In the
United States Court of Appeals
For the Seventh Circuit
____________________
No. 21-2325
SAINT ANTHONY HOSPITAL,
Plaintiff-Appellant,
v.
ELIZABETH M. WHITEHORN, in her official capacity
as Director of the Illinois Department of
Healthcare and Family Services,
Defendant-Appellee,*
and
MERIDIAN HEALTH PLAN OF ILLINOIS, INC., et al.,
Intervening Defendants-Appellees.
____________________
Appeal from the United States District Court for the
Northern District of Illinois, Eastern Division.
On Remand from the Supreme Court of the United States.
No. 1:20-cv-02561 — Steven C. Seeger, Judge.
____________________
SUBMITTED DECEMBER 29, 2023 — DECIDED APRIL 25, 2024
____________________
* We have substituted the new director as the named defendant pur-
suant to Federal Rule of Appellate Procedure 43(c)(2).
2 No. 21-2325
Before WOOD, HAMILTON, and BRENNAN, Circuit Judges.
HAMILTON, Circuit Judge. We first addressed this appeal in
2022, when we reversed in part the district court’s dismissal
of the case and remanded for further proceedings. Saint An-
thony Hospital v. Eagleson, 40 F.4th 492 (7th Cir. 2022). Defend-
ant petitioned for a writ of certiorari. The Supreme Court held
the case while it considered Health & Hospital Corp. of Marion
County v. Talevski, 599 U.S. 166 (2023), which presented similar
issues concerning the use of 42 U.S.C. § 1983 to enforce certain
provisions in the Federal Nursing Home Reform Act amend-
ments to the Medicaid Act. After deciding Talevski, the Court
granted defendant’s petition in this case, vacated our earlier
decision, and remanded for reconsideration in light of Talev-
ski. 143 S. Ct. 2634 (2023) (mem.). Such a “GVR” order calls for
further thought, but it does not necessarily imply that the
lower court’s previous result should be changed. E.g., Klikno
v. United States, 928 F.3d 539, 544 (7th Cir. 2019); see generally
Lawrence v. Chater, 516 U.S. 163, 166–70 (1996) (per curiam)
(discussing GVR practices). Upon remand, the parties submit-
ted statements of position and we ordered further briefing.
We have taken a fresh look at the appeal in light of Talevski.
We again reverse the dismissal of plaintiff’s central claim and
remand for further proceedings.
By way of introduction, in recent years, Illinois moved its
Medicaid program from a fee-for-service model, where a state
agency pays providers’ medical bills, to one dominated by
managed care, where the state pays private insurers to pay
medical bills for Medicaid patients. Most patients of plaintiff
Saint Anthony Hospital are covered by Medicaid, so Saint
Anthony depends on full, timely Medicaid payments to keep
its doors open and provide care to patients. Saint Anthony
No. 21-2325 3
says it is now in a dire financial state. Over four years from
2015 to 2019, it lost roughly 98% of its cash reserves, allegedly
because managed-care organizations (MCOs) repeatedly and
systematically delayed and reduced payments it was owed
for treating patients covered by Medicaid managed care.
Saint Anthony contends in this lawsuit that Illinois offi-
cials owe it a duty under the federal Medicaid Act to act to
push MCOs to make timely and full payments. In a thought-
ful opinion, the district court dismissed the suit for failure to
state a claim for relief. Saint Anthony Hospital v. Eagleson, 548
F. Supp. 3d 721 (N.D. Ill. 2021). We continue to see the case
differently, however, especially at the pleadings stage. Under
the standards of Talevski and related precedents, Saint An-
thony has alleged a viable claim for relief under 42 U.S.C.
§ 1396u-2(f) and may seek injunctive relief under 42 U.S.C.
§ 1983 against the state official who administers the Medicaid
program in Illinois. We appreciate the potential magnitude of
the case and the challenges it may present. Like the district
judge, we can imagine forms of judicial relief that would be
hard to justify. We can also imagine some poor ways to handle
this case going forward in the district court. But we should
not decide this case by assuming that the worst-case scenarios
are inevitable.
The State has tools available to remedy systemic slow and
short payment problems—problems alleged to be so serious
that they threaten the viability of a major hospital and per-
haps even of the managed-care Medicaid program as admin-
istered in Illinois. If Saint Anthony can prove its claims, the
chief state official could be ordered to use some of those tools
to remedy systemic problems that threaten this literally vital
4 No. 21-2325
health care program. We therefore again reverse in part the
dismissal of the case and remand for further proceedings.
I. Factual and Procedural Background
In reviewing the grant of a motion to dismiss under
Federal Rule of Civil Procedure 12(b)(6) for failure to state a
claim, we accept as true all well-pled factual allegations in the
complaint and draw all reasonable inferences in Saint
Anthony’s favor. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). We
are not vouching for the truth of Saint Anthony’s account of
the facts at this point. Rather, because the defense moved to
dismiss on the pleadings, it chose to accept for now the truth
of Saint Anthony’s factual allegations.
A. The Illinois Medicaid Program
The federal Medicaid Act established a cooperative ar-
rangement between the federal government and states to pro-
vide medical services to poor residents. 42 U.S.C. § 1396 et
seq.; Bria Health Services, LLC v. Eagleson, 950 F.3d 378, 380 (7th
Cir. 2020); see also National Federation of Independent Business
v. Sebelius, 567 U.S. 519, 541–42 (2012). By agreeing to partici-
pate in Medicaid, a state receives financial assistance to help
administer the program in exchange for complying with de-
tailed statutory and regulatory requirements. Bria Health Ser-
vices, 950 F.3d at 380. Those requirements are found in the
Medicaid Act itself (Title XIX of the Social Security Act) and
in Department of Health and Human Services (HHS) regula-
tions. See id. at 380, 382; Rock River Health Care, LLC v. Eagleson,
14 F.4th 768, 771 (7th Cir. 2021).
Before discussing the relevant statutory requirements at
issue here, it is important to understand how the Illinois
Department of Healthcare and Family Services (HFS)
No. 21-2325 5
administers the State’s Medicaid program. There are two
major ways for states to pay providers for services provided
to patients covered by Medicaid: fee for service and managed
care. In a fee-for-service program, the state pays providers
directly based on a set fee for a particular service. See 42
U.S.C. § 1396a(a)(30)(A); Medicaid Program; Medicaid
Managed Care: New Provisions, 67 Fed. Reg. 40989, 40989
(June 14, 2002). Under a managed-care program, by contrast,
HFS contracts with MCOs (which are private health insurance
companies) to deliver Medicaid health benefits to
beneficiaries. See 42 U.S.C. § 1396u-2; see also 42 U.S.C.
§ 1396b(m); 42 C.F.R. § 438 (2020). The state typically pays the
MCO a flat fee per patient per month. The MCO then pays
providers for services actually provided to covered Medicaid
patients. Bria Health Services, 950 F.3d at 381, citing 305 ILCS
5/5-30.1; see also 42 U.S.C. §§ 1396u-2, 1396b(m). Like
insurance companies, MCOs are generally entitled to keep as
profits the difference between the money they receive from
the state and the amounts they pay providers for care of
covered patients.
In recent years, Illinois has changed from fee-for-service to
a system dominated by managed care. Illinois introduced
managed care in its Medicaid program in 2006. In 2010, the
State spent just $251 million on managed care. By 2019, that
number had grown to $12.73 billion. In the meantime, the
number of MCOs in Illinois has fallen from twelve to seven.
Federal law establishes requirements for timely Medicaid
payments to health care providers. When a state pays claims
directly, it must pay 90% of so-called “clean claims” within 30
days and 99% within 90 days. See 42 U.S.C. § 1396a(a)(37)(A).
(A “clean claim” is one for which the payor has all
6 No. 21-2325
information needed to determine the proper payments. Id.)
When a state relies on MCOs to pay providers, federal law
requires that the state’s contract with an MCO contain a pro-
vision that requires the same 30/90 pay schedule for MCO re-
imbursements to providers. 42 U.S.C. § 1396u-2(f). (MCOs
and providers can opt for a different pay schedule, but Saint
Anthony has not agreed to a different schedule with any
MCOs.) The focus of this case is the payment schedule provi-
sion, section 1396u-2(f). 1
B. Plaintiff Saint Anthony Hospital
Saint Anthony is a so-called “safety-net hospital” on the
southwest side of Chicago. It provides health care regardless
of patients’ financial means. See 305 ILCS 5/5-5e.1. Most Saint
Anthony patients are on Medicaid. As the Illinois Medicaid
system has shifted from fee for service to managed care, the
hospital has become ever more dependent on timely
payments from MCOs. In recent years, according to Saint
Anthony, those payments have repeatedly arrived late, if they
arrived at all. As of February 2020, payments of at least $20
million were past due. The impact of late payments can be
dramatic. In 2015, Saint Anthony had more than $20 million
in cash on hand, which was enough to fund 72 days of
1 In earlier stages of the case, Saint Anthony argued it was also entitled
to relief under a separate Medicaid statute requiring a participating state
to “provide that all individuals wishing to make application for medical
assistance under the plan shall have opportunity to do so, and that such
assistance shall be furnished with reasonable promptness to all eligible
individuals….” 42 U.S.C. § 1396a(a)(8). We explained in our original opin-
ion, however, why Saint Anthony is not entitled to relief under that clause.
40 F.4th at 515–16. That clause was not part of the Supreme Court’s review,
and we say no more about it here.
No. 21-2325 7
operation. As the State increased its reliance on managed care,
Saint Anthony saw its cash reserves dwindle. By 2019, Saint
Anthony had less than $500,000 cash on hand, enough to
cover just two days of operation. Saint Anthony’s net revenue
per patient also dropped more than 20%.
The MCO payments that eventually arrive are often for
less than is owed. Making matters worse from Saint
Anthony’s perspective, the payment forms it receives from
the MCOs lack the details needed to determine just what is
being paid and what is not. The delays and lack of clarity
benefit the MCOs: since the State pays the MCOs flat fees per
patient and permits them to keep the funds they do not pay
out to providers, MCOs have a powerful profit incentive to
delay and underpay hospitals like Saint Anthony. This
incentive under managed care is inherent and well-known.
The need to control MCOs’ behavior to protect providers and
patients explains why Congress included section 1396u-2(f)
in the statutes governing managed care under Medicaid.
Saint Anthony may not be alone in its experience. Mer-
cyhealth is a regional health-care system and the largest Med-
icaid provider in Illinois outside of Cook County. Illustrating
the potential gravity of the MCO payment problems, in April
2020, Mercyhealth announced it would stop accepting Medi-
caid patients covered by four of the seven MCOs in Illinois.
Decl. of Kim Scaccia ¶ 6, Dkt. 50-1, Ex. 12. This was a drastic
step showing the potential threat to the viability of the man-
aged-care model for Medicaid. Mercyhealth said it took this
step because those MCOs were delaying and underpaying it
to the point that it was losing $30 million per year on Medi-
caid patients. See also David Jackson & Kira Leadholm, Insur-
ance Firms Reap Billions in Profits While Doctors Get Stiffed for
8 No. 21-2325
Serving the Poor, Better Government Association (Nov. 8,
2021), https://www.bettergov.org/news/insurance-firms-
reap-billions-in-profits-while-doctors-get-stiffed-for-serving-
the-poor/ (last visited April 25, 2024). 2
Faced with this dire financial situation, Saint Anthony had
two paths to seek legal relief from what it sees as systemic
defects in the Illinois Medicaid program. One path would be
to sue MCOs individually for violating Saint Anthony’s con-
tractual rights to timely payment. Arbitration provisions in
those contracts might well require arbitration for each indi-
vidual claim in dispute. That path could easily involve many
thousands of individual claims each year, though that is a
matter for the district court to consider when it takes up the
MCO intervenors’ effort to force all or parts of this dispute
into arbitration. This suit represents the second path, seeking
a court order to require Illinois officials to devise systems that
will ensure that they perform the statutorily required over-
sight of MCOs’ payments to providers like Saint Anthony.
C. Procedural History
Saint Anthony filed a complaint under 42 U.S.C. § 1983
against the director of HFS in her official capacity. (We refer
to the director here as HFS or the State.) Count I, the only one
relevant at this point, alleges that HFS is violating the
2 In evaluating a Rule 12(b)(6) motion, we may consider the
Mercyhealth information submitted by plaintiff without converting the
motion into one for summary judgment under Rule 12(d). The information
elaborates on and illustrates factual allegations in the complaint. E.g.,
Geinosky v. City of Chicago, 675 F.3d 743, 745 n.1 (7th Cir. 2012).
Mercyhealth also reportedly worked out a compromise with one MCO,
Molina, under which it continued to care for Molina-covered Medicaid
patients. Decl. of Kim Scaccia ¶ 9, Dkt. 50-1, Ex. 12.
No. 21-2325 9
Medicaid Act, including section 1396u-2(f), by failing to en-
sure that MCOs meet the timely payment requirements. Saint
Anthony seeks injunctive relief directing HFS to require the
MCOs to comply with the 30/90 payment rule, to use trans-
parent remittance forms, and if necessary, to require the State
to cancel a contract with an MCO that continues to fail to com-
ply with the timely payment requirements. 3
HFS moved to dismiss Saint Anthony’s complaint under
Federal Rule of Civil Procedure 12(b)(6) for failure to state a
claim. Its chief argument was that none of the statutory pro-
visions grant Saint Anthony any rights enforceable under sec-
tion 1983, and that even if they did, the factual allegations
failed to state a plausible claim for relief. The district court
agreed and dismissed the case. 548 F. Supp. 3d 721 (N.D. Ill.
2021).
While the motion to dismiss was pending, Saint Anthony
moved to supplement its complaint by adding a due process
claim. HFS responded to Saint Anthony’s request, arguing
that the new claim would fail on the merits. The district court
denied Saint Anthony the opportunity to file a reply to defend
its proposed claim on the merits. Then, four days after grant-
ing the motion to dismiss, the district judge denied the motion
to supplement because he thought it was futile and that the
entire case should be concluded by granting the motion to dis-
miss.
3 Saint Anthony also moved for a preliminary injunction. The district
court granted limited discovery before suspending in part actions related
to the preliminary injunction motion while it resolved a discovery dispute.
The court then granted the motion to dismiss and denied the preliminary
injunction motion as moot.
10 No. 21-2325
In the district court, four MCOs were granted leave to
intervene as defendants. The MCOs asked the court to stay
the lawsuit and compel arbitration. One MCO (Meridian)
demanded arbitration with Saint Anthony, but that
proceeding was stayed because Meridian had not followed
the proper procedures to invoke arbitration. The district court
later denied the MCOs’ motions as moot after granting the
motion to dismiss.
Saint Anthony appealed the district court’s dismissal and
the denial of the motion to supplement. We first address Saint
Anthony’s asserted right to timely payment under section
1396u-2(f). To evaluate Saint Anthony’s claim, we address in
Part II-A the standard for invoking section 1983 under Spend-
ing Clause statutes like the Medicaid Act. We consider in Part
II-B the Talevski standard and then in Part II-C walk through
each of the so-called Blessing factors. In Part II-D, we turn to
whether Congress established an alternative remedial scheme
incompatible with the application of section 1983. We con-
clude by addressing in Part III the district court’s denial of
plaintiff’s motion to supplement its complaint and the ques-
tion of arbitration, which the MCOs ask us to resolve before
the district court has done so.
II. A Right to Timely Payments
The central issue here is whether 42 U.S.C. § 1396u-2(f)
grants a right to providers like Saint Anthony that is privately
enforceable through section 1983. We conclude that the stat-
ute imposes on the State a duty to try to ensure that the MCOs
actually pay providers in accord with the 30/90 pay sched-
ule—not merely that the contracts between the MCOs and
HFS include clauses that say as much on paper. Congress im-
posed this affirmative duty on the State for the benefit of
No. 21-2325 11
health care providers like plaintiff. Congress provided suffi-
ciently clear signals that this is both a duty for the State and a
right for providers. Saint Anthony thus has a right under sec-
tion 1396u-2(f) that is enforceable under section 1983. The
right entails having state officials address MCOs’ systemic
failures to provide timely and transparent payments.
A. The Standard for Invoking Section 1983
We again emphasize that we are reviewing the grant of a
motion to dismiss under Federal Rule of Civil Procedure
12(b)(6) for failure to state a claim. We begin by accepting all
well-pleaded factual allegations as true and drawing all rea-
sonable inferences in Saint Anthony’s favor. Iqbal, 556 U.S. at
678.
The analysis for possible enforcement of federal statutory
rights under section 1983 is familiar. “Section 1983 creates a
federal remedy against anyone who, under color of state law,
deprives ‘any citizen of the United States … of any rights,
privileges, or immunities secured by the Constitution and
laws.’” Planned Parenthood of Indiana, Inc. v. Comm’r of Indiana
State Dep’t of Health, 699 F.3d 962, 972 (7th Cir. 2012), quoting
42 U.S.C. § 1983. This language “means what it says,” Maine
v. Thiboutot, 448 U.S. 1, 4 (1980), and “authorizes suits to en-
force individual rights under federal statutes as well as the
Constitution.” City of Rancho Palos Verdes v. Abrams, 544 U.S.
113, 119 (2005). “‘Laws’ means ‘laws,’ no less today than in
the 1870s….” Talevski, 599 U.S. at 172.
Yet not all statutory benefits, requirements, or interests are
enforceable under section 1983. The Medicaid Act is an exer-
cise of Congress’s power under the Spending Clause. Talevski
reinforced earlier precedents allowing rights under Spending
12 No. 21-2325
Clause legislation to be enforced under section 1983 but set a
“demanding bar” for reliance on section 1983: “Statutory pro-
visions must unambiguously confer individual federal rights.”
599 U.S. at 180, citing Gonzaga University v. Doe, 536 U.S. 273,
280 (2002). Talevski summarized the Court’s approach for de-
termining when a statutory provision enacted under the fed-
eral spending power creates a right, privilege, or immunity
enforceable under section 1983:
Gonzaga sets forth our established method
for ascertaining unambiguous conferral. Courts
must employ traditional tools of statutory con-
struction to assess whether Congress has “un-
ambiguously conferred” “individual rights
upon a class of beneficiaries” to which the plain-
tiff belongs. [536 U.S.] at 283, 285–286; see also
Rancho Palos Verdes v. Abrams, 544 U.S. 113, 120
(2005). Notably, it must be determined that
“Congress intended to create a federal right” for
the identified class, not merely that the plaintiffs
fall “within the general zone of interest that the
statute is intended to protect.” Gonzaga, 536
U.S., at 283 (emphasis deleted). This paradigm
respects Congress’s primacy in this arena and
thus vindicates the separation of powers. Id., at
286.
We have held that the Gonzaga test is satis-
fied where the provision in question is
“‘phrased in terms of the persons benefited’”
and contains “rights-creating,” individual-cen-
tric language with an “‘unmistakable focus on
the benefited class.’” Id., at 284, 287 (emphasis
No. 21-2325 13
deleted). Conversely, we have rejected § 1983
enforceability where the statutory provision
“contain[ed] no rights-creating language”; had
“an aggregate, not individual, focus”; and
“serve[d] primarily to direct the [Federal Gov-
ernment’s] distribution of public funds.” Id., at
290.
Talevski, 599 U.S. at 183–84; accord, Blessing v. Freestone, 520
U.S. 329, 340 (1997) (plaintiff seeking redress for alleged vio-
lation of federal statute through a section 1983 action “must
assert the violation of a federal right, not merely a violation of
federal law”). It is not enough to fall “within the general zone
of interest that the statute is intended to protect” to assert a
right under section 1983. Gonzaga, 536 U.S. at 283. Congress
must have “intended to create a federal right,” id., and “the stat-
ute ‘must be phrased in terms of the persons benefited’ with
‘an unmistakable focus on the benefited class.’” Planned
Parenthood of Indiana, 699 F.3d at 973, quoting Gonzaga, 536
U.S. at 284.
Without the later guidance from Talevski, we and the dis-
trict court had framed our earlier analyses under the so-called
Blessing factors, taken from Blessing v. Freestone. Before diving
in further, we need to address the status of Blessing and its
factors after Talevski. Defendants argue that Talevski effectively
displaced or even overruled Blessing. As noted, Talevski wrote
that “Gonzaga sets forth our established method for ascertain-
ing unambiguous conferral” of statutory rights that can sup-
port relief under section 1983. 599 U.S. at 183. That passage
appeared in Talevski as the Court began to evaluate whether
the disputed Medicaid provisions conferred federal rights.
14 No. 21-2325
Talevski did not cite Blessing in that portion of the opinion, nor
did it disapprove of Blessing.
We do not see a fundamental difference between the Talev-
ski/Gonzaga standard for unambiguous conferral of rights en-
forceable under section 1983 and the first and third Blessing
factors, which require an intended benefit for the plaintiff and
a binding obligation on the states. 520 U.S. at 340–41. Or to be
more precise, we do not see a difference that would change
the outcome of this case. Talevski teaches that “courts must
employ traditional tools of statutory construction to assess
whether Congress has ‘unambiguously conferred’ ‘individual
rights upon a class of beneficiaries’ to which the plaintiff be-
longs.” 599 U.S. at 183, quoting Gonzaga, 536 U.S. at 283, 285–
86.
Given the way this case has evolved and the Court’s in-
struction to reconsider in light of Talevski, the most prudent
course is to analyze the key statutory provisions first under
the instructions of Talevski. We do so next in Part II-B. Then, at
some risk of redundancy, in Part II-C, we analyze the question
again using the Blessing factors. In Part II-D, we consider
whether Congress established another remedial scheme in-
compatible with using section 1983 in disputes like this.
B. Applying the Talevski Standard
We start with the text of section 1396u-2(f), the provision
central to this appeal:
Timeliness of payment; adequacy of payment
for primary care services. A contract under sec-
tion 1396b(m) of this title with a medicaid man-
aged care organization shall provide that the or-
ganization shall make payment to health care
No. 21-2325 15
providers for items and services which are sub-
ject to the contract and that are furnished to in-
dividuals eligible for medical assistance under
the State plan under this subchapter who are en-
rolled with the organization on a timely basis
consistent with the claims payment procedures
described in section 1396a(a)(37)(A) of this title,
unless the health care provider and the organi-
zation agree to an alternate payment sched-
ule….
Section 1396u-2(f) cross-references sections 1396b(m) and
1396a(a)(37)(A). Section 1396b(m) describes the State’s con-
tract with an MCO. Section 1396a(a)(37)(A) declares that a
State plan for medical assistance must …
(37) provide for claims payment procedures which
(A) ensure that 90 per centum of claims for pay-
ment (for which no further written information or
substantiation is required in order to make pay-
ment) made for services covered under the plan
and furnished by health care practitioners through
individual or group practices or through shared
health facilities are paid within 30 days of the date
of receipt of such claims and that 99 per centum of
such claims are paid within 90 days of the date of
receipt of such claims….
§ 1396a(a)(37)(A). We agree with Saint Anthony that section
1396u-2(f) grants providers a right to State procedures that
will ensure timely payment from the MCOs.
16 No. 21-2325
1. Statutory Text
The State’s strongest argument against plaintiff’s reliance
on section 1983 is that section 1396u-2(f) does not use the term
“right” or an equivalent, and that the State has done its job by
ensuring that plaintiff has contractual rights it can enforce di-
rectly against MCOs. The absence of the word “right” is not
conclusive, however. As noted, both Talevski and Gonzaga
teach that courts “must employ traditional tools of statutory
construction to assess whether Congress has ‘unambiguously
conferred’ ‘individual rights upon a class of beneficiaries’ to
which the plaintiff belongs.” Talevski, 599 U.S. at 183, quoting
Gonzaga, 536 U.S. at 283, 285–86.
To begin, providers like Saint Anthony are the intended
beneficiaries of the prompt payment term in section 1396u-
2(f). The text requires states to ensure that the state’s contracts
with MCOs “shall provide” that the MCOs “shall make pay-
ment to health care providers … on a timely basis….” 42 U.S.C.
§ 1396u-2(f) (emphasis added). No one benefits more directly
from a requirement for timely payments to providers than the
providers themselves. Cf. BT Bourbonnais Care, LLC v. Nor-
wood, 866 F.3d 815, 821 (7th Cir. 2017) (“Who else would have
a greater interest than the [nursing facility operators] in the
process ‘for determination of rates of payment under the
[state] plan for … nursing facility services’?” (second altera-
tion and omission in original) (quoting 42 U.S.C.
1396a(a)(13)(A)). 4
4 In our original decision, we rejected the State’s argument that the
term “health care providers” includes practitioners but not hospitals.
40 F.4th at 505–06. The State has not pressed the point further on remand,
so we do not address it further in this opinion.
No. 21-2325 17
Section 1396u-2(f) grants providers a right, not merely a
generalized benefit. It is here that we disagree with the district
court. In granting the motion to dismiss, the court invoked
Gonzaga, asserting that providers received only “a generalized
‘benefit’” from section 1396u-2(f), which “isn’t good enough”
to constitute a right enforceable under section 1983. Saint
Anthony Hospital, 548 F. Supp. 3d at 734, quoting Gonzaga, 536
U.S. at 283. The district court concluded that section 1396u-
2(f) “itself does not entitle providers to much of anything, and
does not contain any ‘explicit rights-creating terms.’” Id.,
quoting Gonzaga, 536 U.S. at 284. For its part, the State seems
to adopt something like Justice Holmes’ theory of contract,
under which one party is free to breach as long as it is willing
to pay damages to the other party. The State is claiming an
unfettered right to decide whether to assert its contractual
rights against MCOs, leaving providers like Saint Anthony to
fend for themselves as best they can in the face of systemic
and disabling breaches by MCOs.
We read the statute differently, considering the statutory
text and its context and history. We read the Medicaid Act in
general and section 1396u-2(f) in particular as ensuring that
providers like plaintiff have contractual rights against MCOs,
but also federal rights to have state officials use the State’s
contractual rights and do their jobs by implementing proce-
dures and systems to ensure that MCOs actually make the
promised timely payments.
Gonzaga provides a useful contrast regarding rights-creat-
ing language. In Gonzaga, a former student sued the univer-
sity and an employee under section 1983 for allegedly violat-
ing his rights under the Family Educational Rights and Pri-
vacy Act (FERPA). Part of the statutory language at issue
18 No. 21-2325
directed the Secretary of Education that “‘[n]o funds shall be
made available’ to any ‘educational agency or institution’
which has a prohibited ‘policy or practice’” of permitting the
release of education records without parents’ written consent.
Gonzaga, 536 U.S. at 287 (alteration in original), quoting 20
U.S.C. § 1232g(b)(1); see also § 1232g(b)(2). That prohibited
activity is allegedly what occurred in the case.
The Supreme Court concluded that Congress did not
grant an individual whose interests were violated under
FERPA a right enforceable through section 1983. Because the
statutory provisions did not have an individualized focus,
they failed Blessing factor one: “[The] provisions further speak
only in terms of institutional policy and practice, not individ-
ual instances of disclosure. Therefore, as in Blessing, they have
an ‘aggregate’ focus, they are not concerned with ‘whether the
needs of any particular person have been satisfied,’ and they
cannot ‘give rise to individual rights.’” Gonzaga, 536 U.S. at
288 (internal citation omitted), quoting Blessing, 520 U.S. at
343–44. The Court also highlighted that the Secretary of Edu-
cation could take away funds only if the university did not
substantially comply with the statutory requirements. This fact
contributed to the understanding that the focus was on sys-
temwide performance rather than individual instances of im-
proper disclosure. Gonzaga, 536 U.S. at 279, 281–82. Finally,
since FERPA’s provisions spoke only to the Secretary and di-
rected him or her to withdraw funding from schools that had
a “prohibited policy or practice,” the Court determined that
their focus was “two steps removed from the interests of in-
dividual students and parents.” Id. at 287 (internal citation
and quotation marks omitted). The provisions therefore failed
to confer an individual right enforceable under section 1983.
No. 21-2325 19
The opposite is true here. Section 1396u-2(f) is concerned
with whether the needs of particular persons and entities—
providers like Saint Anthony—have been satisfied. The statu-
tory text specifies that the State “shall provide” that MCOs
“shall make payment to health care providers … on a timely
basis.” 42 U.S.C. § 1396u-2(f). The focus of section 1396u-2(f)
is not “two steps removed” from the interest of providers. Its
focus is directly on the interest Saint Anthony asserts here: en-
suring that providers receive timely payment from MCOs.
And the provision is not concerned only with whether MCOs
in the aggregate pay providers on the 30/90 pay schedule, but
whether individual providers are receiving the payments in
the timeframe promised.
We see this in the provision’s close attention to provider-
specific exemptions from the 30/90 pay schedule. Section
1396u-2(f) says that its mandate applies “unless the health
care provider and the organization agree to an alternate pay-
ment schedule.” It establishes a personal right to timely pay-
ment, which all providers are entitled to insist upon. Cf.
Planned Parenthood of Indiana, 699 F.3d at 974 (Medicaid state
plan requirement permitting all eligible recipients to receive
medical assistance from the provider of their choice estab-
lished “a personal right to which all Medicaid patients are en-
titled” but, implicitly, need not accept (emphasis added)). Ei-
ther way, the focus is on the individual provider. The focus is
not on whether MCOs in the aggregate substantially comply
with the timely payment requirement. Section 1396u-2(f) is
thus not just a benchmark for aggregate performance.
That conclusion finds support in our precedents under
other Medicaid provisions. Section 1396a(a)(10)(A) provides
that “[a] State plan for medical assistance must … provide …
20 No. 21-2325
for making medical assistance available … to [] all [eligible]
individuals.” We have held that the provision confers private
rights to individuals enforceable under section 1983. See Mil-
ler by Miller v. Whitburn, 10 F.3d 1315, 1319–20 (7th Cir. 1993);
accord, Bontrager v. Indiana Family & Social Services Admin.,
697 F.3d 604, 607 (7th Cir. 2012) (reaffirming Miller’s rights
analysis after Blessing and Gonzaga). In Miller, we found it sig-
nificant that the State was required to provide medical assis-
tance to all eligible individuals. 10 F.3d at 1319. The same is
true here, but with respect to timely payments to providers.
2. Context and History
The context and history of section 1396u-2(f) support find-
ing a right enforceable under section 1983. Context and his-
tory are standard tools in construing statutes, of course, and
Talevski and Gonzaga instruct courts to use them in answering
such questions about applying section 1983. 599 U.S. at 183;
536 U.S. at 283–86.
Under the original fee-for-service model of Medicaid
reimbursement, the State is responsible for making prompt
payments to providers at reasonable rates. The 30-day/90-
percent schedule for payments by MCOs in section 1396u-2(f)
is incorporated from section 1396a(a)(37)(A), which imposes
that mandatory schedule on State payments in the fee-for-
service system. The State has no discretion to avoid making
payments on that schedule, and that provision grants
enforceable rights to providers like Saint Anthony. A few
years before Congress adopted section 1396u-2(f) for
managed care systems, the Supreme Court had decided
Wilder v. Virginia Hospital Ass’n, 496 U.S. 498 (1990). Wilder
held that the Boren Amendment, which required States to pay
Medicaid providers rates that were “reasonable and adequate
No. 21-2325 21
to meet the costs of an efficiently and economically operated
facility,” created rights enforceable under section 1983 with
declaratory and injunctive relief to require state officials’
compliance. Id. at 510, 524.
Congress later repealed the Boren Amendment, but the
reasoning of Wilder extends to the statutory provision
governing the timing of payments of those rates, the fee-for-
service prompt payment rule of section 1396a(a)(37)(A). See,
e.g., Appalachian Regional Healthcare v. Coventry Health & Life
Insurance Co., 970 F. Supp. 2d 687, 697–99 (E.D. Ky. 2013)
(denying summary judgment for state officials in section 1983
case to enforce section 1396u-2(f)); accord, Pee Dee Health Care,
P.A. v. Sanford, 509 F.3d 204, 211–12 (4th Cir. 2007) (following
Wilder and allowing use of section 1983 to enforce another
Medicaid payment requirement under fee-for-service model);
New Jersey Primary Care Ass’n v. New Jersey Dep’t of Human
Services, 722 F.3d 527, 539–43 (3d Cir. 2013) (allowing use of
section 1983 to enforce another Medicaid payment
requirement under managed care); Community Health Care
Ass’n of New York v. Shah, 770 F.3d 129, 157 (2d Cir. 2014)
(same); Rio Grande Cmty. Health Ctr., Inc. v. Rullan, 397 F.3d 56,
74–75 (1st Cir. 2005) (same).
Section 1396u-2(f) and the other statutory provisions that
enabled the dramatic expansion of managed care use in state
Medicaid programs were part of legislation enacted seven
years after Wilder, in the Balanced Budget Act of 1997, Pub. L.
No. 105-33, 111 Stat. 251 (1997). Managed-care provisions be-
gan with section 4701 of the Act. 111 Stat. at 489. Section
1396u-2(f) was part of section 4708(c) of the Act. 111 Stat. at
506. Given the timing, when Congress extended the prompt
payment rules of section 1396a(a)(37)(A) to managed care in
22 No. 21-2325
section 1396u-2(f), providers like Saint Anthony already had
a recognized right to prompt payments. Under Wilder, they
could enforce that right under section 1983 with declaratory
and injunctive relief. We are aware of no indication that Con-
gress intended to cut back on those rights in 1997 when it en-
acted section 1396u-2(f) to extend the prompt payment rule to
managed care.
Talevski shows that courts should pay attention to statu-
tory context when addressing these questions. A good exam-
ple was the treatment of the requirement in Talevski that a
nursing home give a resident and his or her family advance
notice that the home intends to discharge the resident. That
statutory requirement is not phrased in terms of a “right” to
such notice. The Court observed, however, that it is “[n]estled
in a paragraph” with the heading “transfer and discharge
rights.” 599 U.S. at 184–85. The requirement for notice is also
phrased in terms of the resident’s welfare, health, and needs,
lending further and ultimately sufficient weight to the conclu-
sion that the notice requirement was enforceable under sec-
tion 1983. Id. at 185.
The prompt payment rule for managed care at issue here
has similar indications of enforceable rights. In the Balanced
Budget Act of 1997, which adopted section 1396u-2(f) and so
many other managed care provisions, section 4708(c) was en-
titled: “Assuring Timeliness of Provider Payments.” 111 Stat.
at 506. This language signaled that Congress intended section
1396u-2(f) to “assure,” i.e., to guarantee, timely payment to
providers. That language of assurance further supports rec-
ognizing a right enforceable under section 1983.
That understanding is also consistent with later congres-
sional action. In 2009 Congress enacted 42 U.S.C. § 1396u-2(h)
No. 21-2325 23
as part of the American Recovery and Reinvestment Act of
2009. See Pub. L. No. 111-5, 123 Stat. 115, § 5006(d) (2009).
That subsection established special rules for “Indian enrol-
lees, Indian health care providers, and Indian managed care
entities.” 123 Stat. at 507. Relevant to our purposes, section
1396u-2(h)(2)(B) cross-references section 1396u-2(f) and de-
scribes it as the “rule for prompt payment of providers”:
(2) Assurance of payment to Indian health care
providers for provision of covered services
Each contract with a managed care entity
under section 1396b(m) of this title or under
section 1396d(t)(3) of this title shall require
any such entity, as a condition of receiving
payment under such contract, to satisfy the
following requirements:
…
(B) Prompt payment
To agree to make prompt payment (con-
sistent with rule for prompt payment of pro-
viders under section 1396u–2(f) of this title)
to Indian health care providers that are
participating providers with respect to
such entity….
42 U.S.C. § 1396u-2(h)(2)(B) (emphasis added).
We recognize that Wilder may lie close to the outer edge of
the line for section 1983 cases under Spending Clause legisla-
tion. Nevertheless, the Court was invited in Talevski to over-
rule Wilder and chose not to do so. Recognizing section 1396u-
2(f) as creating rights enforceable under section 1983 does not
24 No. 21-2325
push the logic of Wilder or Talevski itself any further than the
Court has already taken it.
Section 1396u-2(f) gives providers like plaintiff a right to
have state officials do their jobs by assuring that MCOs make
timely payments. Section 1396u-2(f) mandates that the State’s
contracts with the MCOs require the MCOs to pay providers
on the 30/90 pay schedule. The State, however, asserts that
section 1396u-2(f) does not impose a duty on the State even to
try to ensure that MCOs actually do what their contracts say.
The State’s theory is that the statute requires only that a pro-
vision in the paper contract specify the timely payment obli-
gation. The State may then, at its unfettered discretion, try to
ensure the MCOs’ compliance—or not. If MCOs fail to pay
providers according to the 30/90 pay schedule, no matter how
blatantly and systematically, the State contends it is free to do
nothing. It may choose to leave providers to do their best to
try to enforce their own contractual rights. In HFS’s view,
nothing in section 1396u-2(f) requires the State itself to do an-
ything more to ensure prompt payment. Put differently, if the
contract between an MCO and the State contains a clause en-
suring timely payment for providers on the 30/90 pay sched-
ule, the State contends it has met its duty under section 1396u-
2(f), regardless of actual performance.
We do not read section 1396u-2(f) as permitting such a
hands-off approach. Nor would a reasonable state official
deciding whether to accept federal Medicaid money have
expected she could take that hands-off approach to MCO
payments to providers. Again, when interpreting statutes for
these purposes, Talevski and Gonzaga teach us to “employ
traditional tools of statutory construction to assess whether
Congress has ‘unambiguously conferred’ ‘individual rights’”
No. 21-2325 25
enforceable under section 1983. Talevski, 599 U.S. at 183,
quoting Gonzaga, 536 U.S. at 283, 285.
When interpreting statutes, often the “meaning—or
ambiguity—of certain words or phrases may only become
evident when placed in context.” King v. Burwell, 576 U.S. 473,
486 (2015), quoting FDA v. Brown & Williamson Tobacco Corp.,
529 U.S. 120, 132 (2000). We must read texts “in their context
and with a view to their place in the overall statutory
scheme.” Id., quoting Brown & Williamson, 529 U.S. at 133; see
also Davis v. Michigan Dep’t of Treasury, 489 U.S. 803, 809
(1989) (“[S]tatutory language cannot be construed in a
vacuum. It is a fundamental canon of statutory construction
that the words of a statute must be read in their context and
with a view to their place in the overall statutory scheme.”).
And to the extent possible, we must “ensure that the statutory
scheme is coherent and consistent.” Ali v. Federal Bureau of
Prisons, 552 U.S. 214, 222 (2008). That’s what the Supreme
Court did in both Talevski, finding several rights of patients
under the Medicaid Act enforceable under section 1983, and
in Gonzaga, rejecting such rights claims under FERPA.
Interpreting section 1396u-2(f) as only a “paper” require-
ment conflicts with these principles of statutory interpreta-
tion. HFS is correct that Congress intended MCOs to “assume
day-to-day functions previously performed by States under a
traditional fee-for-service model.” Appellee HFS’s Br. at 30.
But Congress did not intend for MCOs to go unsupervised.
It has long been obvious to all that under the managed-
care system of Medicaid, MCOs have a powerful incentive to
delay payment to providers for as long as possible and ulti-
mately to underpay to maximize their own profits. It’s a clas-
sic agency problem: MCOs are expected to act in the
26 No. 21-2325
providers’ interests, but their interests are not the same. Re-
garding timely payments, they are in direct conflict.
The Medicaid Act contains several provisions to counter-
act that problem in addition to section 1396u-2(f). They help
inform our understanding of the particular provision in dis-
pute here.
The Act imposes reporting and oversight responsibilities
on states that opt for the managed care model. For example,
section 1396b(m)(2)(A)(iv) requires a state’s contract with an
MCO to permit the state “to audit and inspect any books and
records” of an MCO related to “services performed or deter-
minations of amounts payable under the contract.” Section
1396u-2(c)(2)(A)(i) further specifies that a state’s contract with
an MCO must “provide for an annual (as appropriate) exter-
nal independent review” of the “timeliness” of MCO “ser-
vices for which the organization is responsible,” including
payments. The Medicaid Act thus requires HFS to take steps
to monitor MCO payment activities to gather performance
data and to understand how the system is functioning.
The Act further specifies that a state must establish
provisions for imposing “intermediate sanctions” against an
MCO—short of cancelling an entire, major contract—that the
state can use when an MCO underperforms. 42 U.S.C.
§ 1396u-2(e). The State can put an MCO on a performance
plan, for example. As discovery in this case revealed, HFS has
taken that step with CountyCare, an MCO, after CountyCare
paid only 40% of claims within 30 days and only 62% of claims
within 90 days. The CountyCare case turned up evidence of
the agency problem in action. The State found that
CountyCare’s Medicaid money was improperly diverted
No. 21-2325 27
from the Medicaid program to pay other county government
bills rather than health care providers. 5
In such a case, where an MCO has “repeatedly failed to
meet the requirements” of its contract with the State and the
requirements in section 1396u-2, “the State shall (regardless
of what other sanctions are provided) impose the sanctions
described in subparagraphs (B) and (C) of paragraph (2).”
42 U.S.C. § 1396u-2(e)(3). Subparagraph (B) details the ap-
pointment of temporary management to oversee the MCO.
42 U.S.C. § 1396u-2(e)(2). Subparagraph (C) permits individ-
uals enrolled with the MCO to terminate enrollment without
cause. Id.
Federal Medicaid regulations add to the State’s responsi-
bilities here. For instance, 42 C.F.R. § 438.66(a) (2016) pro-
vides: “The State agency must have in effect a monitoring sys-
tem for all managed care programs.” Section 438.66(b)(3)
specifies that the State’s monitoring system “must address all
aspects of the managed care program, including the perfor-
mance of each MCO … in … [c]laims management.” It’s hard
to imagine a more central aspect of claims management than
timely payments. Saint Anthony alleges here that HFS is fail-
ing even to collect the required data on the timeliness of MCO
payments.
These responsibilities support the conclusion that Con-
gress imposed on states a duty to ensure that the right to
5 As with the information mentioned above in note 2 about
Mercyhealth, we may also consider the CountyCare information in
evaluating the Rule 12(b)(6) motion without converting the motion into
one for summary judgment. The information elaborates on and illustrates
factual allegations in the complaint. E.g., Geinosky, 675 F.3d at 745 n.1.
28 No. 21-2325
timely payment in section 1396u-2(f) is honored in real life.
The State argues here that Congress intended to leave the is-
sue of real-life effectiveness to the unfettered discretion of
state and federal oversight authorities. But Congress chose
language that makes timely payment more than just a paper
requirement that would allow state officials to put the terms
in their MCO contracts and then forget about them, leaving
providers to fend for themselves.
The more coherent reading of the statute as a whole is that
Congress intended the State to engage in these reporting and
oversight responsibilities, and, if it becomes evident that
MCOs are systematically not paying providers on a timely ba-
sis, to impose on the State an obligation to act under section
1396u-2(f) to secure providers’ rights. These mandatory over-
sight responsibilities would make little sense if that were not
the case. The provision’s mandatory language, coupled with
the additional oversight and reporting responsibilities, sup-
ports the reading that section 1396u-2(f) must be doing more
than imposing merely the formality of contract language. Pro-
viders’ right to timely payment must exist in reality. Section
1396u-2(f) defines the minimum terms of the provider’s right
to timely payment and is provider-specific. It uses “individu-
ally focused terminology,” Gonzaga, 536 U.S. at 287, unmistak-
ably “phrased in terms of the persons benefited.” Id. at 284,
quoting Cannon v. University of Chicago, 441 U.S. 677, 692 n.13
(1979).
C. The Blessing Factors
The foregoing analysis under Talevski is sufficient to sup-
port our bottom-line decision here. We reach the same result
by applying the so-called “Blessing factors,” which both we
and the district court used to frame our earlier opinions:
No. 21-2325 29
We have traditionally looked at three factors
when determining whether a particular statu-
tory provision gives rise to a federal right. First,
Congress must have intended that the provision
in question benefit the plaintiff. Second, the
plaintiff must demonstrate that the right assert-
edly protected by the statute is not so vague and
amorphous that its enforcement would strain
judicial competence. Third, the statute must un-
ambiguously impose a binding obligation on
the States. In other words, the provision giving
rise to the asserted right must be couched in
mandatory, rather than precatory, terms.
Blessing, 520 U.S. at 340–41 (internal citations and quotations
omitted). Under Blessing, if these three elements are satisfied,
“the right is presumptively enforceable under section 1983.”
Talevski v. Health & Hospital Corp. of Marion County, 6 F.4th 713,
720 (7th Cir. 2021), aff’d sub nom. Health & Hospital Corp. of
Marion County v. Talevski, 599 U.S. 166 (2023). A defendant
may overcome this presumption by showing that Congress
shut the door to private enforcement, a question we address
below in Part II-D. See Talevski, 599 U.S. at 186–89, citing
among other cases Gonzaga, 536 U.S. at 284, and n.4, and
Blessing, 520 U.S. at 347–48.
As we explained in our original opinion, section 1396u-2(f)
grants providers a right to timely payment from the MCOs
that the State must safeguard because the right satisfies all
three Blessing factors. 40 F.4th at 505–14. First, providers are
the intended beneficiaries of section 1396u-2(f). Second, en-
forcing the 30-day/90-percent pay schedule would not strain
judicial competence. Third, the statute unambiguously
30 No. 21-2325
imposes a binding obligation on the State. We address each
point in turn.
1. Factor One: Intended Beneficiaries
The first Blessing factor asks whether Congress intended
section 1396u-2(f) to benefit providers like Saint Anthony and
whether it intended that benefit to be a right, as distinct from
a generalized entitlement. Both answers are yes.
On these questions, the Blessing test is congruent with the
test set forth in Talevski and Gonzaga. First, providers are the
intended beneficiaries of section 1396u-2(f). The text requires
MCOs to contract that they “shall make payment to health
care providers … on a timely basis….” 42 U.S.C. § 1396u-2(f)
(emphasis added). No one benefits more directly from a re-
quirement for timely payments to providers than the provid-
ers themselves. Cf. BT Bourbonnais Care, 866 F.3d at 821 (“Who
else would have a greater interest than the [nursing facility
operators] in the process ‘for determination of rates of pay-
ment under the [state] plan for … nursing facility services’?”
(second alteration and omission in original) (quoting 42
U.S.C. § 1396a(a)(13)(A)).
In applying the first Blessing factor, we also conclude that
section 1396u-2(f) grants providers a right, not merely a gen-
eralized benefit, for the reasons explained above at pages 17–
28. We need not repeat that discussion here. At bottom, section
1396u-2(f) defines the minimum terms of the provider’s right
to timely payment and is provider-specific. It uses “individu-
ally focused terminology,” Gonzaga, 536 U.S. at 287, unmistak-
ably “phrased in terms of the persons benefited,” id. at 284,
quoting Cannon, 441 U.S. at 692 n.13, and satisfies Blessing fac-
tor one.
No. 21-2325 31
2. Factor Two: Administration
Blessing factor two requires a plaintiff to show that the
right assertedly protected by the statute is not so vague and
amorphous that its enforcement would strain judicial
competence. Blessing, 520 U.S. at 340–41. This factor is not
expressly a part of the Supreme Court’s approach in Talevski
and Gonzaga, but it surely is implicit. We doubt the Court
would approve a section 1983 remedy to enforce a right so
vague and amorphous as to strain judicial competence.
The State does not appear to have contested in this appeal
whether section 1396u-2(f) satisfies this standard, nor could
it. Saint Anthony argues that the State has been violating its
right to timely payment by failing to abide by section 1396u-
2(f)’s statutory mandate of trying to ensure that the MCOs are
paying providers in line with the 30-day/90-percent pay
schedule. Determining whether payments met the 30/90 pay
schedule is “administrable,” “fully capable of judicial resolu-
tion,” and “falls comfortably within the judiciary’s core inter-
pretative competence.” Planned Parenthood of Indiana, 699 F.3d
at 974.
3. Factor Three: Obligation
The third Blessing factor asks whether section 1396u-2(f)
unambiguously imposes a binding obligation on HFS. This
requires answering two subsidiary questions: (1) what is
HFS’s duty under the statute, and (2) is that duty mandatory?
In a typical private right dispute, the emphasis is on the
second question. See, e.g., BT Bourbonnais Care, 866 F.3d at
822. Section 1396u-2(f) plainly contains mandatory language:
“A [State] contract … with a medicaid managed care organi-
zation shall provide that the organization shall make payment
32 No. 21-2325
to health care providers … on a timely basis….” 42 U.S.C.
§ 1396u-2(f) (emphasis added). The double use of “shall” re-
buts the notion that the State’s obligation is anything less than
mandatory. For the reasons we explained above at pages 17–
28, section 1396u-2(f) satisfies the third Blessing factor.
4. Counterarguments
a. An Ambiguous Contract?
HFS counters that the duty imposed by section 1396u-2(f)
is at the very least ambiguous. HFS relies on Pennhurst State
School & Hospital v. Halderman, 451 U.S. 1, 17 (1981), which
taught that Congress may impose conditions on grants of fed-
eral money only if it does so “unambiguously” and “with a
clear voice.” In HFS’s view, if Congress wanted to impose the
significant duty on states that Saint Anthony advocates, it
should have done so more explicitly. Section 1396u-2(f) is not
a clear statement, it’s ambiguous, and therefore cannot carry
the weight Saint Anthony gives it. So says HFS.
We think Congress spoke sufficiently clearly here. The
clear-statement rule explains that “States cannot knowingly
accept conditions of which they are ‘unaware’ or which they
are ‘unable to ascertain.’” Arlington Central School Dist. Bd. of
Educ. v. Murphy, 548 U.S. 291, 296 (2006), quoting Pennhurst,
451 U.S. at 17. Talevski, particularly the portion addressing
pre-transfer notice rights, shows that courts can use ordinary
tools of statutory construction to decide whether Congress
was sufficiently clear. See 599 U.S. at 184–86. The Court has
made similar points in applying similar clear statement rules.
In authorizing a waiver of federal sovereign immunity, for ex-
ample, “Congress need not ‘make its clear statement in a sin-
gle section’ adopted at a single moment in time.” Department
No. 21-2325 33
of Agriculture Rural Development Rural Housing Service v. Kirtz,
601 U.S. 42, 54 (2024), quoting Kimel v. Florida Bd. of Regents,
528 U.S. 62, 76 (2000). “[W]hat matters is whether Congress
has authorized a waiver of sovereign immunity that is ‘clearly
discernible’ from the sum total of its work.” Id. at 54–55, quot-
ing Lac du Flambeau Band of Lake Superior Chippewa Indians v.
Coughlin, 599 U.S. 382, 388 (2023).
To determine whether Congress spoke clearly to create
rights in this case, “we must view [section 1396u-2(f) and the
Medicaid Act] from the perspective of a state official who is
engaged in the process of deciding whether the State should
accept [Medicaid] funds and the obligations that go with
those funds.” Murphy, 548 U.S. at 296.
A reasonable state official planning to launch a managed-
care program would have understood that the state would
have to try to ensure that providers receive prompt payment
from MCOs. Such an official would not reasonably have con-
cluded that Congress intended that the “rule for prompt pay-
ment of providers” be only a proverbial paper tiger. See
§ 1396u-2(h)(2)(B) (describing section 1396u-2(f) as the “rule
for prompt payment of providers”). That conclusion would
conflict with the state’s oversight and reporting obligations
and its enforcement duties under the Medicaid Act.
b. Remedies and State Discretion in Enforcement
HFS also argues that section 1396u-2(f) cannot impose this
duty on the State because it “would negate[] section 1396u-
2(e)’s express grant to States of discretion to seek termination
of an MCO’s contract for violating section 1396u-2[f] or its
contract with the State.” Appellee HFS’s Br. at 27. The
34 No. 21-2325
argument highlights a key issue in this appeal and one that
helps explain our disagreement with the district court.
Saint Anthony requested several forms of relief in its com-
plaint. One of those was canceling a contract with an MCO
that fails to pay on time after State intervention. HFS argues
that forcing it to cancel a contract with an MCO because it did
not meet the 30/90 pay schedule would infringe on the State’s
discretion to decide when it will terminate such a contract,
which is expressly preserved by the statute. See § 1396u-
2(e)(4)(A) (“In the case of a managed care entity which has
failed to meet the requirements of this part or a contract under
section 1396b(m) or 1396d(t)(3) of this title, the State shall have
the authority to terminate such contract….”). In HFS’s view,
that means section 1396u-2(f) cannot impose a duty on HFS
to ensure providers receive timely payment because it might
require HFS to take action that is expressly reserved to its dis-
cretion.
We are inclined to agree with HFS that a district court
could not force the State to cancel a contract with an MCO.
Canceling a contract with any one of the seven MCOs in Illi-
nois might well cause a “massive disruption” to the State’s
Medicaid program. Appellee HFS’s Br. at 28. HFS and only
HFS has the discretion to decide when and why it will invite
that type of disruption. Section 1396u-2(e)(4)(A) is clear on
that point. See also 42 C.F.R. § 438.708 (when states can termi-
nate an MCO contract) and § 438.730 (CMS can sanction an
MCO by denying payment). To the extent that Saint Anthony
requests such relief, we doubt the district court has authority
to impose it, though we need not answer that question defin-
itively at this stage, on the pleadings. Perhaps sufficiently
egregious facts might convince us otherwise, but that
No. 21-2325 35
question about a worst-case scenario can be addressed if and
when it actually arises and matters.
c. The Scope of Judicial Remedies
Continuing with the theme of assuming the worst, HFS
also argues that reading this duty into section 1396u-2(f)
would lead to the district court acting effectively as the Med-
icaid claims processor for the State. In the State’s parade of
horribles, that’s the prize-winning float. Given the practical
difficulties in judicial enforcement that would come with rec-
ognizing a duty here, HFS contends, such a duty could not be
what Congress intended. We agree that any form of retail-
level relief, i.e., requiring the district court to adjudicate issues
at the claim-by-claim level, would strain judicial resources
and seem to conflict with the arbitration clauses in the con-
tracts between the MCOs and Saint Anthony. A process that
required a district judge to micro-manage claims would be in-
appropriate here.
These two limits on remedies in a section 1983 action—not
turning the district court into a claims processor and not can-
celling an MCO contract—do not persuade us, however, that
we should affirm dismissal and deny all relief on the theory
that the State has no duty at all to ensure timely payment un-
der section 1396u-2(f). As noted, HFS can take a number of
other steps at the system level to address chronically late
and/or short payments by MCOs. Those actions could include
a variety of “intermediate sanctions” under section 1396u-
2(e)(2). Those and other actions would neither force the State
to cancel an MCO contract nor turn the district court into a
claims processor. If Saint Anthony can prove its claims of sys-
temic delay and/or underpayment, we are confident that the
36 No. 21-2325
district court could craft injunctive relief to require HFS to do
something to take effective action.
We draw helpful guidance on these issues of potential
equitable relief from O.B. v. Norwood, 838 F.3d 837 (7th Cir.
2016). There, we affirmed a preliminary injunction against the
HFS director in a suit brought by Medicaid beneficiaries who
sought to enforce sections of the Medicaid Act requiring the
State to find nurses to provide home nursing for children en-
rolled in Medicaid. HFS argued in O.B. that it had no obliga-
tion to find nurses (or to act at all). Id. at 842. We rejected that
argument:
Certainly the defenses thus far advanced by
HFS are weak. The primary defense is that noth-
ing in the Medicaid statute “required [HFS] to
ensure that Plaintiffs would receive medical
care from nurses in their homes.” But it was HFS
that decided that home nursing was the proper
treatment for O.B., the other named plaintiffs,
and the other members of the class.
Id. at 840 (alteration in original).
We recognized in O.B. the difficulties state officials faced
in providing the needed nurses. There was no guarantee that
compliance with the injunction would solve the plaintiffs’
problems. In affirming the preliminary injunction, though, we
explained that the injunction “should be understood simply
as a first cut: as insisting that the State do something rather
than nothing to provide in-home nursing care for these chil-
dren.” Id. at 842; see also id. at 844 (Easterbrook, J., concurring)
(“All a district court can do in a situation such as this is require
[the State] to start trying.”). If Saint Anthony can prove its
No. 21-2325 37
claims of systemic delay and/or underpayment, the same is
true here.
The State decided to switch from a fee-for-service model
where the State itself was responsible for making timely and
adequate payments to providers, to a Medicaid program
dominated by managed care. The State cannot now claim it
has no obligation to ensure that Medicaid providers serving
patients under that program receive timely payment. O.B. in-
structs that where HFS has a duty, a district court may order
it to do something when that duty is not being met, at least as
a first cut. Id. at 842. The court may then need to supervise the
effects of the injunction and the State’s response and adjust
the court’s orders as circumstance and equity may require.
The district court should not let the perfect become the enemy
of the good, nor should the possibility that a first cut at an
injunction might not work sufficiently justify a denial of any
relief at all.
To be clear, we are not suggesting that an injunction
ordering the State officials literally to do only “something”
would be sufficient. Federal Rule of Civil Procedure
65(d)(1)(C) requires an injunction to “describe in reasonable
detail … the act or acts restrained or required.” At the same
time, we have often recognized that district courts have
substantial equitable discretion in crafting injunctions so that
they are both understandable by those enjoined and effective
to accomplish their purposes. Eli Lilly & Co. v. Arla Foods, Inc.,
893 F.3d 375, 384–85 (7th Cir. 2018); H-D Michigan, LLC v.
Hellenic Duty Free Shops S.A., 694 F.3d 827, 843 (7th Cir. 2012),
citing Russian Media Group, LLC v. Cable America, Inc., 598 F.3d
302, 307 (7th Cir. 2010). If Saint Anthony can prove systemic
failures by MCOs to comply with the 30/90 payment schedule
38 No. 21-2325
with reasonably transparent payment information, we would
expect the district court to explore with the parties what steps
State officials could reasonably be expected to take to correct
those systemic failures before framing an appropriate and
effective injunction. And if such an injunction later needed to
be modified based on experience, the district court would
have ample power to do so at the request of a party or on its
own motion.
O.B. also makes clear that a district court can craft injunc-
tive relief within its equitable powers and discretion even in
circumstances where some more drastic remedial measures
may be off the table. See O.B., 838 F.3d at 844 (Easterbrook, J.,
concurring) (identifying certain forms of relief that were off
limits while also instructing the district judge to try different
things and to “keep tabs on what is happening and adjust the
injunction as appropriate” to secure relief for plaintiffs); ac-
cord, Rizzo v. Goode, 423 U.S. 362, 376–77 (1976) (“Once a right
and a violation have been shown, the scope of a district court’s
equitable powers to remedy past wrongs is broad, for breadth
and flexibility are inherent in equitable remedies.” (internal
quotations and citation omitted)). Federal Rule of Civil Proce-
dure 54(c) offers relevant guidance here, providing that any
final judgment other than a default judgment “should grant
the relief to which each party is entitled, even if the party has
not demanded that relief in its pleadings.”
The converse is also true. If a complaint demands relief
that is not available, the improper demand does not poison
the well to defeat relief to which the party is otherwise enti-
tled. If Saint Anthony succeeds on the merits of its claims, we
believe the district court here will be able to craft a remedy to
No. 21-2325 39
push the State toward complying with its duty to provide for
timely and transparent payments to Saint Anthony.
We recognize that part of the rationale for adopting the
managed-care model was to ease the State’s administrative
burden. Measures that would force HFS to take a more ag-
gressive oversight role could reduce some of the administra-
tive benefits the State hoped to gain by the switch to managed
care. As we have explained, however, the Medicaid Act per-
mits states to shift major Medicaid duties to MCOs but does
not allow States to wash their hands of effective oversight. On
the contrary, the Medicaid Act in general, and section 1396u-
2(f) in particular, show that Congress recognized the trou-
bling financial incentives inherent in a managed-care system
and the need for effective oversight of MCOs and their treat-
ment of providers’ claims for payment. Recall that the Act re-
quires the State’s contracts with MCOs to include audit and
inspection of MCO books and records, as well as annual ex-
ternal reviews of payment timeliness. The Act also requires
the State to have available intermediate sanctions, short of
cancelling the entire contract, that can be deployed if an MCO
underperforms.
Saint Anthony alleges here that HFS is falling far short on
those oversight and monitoring duties. HFS cannot avoid
those duties altogether on the theory that Saint Anthony also
asked for certain remedies that might not be available in this
section 1983 action. If the State cannot manage to carry out
those oversight and monitoring duties, an effective remedy to
enforce the requirements would honor the bargain struck
when Illinois accepted funding for Medicaid in the first place.
If Saint Anthony can prove its allegations, we do not view
the judicial choice as a binary either-or: either the district
40 No. 21-2325
court must prepare to take over day-to-day claims manage-
ment, or no judicial relief is available at all. The case is diffi-
cult, but the judicial options are not so limited.
First, the Medicaid Act and the relevant contracts recog-
nize that perfection is not required. That much is clear from
the 30/90 pay schedule itself: pay 90% of clean claims within
30 days and 99% within 90 days.
Second, HFS itself seems to be able to tell the difference
between minor problems and systemic ones, and there is rea-
son to think it can identify systemic measures that can be ef-
fective without having HFS (let alone the district court) take
over day-to-day claims management. As noted above, for ex-
ample, HFS took action against CountyCare based on data
showing that CountyCare “was not regularly meeting” the
30/90 pay schedule. Decl. of Robert Mendonsa ¶ 16, Dkt. 86-
10. HFS investigated, demanded that CountyCare adopt a
“Corrective Action Plan,” and reported that a few months af-
ter adopting such a plan, CountyCare “significantly reduced
the number of outstanding claims that [were] older than 90
days.” Id. ¶¶ 17–21. We need not and should not adopt a
mathematical definition of “systemic” failures at the plead-
ings stage. That problem can await further factual develop-
ment. (To use a metaphor often used in the law, a person can
usually tell the difference between being in mountains, in foot-
hills, or on a plain even if there is not a sharp boundary be-
tween mountains, foothills, and plains.)
For these reasons, we conclude that section 1396u-2(f) sat-
isfies the third Blessing factor because the State has a binding
obligation to try to ensure prompt payment for providers
from MCOs.
No. 21-2325 41
D. An Alternative Remedial System?
Since section 1396u-2(f) satisfies the Talevski requirement
of an unambiguous statutory right and the three Blessing fac-
tors, the right to prompt payment is presumptively enforcea-
ble under section 1983. Talevski, 599 U.S. at 186. The Medicaid
Act includes no express prohibition on enforcement under
section 1983. The State contends, however, that a section 1983
remedy is implicitly barred because it would be incompatible
with remedies available under the Medicaid Act itself. As the
Court in Talevski explained, the burden is on the defendant to
make such a showing. 599 U.S. at 186; accord, Gonzaga, 536
U.S. at 284 n.4. This is a “difficult showing.” Blessing, 520 U.S.
at 346.
Talevski explained that in the three cases where the Court
has found that more specific statutory and administrative re-
medial schemes were incompatible with section 1983, the stat-
utes (a) had their own statute-specific private rights of action,
(b) had specialized administrative procedures for those rem-
edies, and (c) offered remedies more limited than those under
section 1983. 599 U.S. at 189–90, citing Rancho Palos Verdes v.
Abrams, 544 U.S. 113 (2005), Smith v. Robinson, 468 U.S. 992
(1984), and Middlesex Cty. Sewerage Auth. v. Nat’l Sea Clammers
Ass’n, 453 U.S. 1 (1981). None of those features are present in
this case. That fact weighs heavily against finding implicit in-
compatibility here.
Still, if the MCOs are failing to abide by the contractual
terms, says HFS, Saint Anthony should just enforce its own
contracts with them. And providers like Saint Anthony are in
the best position to “enforce their right to timely payment di-
rectly under their contracts with MCOs.” Appellee HFS’s Br.
at 29. As HFS sees the matter, there is no need to permit
42 No. 21-2325
section 1983 actions to achieve Congress’s goal of enabling
Medicaid providers to receive timely payment.
A contractual remedy may offer some prospect of relief to
a provider like Saint Anthony. But HFS has not convinced us
that Congress meant to leave providers on their own, or with
only such help as state officials choose to provide. In other
words, HFS has not shown that “allowing [section] 1983 ac-
tions to go forward in these circumstances ‘would be incon-
sistent with’” a “carefully tailored [Congressional] scheme.’”
Blessing, 520 U.S at 346, quoting Golden State Transit Corp. v.
City of Los Angeles, 493 U.S. 103, 107 (1989); accord, Talevski,
599 U.S. at 190. Rather, Congress intended the State’s entire
Medicaid plan to ensure timely payment to providers. If, as
Saint Anthony alleges, the plan has been failing to meet this
requirement, repeatedly and systematically, we would not be
surprised if provider-MCO arbitrations would do little to cor-
rect that problem on a systemic basis.
There is good reason to doubt that contractual remedies
alone can vindicate the provider’s right to prompt payment.
Saint Anthony files many thousands of Medicaid claims each
year. If most claims are not paid on time, Saint Anthony’s op-
tion under the contract is to sue the MCO and/or to submit
each claim for arbitration. Many other Medicaid providers
across Illinois might need to do the same with each of the
seven MCOs. That avenue represents a claim-by-claim adju-
dication on the individual provider-MCO level, across many
thousands of claims, all in their own arbitrations. It’s not im-
mediately obvious that this dispute-resolution system would
even be manageable, let alone superior to a systemic solution
implemented by HFS. At the very least, we are not persuaded
that Congress, implicitly through the contractual model,
No. 21-2325 43
created “a comprehensive enforcement scheme that is incom-
patible with individual enforcement under [section 1983].”
Gonzaga, 536 U.S. at 285 n.4, quoting Blessing, 520 U.S. at 341;
accord, Talevski, 599 U.S. at 190–91.
To sum up on the central question, for all of these reasons,
we conclude that section 1396u-2(f) satisfies Talevski, Gonzaga,
and Blessing and confers on plaintiff a right enforceable under
section 1983 to have state officials use their powers to assure
timely payments by MCOs. Saint Anthony has plausibly al-
leged a violation of the right that could, if proven, support in-
junctive relief. We therefore reverse the district court’s dismis-
sal of this claim.
We emphasize again, as in our earlier decision, that we are
deciding this case only on the pleadings. This is a hard case
with high stakes for the State, for Medicaid providers, and
especially for Medicaid patients. There is one genuine binary
choice in this case: whether to affirm dismissal of Saint
Anthony’s claims under section 1983 for failure to state a
claim—no matter how egregious and systemic the MCOs’
slow payments, no matter how little the State has done to
ensure timely payments, and no matter how devastating the
effects of the delays on Saint Anthony and its patients. The
stakes for Saint Anthony are measured in millions of dollars.
Looking more broadly, managed care contracts under
Medicaid—with their inherent incentives to slow payments to
providers—now control more than half of all Medicaid
spending, hundreds of billions of dollars a year. Millions of
Americans depend on that system for their health care.
Accordingly, we recognize the potential magnitude of the
case. We also recognize the challenges it may present to the
district court. If it turns out that resolving this dispute would
44 No. 21-2325
actually require the district court to analyze each late claim,
effectively taking on the role of the State’s Medicaid claims
processors, or that effective relief could come only by cancel-
ing a contract with an MCO, then we may face a different sit-
uation. But we do not know at this point what direction the
course of this litigation will take.
We should not decide today whether Saint Anthony has
alleged a viable claim by assuming only the worst-case litiga-
tion scenarios will materialize down the line. If Saint Anthony
can support its factual allegations about systematically late
and inadequate payments, we expect the district court has
sufficiently broad and flexible equitable discretion to fashion
effective relief. The corrective action plan that HFS demanded
from CountyCare may provide a starting point, adaptable to
the circumstances of different MCOs.
III. Additional Issues
We have two issues left to discuss: the district court’s de-
nial of Saint Anthony’s motion to supplement its complaint,
and a possible stay in favor of arbitration.
A. Plaintiff’s Motion to Supplement the Complaint
While the motion to dismiss was pending in the district
court, Saint Anthony moved to supplement its complaint with
a claim for deprivation of property without due process of
law. Saint Anthony alleged HFS violated its due process
rights in two ways, both related to payment transparency:
(1) by failing to notify Saint Anthony of the amounts being
paid for services provided to Medicaid beneficiaries in the
fee-for-service program; and (2) by failing to require MCOs to
provide such notice in the managed-care program. Four days
No. 21-2325 45
after the district court dismissed the existing complaint, the
court denied Saint Anthony’s motion to supplement.
As a preliminary matter, there is an academic question
whether this request should be construed as a motion to sup-
plement under Federal Rule of Civil Procedure 15(d) or a mo-
tion to amend under Rule 15(a). Saint Anthony’s motion
sought to add allegations concerning both post-complaint
events (most appropriate as a 15(d) supplement) and some
pre-complaint events that came to light in discovery (most ap-
propriate under 15(a)). The distinction between 15(a) amend-
ments and 15(d) supplements is not important here. District
courts have essentially the same responsibilities and discre-
tion to grant or deny motions under either subsection. See
Glatt v. Chicago Park District, 87 F.3d 190, 194 (7th Cir. 1996)
(“[T]he standard is the same.”); see also 6A Charles Alan
Wright & Arthur R. Miller, Federal Practice and Procedure
§ 1504 (3d ed. Supp. 2023) (lack of formal distinction between
the two is “of no consequence,” and leave should be freely
granted when doing so will promote economic and speedy
disposition of entire controversy and will not cause undue de-
lay or unfair prejudice to other parties).
Ordinarily, “a plaintiff whose original complaint has been
dismissed under Rule 12(b)(6) should be given at least one op-
portunity to try to amend her complaint before the entire ac-
tion is dismissed. We have said this repeatedly.” Runnion ex
rel. Runnion v. Girl Scouts of Greater Chicago & Northwest Indi-
ana, 786 F.3d 510, 519 (7th Cir. 2015) (collecting cases). The de-
cision to deny the plaintiff such an opportunity “will be re-
viewed rigorously on appeal.” Id. “Unless it is certain from the
face of the complaint that any amendment would be futile or
otherwise unwarranted, the district court should grant leave
46 No. 21-2325
to amend after granting a motion to dismiss.” Id. at 519–20,
quoting Barry Aviation Inc. v. Land O'Lakes Municipal Airport
Commission, 377 F.3d 682, 687 (7th Cir. 2004). Reasons for
denying leave to amend include “futility, undue delay, preju-
dice, or bad faith.” Kreg Therapeutics, Inc. v. VitalGo, Inc., 919
F.3d 405, 417 (7th Cir. 2019).
The district court used a procedure here that ran a high
risk of error. Saint Anthony requested leave to add the due
process claim after minimal discovery and before the court
ruled on the pending motion to dismiss. The court entered a
minute order recognizing that “Rule 15(a)(2) provides that the
‘court should freely give leave when justice so requires.’” It
then ordered HFS to respond, even permitting an oversized
brief. HFS responded by arguing the merits of the due process
claim, saying in essence that the proposed amendment or sup-
plement would be futile.
Futility could be a good reason to deny the amendment or
supplement, but then the district court took a wrong turn. It
denied Saint Anthony an opportunity to file a reply defending
the merits of its proposed due process claim. The court then
denied Saint Anthony’s motion on futility grounds. This un-
usual procedure thus denied Saint Anthony a fair oppor-
tunity to defend the merits of its supplemental claim—only to
lose on the supposed lack of merit. That procedure amounted
to an abuse of discretion.
Other aspects of the district court’s decision on that mo-
tion also point toward reversal. For instance, Saint Anthony’s
request to supplement the complaint occurred early in the
lawsuit. See Abu-Shawish v. United States, 898 F.3d 726, 738
(7th Cir. 2018) (“The usual standard in civil cases is to allow
defective pleadings to be corrected, especially in early stages, at
No. 21-2325 47
least where amendment would not be futile.” (emphasis
added)). The district court did not find bad faith by Saint An-
thony or prejudice to HFS.
The district court denied the motion in part because it con-
cluded the new claim would expand the scope and nature of
the case, which the court thought was “otherwise over.” We
do not find this rationale persuasive, especially after we have
concluded that the case is not otherwise over. The due process
claim against the State pertains to the lack of transparency in
the Medicaid remittances, based at least in part on new infor-
mation produced in the limited discovery. Saint Anthony al-
leged problems with the remittances in its original complaint,
as HFS acknowledges. The new claim added issues related to
the fee-for-service aspects of Illinois Medicaid, but that fact
alone was not reason enough to deny leave so early in the life
of a case and before discovery was in full swing. Courts
should not be surprised, and should not respond rigidly,
when discovery in a complex case turns up evidence to sup-
port a new theory for relief or defense.
In addition, by denying the motion to amend or supple-
ment, the district court put Saint Anthony at risk of serious
and unfair prejudice. To the extent the district court might
have thought that the due process claim should be presented
in a separate lawsuit, Saint Anthony could face serious prob-
lems with claim preclusion. See Arrigo v. Link, 836 F.3d 787,
798–80 (7th Cir. 2016). 6
6 In Arrigo, the first district court denied plaintiff’s motion to amend
the complaint to add a related claim, and we affirmed. Then, when the
plaintiff tried to bring the claim in a new action, the second district court
dismissed it. We upheld that decision, asserting that “allowing Arrigo to
proceed here would result in the very prejudice and inefficiency that the
48 No. 21-2325
At this stage of the proceedings, the only arguable ground
for denying Saint Anthony’s request to supplement its com-
plaint would have been futility on the merits. The district
court did say that it “ha[d] doubts about the legal sufficiency
of Saint Anthony’s proposed new claim.” As noted above, the
denial of a plaintiff’s first attempt at leave to amend or sup-
plement “will be reviewed rigorously on appeal.” Runnion,
786 F.3d at 519. Doubts on the merits do not show futility. See,
e.g., id. at 519–20; Bausch v. Stryker Corp., 630 F.3d 546, 562 (7th
Cir. 2010) (“Generally, if a district court dismisses for failure
to state a claim, the court should give the party one oppor-
tunity to try to cure the problem, even if the court is skeptical
about the prospects for success.”). We thus reverse the denial
of Saint Anthony’s motion to supplement its complaint.
denial of the untimely amendment, which we upheld, was intended to
avoid.” 836 F.3d at 800. We also stressed that “[t]o rule otherwise would
undermine the principles animating the doctrines of res judicata and claim
splitting, as well as our decision upholding on appeal the denial of the
motion for leave to amend.” Id. In that sense, by prohibiting the supple-
mental claim here, the district court might have also prevented Saint An-
thony from bringing that claim in a future case, all without the oppor-
tunity for Saint Anthony to defend the merits of the claim. HFS argues that
Saint Anthony’s concerns are misplaced because the district court implied
that Saint Anthony could bring its due process claim in a future action. It
is true that a district court can expressly reserve a claim for future adjudi-
cation, see, e.g., Sklyarsky v. Means-Knaus Partners, L.P., 777 F.3d 892, 896
(7th Cir. 2015); 18 Wright & Miller § 4413, but such an exception requires
the second court to conclude the first court adequately preserved the
claim. One could understand why such assurances from HFS, including
its post-argument letter promising to forgo a claim preclusion defense in
a separate lawsuit, might provide Saint Anthony limited comfort, espe-
cially since the district court’s stated rationale was based at least in part
on a supposed lack of merit.
No. 21-2325 49
B. Arbitration
The remaining issue is whether we should stay the case in
favor of arbitration, as the intervening MCOs have requested.
A necessary aspect of Saint Anthony’s claim against HFS is
showing that the MCOs systematically miss the 30/90 pay
schedule. The MCOs dispute that allegation, however. They
argue that under the contracts, each allegedly late claim pre-
sents a factual dispute that must be resolved in arbitration be-
fore Saint Anthony’s case against HFS can proceed on the
merits.
The district court did not address this issue. We declined
to address it in the first instance when this appeal was first
before us, and we do so again now. Both HFS and the MCOs
have their distinct obligations to ensure timely payment for
providers. While factual issues related to the MCOs appear
intertwined with Saint Anthony’s claim against HFS, they do
not foreclose Saint Anthony’s section 1983 action. Faced with
chronic late payments, Saint Anthony is entitled to seek relief
against HFS as well as against the MCOs.
* * *
To sum up, Saint Anthony has alleged a viable right under
42 U.S.C. § 1396u-2(f) to have HFS act to try to ensure timely
payments from MCOs, and that right is enforceable in this
section 1983 action against the HFS director. We REVERSE the
dismissal of Count One. We AFFIRM the dismissal of Count
Two, which sought to use section 1983 to assert rights under
section 1396a(a)(8). We REVERSE the denial of Saint An-
thony’s motion to supplement, we DECLINE to stay the pro-
ceedings in favor of arbitration, and we REMAND for pro-
ceedings consistent with this opinion.
50 No. 21-2325
BRENNAN, Circuit Judge, dissenting. The Supreme Court re-
cently underscored when a private right of action is cogniza-
ble under 42 U.S.C. § 1983: a statute must contain explicit
rights-creating, individual-centric language. Health and Hosp.
Corp. of Marion Cty. v. Talevski, ___ U.S. ___, 143 S. Ct. 1444,
1457 (2023). The provision of the Medicaid Act at issue here,
42 U.S.C. § 1396u-2(f), contains no such language. Even more,
conferring a privately enforceable right under this statute
would conflict with and defeat the contractual enforcement
scheme Congress created for state monitoring and sanction of
managed care organizations. Medicaid’s timely-payment pro-
vision does not enable Saint Anthony and other providers to
sue Illinois to enforce it, so I respectfully dissent.
I
Much of this case’s relevant factual background has not
changed since our court’s last decision. St. Anthony Hosp. v.
Eagleson, 40 F.4th 492 (7th Cir. 2022). Saint Anthony maintains
that it has not received timely Medicaid payments from mul-
tiple managed care organizations (MCOs). Yet, the hospital
wants to address this dispute outside the means set forth in
its contracts with those MCOs. Saint Anthony continues to ar-
gue that it can sue Illinois under 42 U.S.C. § 1396u-2(f) and 42
U.S.C. § 1983, forcing the state to proactively ensure that
MCOs issue timely payments to hospital providers.
This dispute returns to us, though, with the applicable
rules emphasized. The Supreme Court granted Illinois’s peti-
tion for a writ of certiorari, vacated this court’s original judg-
ment in this case, and remanded for our reconsideration in
light of Talevski. Eagleson v. St. Anthony Hospital, 143 S. Ct.
2634, 2634 (2023).
No. 21-2325 51
In Talevski, the Court considered whether certain provi-
sions of the Federal Nursing Home Reform Act (FNHRA)
could be enforced via a private right of action under § 1983.
Revisiting and explaining the requirements governing
whether statutory provisions are enforceable under § 1983,
the Court ruled that the two FNHRA provisions at issue “un-
ambiguously create § 1983-enforceable rights.” Talevski 143 S.
Ct. at 1450. At the jump, the Court noted the particularly “de-
manding bar” that must be met: “Statutory provisions must
unambiguously confer individual federal rights.” Id. at 1455
(emphasis in original). And Gonzaga Univ. v. Doe, 536 U.S. 273
(2002), “sets forth our established method for ascertaining un-
ambiguous conferral.” Id. at 1457. The Court then described
the Gonzaga test.
Under Gonzaga, courts must use “traditional tools of stat-
utory construction to assess whether Congress has ‘unambig-
uously conferred’ ‘individual rights upon a class of benefi-
ciaries’ to which the plaintiff belongs.” Id. (quoting Gonzaga,
536 U.S. at 283, 285–86). The statute in question must be
“phrased in terms of the persons benefited and contain[]
rights-creating, individual-centric language with an unmis-
takable focus on the benefited class.” Id. (quotations marks
omitted). If a statute contains the requisite language to mount
this “significant hurdle,” the statute “secures § 1983-enforce-
able rights.” Id. (cleaned up).
Applying this test, the Court in Talevski concluded that the
provisions of FNHRA at issue contained unambiguous,
rights-creating, individual-centric language. Those provi-
sions—concerning unnecessary restraint of nursing home res-
idents and predischarge notice—“reside in 42 U.S.C. § 1396r,
52 No. 21-2325
which expressly concerns requirements relating to residents’
rights.” Id. (emphasis in original) (cleaned up).
The Court began with the unnecessary-restraint provision,
which “requires nursing homes ‘to protect and promote …
[t]he right to be free from … any physical or chemical re-
straints imposed for purposes of discipline or convenience
and not required to treat the resident’s medical symptoms.’” Id.
at 1458 (emphasis in original) (quoting 42 U.S.C.
§ 1396r(c)(1)(A)). The exceptions within that provision con-
tain additional language “sustain[ing] the focus on individual
residents,” including permissive use of restraints “to ensure
the physical safety of the resident or other residents.” Id. (empha-
sis in original) (quoting 42 U.S.C. § 1396r(c)(1)(A)(ii)(I)).
FNHRA’s predischarge-notice provision, the Court noted,
contains “more of the same.” Id. That provision, included in a
paragraph “concerning ‘transfer and discharge rights,’” id.
(emphasis in original) (quoting 42 U.S.C. § 1396r(c)(2)), man-
dates that nursing homes “must not transfer or discharge [a]
resident,” prior to fulfillment of certain preconditions. 42
U.S.C. § 1396r(c)(2)(A) (emphasis added). Any exceptions to
the predischarge-notice provision maintain the required “un-
mistakable focus on the benefited class” that Gonzaga de-
mands. Talevski, 143 S. Ct. at 1457. For example, discharges or
transfers of nursing home residents must be “necessary to
meet the resident’s welfare.” Id at 1458. (emphasis in original)
(quoting 42 U.S.C. § 1396r(c)(2)(A)). Because “[t]he unneces-
sary-restraint and predischarge-notice provisions use clear
‘rights-creating language,’ speak ‘in terms of the persons ben-
efited,’ and have an ‘unmistakable focus on the benefited
class,’” the Court concluded that those particular provisions
No. 21-2325 53
are presumptively enforceable under § 1983. Id. at 1458–59
(quoting Gonzaga, 536 U.S. at 284, 287, 290).
But “[e]ven if a statutory provision unambiguously se-
cures rights, a defendant ‘may defeat t[he] presumption by
demonstrating that Congress did not intend’ that § 1983 be
available to enforce those rights.” Id. at 1459 (quoting Rancho
Palos Verdes v. Abrams, 544 U.S. 113, 120 (2005)). Such an inten-
tion can be expressed (1) explicitly in the text of the statute
creating the right, or (2) implicitly by showing that Congress
“creat[ed] ‘a comprehensive enforcement scheme that is in-
compatible with individual enforcement under § 1983.’” Id.
(quoting Rancho Palos Verdes, 544 U.S. at 120). To determine
whether Congress implicitly intended to prevent enforcement
through § 1983, the relevant “question is whether the design
of the enforcement scheme in the rights-conferring statute is
inconsistent with enforcement under § 1983.” Id. That is, do
the statute’s text and context evince congressional intent for
“a statute’s remedial scheme to ‘be the exclusive avenue
through which a plaintiff may assert his claims.’” Id. (empha-
sis in original) (citation omitted).
Applying these precepts, the Court in Talevski “discern[ed]
no incompatibility between the FNHRA’s remedial scheme
and § 1983 enforcement of the rights that the unnecessary-re-
straint and predischarge-notice provisions unambiguously
secure.” Id. at 1460. This was because FNHRA “lacks any in-
dicia of congressional intent to preclude § 1983 enforcement,
such as an express private judicial right of action or any other
provision that might signify that intent.” Id. Rather, the Court
deemed FNHRA unlike other statutes it had previously ex-
amined, which “required plaintiffs to comply with particular
procedures and/or to exhaust particular administrative
54 No. 21-2325
remedies under the statute’s enforcement scheme” before fil-
ing suit. Id. at 1461 (quotation marks omitted) (discussing
Middlesex Cty. Sewerage Auth. v. Nat’l Sea Clammers Ass’n, 453
U.S. 1 (1981); Rancho Palos Verdes; and Smith v. Robinson, 468
U.S. 992 (1984)). “[I]n all three cases, § 1983’s operation would
have thwarted Congress’s scheme … circumvented the stat-
utes’ presuit procedures, and would have also given plaintiffs
access to tangible benefits as remedies that were unavailable
under the statutes.” Id. (quotation marks omitted).
The Court concluded, “the test that our precedents estab-
lish leads inexorably to the conclusion that the FNHRA
secures the particular rights that Talevski invokes without
otherwise signaling that enforcement of those rights via
§ 1983 is precluded as incompatible with the FNHRA’s reme-
dial scheme.” Id. at 1462. 1
II
Applying this Gonzaga framework here, § 1396u-2(f) is not
enforceable under § 1983. The text and context of the provi-
sion do not unambiguously confer an individually enforcea-
ble right. See Pennhurst State Sch. and Hosp. v. Halderman, 451
U.S. 1, 17 (1981) (holding that Congress must speak “unam-
biguously … with a clear voice” in Spending Clause
1 The majority opinion in Talevski cites Blessing v. Freestone, 520 U.S.
329 (1997), only once, and without further discussion, for the proposition
that some statutes will permit § 1983 enforcement alongside a detailed en-
forcement regime so long as they are not incompatible. 143 S. Ct. at 1460.
The only other mention of Blessing in Talevski is in a dissenting opin-
ion, agreeing with the majority “that there is no room for ‘a multifactor
balancing test to pick and choose which federal requirements may be en-
forced by § 1983 and which may not.’” Id. at 1484 (Alito, J., dissenting)
(quoting Gonzaga, 536 U.S. at 286).
No. 21-2325 55
legislation—like the Medicaid Act—before imposing obliga-
tions on the states). Even if it did, such a right is inconsistent
with the Medicaid Act’s contractual enforcement scheme.
A
Section 1396u-2(f), referred to as the timely-payment pro-
vision, governs contracts between states and MCOs. It states
in relevant part:
A contract under section 1396b(m) of this title
with a Medicaid managed care organization
shall provide that the organization shall make
payment to health care providers … on a timely
payment basis consistent with the claims pay-
ment procedures described in section
1396a(a)(37)(A) of this title, unless the
healthcare provider and the organization agree
to an alternate payment schedule … .
Section 1396a(a)(37)(A) provides a default payment schedule
to be included in contracts between states and MCOs, requir-
ing MCOs to furnish payment to providers for 90% of clean
claims within 30 days and 99% of clean claims within 90 days.
Section 1396u-2(f) does not grant providers like Saint An-
thony an individual enforcement right. Neither § 1396u-2(f)
nor § 1396a(a)(37)(A) contains the clear, rights-creating lan-
guage necessary to show that Congress “manifests an ‘unam-
biguous’ intent to confer individual rights” upon providers to
pursue private enforcement of the timely-payment provision
under § 1983. Gonzaga, 536 U.S. at 273–74 (quoting Pennhurst,
451 U.S. at 17).
Unlike the unnecessary-restraint and predischarge-notice
provisions in Talevski, which expressly granted nursing home
56 No. 21-2325
residents specific rights, § 1396u-2(f) and § 1396a(a)(37)(A) do
not mention rights. Nor does the timely-payment provision
impose any duty on states (or grant providers a correspond-
ing right) to guarantee that MCOs consistently make prompt
payments. The provision requires only that a state’s contract
with an MCO contain language that payments will comply
with either § 1396a(a)(37)(A)’s 30-day/90-day payment sched-
ule or some agreed upon alternative.
Saint Anthony responds by citing to the only two Supreme
Court cases since Pennhurst to hold that a Spending Clause
statute confers a § 1983-enforceable right. See Wright v. Roa-
noke Redevelopment and Housing Authority, 479 U.S. 418 (1987),
and Wilder v. Virginia Hosp. Ass’n, 496 U.S. 498 (1990).
Wright addressed whether a rent ceiling statute for low-
income housing appended by amendment to the Housing Act
of 1937 was § 1983-enforceable. 479 U.S. at 419. The dispute
arose when the Housing Authority allegedly overcharged for
utilities, which the statute defined as part of a tenant’s rent.
Id. at 420–21. The relevant statute read, “[a] family shall pay
as rent for a dwelling unit assisted under this chapter”
amounts defined by statute. Id. at 420 n.2. As Gonzaga
acknowledged, the Court held in Wright that the rent ceiling
statute was enforceable under § 1983 because “Congress
spoke in terms that ‘could not be clearer’ and conferred enti-
tlements ‘sufficiently specific and definite to qualify as en-
forceable rights.’” 536 U.S. at 280 (quoting Wright, 479 U.S. at
432). The Court also found persuasive the Housing Act’s lack
of procedure “by which tenants could complain to [Housing
and Urban Development] about the alleged failures of [a pub-
lic housing authority] to abide by [the Act’s rent-ceiling pro-
vision].” Wright, 479 U.S. at 426.
No. 21-2325 57
In Wilder, the Court set out to answer whether the Boren
Amendment to the Medicaid Act—a reimbursement provi-
sion—could be enforced by a private cause of action under
§ 1983. 496 U.S. at 501–02. As Gonzaga recognized, the Court
in Wilder analogized the Boren Amendment to Wright’s rent-
ceiling provision, as both “explicitly conferred specific mone-
tary entitlements upon the plaintiffs.” Gonzaga, 536 U.S. at
280. In addition, regulations requiring states to adopt an ap-
peals procedure for individual providers to obtain review of
reimbursement rates was not “sufficiently comprehensive to
demonstrate a congressional intent to withdraw the private
remedy of § 1983.” Wilder, 496 U.S. at 522.
Saint Anthony argues that the statutes at issue in Wright
and Wilder—which contain less precise language than
§ 1396u-2(f) and omit the term “rights” altogether—still
conferred a § 1983-enforceable right. But Wright and Wilder
predate Gonzaga’s requirement that a statute must contain ex-
plicit “rights-creating” language to unambiguously confer a
private cause of action under § 1983. Gonzaga, 536 U.S. at 284,
287. The two cases also predate the Court’s “reject[ion of] at-
tempts to infer enforceable rights from Spending Clause stat-
utes.” Gonzaga, 536 U.S. at 281; see also Suter v. Artist M., 503
U.S. 347, 363 (1992) (holding that a provision in the Adoption
Assistance and Child Welfare Act of 1980 is not § 1983-en-
forceable); Rancho Palos Verdes, 544 U.S. at 127 (holding that
limitations on local zoning authority included in the Telecom-
munications Act of 1996 do not confer an individual enforce-
ment right under § 1983). These more recent cases reaffirm
that “the typical remedy for state noncompliance with feder-
ally imposed conditions is not a private cause of action for
noncompliance but rather action by the Federal Government
58 No. 21-2325
to terminate funds to the State.” Gonzaga, 536 U.S. at 280
(quoting Pennhurst, 451 U.S. at 28).
Without any rights-creating, individual-centric language
in § 1396u-2(f), the majority opinion turns to three other pro-
visions of the Medicaid Act, looking for an unambiguous con-
ferral of a § 1983-enforceable right. But if other statutes are
needed to show that the timely-payment provision is not am-
biguous, how did Congress “unambiguously confer” the
claimed individual right within “the provision in question?”
Talevski, 143 S. Ct. at 1457. These three other provisions—
§ 1396u-2(c)(2)(A)(i), § 1396u-2(h)(2)(B), and
§ 1396b(m)(2)(A)(iv)—also do not extend as far as the major-
ity option concludes.
The first, § 1396u-2(c)(2)(A)(i), requires certain language in
state contracts with MCOs. The contracts must “provide for
an annual … external independent review … of the quality of
outcomes and timeliness of, and access to, the items and ser-
vices for which the organization is responsible under the con-
tract.” 42 U.S.C. § 1396u-2(c)(A)(i). This says nothing about
rights, much less anything about the focus of this suit: MCO
payments to providers. 2
The second, § 1396u-2(h)(2)(B), is a timely-payment provi-
sion that applies to contracts between states and MCOs
concerning managed-care programs for Indian health care
providers. It requires that MCOs “agree to make prompt
2 An argument that “items and services” can be construed to mean
payments is defeated by language elsewhere. That phrase refers to the
medical services and supplies provided by providers to the individuals
they treat. See, e.g., 42 U.S.C. §§ 1396u-2(a)(5)(B)(4), 1396u-2(d)(1)(A)(ii),
1396u-2(e)(1)(A)(i), 1396u-2(h)(4)(D).
No. 21-2325 59
payment” to Indian health care providers “consistent with”
§ 1396u-2(f)’s rule for prompt payment. 42 U.S.C. § 1396u-
2(h)(2)(B). So, it operates exactly as § 1396u-2(f), just in the In-
dian health care context. It requires contracts between states
and MCOs to contain language dictating that MCO payments
to providers will comply with the 30-day/90-day payment
schedule or with some other agreed upon schedule.
The majority opinion also notes that this second statute,
§ 1396u-2(h)(2)(B), refers to § 1396u-2(f) as the “rule for
prompt payment of providers.” For my colleagues, such a title
supports a conclusion that Congress intended § 1396u-2(f) to
guarantee timely payment to providers by imposing a bind-
ing obligation on states to enforce MCO payment schedules.
“But headings and titles are not meant to take the place of the
detailed provisions of the text. Nor are they necessarily de-
signed to be a reference guide or a synopsis.” Brotherhood of R.
R. Trainmen v. Balt. & O.R. Co., 331 U.S. 519, 528 (1947). This
title is especially unhelpful because it does not clarify whether
§ 1396u-2(f) is an administrative requirement that a managed
contract included deadlines, or a rule that imposes a privately
enforceable, managerial duty on states to guarantee all MCO
payments are timely. 3 A passing reference in § 1396u-
2(h)(2)(B) to the provision in dispute fails to alter the plain
meaning of the text in § 1396u-2(f).
3 The same critique applies to the majority opinion’s reliance on the
title of § 4708(c) of the Balanced Budget Act of 1997—“Assuring Timeli-
ness of Provider Payments.” Pub. L. No. 105-33, 111 Stat. 251, 506. In fact,
reliance on section titles in the Balanced Budget Act may point towards a
determination that § 1396u-2(f) is merely an administrative requirement.
Section 4708 itself is entitled “Improved Administration.” Id.
60 No. 21-2325
The third, § 1396b(m)(2)(A)(iv), mandates specific provi-
sions in state contracts with MCOs. It requires these contracts
to “provide[] that … the State … shall have the right to audit
and inspect any books and records” of MCOs “pertain[ing] …
to services performed or determinations of amounts payable
under the contract.” 42 U.S.C. § 1396b(m)(2)(A)(iv). This pro-
vision expressly mentions a “right.” But it is Illinois’s right—
not any individual provider’s—to audit and inspect MCO
books and records. And as discussed below, this provision is
more congruent with the Congressionally created, contract-
based enforcement scheme through which states may moni-
tor MCO compliance and sanction bad actors.
Relying on these three other Medicaid provisions proves
too much. Granting states oversight of MCOs could serve sev-
eral purposes, but one of them is not to legislatively require
Illinois to enforce the prompt payment provision through an-
ything other than the contractual enforcement mechanisms
provided in the Medicaid Act. See infra II.B. Imposing report-
ing and oversight responsibilities does not show that
Congress prescribes a privately enforceable duty on states to
guarantee that healthcare providers are timely paid. None of
these statutes contains any language meeting the require-
ments of Gonzaga.
The majority opinion also turns to circuit precedent inter-
preting another Medicaid statute, § 1396a(a)(10)(A). That pro-
vision requires state plans for medical assistance to “provide
… for making medical assistance available … to [] all individ-
uals” who meet certain eligibility requirements. Twice this
court has concluded that that provision confers a right en-
forceable under § 1983. In Miller by Miller v. Whitburn, 10 F.3d
1315, 1318 (7th Cir. 1993), this court held that Medicaid
No. 21-2325 61
recipients have a right of action to “challenge the reasonable-
ness of a state’s decision regarding the medical necessity of a
life saving procedure.” After Blessing and Gonzaga, the hold-
ing in Miller was reaffirmed in Bontrager v. Indiana Family &
Social Services Admin., 697 F.3d 604, 607 (7th Cir. 2012).
But these precedents do not bear the weight the majority
opinion would have them carry. Though Bontrager reaffirmed
Miller, the Blessing test was top of mind. See id. (“Generally,
we consider three factors to determine if a statute creates an
enforceable right.”). And Miller relied on Wilder and the same
three factors that became the Blessing test. 10 F.3d at 1319–20.
But we now know—not just generally, but after a vacate and
remand of our previous decision in this same case—that Gon-
zaga’s text-rooted approach is to be applied to identify
whether a statute grants a § 1983-enforceable right. Talevski,
143 S. Ct. at 1457. So, Miller and Bontrager do not help the hos-
pital.
Rather than apply the Gonzaga test as explained in Talevski,
Saint Anthony argues that (1) Talevski did not overrule
Blessing, and (2) our court’s original ruling, particularly its ap-
plication of the Blessing factors to find an individually en-
forceable right in § 1396u-2(f), is consistent with Talevski. 4 The
majority opinion agrees with the first proposition. And
though it now supplies a Gonzaga analysis, the majority opin-
ion accedes to the second by continuing to apply the Blessing
factors.
4 Saint Anthony now asserts in its Supplemental Reply Brief that this
court’s original decision “applied the same rule as Talevski.” If that was
correct, there would have been no need for a GVR.
62 No. 21-2325
Saint Anthony’s first point is correct—Talevski does not say
that Blessing is no longer good law. 5 But Saint Anthony’s sec-
ond assertion falters. Even if a marginalized Blessing survives,
Talevski expressly and repeatedly looks to and applies Gonzaga
and its principles—not Blessing—to decide whether a federal
statute confers a § 1983-enforceable right. “Gonzaga sets forth
our established method for ascertaining unambiguous confer-
ral.” Talevski, 143 S. Ct. at 1457. After Talevski, Blessing and its
factors are severely diminished as a means to determine
whether there is a privately enforceable right. In Gonzaga the
Court named Blessing as an example of past Supreme Court
opinions “suggest[ing] that something less than an unambig-
uously conferred right is enforceable by § 1983.” 536 U.S. at
282. Gonzaga “reject[ed] the notion” that the law “permit[s]
anything short of an unambiguously conferred right to sup-
port a cause of action brought under § 1983.” Id. at 283; see also
id. at 286 (addressing separation of powers concerns and stat-
ing, “we fail to see how relations between the branches are
served by having courts apply a multifactor balancing test to
pick and choose which federal requirements may be enforced
by § 1983 and which may not.”).
Saint Anthony also characterizes Talevski and Gonzaga as
“best understood as reformulating Blessing factors 1–2 into a
single statement that captures the plaintiff benefit and clear
5 Doubts exist about Blessing’s continued validity post-Talevski. Fed. L.
Enf’t Officers Ass’n v. New Jersey, 93 F.4th 122, 128–130, n.4 (3d Cir. 2024)
(applying Gonzaga and holding that the Law Enforcement Officers Safety
Act of 2004 confers an individually enforceable right to qualified retired
law enforcement officers under § 1983, conducting Blessing analysis in a
footnote, and noting that “recent Supreme Court authority casts doubt
upon the continued application of the Blessing factors.”).
No. 21-2325 63
right factors” and “clarifies that the Blessing standard requires
the court to find that Congress granted a ‘right’ and not just a
‘benefit.’” The majority opinion views the Blessing standard
otherwise, as my colleagues “do not see a fundamental differ-
ence between the Talevski/Gonzaga standard … and the first
and third Blessing factors.” Regardless of what may survive of
Blessing, neither the text nor context of §1396u-2(f) grants a
§ 1983-enforceable right.
The inquiry should end here. The timely-payment provi-
sion does not satisfy the Gonzaga requirements, reaffirmed in
Talevski. Section 1396u-2(f)’s text does not contain “rights-cre-
ating, individual-centric language” from which to conclude
that Congress unambiguously conferred a privately enforce-
able right under § 1983.
B
Even if the text of § 1396u-2(f) unambiguously secures
rights actionable under § 1983, those rights would be incom-
patible with the comprehensive, contractual enforcement
scheme of the Medicaid Act. That Act contains no express pro-
hibition against enforcement of the timely-payment provision
under § 1983. So, the relevant “question is whether the design
of the enforcement scheme in the rights-conferring statute is
inconsistent with enforcement under § 1983.” Talevski, 143 S.
Ct. at 1459. That is, do the statute’s text and context evince
congressional intent for “a statute’s remedial scheme to ‘be the
exclusive avenue through which a plaintiff may assert his
claims.’” Id. (emphasis in original) (citation omitted).
As noted above, Congress grounded the state-MCO rela-
tionship in contract. Under its Spending Clause power, Con-
gress imposes many requirements that must be included in
64 No. 21-2325
state contracts with MCOs. Along with those requirements,
Congress provides states with an enforcement mechanism
that requires MCO compliance with those contracts. This
mechanism gives states broad discretion in how they enforce
the contractual obligations of MCOs.
The mechanism for this discretionary enforcement is
§ 1396u-2(e). It requires states to establish certain “intermedi-
ate sanctions” before entering into a contract with any MCO.
42 U.S.C. §§ 1396u-2(e)(1)(A), (e)(2)(A)–(E). A state “may im-
pose” these sanctions when an MCO acts in a manner prohib-
ited under the section 42 U.S.C. § 1396u-2(e)(1)(A)(i)–(v). And
where an MCO fails to meet its contractual obligations, states
“have the authority to terminate such contract[s].” 42 U.S.C.
§ 1396u-2(e)(4)(A).
For my colleagues, more is required than § 1396u-2(e)’s
contractual enforcement mechanism to rebut the presump-
tion that § 1396u-2(f) confers an enforceable right for prompt
payment to providers. That is because, they posit, this mech-
anism lacks the characteristics that Talevski said show incom-
patibility with § 1983. Those characteristics are the inclusion
of “statute-specific private rights of action,” requiring compli-
ance with particular administrative remedies before filing suit
under that right of action, that “offered fewer benefits than
those available under § 1983.” Talevski, 143 S. Ct. at 1461 (cit-
ing Rancho Palos Verdes, 544 U.S. at 120–23; Smith, 468 U.S. at
1008–1013, and Sea Clammers, 453 U.S. at 6–7, 19–21). In those
three cases, “§ 1983’s operation would have thwarted Con-
gress’s scheme coming and going: It would have circum-
vented the statutes’ presuit procedures, and would have also
given plaintiffs access to tangible benefits as remedies that
were unavailable under the statues.” Id. (cleaned up).
No. 21-2325 65
But the Medicaid statutory scheme here includes these
characteristics, and § 1983’s operation here would thwart
Congress’s scheme. Section 1396u-2(f) enables a healthcare
provider like Saint Anthony to privately enforce their contrac-
tual rights against MCOs directly through arbitration or liti-
gation. Recall that Saint Anthony has a direct vehicle to press
its arguments about nonpayment of claims. The hospital has
contracts with MCOs, each of which contains a bargained-for
arbitration clause. And even before the initiation of dispute
resolution, either in the courts or before an arbitrator, a state
has the Congressionally provided tools described above—in-
termediate sanctions and, if necessary, termination of its con-
tract with an MCO. To also provide a § 1983-enforceable right
would give providers a new benefit (a “systemic” remedy, as
the majority opinion crafts it) that is not otherwise available.
The contractual enforcement mechanism provided to
states cannot stand alongside the § 1983-enforceable right
Saint Anthony divines for itself. Such a right would strip the
discretion Congress has provided to Illinois to decide for itself
when and how it will enforce an MCO’s contractual obliga-
tion. To find a § 1983-enforceable right here would render the
contractual scheme superfluous. See Smith 468 U.S. at 1011
(finding “it difficult to believe” that the [Education of the
Handicapped Act’s] comprehensive procedures and guaran-
tees plus Congress’s “express efforts” to give local and state
agencies the primary responsibility to provide accommoda-
tions to handicapped children rendered a § 1983-enforceable
right anything other than “superfluous”); see also Antonin
Scalia & Bryan A. Garner, READING LAW: THE INTERPRETATION
OF LEGAL TEXTS 174–79 (2012) (“If possible … every provision
is to be given effect … None should needlessly be given an
interpretation that causes it … to have no consequence”).
66 No. 21-2325
C
Finding a § 1983-enforceable right within the text of
§ 1396u-2(f) refuses to accept the burdens this holding will
place on Illinois and the judiciary. Creating and conferring
this individual right will turn trial courts into “de facto Med-
icaid claims processors for states,” regardless of an attempt to
limit the holding to systemic MCO noncompliance—a limit
discussed nowhere in § 1396u-2(f) or surrounding provisions.
See St. Anthony Hosp. v. Eagleson, 40 F.4th 492, 522 (7th Cir.
2022) (Brennan, J., dissenting), cert. granted, judgment vacated
sub nom. Eagleson v. St. Anthony Hosp., 143 S. Ct. 2634 (2023).
Before even reaching the merits of a provider’s § 1396u-2(f)
claims, district courts will need to decide what is and what is
not a “systemic” failure to provide timely payment to provid-
ers—without any statutory or judicial directive.
The majority opinion promises district courts that they
will not need to “adjudicate issues at the claim-by-claim
level”—a task my colleagues concede “would strain judicial
resources and seem to conflict with the arbitration clauses in
the contracts between the MCOs and Saint Anthony.” But a
district court cannot decide if an MCO has violated this new
“systemic” standard if it does not examine claims for
untimely payments on the merits. Whether the payment
schedule even applies to a group of payment claims cannot be
decided without evaluating the nature, timeliness, and merits
of those claims, rendering district courts the new Medicaid
claims processors for the states.
Moreover, without inspecting whether the individual
claims are being paid on time, a district court has no metric
by which to gauge the effectiveness of, or a state’s compliance
with, injunctions designed to ensure timely payment.
No. 21-2325 67
Pointing to O.B. v. Norwood, 838 F.3d 837 (7th Cir. 2016), the
majority opinion highlights that all the district court must
require is that the State do “something.” But my colleagues
recognize that such a remedy is appropriate only “[i]f Saint
Anthony can prove its claims of systemic delay and/or under-
payment,” which necessarily involves adjudicating the un-
derlying claims on the merits. 6
The majority opinion requires district courts to perform
the arduous task of deciphering whether a healthcare pro-
vider has met an unclear standard. It is not shy about what
success looks like here for Saint Anthony and future litigants:
requiring states to “devise systems” to ensure MCO compli-
ance. What those “systems” look like or how they operate is
anybody’s guess—Congress did not speak to them in the con-
tract-based enforcement scheme it enshrined in statute. As a
consequence, “day-to-day” functions and enforcement are re-
turned to the states—the precise type of fee-for-service man-
agement that MCOs were designed to avoid.
* * *
In sum, the majority opinion’s interpretation of § 1396u-
2(f) finds no support in the statute’s text, contravenes other
provisions of the Medicaid Act, and misapplies governing
6 O.B. is distinguishable. There, the statutory text of 42 U.S.C.
§ 1396a(a)(10)(A) imposed a duty on the State to make “medical assis-
tance” available, which this court determined included providing nurses
for children. 838 F.3d at 842–43. Here, there is no textual mooring for this
holding that states have a privately enforceable duty to ensure healthcare
providers are timely paid in instances where MCOs are systemically de-
laying payments. See also id. at 843–44 (Easterbrook, J. concurring) (noting
the district court’s injunctive order requiring the states to do something to
find nurses “does not supply any detail,” and “[t]he Supreme Court has
reversed injunctions that read like this one”).
68 No. 21-2325
Supreme Court precedent. In those rare cases in which this
court has recognized a private right of action under Medicaid,
none has imposed a duty on states as broad in scope, ongoing
in nature, and difficult to enforce as here. 7 Nor has any other
federal circuit ever recognized a state’s privately enforceable
duty to guarantee timely payment under § 1396u-2(f). Jane
Perkins, Private Enforcement of the Medicaid Act Under Section
1983, NAT’L. HEALTH L. PROGRAM 5–7 (July 16, 2021),
https://bit.ly/2XaCtDY. To find such a new and expansive
duty under § 1396u-2(f) stretches that statute, doing so in the
context of Spending Clause legislation where Congress must
“unambiguously” confer an individual right.
III
I also see no abuse of discretion in the district court’s de-
nial of Saint Anthony’s motion to supplement its complaint
under Federal Rule of Civil Procedure 15(d).
The relevant language of Rule 15(d) provides that “[o]n
motion and reasonable notice, the court may, on just terms,
permit a party to serve a supplemental pleading setting out
7 See, e.g., BT Bourbonnais Care, LLC v. Norwood, 866 F.3d 815, 824 (7th
Cir. 2017) (holding that 42 U.S.C. § 1396a(a)(13)(A) creates a privately en-
forceable duty on states to provide a public process with notice and op-
portunity to comment as outlined in § 1396a(a)(13)(A)); O.B., 838 F.3d at
842–43 (holding that provisions in the Medicaid Act impose a privately
enforceable duty on states to take affirmative steps to locate and provide
home nurses for children that the Illinois Department of Healthcare and
Family Services have approved for home nursing); Planned Parenthood of
Ind., Inc. v. Comm’r of the Indiana State Dept. of Health, 699 F.3d 962, 974 (7th
Cir. 2012) (holding that 42 U.S.C. § 1396a(a)(23) creates a privately enforce-
able “right to receive reimbursable medical services from any qualified
provider”); Bontrager, 697 F.3d at 607–08 (reaffirming Miller, 10 F.3d at
1318).
No. 21-2325 69
any transaction, occurrence, or event that happened after the
date of the pleading to be supplemented.” Supplemental com-
plaints are meant to “bring[] the case up to date.” 6A CHARLES
ALAN WRIGHT & ARTHUR R. MILLER, FEDERAL PRACTICE AND
PROCEDURE § 1504 (3d ed.). Our review is for an abuse of dis-
cretion, which we find “only if no reasonable person would
agree with the decision made by the trial court.” Lange v. City
of Oconto, 28 F.4th 825, 842 (7th Cir. 2022) (quoting Smith v.
Hunt, 707 F.3d 803, 808 (7th Cir. 2013)).
Saint Anthony’s supplemental complaint sought to do
more than bring the case up to date. As discussed previously,
St. Anthony Hosp., 40 F.4th at 526–28 (Brennan, J., dissenting),
the hospital asked to add an entirely new due process claim
centered on the transparency of both the managed care pro-
gram and Illinois’s separate fee-for-service program. The lat-
ter program was not part of the original case, and this request
was raised after the parties had engaged in expedited discov-
ery. Saint Anthony, in its original complaint, had previously
included an entire section challenging the lack of transpar-
ency in the MCOs’ dealings with providers, and made no
mention of the fee-for-service program.
The district court correctly described the state of the case:
the addition of this claim would have required expeditions
into “whole new frontiers of discovery,” including Saint An-
thony’s claim involving the Medicaid fee-for-service pro-
gram. “The court not only may but should consider …
whether the claim could have been added earlier; and the bur-
den on the defendant of having to meet it.” Glatt v. Chicago
Park Dist., 87 F.3d 190, 194 (7th Cir. 1996). The district court
did that here. Given this case’s already huge scope—the total
value of the state’s contracts with the seven MCOs is $63
70 No. 21-2325
billion, the largest single procurement in Illinois history—and
its highly technical subject matter, reasonable persons could
agree with its decision not to vastly expand the suit. Lange, 28
F.4th at 842. So, the district court did not abuse its discretion
in denying Saint Anthony’s desire to engage in this expedi-
tion.
For these reasons, I respectfully dissent.