifests an intent to benefit providers simply because it says that a
state plan must provide methods and procedures "relating to the
utilization of, and payment for, care and services available under the
plan."

First, Judge Rendell's analysis looks at only part of Section 30(A), but
we do not think that it is possible to determine whether Section 30(A)

14
In attempting to point out what we view as the critical
differences between the Boren Amendment and Section
30(A), we do not dispute the obvious point that these
provisions have other features in common, as the principal
dissent points out. For instance, the principal dissent is
correct in noting that "[b]oth the Boren Amendment and
Section 30(A) require states to reimburse providers for
_________________________________________________________________

was intended to benefit providers or just recipients without looking at
the entire provision. Moreover, although Judge Rendell would look at
only one part of Section 30(A) in determining whether that provision was
intended to benefit providers, we assume that she would look at the rest
of the provision in determining whether Section 30(A) meets the next
requirement set out in Wilder and Blessing, viz., that the right allegedly
protected by the statute must not be so "vague and amorphous" that its
enforcement would strain judicial competence. Blessing, 520 U.S. at
340-41; Wilder, 496 U.S. at 509. If she did not do so -- if she confined
her analysis of this question to the portion of the statute that she
examines in relation to the intent-to-benefit issue-- she would have to
conclude that this second requirement cannot be met. If Section 30(A)
simply said that a state plan must "provide . . . methods and procedures
relating to the utilization of, and the payment for, care and services
available under the plan," it would not set out a standard that a court
could enforce. The substance of what a state plan must meet is set out
in the portion of Section 30(A) that follows, and this part of the
provision
cannot be ignored. We see no justification for examining only one part of
a statute in considering the intent-to-benefit issue and then considering
other parts of the statute in considering other prongs of the
Wilder/Blessing inquiry.

Second, if the mere reference to "payment" in the part of Section 30(A)
that Judge Rendell examines were enough to show an intent to benefit
providers, it would be virtually impossible to draft a provision requiring
a state plan to provide services without creating an entitlement to sue on
behalf of the providers who furnish those services. Providers, after all,
must be paid, and according to Judge Rendell's position, if a statute
makes any mention of "payment," it evidences an intent to benefit
providers. It is interesting to apply Judge Rendell's analysis to the
current version of 42 U.S.C. S 1396a(a)(13), which replaced the Boren
Amendment. One of Congress's main objectives -- perhaps its dominant
objective -- in repealing the Boren Amendment was to take away the
right to sue under S 1983, but the provision that replaced the Boren
Amendment, refers to the "determination of rates of payment under the
[state] plan" and goes on to refer repeatedly to "rates."

15
services rendered." Principal Dissent at 32. But as we
began by cautioning, the inquiry mandated by Wilder and
Blessing - whether Congress intended for Section 30(A) to
benefit providers as opposed to simply knowing that
providers would be benefitted -- calls for us to draw a fine
line and to take into account the precise statutory language
adopted by Congress. After considering the language of the
Boren Amendment and Section 30(A), we remain convinced
that there are critical differences and that Section 30(A),
unlike the Boren Amendment, was not intended to benefit
providers.

C.

We have examined the legislative history of Section 30(A)
and have found nothing inconsistent with our reading of
the statutory language. The plaintiffs note that when
Section 30(A) was originally enacted in 1967, see Social
Security Amendments of 1967, Pub. L. 90-248, S 237, 81
Stat. 821, 911 (1968), it differed in two respects from the
current version: it required a state plan to assure that
payments were "not in excess of reasonable charges," and
it lacked the adequate access requirement that the current
version contains.16 In 1981, Congress changed these
features.

Nothing in the 1981 amendments suggests that the
current version of the statute is intended to benefit
providers. On the contrary, the effect of the 1981
_________________________________________________________________

16. As enacted in 1967, it required a state to:

provide such methods and procedures relating to the utilization of,
and the payment for, care and services available under the plan as
may be necessary to safeguard against unnecessary utilization of
such care and services and to assure that payments .. . are not in
excess of reasonable charges consistent with efficiency, economy,
and quality of care.

This provision originated as a Senate Amendment to the House bill, and
the brief discussion of this provision in the Conference Committee report
says nothing that has a bearing on the issue before us. See Conf. Rep.
No. 1030, 90th Cong., 1st Sess. (1967), reprinted in 1967 U.S.C.C.A.N.
3179, 3213 (1967).

16
amendments was to sharpen the focus on Medicaid
beneficiaries. Language referring to providers' charges was
removed, and language providing a further protection for
beneficiaries was added.

The plaintiffs note, however, that the House Committee
Report on the 1981 amendments observed that "in
instances where the States or the Secretary fail to observe
these statutory requirements, the courts would be expected
to take appropriate remedial action." H.R. Rep. No. 158,
97th Cong., 312-13 (1981). This statement certainly
suggests that the Committee anticipated that some class of
plaintiffs would be able to sue to enforce Section 30(A), but
it does not show that the Committee anticipated that
Medicaid providers, as opposed to recipients, would be able
to do so. It is thus of little value for present purposes.

The plaintiffs rely, finally, on certain HHS regulations
that the plaintiffs view as showing that HHS has
interpreted Section 30(A) as intended to benefit providers.
We have examined these regulations, and we do not believe
that they evidence any such interpretation. The most
pertinent of the current regulations cited by the plaintiffs
establish upper limits on what a state program may pay for
drugs. See 42 C.F.R. SS 447.301, 447.331- .334 (2001).
Section 447.331(b), which applies to brand name drugs
duly certified by a physician to be medically necessary for
a particular recipient, is illustrative. This provision states
that a state agency's payments for such drugs

must not exceed in the aggregate, payment levels that
the agency has determined by applying the lower of the
--

(1)Estimate acquisition costs plus reasonable
dispensing fees established by the agency; or

(2)Providers' usual and customary charges to the
general public

These regulations do not assist the plaintiffs here for the
obvious reason that they merely set a ceiling, but no floor,
on what providers must be paid. Any payments below the
ceiling, no matter how low, would satisfy the regulation.
Accordingly, the regulations do not show that the Secretary

17
has interpreted Section 30(A) as intended to benefit
providers; nor can they be viewed as themselves intended to
benefit providers.17

In sum, we are convinced that Section 30(A) is not
intended to benefit providers and that therefore providers
may not assert a Section 30(A) claim under S 1983.

D.

Of the other courts of appeals that have considered the
question whether providers may assert a Section 30(A)
claim under S 1983, the Fifth Circuit's opinion contains the
most thorough analysis of the intended-to-benefit
requirement. See Evergreen Presbyterian Ministries, Inc. v.
Hood, 235 F.3d 908, 928-29 (5th Cir. 2000); see also
Walgreen Co. v. Hood, 275 F.3d 475 (5th Cir. 2001). In
Evergreen Presbyterian Ministries, the Fifth Circuit wrote:

Section 30(A) . . . focuses on recipients in that it is
directly keyed to the recipients' access to medical care,
and as a result, the recipients are the direct intended
beneficiaries of the section. . . . [I]n contrast to the
Boren Amendment, section 30(A) does not create an
individual entitlement in favor of any provider. The
section benefits recipients by ensuring there is an
adequate number of providers in the marketplace.
Therefore, it may be true that health care providers as
a group are indirectly benefitted by section 30(A)
because the section requires that the payments to
providers be sufficient to ensure that Medicaid
recipients have equal access to medical care. But it
cannot be said that section 30(A) necessarily confers
upon each provider an individual right to a particular
payment because the section does not focus directly on
providers.

235 F.3d at 928-29 (emphasis in the original). We agree
with the Fifth Circuit's analysis and holding.
_________________________________________________________________

17. In South Camden Citizens in Action v. New Jersey Dep't of Envtl.
Prot., 274 F.3d 771 (3d Cir. 2001), we held that a regulation may invoke
a private right of action that Congress created through statutory text but
may not create a new right.

18
Prior to the decision in Evergreen Presbyterian Ministries,
the First, Seventh, and Eighth Circuits had held that
providers may pursue a Section 30(A) action underS 1983,
but we decline to follow these decisions. See Visiting Nurse
Ass'n of North Shore, Inc. v. Bullen, 93 F.3d 997, 1004 (1st
Cir. 1996); Methodist Hosp., Inc. v. Sullivan , 91 F.3d 1026,
1029 (7th Cir. 1996); Arkansas Med. Soc'y, Inc. v. Reynolds,
6 F.3d 519, 526 (8th Cir. 1993).18

In Arkansas Medical Society, the Eighth Circuit reasoned
as follows:

The question of whether the Medicaid providers are
intended beneficiaries is . . . easily resolved. Wilder
concluded that institutional providers were intended
beneficiaries of the Boren Amendment because the
Amendment concerned their reimbursement. Wilder, 496
U.S. at 510, 110 S.Ct. at 2517. Similarly, the equal
access provision [of Section 30(A)] addresses payment
for "care and services" provided by noninstitutional
providers. The providers here are beneficiaries for the
same reason that the providers in Wilder were
beneficiaries.

6 F.3d at 526 (emphasis added).

This analysis pays little attention to the differing terms of
the Boren Amendment and Section 30(A) and is thus
inconsistent with the reminder in Suter to examine each
particular statutory provision "in detail." 503 U.S. at 357.
Arkansas Medical Society fails to note that the Boren
Amendment was keyed to providers' costs, whereas Section
30(A) focuses on the care and services available to
recipients. Moreover, while Arkansas Medical Society read
Wilder to mean that the Boren Amendment was intended to
benefit providers simply because it "concerned their
reimbursement," 6 F.3d at 526, Wilder actually relied on
the fact that the Boren Amendment "establishe[d] a system
_________________________________________________________________

18. In Orthopaedic Hosp. v. Belshe, 103 F.3d 1491 (9th Cir. 1997), the
Court held in favor of a hospital that appealed an adverse decision
regarding a Section 30(A) claim brought under S 1983. However, the
Court's opinion provides no indication that the hospital's right to
proceed
under S 1983 was challenged, and the Court did not address the issue.

19
for reimbursement of providers and [was] phrased in terms
benefitting health care providers." Wilder, 496 U.S. at 510
(emphasis added). As we have noted, the same cannot be
said of Section 30(A).

In Methodist Hosp., Inc. v. Sullivan, supra, the Seventh
Circuit held that Medicaid providers may assert Section
30(A) claims under S 1983, but the opinion provides no
indication that the Seventh Circuit was presented with the
question whether Section 30(A) was intended to benefit
providers. Instead, the opinion merely addresses-- and
rejects -- the district court's holding that providers could
not sue under Section 30(A) because the term "geographic
area"19 is so "vague and amorphous" that its enforcement
would strain judicial competence. Methodist Hosp. v.
Indiana Family and Social Services Admin., 860 F. Supp.
1309, 1331- 33 (N.D. In. 1994).

In Visiting Nurse Ass'n of North Shore, Inc. v. Bullen,
supra, the argument presented to the First Circuit
regarding the intended-to-benefit requirement was notably
different from the argument presented to us. In Visiting
Nurse Ass'n, it was argued that Section 30(A), unlike the
Boren Amendment, is not intended to benefit providers
because Section 30(A) "does not list specific categories of
health care providers (e.g., hospitals, nursing facilities, and
intermediate care facilities." 93 F.3d at 1004. The First
Circuit rejected this attempted distinction and wrote:

The Wilder Court first observed that the statute "is
phrased in terms benefitting health care providers,"
and leaves "little doubt that health care providers are
the intended beneficiaries," then proceeded to illustrate
how the plain language of the Boren Amendment
"establishes a system for reimbursement of providers"
through its listing of specific types of health care
providers. Nowhere did the Court indicate that the
more general term "providers" would not suffice,
however, or that a listing of specific types of providers
_________________________________________________________________

19. As previously noted, Section 30(A) requires that a plan assure that
"care and services are available under the plan at least to the extent
that
such care and services are available to the general population in the
geographic area." 42 U.S.C. S 1396a (30)(A)(emphasis added).

20
 is a sine qua non without which a congressional intent
to benefit health care providers could not be inferred.
As long as the two statutory provisions evince a
congressional concern for preserving financial
incentives to providers--by ensuring adequate
reimbursement payment levels--providers are
appropriately considered intended beneficiaries. See
Arkansas Med. Soc'y, Inc., 6 F.3d at 526.

93 F.3d at 1004 (italics in quotations from Wilder added by
First Circuit). To the extent that the First Circuit rejected
the particular argument advanced to it, its decision has no
bearing on the issue we address here. And to the extent
that the First Circuit simply adopted the reasoning of
Arkansas Medical Society, we find that reasoning
unpersuasive for the reasons already explained.

After considering all of the decisions of other courts of
appeals on the question before us, we agree with the Fifth
Circuit's analysis in Evergreen Presbyterian Ministries, and
we respectfully decline to follow the contrary courts of
appeals decisions.

E.

Our conclusion that providers may not assert Section
30(A) claims under S 1983 does not mean that Section
30(A)'s important "quality of care" and access requirements
will go unenforced. Not only is HHS responsible for
ensuring that state plans are administered in accordance
with these requirements, see 42 U.S.C. S 1396c, but
Medicaid recipients plainly satisfy the intended-to-benefit
requirement and are thus potential private plaintiffs. In
other parts of the country, recipients have sued to enforce
Section 30(A), and the other courts of appeals have
uniformly held that recipients may assert such claims
under S 1983. See Evergreen Presbyterian Ministries, 235
F.3d at 927; Visiting Nurses Ass'n, 93 F.3d at 1004 n.7;
Arkansas Medical Society, 6 F.3d at 526. If, as the plaintiffs
in this case allege, the rates set under the HealthChoices
program are so low that compliance with the "quality of
care" and access requirements is threatened, we see no
reason to believe that recipients in the affected area of the

21
Commonwealth will not seek legal redress to ensure that
these critical mandates are met.

IV.

For the reasons explained above, the order of the District
Court is affirmed.

22
BECKER, Chief Judge, dissenting, with whom Judges
Mansmann,* Scirica, McKee and Rendell join.

The focus of the majority opinion, quite properly, is on
whether Section 30(A) is intended to benefit the provider
plaintiffs. To reach the result that it was not, the majority
must distinguish the case central to the outcome, Wilder v.
Virginia Hospital Association, 496 U.S. 498 (1990), which
held that the Boren Amendment, a statute that by its
express terms required states to establish a scheme for
reimbursement of Medicaid healthcare providers, is
intended to benefit providers. The majority attempts to do
so by reasoning that the Boren Amendment and Section
30(A) "contrast[ ] sharply." Maj. Op. at 11. I disagree, for as
I will explain, the two statutes confer nearly identical rights
on providers. Hence this case is squarely controlled by
Wilder, which compels the conclusion that healthcare
providers may sue under S 1983 to enforce their rights
under Section 30(A). The clear majority of Circuits to
address the question whether healthcare providers may sue
under S 1983 to enforce their rights under Section 30(A)
have resolved that question in the affirmative, and my views
are in accord.

As the majority observes, the Boren Amendment and
Section 30(A) differ textually insofar as the Boren
Amendment's reference to provider costs in its definition of
reimbursement rates is absent from Section 30(A). The
rationale of Wilder, however, renders this difference
immaterial, since Wilder nowhere relied on the Boren
Amendment's reference to provider costs in concluding that
providers were intended beneficiaries of that statute.
Rather, Wilder clearly explained that the reason providers
were intended beneficiaries of the Boren Amendment is that
the provision by its express terms required states to
establish a scheme for provider reimbursement. See Wilder,
496 U.S. at 510. Similarly, Section 30(A) expressly requires
states to establish a system for reimbursing providers for
services rendered.
_________________________________________________________________

* The Honorable Carol Los Mansmann participated in the oral argument
and joined in this opinion, but died before the opinion could be filed.

23
Much of the majority opinion is devoted to explaining
why Medicaid recipients are among the intended
beneficiaries of Section 30(A). I agree, but a statute can
have more than one class of intended beneficiaries and
hence the mere fact that Congress intended Section 30(A) to
benefit Medicaid recipients has no bearing on whether
Congress also intended Section 30(A) to benefit Medicaid
providers. By its own terms, Section 30(A) is addressed to
both healthcare providers and Medicaid recipients, for, like
the Boren Amendment, it expressly requires states to
establish a scheme for provider reimbursement and
mandates minimum reimbursement rates defined by
reference to quality of care and recipients' access to care
and services. Hence, Wilder controls.

While this brief introduction sets up the analytical core of
this opinion, it is deficient to the extent that it lacks context
-- the dynamic of the real world of healthcare.
Unfortunately, so does the majority opinion, which, while
commendably terse, is short on "realpolitik." I will therefore
supply that broader context, which implicates the
relationship between provider costs and the availability of
services to Medicaid recipients. The background of this case
is the recent change in the Medicaid system in the five-
county Philadelphia metropolitan area from fee-for-service
to managed care. The plaintiffs have adduced evidence
designed to demonstrate that the HMOs, in administering
Medicaid, have squeezed the pharmacies and reduced
provider reimbursement rates to levels that, according to
the plaintiffs, are below any reasonable measure of the cost
of providing care and services. As a practical matter, if the
HMOs set provider reimbursement rates too low, providers
will simply refuse to render services to Medicaid recipients,
and recipients will go without adequate access. In fact, 50%
of the pharmacies that participated in Medicaid in the five
county area have dropped out since 1997. The plaintiffs
also produced evidence that no pharmacy within fifteen
contiguous zip codes in Bucks and Montgomery counties
participates in Medicaid, and that among those pharmacies
in the five-county area that continue to participate in
Medicaid, quality of care has suffered as a result of
inadequate reimbursement rates.

24
While the plaintiffs' submissions in this area are
contested, and failure to establish that the challenged
reimbursement rates violate Section 30(A)'s quality of care
and adequate access mandates would be fatal to their case,
they demonstrate a nexus between the interests of
providers and the interests of recipients, which is
recognized by the express terms of Section 30(A). Moreover,
given the financial straits of Medicaid recipients and
providers' access to information on the relationship between
reimbursement rates and provider participation in
Medicaid, healthcare providers may be better able to
enforce recipients' and providers' shared interest in
assuring that provider reimbursement rates comply with
the mandates of Section 30(A).

I thus respectfully dissent from the conclusion that
S 1983 does not grant providers a cause of action to sue for
violations of Section 30(A). Since the Court has not gone
beyond the threshold issue of whether S 1983 grants
providers a right of action to enforce Section 30(A), I would
reconstitute the original panel so that it may resolve the
merits of the Department's summary judgment motion,
which requires determining whether plaintiffs have
produced sufficient evidence for a reasonable jury to find
that the challenged reimbursement rates violate Section
30(A)'s quality of care and adequate access mandates, an
issue on which I express no opinion.

I.

The managed care program at issue is HealthChoices,
under which the Pennsylvania Department of Public
Welfare has contracted with four HMOs to administer the
Medicaid program in the five-county area. The Department
agrees to pay the HMOs on a per-person basis, and permits
the HMOs to set pharmacy reimbursement rates. The
plaintiffs allege that the pharmacy reimbursement rates set
by the HMOs are below any reasonable estimate of
pharmacies' costs, and that unless rates are at least
adequate to cover providers' costs, they cannot be
consistent with quality of care or sufficient to induce
enough pharmacies to participate in Medicaid so that
Medicaid recipients have the same access to pharmacies as

25
members of the general population, as is required by
Section 30(A).

In support of their claim that current rates are
inconsistent with quality of care, the plaintiff pharmacists
produced evidence that: (1) low reimbursement rates
prevent them from dispensing or stocking certain drugs; (2)
low reimbursement rates require them to cut back on
services provided to customers, such as counseling
customers about how to use their medication; (3)
administrative problems with the HealthChoices HMOs
prevent their customers from obtaining medication; (4)
HealthChoices HMOs force their customers to change
repeatedly their medication, causing delays and leading to
health problems when the new medication is ineffective; (5)
HealthChoices HMOs restrict the formularies that may be
used to fill customer prescriptions, causing delays in
customers' prescriptions being filled, often to the detriment
of customers' health; and (6) HealthChoices HMOs make
medical judgments on a daily basis over the phone and
deny medications that they know nothing about.

In support of their allegation that the reimbursement
rates fall below the minimum rates mandated by Section
30(A)'s access requirement, plaintiffs produced evidence
showing a precipitous drop in the number of pharmacies in
the five-county area who participate in Medicaid since the
inception of HealthChoices. In particular, 50% of the
pharmacies that participated in Medicaid have dropped out
since 1997. Plaintiffs also produced evidence that the
HealthChoices reimbursement rates are the lowest rates in
the five-county area, and that whereas the Blue Cross
network has 963 participating pharmacies in the five-
county area, the four HealthChoices HMOs have only 600,
635, 794, and 864 pharmacies each participating in their
networks. Moreover, there are no pharmacies that
participate in Medicaid in fifteen contiguous zip codes in
Bucks and Montgomery counties. Consequently, according
to the plaintiffs, Medicaid recipients lack access to
pharmacies to the same extent as the general population.

Whether this evidence is sufficient to create a triable
issue of fact as to whether the current rates violate Section
30(A)'s quality of care and adequate access mandate is, of

26
course, disputed by the Department. My purpose in
summarizing this evidence is not to express a view as to
whether this evidence is sufficient for plaintiffs' claims to
survive summary judgment, but rather to provide concrete
evidence of the common interest shared by providers and
recipients in enforcing the provider reimbursement rates
mandated by Section 30(A).

On its face Section 30(A) is addressed to both healthcare
providers and Medicaid recipients, as it expressly requires
states to establish a scheme for provider reimbursement
and mandates minimum reimbursement rates defined by
reference to recipients' quality of care and access to care
and services. In particular, Section 30(A) requires states to
"provide . . . methods and procedures relating to. . . the
payment for[ ] care and services available under the plan"
and to reimburse providers at rates that are "consistent
with efficiency, economy, and quality of care and are
sufficient to enlist enough providers so that care and
services are available under the plan at least to the extent
that such care and services are available to the general
population in the geographic area."

The House Report on the 1989 amendment to Section
30(A) confirms Congress's recognition that because
healthcare providers' participation in Medicaid is voluntary,
Medicaid recipients' access to healthcare will suffer if
provider reimbursement rates are too low to induce a
sufficient number of providers to participate in Medicaid:

There is no doubt that Medicaid reimbursement rates
have not kept pace with average community rates. . ..
The Committee believes that, without adequate
payment levels, it is simply unrealistic to expect
physicians to participate in the program. . . .[T]he
Committee bill would require that Medicaid payments
for all practitioners be sufficient to enlist enough
providers so that care and service are available under
the plan at least to the extent that such care and
services are available to the general population in the
geographic area.

H.R. Rep. No. 101-247, at 390 (1989), reprinted in 1989
U.S.C.C.A.N. 2060, 2116. As the majority notes, Section

27
30(A)'s legislative history also indicates that Congress
intended Section 30(A) to be enforced through private
actions. See H.R. Rep. No. 158, at 312-13 (1981) ("[I]n
instances where the States or the Secretary fail to observe
these statutory requirements, the courts would be expected
to take appropriate remedial action.").

The evidence we have described illustrates the manner in
which the interests of healthcare providers and Medicaid
recipients are inextricably intertwined. As we noted in West
Virginia University Hospitals, Inc. v. Casey, 885 F.2d 11 (3d
Cir. 1989), aff 'd on other grounds, 499 U.S. 83 (1991):

We recognize, of course, that the primary purpose of
medicaid is to achieve the praiseworthy social objective
of granting health care coverage to those who cannot
afford it. It does not necessarily follow, however, that
Title XIX grants substantive rights only to medicaid
patients. Although the broad purpose of the Medicaid
Act as a whole is to help the poor attain medical care,
the specific purpose of section 1396a(a)(13)(A) is to
assure state compliance with some federal standard of
hospital reimbursement. The section sets up a plan for
the adequate and reasonable reimbursement of
hospitals which serve medicaid patients, and thus
hospitals are the section's "beneficiaries." Their
interests and the interests of medicaid patients are
bonded by a common goal, the delivery of adequate
health care by the hospitals to state medicaid patients
and the enjoyment of such care by the patients. The
interests of both are intertwined and hospitals have a
concrete stake in reimbursement in accordance with
the federal statute and regulations.

Id. at 20. Against this backdrop, I now turn to the doctrinal
question whether S 1983 grants healthcare providers a
cause of action to enforce Section 30(A).

II.

Until now, nearly every Circuit to consider the issue has
held that whether providers may bring actions under
S 1983 to enforce the mandates of Section 30(A) is squarely
controlled by the Supreme Court's decision in Wilder, which

28
of course remains binding on this Court unless the
Supreme Court overrules it. See State Oil Co. v. Khan, 522
U.S. 3, 20 (1997) ("[I]t is this Court's prerogative alone to
overrule one of its precedents."). The first Court of Appeals
to consider the issue was the Eighth Circuit in Arkansas
Medical Society, Inc. v. Reynolds, 6 F.3d 519 (8th Cir.
1993), which concluded that Section 30(A) is
indistinguishable from the Boren Amendment, which the
Supreme Court in Wilder held was enforceable by providers
under S 1983:

Our analysis in this case is greatly simplified by the
Wilder opinion. Although focusing on a different
subsection, Wilder addressed the same statute facing
us in this case. Suter urges a careful scrutiny of the
exact legislation at issue and Wilder has already done
that. . . . [T]he equal access provision is very analogous
to the Boren Amendment examined in Wilder; they are
similar not only in function but also in the specific
language employed.

Id. at 525. With regard to the particular question whether
providers are among the intended beneficiaries of Section
30(A), the Court determined that:

The question of whether the Medicaid providers are
intended beneficiaries is also easily resolved. Wilder
concluded that institutional providers were intended
beneficiaries of the Boren Amendment because the
Amendment concerned their reimbursement. Similarly,
the equal access provision [of Section 30(A)] addresses
payment for "care and services" provided by
noninstitutional providers. The providers here are
beneficiaries for the same reason that the providers in
Wilder were beneficiaries.

Id. at 526 (internal citations omitted).

The First Circuit and the Seventh Circuit have also easily
resolved the issue whether providers may bring S 1983
actions to enforce Section 30(A) by noting that the question
is squarely controlled by Wilder. In Visiting Nurse
Association of North Shore, Inc. v. Bullen, 93 F.3d 997 (1st
Cir. 1996), the First Circuit concluded that providers are
among the intended beneficiaries of Section 30(A) for the

29
same reason that the Supreme Court held that they were
among the intended beneficiaries of the Boren Amendment:

The Wilder Court first observed that the[Boren
Amendment] "is phrased in terms benefitting health
care providers," and leaves "little doubt that health
care providers are the intended beneficiaries," then
proceeded to illustrate how the plain language of the
Boren Amendment "establishes a system for
reimbursement of providers" . . . . As long as the two
statutory provisions evince a congressional concern for
preserving financial incentives to providers -- by
ensuring adequate reimbursement payment levels --
providers are appropriately considered intended
beneficiaries.

Id. at 1004 (emphasis and internal citations omitted).
Similarly, the Seventh Circuit observed that because Wilder
had not been overruled, "Wilder's holding binds us," and
consequently held that providers have a private right of
action under S 1983 to enforce Section 30(A). See Methodist
Hosps., Inc. v. Sullivan, 91 F.3d 1026, 1029 (7th Cir. 1996)
("We therefore . . . hold that providers of medical care have
a private right of action, derived through S 1983, to enforce
S 1396a(a)(30)."). Thus, most courts have found that
whether S 1983 grants providers a cause of action to
enforce Section 30(A) is an issue that is easily disposed of
by Wilder. Until now, the only Circuit to hold otherwise is
the Fifth Circuit in Evergreen Presbyterian Ministries, Inc. v.
Hood, 235 F.3d 908 (5th Cir. 2000), which I discuss in
Section IV, infra.

III.

A.

The majority holds that providers may not sue under
S 1983 to enforce Section 30(A) because they are not among
the provision's intended beneficiaries.1 Like most Courts of
_________________________________________________________________

1. I disagree with the majority's replacement of the requirement under
S 1983 that "Congress must have intended that the provision in question

30
Appeals to consider the issue, I believe that the inquiry into
whether providers are among the intended beneficiaries of
Section 30(A) begins and ends with Wilder.

The Boren Amendment, which was the statute that
providers sought to enforce in Wilder, provided, in relevant
part:

A State plan for medical assistance must . . . provide
. . . for payment . . . of hospital services, nursing
facilities, and services in an intermediate care facility
for the mentally retarded provided under the plan
through the use of rates . . . which the State finds. . .
are reasonable and adequate to meet the costs which
must be incurred by efficiently and economically
operated facilities in order to provide care and services
in conformity with applicable State and Federal laws,
regulations, and quality and safety standards and to
assure that individuals eligible for medical assistance
_________________________________________________________________

benefit the plaintiff," Blessing v. Freestone , 520 U.S. 329, 340 (1997),
with the stricter requirement, drawn from an implied right of action case,
that the statute must be "draft[ed] . . . with an unmistakable focus on
the benefitted class." Cannon v. Univ. of Chi., 441 U.S. 677, 691 (1979).
See Maj. Op. at 9, 11. The Supreme Court has made clear that:

[Whether a cause of action exists under S 1983] is a different
inquiry
than that involved in determining whether a private right of action
can be implied from a particular statute. In implied right of
action
cases, we employ the four-factor Cort test to determine whether
Congress intended to create the private remedy asserted for the
violation of statutory rights. The test reflects a concern,
grounded in
separation of powers, that Congress rather than the courts controls
the availability of remedies for violations of statutes. Because S
1983
provides an alternative source of express congressional
authorization of private suits, these separation-of-powers concerns
are not present in a S 1983 case.

Wilder, 496 U.S. at 508 n.9 (internal quotations and citations omitted).
The Supreme Court has never held that to be enforceable under S 1983,
a provision must also be "draft[ed] . . . with an unmistakable focus on
the benefitted class," Cannon, 441 U.S. at 692, as the majority asserts.
Rather, in the S 1983 context, a plaintiff must simply show that the
provision in question was "intended to benefit" the plaintiff. Golden
State
Transit Corp. v. City of L.A., 493 U.S. 103, 106 (1989).
31
 have reasonable access (taking into account geographic
location and reasonable travel time) to inpatient
hospital services of adequate quality . . . .

42 U.S.C. S 1396a(a)(13)(A) (repealed).

The text of Section 30(A) is strikingly similar. It provides,
in relevant part:

A State plan for medical assistance must . . . provide
such methods and procedures relating to the utilization
of, and the payment for, care and services available
under the plan . . . as may be necessary to safeguard
against unnecessary utilization of such care and
services and to assure that payments are consistent
with efficiency, economy, and quality of care and are
sufficient to enlist enough providers so that care and
services are available under the plan at least to the
extent that such care and services are available to the
general population in the geographic area . . . .

42 U.S.C. S 1396a(a)(30)(A). Comparing the two statutes, I
can find no principled basis for holding that providers are
intended beneficiaries of the Boren Amendment, as the
Supreme Court held in Wilder, but are not intended
beneficiaries of Section 30(A), as the majority holds today.
In particular, I cannot accept the majority's contention that
"[t]he language of Section 30(A) contrasts sharply with that
of the Boren Amendment." Maj. Op. at 11.

Both the Boren Amendment and Section 30(A) require
states to reimburse providers for services rendered. See
Boren Amendment ("A State plan for medical assistance
must . . . provide . . . for payment . . . of . . . services . . .
provided under the plan . . . ."); Section 30(A) ("A State plan
for medical assistance must . . . provide . . . methods and
procedures relating to . . . payment for, care and services
available under the plan . . . ."). And both the Boren
Amendment and Section 30(A) define reimbursement rates
by reference to efficiency and economy. See Boren
Amendment (defining rates by reference to "efficiently and
economically operated facilities"); Section 30(A) (requiring
states "to assure that payments are consistent with
efficiency [and] economy").

32
Both the Boren Amendment and Section 30(A) require
states to reimburse providers at rates that are sufficient to
ensure quality of care. See Boren Amendment (requiring
that reimbursement rates be "reasonable and adequate to
meet the costs which must be incurred . . . in order to
provide care and services in conformity with . . . quality
and safety standards"); Section 30(A) (requiring states "to
assure that payments are consistent with . . . quality of
care"). And both the Boren Amendment and Section 30(A)
require states to reimburse providers at rates that are
sufficient to guarantee Medicaid recipients adequate access
to healthcare. See Boren Amendment (requiring "rates . . .
which . . . are reasonable and adequate . . . to assure that
individuals eligible for medical assistance have reasonable
access . . . to inpatient hospital services"); Section 30(A)
(requiring states "to assure that payments are . . . sufficient
to enlist enough providers so that care and services are
available under the plan at least to the extent that such
care and services are available to the general population in
the geographic area").

Thus, far from "contrast[ing] sharply," as the majority
contends, see Maj. Op. at 11, the Boren Amendment and
Section 30(A) confer on providers nearly identical rights to
be reimbursed for services provided and to be reimbursed
at a minimum rate that is defined by reference to quality of
care and adequate access. See Ark. Med. Soc'y, Inc. v.
Reynolds, 6 F.3d 519, 525 (8th Cir. 1993) ("[T]he equal
access provision [of Section 30(A)] is very analogous to the
Boren Amendment examined in Wilder; they are similar not
only in function but also in the specific language
employed."). This case is therefore squarely controlled by
Wilder, and I would hold that healthcare providers may
bring S 1983 actions to enforce the rights conferred on
them by Section 30(A).2
_________________________________________________________________

2. I fully concur in the majority's distinction between "the question
whether a statute is intended to benefit particular plaintiffs" and "the
question whether the statute in fact benefits those plaintiffs." Maj. Op.
at
8. Similarly, I agree with the majority's observation that "lessors of
pharmacy premises, cleaning service firms retained by pharmacies, trash
collection companies retained by pharmacies, [and] private security firms
retained by pharmacies" may all benefit from Section 30(A). Maj. Op. at

33
B.

The majority's rationale relies heavily on the fact that
Section 30(A) is addressed in part to recipients, since it
defines provider reimbursement rates by reference to
quality of care and adequate access. See Maj. Op. at 11
("[Section 30(A)'s] directives to provide`quality of care' and
adequate access . . . . are drafted with an unmistakable
focus on Medicaid beneficiaries, not providers."); id. at 12
("[Section 30(A)] demands that payments be set at levels
that are sufficient to meet recipients' needs."); id. ("[T]he
adequacy of payments [under Section 30(A)] is measured in
relation to the health needs of recipients."); id. at 19
("Section 30(A) focuses on the care and services available to
recipients."); id. at 12 ("It is therefore apparent from the
statutory language that the intended beneficiaries of
Section 30(A) are recipients, not providers.").

To rely on the quality of care and adequate access
guarantees as a basis for holding that Section 30(A) was
not intended to benefit providers, however, would require
overruling Wilder, which squarely held that a statute that
defines provider reimbursement rates by reference to
Medicaid recipients' quality of care and Medicaid recipients'
access to care and services may nonetheless be intended to
benefit providers. Nowhere in Wilder did either the majority
or the dissent even hint that the Boren Amendment's
reference to quality of care and adequate access should give
the Court pause before concluding that the Boren
Amendment was intended to benefit providers. As such, for
purposes of determining whether providers are intended
beneficiaries of Section 30(A), Wilder renders irrelevant the
fact that Section 30(A) includes quality of care and
adequate access guarantees.

Inexplicably, then, the majority makes the adequate
access and quality of care guarantees that are found in
_________________________________________________________________

8. But I have little difficulty in concluding that these third parties are
not among the intended beneficiaries of Section 30(A), for the simple
reason that Section 30(A) expressly requires states to establish a scheme
for reimbursing those who provide healthcare services, not garbage
collection services or security services.

34
both the Boren Amendment and Section 30(A) the
cornerstone of its analysis in holding that providers are not
intended beneficiaries of Section 30(A). To be consistent
with Wilder, which held that providers are intended
beneficiaries of the Boren Amendment, however, a rationale
leading to the conclusion that providers are not intended
beneficiaries of Section 30(A) must rest not on similarities
between the Boren Amendment and Section 30(A), as does
the vast bulk of the majority opinion, but rather on
differences.

C.

The only difference between the Boren Amendment and
Section 30(A) that the majority relies on is the Boren
Amendment's reference to providers' costs, which is absent
from Section 30(A). For the reasons discussed below,
however, the reference to providers' costs in the Boren
Amendment and the absence of such a reference in Section
30(A) are immaterial for purposes of determining whether
providers are among the intended beneficiaries of Section
30(A).

First, the language of the Boren Amendment did not
create any independent right on the part of providers to be
reimbursed for their costs without reference to quality of
care, as the majority maintains. The majority repeatedly
quotes the language in the Boren Amendment requiring
payments to be "reasonable and adequate to meet the costs
which must be incurred by efficiently and economically
operated facilities," Maj. Op. at 10, 11, but neglects to
quote the remainder of the clause, which goes on to
expressly define costs in terms of quality of care. In fact,
the Boren Amendment required payment for "the costs
which must be incurred by efficiently and economically
operated facilities in order to provide care and services in
conformity with applicable State and Federal laws,
regulations, and quality and safety standards ." (emphases
added). The plain language of the Boren Amendment thus
explicitly defined "costs" by reference to quality of care, and
created no independent right of providers to be reimbursed
for their costs beyond that conferred by the quality of care
requirement, such as exists in Section 30(A).

35
I acknowledge that quality of care guarantees in the two
statutes are not completely identical -- the Boren
Amendment requires rates that "meet the costs which must
be incurred . . . to provide care and services in conformity
with . . . quality and safety standards," while Section 30(A)
requires rates that "are consistent with . . . quality of care."
I cannot agree with the majority's conclusion, however, that
this difference is so significant that quality of care "played
a decidedly secondary role in the Boren Amendment," but
"is a primary benchmark" in Section 30(A). Maj. Op. at 14.
Indeed, the majority never explains how a reimbursement
rate could be so low that it violates the Boren Amendment's
requirement that rates meet "the costs which must be
incurred by efficiently and economically operated facilities
in order to provide care and services in conformity with
applicable State and Federal laws, regulations, and quality
and safety standards," yet nonetheless be "consistent with
. . . quality of care," as mandated by Section 30(A).

Even assuming, arguendo, that the majority is correct
that the Boren Amendment created an independent right on
the part of providers to be reimbursed for their costs
without reference to quality of care, the plaintiffs in Wilder
were suing to enforce both their right to be reimbursed at
rates that covered their costs, as well as their independent
right under the Boren Amendment to be reimbursed at
rates that are sufficient to ensure adequate access. See
Wilder, 496 U.S. at 503 ("Respondent contends that
Virginia's Plan for reimbursement violates the Act because
the rates are not reasonable and adequate to meet the
economically and efficiently incurred cost of providing care
to Medicaid patients in hospitals and do not assure access
to inpatient care.") (emphasis added and internal quotation
marks omitted). Had Wilder's holding rested on the Boren
Amendment's reference to provider costs, as the majority
contends, then the Court would have permitted the
providers to sue under S 1983 to enforce only their right to
be reimbursed for their costs, and not their additional right
under the Boren Amendment to be reimbursed at rates
sufficient to ensure recipients adequate access to care and
services.

The plain language of S 1983 creates a cause of action
not for a violation of a statute as an undifferentiated whole,

36
but rather for a violation of a "right[ ] . . . secured by the
Constitution or laws" of the United States. See Blessing v.
Freestone, 520 U.S. 329, 340 (1997) ("In order to seek
redress through S 1983, . . . a plaintiff must assert the
violation of a federal right, not merely a violation of federal
law."); id. at 342 ("It was incumbent upon the respondents
to identify with particularity the rights they claimed, since
it is impossible to determine whether Title IV-D, as an
undifferentiated whole, gives rise to undefined`rights.' "). By
permitting the providers' suit to proceed, the Supreme
Court necessarily held that providers are among the
intended beneficiaries of not only the Boren Amendment's
requirement that reimbursement rates be sufficient to cover
provider costs, but also the Boren Amendment's
requirement that reimbursement rates be sufficient to
ensure recipients' adequate access to care and services.

Finally, and most importantly, the Supreme Court's
rationale in Wilder made clear that in concluding that
providers were intended beneficiaries of Section 30(A), it
was relying not on the Boren Amendment's reference to
providers' costs, as the majority asserts, but rather on the
Boren Amendment's express requirement that states
establish a scheme to reimburse providers for services
rendered. In attempting to distinguish Section 30(A) from
the Boren Amendment, the majority repeatedly quotes
Wilder's conclusion that the Boren Amendment"was
phrased in terms benefitting health care providers," see
Maj. Op. at 10, 12, 20, but conspicuously omits the rest of
the sentence, in which the Wilder Court explained why it
concluded that the Boren Amendment "was phrased in
terms benefitting health care providers." The remainder of
the sentence, which the majority never fully quotes, makes
clear what particular statutory language in the Boren
Amendment the Court in Wilder was in fact relying on in
concluding that the Boren Amendment was "phrased in
terms benefitting providers":

There can be little doubt that health care providers are
the intended beneficiaries of the Boren Amendment.
The provision establishes a system for reimbursement
of providers and is phrased in terms benefitting health
care providers: It requires a state plan to provide for

37
 "payment of the hospital services, nursing facility
services, and services in an intermediate care facility for
the mentally retarded provided under the plan." 42
U.S.C. S 1396a(a)(13)(A) (1982 ed., Supp. V)

Wilder, 496 U.S. at 510 (internal alterations omitted)
(emphasis added).

The majority is "convinced," Maj. Op. at 12, that when
the Wilder Court stated that the Boren Amendment "is
phrased in terms benefitting health care providers: It
requires a state plan to provide for `payment of the hospital
services, nursing facility services, and services in an
intermediate care facility for the mentally retarded provided
under the plan,' " the Court was relying on language in the
Boren Amendment other than the language it directly
quoted. It is difficult to imagine how a judicial opinion
could be more clear about what particular statutory
language it is relying on to establish a given proposition
than by expressly quoting that language immediately
following the proposition, as the Supreme Court did in
Wilder. The majority's conclusion that the Court quoted
only a portion of the statutory language that it relied on in
concluding that the Boren Amendment was "phrased in
terms benefitting health care providers" is particularly
puzzling given that, according to the majority, that portion
of the Boren Amendment that the Court actually quoted in
the passage above was insufficient to establish the
proposition for which it was cited, while that portion of the
Boren Amendment that the Court neglected to quote (the
Boren Amendment's reference to provider costs) was,
according to the majority, "plainly a boon for providers,"
and "an unmistakable sign of a congressional desire to
benefit providers." Maj. Op. at 14.

Indeed, by the majority's reasoning, it is hard to see why
the Wilder majority, in concluding the Boren Amendment
was "phrased in terms benefitting health care providers,"
would even bother to quote the particular language in the
Boren Amendment requiring "payment of the hospital
services, nursing facility services, and services in an
intermediate care facility for the mentally retarded provided
under the plan," given that, according to the majority, the
nearly identical language in Section 30(A) requiring

38
"payment for[ ] care and services available under the plan,"
"manifests concern solely for the well-being of recipients."
Maj. Op. at 12 (emphasis added).3
_________________________________________________________________

3. The majority attempts to overcome the obvious difficulty posed by the
Wilder Court's quotation of the particular language in the Boren
Amendment that it was relying on by invoking the canon of construction
that a statute should be construed to avoid rendering any part of it
superfluous. According to the majority, if the reason that Wilder
concluded that the Boren Amendment was "phrased in terms benefitting
health care providers" was that it required a state plan to provide for
"payment of the hospital services, nursing facility services, and services
in an intermediate care facility for the mentally retarded provided under
the plan" (the language in the Boren Amendment that the Wilder
majority relied on), then the Supreme Court's "full [sic] sentence (`The
provision establishes a system for reimbursement of providers and is
phrased in terms benefitting health care providers') would say exactly the
same thing twice . . . ." Maj. Op. at 12.

I believe that this reasoning errs by "minutely parsing phrases, and
seeking shades of meaning in the interstices of sentences and words, as
though a discursive judicial opinion were a statute." Schlup v. Delo, 513
U.S. 298, 343 (1995) (Scalia, J., dissenting). Even if the majority were
correct that my reading of Wilder renders a portion of a sentence in the
opinion redundant, it would be neither the first nor the last time that a
judicial opinion sought clarity at risk of redundancy. Whatever
redundancy might exist in the sentence at issue in Wilder, I nonetheless
believe that the Court was relying on the statutory language that it
quoted when it stated that the Boren Amendment "is phrased in terms
benefitting health care providers: It requires a state plan to provide for
`payment of the hospital services, nursing facility services, and services
in an intermediate care facility for the mentally retarded provided under
the plan.' "

At all events, the Supreme Court's statement that the Boren
Amendment "establishes a system for reimbursement of providers" and
the Supreme Court's conclusion that the Boren Amendment "is phrased
in terms benefitting health care providers" because it "requires a state
plan to provide for `payment of the hospital services, nursing facility
services, and services in an intermediate care facility for the mentally
retarded provided under the plan' " do not amount to "say[ing] exactly
the same thing twice." Maj. Op. at 12. The first statement is addressed
to the substance of the Boren Amendment (the Boren Amendment
"establishes a system for reimbursement of providers," 496 U.S. at 510);
the second statement is addressed to the Boren Amendment's text (the
Boren Amendment "is phrased in terms benefitting health care providers:

39
Given that the excerpt quoted above contains the Wilder
Court's entire discussion of whether providers were
intended beneficiaries of the Boren Amendment, the
majority is plainly incorrect when it asserts that"the
Supreme Court [in Wilder] stressed the Boren Amendment's
cost-reimbursement language," and that "the Court relied
on language in the Boren Amendment that measured the
adequacy of payments in relation to the economics of
providers, i.e., their need to cover their reasonable costs."
Maj. Op. at 10 (emphases added). Nowhere in its analysis
did the Court rely on the Boren Amendment's reference to
provider costs, much less "stress" such language, as the
majority contends. And whatever this Court may think
about the breadth of the Supreme Court's rationale, it is
not our function to rewrite a Supreme Court opinion to
narrow its holding by imputing to the Court reliance on a
fact that played no role in the Court's rationale. Rather, the
scope of the Wilder Court's holding must be determined by
reference to the Wilder Court's ratio decidendi as articulated
by the Wilder Court.

As is readily apparent from the analysis quoted above,
the Wilder Court made perfectly clear that in concluding
that "there can be little doubt that healthcare providers are
the intended beneficiaries of the Boren Amendment," it was
relying on the language in the Boren Amendment requiring
a state plan to provide for "payment of the hospital services,
nursing facility services, and services in an intermediate
care facility for the mentally retarded provided under the
plan." See Ark. Med. Soc'y, Inc. v. Reynolds , 6 F.3d 519,
526 (8th Cir. 1993) ("Wilder concluded that institutional
providers were intended beneficiaries of the Boren
_________________________________________________________________

It requires a state plan to provide for `payment of the hospital services,
nursing facility services, and services in an intermediate care facility
for
the mentally retarded provided under the plan.' " 496 U.S. at 510). See
Maj. Op. at 9 (commenting on "the importance of the particular phrasing
of a statute in this regard"); Maj. Op. at 16 ("[T]he inquiry mandated by
Wilder and Blessing -- whether Congress intended for Section 30(A) to
benefit providers as opposed to simply knowing that providers would be
benefitted -- calls for us . . . to take into account the precise
statutory
language adopted by Congress.").

40
Amendment because the Amendment concerned their
reimbursement."); see also Evergreen Presbyterian
Ministries, Inc. v. Hood, 235 F.3d 908, 925 (5th Cir. 2000)
("[T]he [Wilder] Court concluded that there was little doubt
that the providers were the intended beneficiaries of the
Boren Amendment because it established a system for
reimbursement of providers and was phrased in terms
benefitting health care providers, in that it required a state
plan to provide for their payment.") (internal quotations and
alterations omitted); Visiting Nurse Ass'n of N. Shore, Inc. v.
Bullen, 93 F.3d 997, 1004 (1st Cir. 1996) ("The Wilder
Court . . . observed that the statute `is phrased in terms
benefitting health care providers,' and . . . then proceeded
to illustrate how the plain language of the Boren
Amendment `establishes a system for reimbursement of
providers.' ") (emphasis omitted).

Thus, for the same reason that the Wilder Court
concluded that the Boren Amendment was "phrased in
terms benefitting health care providers: It requires a state
plan to provide for `payment of the hospital services,
nursing facility services, and services in an intermediate
care facility for the mentally retarded provided under the
plan,' " 496 U.S. at 510 (quoting the Boren Amendment), I
would conclude that Section 30(A) is phrased in terms
benefitting health care providers: It requires a state plan to
provide for "payment for[ ] care and services available under
the plan." See Ark. Med. Soc'y, 6 F.3d at 526 ("[T]he equal
access provision [of Section 30(A)] addresses payment for
`care and services' provided by noninstitutional providers.
The providers here are beneficiaries for the same reason
that the providers in Wilder were beneficiaries."); Visiting
Nurse Ass'n, 93 F.3d at 1004 (1st Cir. 1996) ("As long as
the two statutory provisions evince a congressional concern
for preserving financial incentives to providers-- by
ensuring adequate reimbursement payment levels --
providers are appropriately considered intended
beneficiaries.").4

(Text continued on page 43)
_________________________________________________________________

4. One further point needs to be made -- that the majority's departure
from Wilder creates serious line-drawing problems. Whereas Wilder held
that any statute that expressly requires states to pay providers is

41
intended to benefit providers, the majority holds that whether such a
statute is intended to benefit providers depends on how the statute
defines the minimum payment rate. But the majority never offers an
analytically sound explanation of how we are to distinguish those
payment floors that are intended to benefit providers from those
payment floors that are not.

At times, the majority appears to rely on the fact that the payment
floor mandated by Section 30(A) is not expressly defined by reference to
provider costs or provider economics. See Maj. Op. 12 (distinguishing
Wilder on the ground that the Boren Amendment"measured the
sufficiency of payments by reference to the economics of providers"); Id.
at 12 ("Unlike the Boren Amendment, [Section 30(A)] evinces no direct
concern for the economic situation of providers."). But if the majority's
test of whether providers are intended beneficiaries of a statute
requiring
states to pay providers some minimum amount turns on whether the
language of the statute expressly defines the minimum reimbursement
rate by reference to provider costs or provider economics, then providers
would not be among the intended beneficiaries of a statute that required
states to pay pharmacies $2,500 each time they dispense a given dosage
of a particular prescription drug, but would be among the intended
beneficiaries of a statute that required states to pay providers 1% of
their
costs each time they dispensed a drug. In my view, this taxonomy is
unreasonable.

Elsewhere, the majority appears to rely on the fact that the text of
Section 30(A) defines the minimum reimbursement rates solely by
reference to the health needs of recipients. See Maj. Op. at 12
(observing
that under Section 30(A), "the adequacy of payments is measured in
relation to the health needs of recipients"). But if the majority's test
of
whether providers are intended beneficiaries of a statute requiring states
to pay providers is whether the statute's language expressly defines
reimbursement rates solely by reference to the health needs of
recipients, then that test too, produces unreasonable results. Under
such a test, providers would not be among the intended beneficiaries of
a statute whose language expressly required states to pay providers ten
times the rate needed to ensure Medicaid recipients quality of care and
adequate access, but providers would be intended beneficiaries of a
statute whose language expressly required states to pay providers a
dollar every time they filled a Medicaid prescription.

Finally, it may be that the minimum reimbursement rates actually
mandated by the Boren Amendment were lower than the actual
minimum rates mandated by Section 30(A). For example, the Boren

42
In sum, although there are differences between the
specific language of the Boren Amendment and the specific
language of Section 30(A), as there inevitably will be
between any two statutes, these differences are immaterial
in light of Wilder's rationale, and the Supreme Court in
Wilder gave no indication that its rationale was"good for
this day and train only." County of Washington v. Gunther,
452 U.S. 161, 183 (1981) (Rehnquist, J., dissenting).

IV.

Until now, the only Court of Appeals to hold that
providers may not bring S 1983 actions to enforce their
rights under Section 30(A) was the Fifth Circuit in
Evergreen Presbyterian Ministries, Inc. v. Hood, 235 F.3d
908 (5th Cir. 2000), which I would decline to follow. In
holding that providers are not among the intended
beneficiaries of Section 30(A), the Fifth Circuit in Evergreen
relied heavily on the Supreme Court's decision in Blessing
v. Freestone, 520 U.S. 329, 340 (1997), which held that a
plaintiff may sue under S 1983 for a violation of a federal
statute only if the statute creates an individual entitlement,
and not simply a systemwide guarantee. Id. at 343. In
Blessing, the plaintiffs were mothers whose children were
eligible to receive child support services from the state
pursuant to Title IV-D of the Social Security Act. Id. at 332.
Plaintiffs brought a S 1983 action seeking to enforce 42
_________________________________________________________________

Amendment's access requirement mandated that rates be sufficient to
ensure only that "individuals eligible for medical assistance have
reasonable access," whereas Section 30(A) requires equal access -- rates
must be "sufficient to enlist enough providers so that care and services
are available under the plan at least to the extent that such care and
services are available to the general population in the geographic area."
Fortunately, Wilder avoided the problem of distinguishing those
mandatory payment floors that are intended to benefit the payee from
those that are not. While how high the statute sets the payment floor will
determine the magnitude of the intended benefit (a low minimum
reimbursement rate obviously does not benefit providers as much as a
high minimum reimbursement rate), under Wilder as long as the statute
expressly requires states to pay providers, providers are intended
beneficiaries.

43
U.S.C. S 609, which authorizes the Secretary of the
Department of Health and Human Services to penalize a
state if it is not in "substantial compliance" with Title IV-D.
Id. at 335.

The Blessing Court held that S 609(a)(8) does not create
an individual right, enforceable under S 1983, to have
states achieve substantial compliance with Title IV-D. First,
the Court noted that the plaintiffs had failed to identify a
particular provision of Title IV-D that grants them an
individual entitlement, and may not simply sue to enforce
substantial compliance with Title IV-D as a whole. See
Blessing, 520 U.S. at 342 ("It was incumbent upon
respondents to identify with particularity the rights they
claimed, since it is impossible to determine whether Title
IV-D, as an undifferentiated whole, gives rise to undefined
`rights.' "). Second, the Court reasoned that because
S 609(a)(8)'s "substantial compliance" requirement would be
satisfied if the state provided the mandated services in only
75% of the cases reviewed during the federal audit period,
"even when a State is in `substantial compliance' with Title
IV-D, any individual plaintiff might still be among the 10 or
25 percent of persons whose needs ultimately go unmet."
Id. at 344. Thus, "[f]ar from creating an individual
entitlement to services, the standard [which plaintiffs seek
to enforce under S 1983] is simply a yardstick for the
Secretary to measure the systemwide performance of a
State's Title IV-D program." Id. at 343.

In view of the Supreme Court's rationale in Blessing,
plaintiffs' claims in this case are easily distinguishable from
plaintiffs' claims in Blessing. First, unlike the plaintiffs in
Blessing, the plaintiffs in this case have identified with
particularity the right claimed, since they allege that the
reimbursement rates violate Section 30(A)'s quality of care
and adequate access mandates. Cf. Blessing, 520 U.S. at
342 (distinguishing Wilder on the ground that "in Wilder,
we held that health care providers had an enforceable right
to reimbursement . . . as required by a particular provision
in the Medicaid statute") (emphasis added). This case is
therefore distinguishable from Blessing for the same reason
that the Blessing Court concluded that Wilder was
distinguishable from Blessing.

44
Blessing is further distinguishable on the ground that in
that case, the plaintiffs would not necessarily have obtained
any benefit had they succeeded on the merits of their claim,
since the provision that they sought to enforce under
S 1983 required only "substantial compliance" with Title IV-
D. See Blessing, 520 U.S. at 344 ("[E]ven when a State is in
`substantial compliance' with Title IV-D, any individual
plaintiff might still be among the 10 or 25 percent of
persons whose needs ultimately go unmet."). By contrast,
in this case each individual plaintiff will necessarily benefit
if they succeed on the merits, since they would each be
individually entitled to reimbursement at higher rates.

I therefore disagree with Evergreen's reliance on Blessing
in concluding that Section 30(A) creates only a system-wide
guarantee, not an individual entitlement on the part of
providers. The Fifth Circuit in Evergreen illustrated its
reasoning with the following example:

Assume we have a nursing home in Baton Rouge with
150 residents, which, following the [rate reduction at
issue], is forced into bankruptcy and then liquidation.
Assume further that the district court decides that the
relevant geographic market to measure the access of
recipients is the Baton Rouge market for nursing home
care and also that the district court concludes that the
recipients are entitled to the same access to nursing
home care in Baton Rouge as that of non-Medicaid
recipients. Finally, assume that, once the nursing
home closes, all 150 residents are able to fill vacant
beds in other facilities in Baton Rouge. Under this
scenario, there is no violation of the recipients' equal
access rights, despite the fact that the bankrupt
nursing home was put out of business.

From this example, it is apparent that while
recipients have an individual entitlement to equal
access to medical care, any benefit to healthcare
providers is indirect at best. The statute does not
confer any direct right upon the individual provider
because, as the above example illustrates, even if an
individual provider is forced to liquidate, the recipients'
right to access is not necessarily violated.

45
235 F.3d at 929. I find this reasoning unpersuasive.

First, the Fifth Circuit put the rabbit in the hat when it
reasoned from a hypothetical example in which Section
30(A) is not violated. See Evergreen, 235 F.3d at 929
("Under this scenario, there is no violation of the recipients'
equal access rights . . . ."). Of course providers will have no
individual entitlement under Section 30(A) to increased
reimbursement rates under a factual scenario in which
Section 30(A) is not violated. But in a factual scenario
where reimbursement rates are so low that Section 30(A)'s
adequate access guarantee is violated, every provider who
participates in Medicaid would be individually entitled to
reimbursement at the higher rate mandated by Section
30(A).

Second, Evergreen incorrectly assumed that unless a
statute requiring providers to be reimbursed at a given rate
ensures that no providers will ever be put out of business,
the statute does not create any direct right on the part of
providers. See Evergreen, 235 F.3d at 929 ("The statute
does not confer any direct right upon the individual
provider because, as the above example illustrates, even if
an individual provider is forced to liquidate, the recipients'
right to access is not necessarily violated."). Under any
statute addressed to provider reimbursement, however, it
will almost always be the case that some providers may go
out of business notwithstanding the statute. But this
possibility does not mean that the statute creates no
individual entitlement on the part of providers.

Consider, for example, a statute that expressly requires
states to reimburse pharmacies at least $25 each time they
dispense a given dosage of a particular prescription drug to
a Medicaid recipient. A $25 reimbursement rate might force
certain providers out of business, but it is hard to imagine
a statute that more directly confers an individual
entitlement on providers. Similarly, there was no guarantee
in the Boren Amendment that no provider would ever be
put out of business, but the Court in Wilder nonetheless
held that the Boren Amendment conferred on providers
rights that are enforceable under S 1983.

Finally, the Evergreen Court mistakenly reasoned that
because the minimum reimbursement rate mandated by

46
Section 30(A) is defined by reference to the market-wide
criterion of Medicaid recipients' access to healthcare, it
does not confer an individual entitlement on providers. See
Evergreen, 235 F.3d at 928 ("Section 30(A) does not create
an individual entitlement in favor of any provider. The
section benefits recipients by ensuring there is an adequate
number of providers in the market place."). That Section
30(A) defines the mandatory minimum provider
reimbursement rate by reference to the number of providers
in the market place, however, does not make the rate any
less mandatory or any less of a minimum. As long as a
statute expressly requires providers to be reimbursed at
rates that are at least equal to a defined minimum, then
the statute creates an individual entitlement on the part of
every provider to be reimbursed at that minimum,
regardless whether the minimum is defined by reference to
providers' costs, recipients' access, quality of care, market
rates, or a fixed sum.

Thus, contrary to the Fifth Circuit's conclusion that "it
cannot be said that section 30(A) necessarily confers upon
each provider an individual right to a particular payment,"
Section 30(A) clearly does confer upon each provider an
individual right to be paid at rates that are at least equal to
the statutory minimum. See Wilder, 496 U.S. at 510
("There can be little doubt that health care providers are
the intended beneficiaries of the Boren Amendment. The
provision establishes a system for reimbursement of
providers and is phrased in terms benefitting health care
providers: It requires a state plan to provide for `payment of
the hospital services, nursing facility services, and services
in an intermediate care facility for the mentally retarded
provided under the plan.' ") (internal alterations omitted).
Cf. W. Va. Univ. Hosps., Inc. v. Casey, 885 F.2d 11, 21 (3d
Cir. 1989), aff 'd on other grounds, 499 U.S. 83 (1991)
("Who else is more aggrieved by the absence of an adequate
or reasonable hospital reimbursement rate than a
disadvantaged hospital and who has a more compelling
interest to press for a correction?").

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V.

Finally, although one can find isolated instances of
Medicaid recipients suing to enforce Section 30(A), see, e.g.,
Evergreen Presbyterian Ministries, Inc. v. Hood, 235 F.3d
908, 931-32 (5th Cir. 2000); Ark. Med. Soc'y, Inc. v.
Reynolds, 6 F.3d 519, 522 (8th Cir. 1993), I do not share
the majority's optimism that lawsuits brought by Medicaid
recipients will provide sufficient private enforcement. See
Maj. Op. at 21-22 ("If, as the plaintiffs in this case allege,
the rates set under the HealthChoices program are so low
that compliance with the `quality of care' and access
requirements is threatened, we see no reason to believe
that recipients in the affected area of the Commonwealth
will not seek legal redress to ensure that these critical
mandates are met."). Medicaid recipients are, by definition,
people facing severe financial hardship, and therefore are
unlikely to have the same access to legal services as
healthcare providers.5

Moreover, Section 30(A), by its express terms, uses
provider reimbursement rates as the means of ensuring
recipients' quality of care and adequate access, and
healthcare providers are more likely than Medicaid
recipients to possess information about the relationship
between current provider reimbursement rates and
recipients' quality of care and access to care and services.
Indeed, few if any Medicaid recipients will even be aware of
current provider reimbursement rates, much less have an
idea of how a particular rate compares with provider costs
_________________________________________________________________

5. To be sure, attorney's fees are available to a successful S 1983
plaintiff. See 42 U.S.C. S 1988 ("In any action or proceeding to enforce a
provision of section[ ] . . . 1983 . . . of this title, . . . the court,
in its
discretion, may allow the prevailing party . . . a reasonable attorney's
fee
as part of the costs . . . ."). Awards of attorney's fees may be
inadequate
to induce attorneys to represent Medicaid recipients in Section 30(A)
cases, however, since such attorneys would assume the risk of earning
no fees if the lawsuit is unsuccessful. See City of Burlington v. Dague,
505 U.S. 557 (1992) (holding that in determining the reasonableness of
attorney's fees under federal fee shifting statutes, courts may not
enhance the fee award above the "lodestar" amount to compensate
attorneys for assuming the risk of receiving no payment for their services
if the lawsuit failed).

48
and the reimbursement rates offered by non-Medicaid
healthcare plans. Nor are Medicaid recipients likely to have
ready access to statistical information on the extent to
which healthcare is available to the general public, for
purposes of determining whether current reimbursement
rates comply with Section 30(A)'s adequate access mandate.
By contrast, professional associations such as the
pharmacists association plaintiff in this case are more
likely to possess the market data necessary to determine
whether a colorable claim under Section 30(A) exists.

In sum, because Section 30(A) is expressly addressed to
the financial incentives of healthcare providers to
participate in Medicaid, healthcare providers are well-
situated to vindicate recipients' and providers' shared
interest in ensuring that provider reimbursement rates are
consistent with quality of care and sufficient to guarantee
Medicaid recipients access to care and services to the same
extent as the general public. These practical considerations
further support the result compelled by Wilder .

VI.

Because I believe that the question whether providers
may bring S 1983 actions to enforce Section 30(A) is
squarely controlled by Wilder, I would decline to follow
Evergreen Presbyterian Ministries, Inc. v. Hood, 235 F.3d
908 (5th Cir. 2000), and would join those Circuits that,
relying on Wilder, have permitted providers to bring such
claims. See Visiting Nurse Ass'n of N. Shore, Inc. v. Bullen,
93 F.3d 997, 1005 (1st Cir. 1996) ("[W]e conclude that
plaintiffs possess standing . . . to enforce section
1396a(a)(30) . . . ."); Methodist Hosps., Inc. v. Sullivan, 91
F.3d 1026, 1029 (7th Cir. 1996) ("We therefore . . . hold
that providers of medical care have a private right of action,
derived through S 1983, to enforce S 1396a(a)(30)."); Ark.
Med. Soc'y, Inc. v. Reynolds, 6 F.3d 519, 528 (8th Cir.
1993) ("[T]he equal access provision [of Section 30(A)] may
be enforced by Medicaid recipients and providers using 42
U.S.C. S 1983."). I thus respectfully dissent.

To hold as have these other Courts would not of course
be the end of the case, for the plaintiffs would still have

49
significant hurdles in the next phase. In particular,
plaintiffs would have to demonstrate that they have
produced sufficient evidence for a reasonable jury to find
that the current reimbursement rates are so low that they
violate either the quality of care or adequate access
mandate contained in Section 30(A), a question on which I
express no opinion here. Since the Court has not gone
beyond the threshold issue of whether S 1983 grants
providers a right of action to enforce Section 30(A), I would
reconstitute the original panel so that it may resolve the
merits of the Department's summary judgment motion,
which requires determining whether plaintiffs have
produced sufficient evidence for a reasonable jury to find
that the challenged reimbursement rates violate Section
30(A)'s quality of care and adequate access mandates.

50
RENDELL, Circuit Judge, dissenting, with whom Chief
Judge BECKER joins:

I join in Chief Judge Becker's thoughtful dissenting
opinion and write separately only to offer a permissible
reading of the statutory language different from that urged
by the majority. The majority terms the language"complex"
and "breaks it down." However, I see it as fairly straight-
forward -- at least regarding what we need to decide --
when properly parsed. If we were to "parse" the statute at
issue in grammarian fashion, we would note that the"state
plan" is the noun, "must provide," the verb, and "methods
and procedures," the object. Then comes the descriptive
phrase "relating to the utilization of, and payment for, care
and services available under the plan." The methods and
procedures must relate to the use of care and services -- by
individual recipients -- and the payment-- to providers --
for care and services.

What then follows in the statute -- preceded by"as may
be necessary . . ." -- is no more than a further descriptive
phrase setting forth the barometer or standard against
which the utilization and payment methods and procedures
are to be measured. Why should only the users be able to
challenge a plan that must pass muster not only in terms
of the methods and procedures for "utilization," but also the
methods and procedures for "payment?"

I think it eminently reasonable to conclude that both
aspects -- use and payment -- are foci, and that both
constituencies can speak to whether the statutory
requirement ("as may be necessary to . . .") has been
fulfilled, and both should have the right to complain that in
fact it has not.

Also, in response to the majority's footnote 15, I submit
that I am not ignoring the second part of the provision, and
I do not view the provision as hopelessly vague. Rather, I
see no need to mention it because it sets forth a standard
that is quite susceptible to proof. I have little difficulty
imagining the gist of the testimony of recipients, providers,
and state administrators as to how the procedures in place
impact the sufficiency of payment and quality of service, so
that judicial decision making can be exercised. I do,

51
however, continue to have difficulty in understanding why
there cannot be two intended beneficiaries, especially if the
statute is designed to benefit one (the providers) in order to
provide the desired level of services to the other (the
recipients).

Further, I suggest that the fact that the language post-
repeal of Boren continues to reference "rates" is actually
quite insignificant. In repealing Boren, Congress replaced
the standard for the rates ("reasonable and adequate") with
the requirement that the state provide for a public process
for determination of rates. What is significant, however, is
the fact that the Boren Amendment language that had been
held to afford a cause of action required that rates be
"reasonable and adequate," and the language we are
quibbling over similarly describes a standard for payments
to providers. I see no meaningful distinction between the
two and therefore respectfully dissent.

A True Copy:
Teste:

Clerk of the United States Court of Appeals
for the Third Circuit

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