Rio Grande Community Health Center, Inc. v. Rullan

United States Court of Appeals
For the First Circuit

No. 04-1526

RIO GRANDE COMMUNITY HEALTH CENTER, INC.; CONCILIO DE SALUD
INTEGRAL DE LOIZA, INC.; Dr. JOSE S. BELAVAL, INC.,

Plaintiffs, Appellees,

v.

JOHNNY RULLAN, Secretary of the Department of Health, Puerto
Rico,

Defendant, Appellant.

APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF PUERTO RICO

[Hon. Jay A. Garcia-Gregory, U.S. District Judge]

Before

Lynch, Circuit Judge,
Campbell, Senior Circuit Judge,
and Howard, Circuit Judge.

Eduardo A. Vera-Ramírez, with whom Eileen Landron Guardiola,
Ivette M. Berrios Hernandez, and Landrón & Vera, LLP were on brief,
for appellant.
James L. Feldesman, with whom Feldesman Tucker Leifer Fidell,
LLP was on brief, for appellee Concilio de Salud Integral de Loiza,
Inc.

February 14, 2005
 LYNCH, Circuit Judge. This case raises two issues of

importance to the administration of Medicaid funds for medically

underserved populations. The first is whether the health centers

serving those populations have enforceable rights to sue, under 42

U.S.C. § 1983, to obtain an injunction requiring that monies

(called wraparound payments) be paid as they become due. The

second is how a federal court hearing such a prospective claim

should proceed when parallel litigation is proceeding in a state

court, seeking damages for past overdue payments and other relief.

Of course, due to the Eleventh Amendment to the United States

Constitution, suits for such past damages may often only be brought

in state court. And so, in the world of Medicaid payments, such

parallel suits are not uncommon.

Here, the Secretary of Health for the Commonwealth of

Puerto Rico, Johnny Rullan, appeals from the grant of a preliminary

injunction that forced him to make a prospective interim Medicaid

reimbursement payment to the plaintiff health center, Concilio de

Salud Integral de Loiza, Inc. ("Loiza"), for the first quarter of

2005.1 It is undisputed that the Secretary has not, to date, been

in compliance with the special Medicaid reimbursement requirements

applicable to federally-qualified health centers (FQHCs) like

Loiza, which provide care to medically underserved populations. 42

1
The other plaintiffs to this federal action, Rio Grande
Community Health Center and Dr. Jose S. Belaval, Inc., are not
parties to this appeal.

-2-
U.S.C. §§ 1396a(bb). As a result of the Secretary's noncompliance

with these requirements, the plaintiff Puerto Rico FQHCs alleged

they were experiencing financial problems and Loiza, in particular,

alleged that it was facing imminent foreclosure and bankruptcy.

The Secretary did not seriously deny this.

Nonetheless, the Secretary argues that the preliminary

injunctive relief given here was inappropriate. He argues that (1)

the district court should have abstained, under Younger v. Harris,

401 U.S. 37 (1971), from granting relief, because of a pending

local court action on similar issues; (2) there is no action to

enforce the relevant provisions of the Medicaid law under 42 U.S.C.

§ 1983; and (3) the district court otherwise abused its discretion

in granting the injunction because relief was moot and for other

reasons.

We affirm. Younger does not apply to the sort of ongoing

local court action at issue here. The exceptional circumstances

necessary for abstention due to the mere presence of a parallel

state court action, under Colorado River Water Conservation Dist.

v. United States, 424 U.S. 800 (1976), are absent. There is an

implied action under section 1983 to enforce the special provisions

of the Medicaid law dealing with FQHC reimbursement, 42 U.S.C. §

1396a(bb), as these provisions vest the FQHCs with a federal right

to proper reimbursement.

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 I.

The Medicaid scheme

Loiza operates a community "health center" under the

Public Health Service [PHS] Act, 42 U.S.C. § 254b. Such centers

must meet various requirements: most importantly, they must be

located in a medically underserved area or serve a medically

underserved population. 42 U.S.C. § 254b(a)(1). They must also

provide services to Medicaid recipients. See 42 U.S.C. §

254b(k)(3)(E). As a "health center," Loiza is eligible to receive,

and has received, federal grant funds under section 330 of the

Public Health Service Act. 42 U.S.C. § 254b.

Loiza alleges that the Commonwealth has failed to

properly compensate the plaintiff health centers for their

treatment of Medicaid patients. Some elaboration of the Medicaid

scheme is needed to understand the dispute. The Medicaid program,

which was begun in 1965, is jointly supported with federal and

state funds and directly administered by state governments: the

purpose is to provide medical assistance to indigent families with

dependent children, as well as indigent disabled, blind, and aged

individuals. 42 U.S.C. § 1396 et seq.; see Rabin v. Wilson-Coker,

362 F.3d 190, 192 (2d Cir. 2004). The Commonwealth of Puerto Rico

is such a state for Medicaid purposes, 42 U.S.C. § 1301(a)(1), and

for these purposes we refer to it as a state. A state need not

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participate in Medicaid, but once a state decides to participate,

it must comply with all federal requirements.

One such federal requirement is that a state must

provide, as a part of its Medicaid plan, certain types of health

services. 42 U.S.C. § 1396a(a)(10). For example, a state must

provide "Federally-qualified health center services." 42 U.S.C. §

1396a(a)(10)(A); 42 U.S.C. § 1396d(a)(2)(C). Such services can, by

statutory definition, only be provided by "Federally-qualified

health centers" (FQHCs). Loiza is a FQHC because it is eligible to

receive grants under section 330 of the Public Health Service Act

(most importantly, it serves a medically underserved area). 42

U.S.C. § 254b.

Federal law regulates in great detail the ways in which

FQHCs receive payment for the services that they provide to

Medicaid patients. The special provisions on FQHC reimbursement

reflect the important public health role that these centers play.

The FQHC reimbursement scheme has changed several times, most

recently on January 1, 2001. The system in place between 1989 and

2000 required that FQHCs be reimbursed for "100 percent . . . of

[each FQHC's] costs which are reasonable." 42 U.S.C. §

1396a(a)(13)(C) (repealed 2000).

A new system, which relieved centers of having to supply

new cost data every year, was put in place after fiscal year 2000.

The new system, which is the focus of this action, is referred to

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as the prospective payment system (PPS). The first step is to

calculate each center's total cost of providing Medicaid services

for two years, 1999 and 2000. FQHCs must submit detailed cost

reports and only "reasonable" costs can be considered. 42 U.S.C.

§ 1396a(bb)(2). The total reasonable costs for 1999 and 2000 are

then divided by the total number of visits by Medicaid patients in

those two years to obtain an average per visit rate. Id. This

1999 and 2000 per visit cost data becomes the baseline cost data

that will be used for all future years. 42 U.S.C. § 1396a(bb)(2)-

(3).

To obtain a center's reimbursement for fiscal year 2001,

this per visit average cost from 1999 and 2000 is multiplied by the

number of Medicaid visits in fiscal year 2001. 42 U.S.C. §

1396a(bb)(2). In subsequent years (fiscal year 2002, etc.), the

per visit average cost of 1999 and 2000 is first multiplied by a

Medicare Economic Index ("MEI" -- a standard measure of inflation)

and then multiplied by the number of visits in those succeeding

years.2 The amount of the per visit payment thus automatically

rises every year, because of the MEI, and costs are no longer re-

audited every year as the 1999 and 2000 per visit cost figures are

the baseline for the calculation. New visit data, of course, is

necessary for each new year. A state may only deviate from the

2
The formula is slightly more complex because changes in the
scope of services provided can be used to adjust the payments, both
in fiscal year 2001 and thereafter. 42 U.S.C. § 1396a(bb)(2), (3).

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very specific payment methodology of the PPS if the FQHC involved

gives its consent and there is no reduction in total payments made

as compared to the PPS method. 42 U.S.C. § 1396a(bb)(6). No such

consent to deviate was given by Loiza here.

The system of states reimbursing FQHCs for their Medicaid

costs is complicated considerably by the fact that many states --

including the Commonwealth of Puerto Rico -- use a managed care

approach to running their Medicaid system. Essentially, the state

Medicaid agency contracts with managed care organizations (MCOs,

commonly known as health maintenance organizations or HMOs) to

arrange for the delivery of health care services to Medicaid

patients. The state generally pays each MCO a fixed monthly sum

per Medicaid patient assigned to the MCO; in return, the MCO agrees

to provide all covered services to the individual. The MCO turns

a profit if its costs are less than the fixed monthly sum, and has

a loss if its costs are more than the fixed monthly sum. Unless

the MCO actually owns hospitals and clinics, it then must contract

with various health care providers, including FQHCs, in order to

actually provide services to Medicaid patients.

A problem arises when the MCO contract with the FQHC

gives the FQHC less than the amount of compensation it is supposed

to get according to the detailed per visit PPS reimbursement method

outlined above. Congress has dealt with this problem by providing

that states must pay FQHCs a supplemental or wraparound payment to

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make up the difference between what the MCO is paying the FQHC and

what the FQHC is entitled to via the detailed PPS methodology.3 42

U.S.C. § 1396a(bb)(5). Such wraparound payments must be made at

least three times each year. Id. Thus, even in a managed care

system like Puerto Rico's, FQHCs are protected and must receive

reimbursements equal to the PPS methodology that Congress has laid

out. Since Puerto Rico uses a managed care system, FQHCs will get

Medicaid payments from two sources: first, the MCO, and second, a

wraparound payment from the Commonwealth.

Facts as to Puerto Rico's compliance

This case arose because the Commonwealth did not

establish a PPS promptly after January 1, 2001, when the system

came into effect. In fact, no wraparound payments at all were made

by the Commonwealth to FQHCs before the federal court, and a

Commonwealth court in a related case, recently ordered relief.

The commencement of a related state court case by various

Puerto Rican FQHCs against the Commonwealth on May 10, 2002

apparently led the Commonwealth to begin developing a PPS, but not

to make payments. After the commencement of that case, the

Commonwealth filed amendments to its state Medicaid plan adding the

PPS methodology as laid out in the statute, 42 U.S.C. § 1396a(bb),

to its plan without adding much, if any, additional detail beyond

3
Congress created the wraparound requirement for FQHCs in 1997,
several years before the PPS for FQHCs was statutorily created.
See 42 U.S.C § 1396a(a)(13)(C) (repealed 2000).

-8-
what is stated in the statute itself. These amendments were

approved by the federal government on April 8, 2003.

In July 2003, the Commonwealth's Department of Health

hired an auditor, Ramon L. Marrero Rosado ("Marrero"), to assist it

in actually performing the calculations that would be necessary to

pay its obligations under the PPS. Marrero produced a spreadsheet

containing the data he gathered and calculations he performed,

dated November 25, 2003.

Marrero attempted to calculate some of the basic data

needed. He assembled data from government agencies and MCOs on the

total number of patients seen by each of the Puerto Rico FQHCs in

1999 and 2000. For two reasons, this was not equivalent to the

number of Medicaid visits data required by federal law. First, it

included all patients, not just those using Medicaid. To adjust

for this, Marrero multiplied the total number of patients by

another number, the percentage of patients attended to who are

"purely Medicaid." It is unclear exactly what the source of this

"purely Medicaid" data is or what precisely it means. Second, the

PPS statute speaks of a per visit rate, not a per patient rate.

Marrero testified to the federal court that he could not correct

for this error because of limitations in the data. But he stated

that the per visit number could be calculated if better data were

obtained.

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 Marrero also produced data on the Medicaid costs of the

various FQHCs, including Loiza. Total cost data for 1999 and 2000

was obtained from each of the centers, averaged between the two

years, and adjusted slightly for reasons that are unclear. There

were no significant adjustments to the cost data for

reasonableness; the statutory requirement is that only reasonable

costs be used. 42 U.S.C. § 1396a(bb)(2). This total cost data was

multiplied by the "purely Medicaid" percentage to obtain data on

each center's total Medicaid-related costs. Marrero then

subtracted other sources of income for the centers in 1999 and 2000

from these total Medicaid costs. For example, any payments made

from the MCOs to the FQHCs in 1999 and 2000 were subtracted. Also,

grants made to the centers under section 330 of the Public Health

Service Act in 1999 and 2000 were subtracted. The plaintiffs have

argued that Marrero acted illegally in subtracting section 330

grants.

Comparing the total costs for 1999/2000 with the total

income for those same years, Marrero ultimately came up with a net

number. This number was positive for most of the centers, but it

was negative for Loiza: $776,626. Marrero represented this as

meaning that no wraparound payment was owed to most of the centers

-- only Loiza and one other FQHC were actually owed wraparound

payments.

-10-
 Whether the data was correct as to years before 2001 need

not concern us. Marrero's calculation is not a correct calculation

of the proper wraparound payment for any of the years at issue

since the January 1, 2001 establishment of the PPS. The average

cost per Medicaid visit for 1999 and 2000 is to be used as the

baseline for establishing per visit costs in every subsequent year

(multiplied by the MEI after 2001). 42 U.S.C. § 1396a(bb)(2)-(3).

However, only these per visit costs are standardized; one still

needs new Medicaid visit and MCO payment data for each center for

every subsequent year in order to calculate the amount of the

wraparound payment due in that given year. Since there is no MCO

payment or visit data on the spreadsheet for the years 2001 up to

the present (all of the income and visit data is from the 1999 and

2000 periods), wraparound payments for those later years cannot be

calculated from Marrero's data. The data on the spreadsheet

appears to come closest to accurately calculating the wraparound

payments due in 1999 and 2000.

Loiza's Financial Situation

There was testimony on the precarious financial state of

Loiza. Jose Orlando Colon Gonzalez ("Colon"), an accountant,

testified on March 15, 2004, that Loiza had four sources of funds:

"program income" from customers able to make cash payments because

of private insurance or other reasons, section 330 grants from the

federal government, contractual payments from the MCOs, and

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wraparound payments from the Commonwealth to make up the difference

between MCO payments and payments required under the PPS. He

testified that program income was only a small portion of the total

budget and that the MCOs had not made any payments to Loiza "for

the last few months." He further testified that neither Loiza nor

any other center had ever received any wraparound payments from the

Puerto Rican government. To make matters worse, Loiza was told by

the federal government that its section 330 federal grants would be

stopped on March 31, 2004, if it did not submit quarterly financial

reports for the 2003 fiscal year by that date. Colon stated that

Loiza could not afford the audit needed to prepare the reports

because it did not have the money to pay for it.

Colon prepared a monthly projected income statement for

Loiza for March and April 2004. Expenses exceeded income for each

of these two months by substantial margins ($141,067 in April

2004). Colon also testified that even before March 2004, Loiza was

already $688,000 behind on its mortgage payments. He stated that

the mortgage had been overdue for eight or nine months and that the

bank had told Loiza that it was going to begin foreclosure

proceedings.

II.

Procedural background

On May 10, 2002, some thirteen months before this federal

action was filed, Loiza and 18 other FQHCs sued the Commonwealth of

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Puerto Rico, the Puerto Rico Secretary of Health, and related

parties in a Commonwealth court in San Juan. The complaint alleged

that the Commonwealth was not properly making payments under the

PPS effective after January 2001 and codified at 42 U.S.C. §

1396a(bb), and in fact that it had not yet created a system to make

such payments. The complaint asked that the state court issue a

writ of mandamus ordering the Secretary of Health to comply with

his duties under the PPS, that it issue a declaratory judgment that

the defendants were acting unlawfully, and that it order

retroactive damages relief back to October 1, 1997. It did not

expressly seek injunctions that future payments be made.

A year and a half later, after the federal action had

commenced, the Commonwealth court issued a partial judgment on

December 18, 2003. This judgment stated that it was determining

two discrete issues related to the controversy. First, "whether or

not the [section] 330 funds received by co-plaintiffs" could be

deducted "from the total amount of the costs that . . . Puerto Rico

has to reimburse the centers." On this issue, the court ruled for

the plaintiffs that no deduction of section 330 grants should be

allowed because section 330 grants are for special purposes and

cannot be used to cover the costs of services to Medicaid patients.

Using such section 330 grants to reduce wraparound payments would

be defeating the purpose of section 330 grants by essentially

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forcing health centers to use these grants for Medicaid purposes.4

The second issue the local court addressed in this order was

"whether . . . Puerto Rico can establish a 7.5% cap to the

administrative expenses incurred by the community centers in

providing their [Medicaid] services." Here, the court held that no

such 7.5% cap is in the statute or any regulations, and therefore

it cannot be used.

Loiza and two of the other FQHCs that had initially filed

suit in Commonwealth court had brought suit in federal court on

June 6, 2003 and had filed an amended complaint on October 23,

2003, naming as a defendant Secretary Rullan.5 The amended

complaint, brought under 42 U.S.C. § 1983, alleged a failure by the

defendant to set up a PPS and make wraparound payments as required

by law. The amended complaint asked, as relief, that the

defendant's failure to establish a proper PPS and make wraparound

payments be declared unlawful, that the defendant be enjoined to

4
The state court heard the Commonwealth's motion for
reconsideration of the section 330 part of this partial judgment at
a hearing on June 3, 2004; it issued a partial judgment granting
the motion for reconsideration on June 16, 2004, notably well after
the preliminary injunction being appealed here. After
reconsideration it partially reversed course. This new judgment
held that some section 330 grant funds actually could be counted as
income for purposes of calculating the amount of the wraparound
payment under the PPS.
5
The initial complaint named the Commonwealth of Puerto Rico
as a party as well. After the Commonwealth moved to dismiss on
Eleventh Amendment immunity grounds, the plaintiffs amended the
complaint, removing the Commonwealth as a party and leaving only
the Secretary of Health.

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establish a PPS, that the court enjoin the defendant to make

emergency wraparound payments (based on reasonable approximations)

to the plaintiffs until a PPS can be established, and for

attorney's fees and costs. Unlike the state court complaint, the

amended complaint in federal court did not ask for retroactive

monetary relief: such relief would be clearly barred by the

Eleventh Amendment, as the Commonwealth has not waived its immunity

from this kind of suit in federal court.

All of the plaintiffs in the federal action filed a

motion for a preliminary injunction and for summary judgment on

January 7, 2004, some six months after the complaint was filed,

arguing that the case raised no genuine issues of material fact

against them and that the requirements for a preliminary injunction

had been met. Before the district court had issued any ruling on

that motion, Loiza filed a motion for a temporary restraining order

on March 1, 2004. The motion asked that the Secretary be ordered

to make an emergency prospective payment, covering Medicaid

reimbursement for the first quarter of 2004, due to Loiza's

precarious financial position. A magistrate judge to whom the case

was referred for recommendation held an evidentiary hearing on that

motion on March 15, 2004, at which three witnesses testified.

Loiza argued that emergency relief was appropriate and

necessary and that given this need, the district court should use

parts of the Commonwealth auditor's (Marrero) calculations, making

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corrections to these in a few places where this was possible and

legally required. The district court granted a preliminary

injunction to Loiza on March 31, 2004, and essentially adopted

Loiza's suggestions on how to modify the auditor's calculations.

The court stated first that the relief being requested

posed no Eleventh Amendment immunity problems, given that no

retroactive monetary relief was sought and that the Secretary was

being sued solely so that he would fulfill prospective duties under

federal law. The court also noted that abstention under Younger v.

Harris, 401 U.S. 37 (1971), and Colorado River Water Conservation

Dist. v. United States, 424 U.S. 800 (1976), was not appropriate

because the relief sought in the state case differed from the

relief sought in the federal case, inasmuch as retroactive monetary

relief was only sought in the state case. Further, Loiza was not

seeking to sidestep an unfavorable state court ruling that was on

appeal.

Finally, the court considered the four traditional

elements of a preliminary injunction -- likelihood of success on

the merits, irreparable harm, balance of hardships, and public

interest. See McGuire v. Reilly, 260 F.3d 36, 42 (1st Cir. 2001).

The court held that since the 2001 Medicaid law amendment requiring

states to use a PPS and make wraparound payments is clear, as is

the Commonwealth's noncompliance with that law (a fact not disputed

by the Commonwealth), Loiza demonstrated a strong probability of

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success on the merits. On the other three prongs, the court

stressed that Loiza would have to close its doors if it did not get

a prompt payment, which would harm "hundreds of Medicaid patients,"

while a single quarterly payment made by the Commonwealth would

have little effect on the public treasury.

The court's injunction ordered the Secretary to make the

first quarter 2004 payment by April 7, 2004. Specifically, the

court adopted the following methodology:

2. In computing the first quarter payment, Dr. Rullan
shall use the number of Medicaid patients annually served
by Loiza during 1999-2000 [according to the auditor's
calculations], to wit, 8009.
3. The above number shall be multiplied by one fourth
(1/4) of the annual total average of Medicaid patient
cost incurred by Loiza during 1999-2000 [according to the
auditor], to wit, $644.49. This fraction amounts to
$161.17.
4. Dr. Rullan, may in turn, deduct any sums paid to Loiza
by a managed care entity for the provisions of services
to Medicaid during the first quarter of 2004.
5. Dr. Rullan shall not deduct [section 330] grant funds
Loiza has received under the [PHS] Act.
6. If Dr. Rullan cannot . . . rapidly and effectively
calculate items 4-5 above, he shall base his payment
amount exclusively on the numbers in items 2-3, above.

The court used the government auditor Marrero's methodology and

numbers except for two changes.

First, the auditor had subtracted payments made by MCOs

to Loiza in 1999/2000 from the amount of the wraparound due; the

court did not allow this but would only allow deductions of MCO

payments made in the first quarter of 2004. This was clearly a

proper correction. Second, the auditor deducted funds received by

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Loiza as section 330 grants from total costs when determining

Medicaid payments due (this is the key issue that was before the

local court). The district court, siding with Loiza at this stage,

did not allow section 330 grant funds to reduce Medicaid payments.

Several other problems with the auditor's methodology were left

uncorrected for purposes of this emergency order,6 given the need

for rapid relief.

On April 6, 2004, the Secretary filed a motion with the

district court to set aside the district court's March 31, 2004

order granting a preliminary injunction; this was denied on April

20, 2004. This motion was based on a new order from the

Commonwealth court in the related local case, filed on March 30,

2004, one day before the federal court order at issue, ordering the

payment of $776,626 from the Commonwealth to Loiza within thirty

days. The amount that it ordered the Commonwealth to give Loiza is

from the "net" column on the auditor Marrero's chart. The district

court, in its denial of reconsideration, noted that the Secretary

had not given him any information to assess whether the local court

order was prospective or retroactive relief, nor had the Secretary

shown that he had complied with the local court order. Moreover,

the Secretary failed to provide to the district court a certified

6
For example, the auditor's use of a per patient rather than
per visit scale was not corrected. As well, the number of patients
seen in first quarter 2004 was unavailable, so the auditor's
calculation of patients in 1999/2000 was used instead.

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English translation of the Commonwealth court order. A motion to

alter or amend the April 20 decision, filed with an English

translation of the March 30 Commonwealth court order, was submitted

on April 21; this was denied as well on April 22. It is now clear

that the Commonwealth court was ordering a retroactive damages

payment in its March 30 order.7

Appellate Jurisdiction

Meanwhile, the Secretary had appealed the district

court's March 31 preliminary injunction on April 5, 2004. We have

jurisdiction over an interlocutory order granting or denying a

preliminary injunction. 28 U.S.C. § 1292(a)(1); Matrix Group Ltd.

v. Rawlings Sporting Goods Co., 378 F.3d 29, 32 (1st Cir. 2004).

The Secretary's motion for the district court to "set

aside" its March 31, 2004 order should be considered a timely

motion to alter or amend the judgment under Fed. R. Civ. P. 59(e).

See Silberstein v. IRS, 16 F.3d 858, 859 (8th Cir. 1994). If a

party files, as here, a notice of appeal after the entry of

7
One of the filings that the Commonwealth submitted to this
court, with a Rule 28(j) letter, stated explicitly that the state
court had twice found that the payment it ordered was retroactive
and for a different period than the federal preliminary injunction.
Further, the federal statute requires wraparound payments to be
made at least three times per year, 42 U.S.C. § 1396a(bb)(5)(B),
while the Commonwealth's Medicaid plan calls for quarterly
payments. The payment ordered by the state court was for an entire
year. If the state court was ordering prospective relief, it
presumably would have ordered only a quarterly payment, like the
federal district court, and not a full annual payment. Finally,
the Commonwealth court made none of the corrections that the
district court used to update Marrero's 1999/2000 data for 2004.

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judgment but before the entry of orders disposing of timely motions

to alter or amend a judgment, the notice of appeal becomes

effective after the order disposing of those motions. Fed. R. App.

P. 4(a)(4)(B)(i). The Secretary's notice of appeal is effective to

give us jurisdiction over the March 31 preliminary injunction

order.

However, we have no jurisdiction over the April 20 order

or any later orders denying motions to alter or amend the judgment.

No new notice of appeal was filed after these orders were entered,

as required by Fed. R. App. P. 4(a)(4)(B)(ii). Thus, our

jurisdiction is confined to the earlier, March 31, 2004, order.

See, e.g., Union Pac. R.R. Co. v. Greentree Transp. Trucking Co.,

293 F.3d 120, 126 (3d Cir. 2002); EEOC v. Union Independiente de la

Autoridad de Acueductos, 279 F.3d 49, 54 n.5 (1st Cir. 2002); Fant

v. New Eng. Power Serv. Co., 239 F.3d 8, 13 n.4 (1st Cir. 2001).

But see Beason v. United Techs. Corp., 337 F.3d 271, 274-75 (2d

Cir. 2003) (appeals court has discretion to hear at least purely

legal arguments raised on a reconsideration motion even if notice

of appeal was not amended pursuant to Rule 4(a)(4)(B)(ii)).

To the extent we have any discretion to exercise

jurisdiction over these later orders, which is doubtful, we decline

to exercise it -- the Secretary did not even reference those later

orders in his brief. And even if we had discretion and chose to

assume jurisdiction over these later orders, it would not change

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the result here, because as we have already noted, the Commonwealth

local court payment ordered on March 30, 2004 (the basis for the

motions) was retroactive and thus for a different period than the

district court's order of prospective relief.

On appeal, the Secretary raises three arguments: 1) the

district court should have abstained from hearing the case,8 2)

Loiza cannot bring a cause of action under 42 U.S.C. § 1983 to

enforce the Medicaid provision at issue, 42 U.S.C. § 1396a(bb), and

3) granting the preliminary injunction was otherwise inappropriate.

We address these points in turn.

III.

Abstention

Ordinarily, our review of whether a preliminary

injunction has been properly granted is for abuse of discretion.

See Brooks v. N.H. Supreme Court, 80 F.3d 633, 636-37 (1st Cir.

1996). On the abstention issue, however, our review is necessarily

controlled by the precise abstention doctrine at issue. Id. at

637. Younger abstention is mandatory if its conditions are met,

and our review of whether these have been met is de novo. Esso

Standard Oil Co. v. Cotto, 389 F.3d 212, 217 (1st Cir. 2004);

Brooks, 80 F.3d at 637. Decisions whether to grant or deny

abstention under Colorado River are reviewed for abuse of

8
The Secretary has not argued that either the res judicata or
Rooker-Feldman doctrines apply to this case.

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discretion. KPS & Assocs., Inc. v. Designs by FMC, Inc., 318 F.3d

1, 10 (1st Cir. 2003).

The Supreme Court has identified certain discrete types

of abstention. See Quackenbush v. Allstate Ins. Co., 517 U.S. 706,

716-17 (1996) (listing the several types of abstention). These

varieties are not "rigid pigeonholes into which federal courts must

try to fit cases." Pennzoil Co. v. Texaco, Inc., 481 U.S. 1, 11

n.9 (1987); see also Cruz v. Melecio, 204 F.3d 14, 23 (1st Cir.

2000). But the categories do matter: they are "carefully defined,"

New Orleans Public Service, Inc. (NOPSI) v. Council of New Orleans,

491 U.S. 350, 359 (1989), and the general rule, unless a case falls

into one of those exceptions, is that federal courts have a

"virtually unflagging obligation . . . to exercise the jurisdiction

given them." Colorado River Water Conservation Dist. v. United

States, 424 U.S. 800, 817 (1976).

Younger abstention

Here, the Secretary hangs his hat on the type of

abstention identified in Younger v. Harris, 401 U.S. 37 (1971).

Younger held that abstention was required where a plaintiff who was

defending criminal charges in state court sought to get the federal

court to enjoin the ongoing state criminal proceedings. Id. at 53-

54. Younger is grounded in notions of comity: the idea that the

state courts should not, in certain circumstances, be interfered

with. See Huffman v. Pursue, Ltd., 420 U.S. 592, 601, 603-04

-22-
(1975). For at least two reasons, the abstention principle

announced in Younger does not apply to this case.

First, the ongoing state proceeding involved here is not

the proper type of proceeding to require adherence to Younger

principles. Younger itself occurred within the context of a

criminal state proceeding. It has expanded beyond that context,

however. "[C]ertain types of state civil proceedings" are also

subject to Younger abstention. Quackenbush, 517 U.S. at 716-17.

The Supreme Court has extended abstention to two types of state

civil actions. See NOPSI, 491 U.S. at 367-68.

First and most importantly, Younger has been extended to

some quasi-criminal (or at least "coercive") state civil

proceedings -- and even administrative proceedings -- brought by

the state as enforcement actions against an individual. Maymo-

Melendez v. Alvarez-Ramirez, 364 F.3d 27, 31-32, 34 (1st Cir. 2004)

(applying Younger principles to state administrative disciplinary

proceeding of horse trainer); see, e.g., Middlesex County Ethics

Comm. v. Garden State Bar Ass'n, 457 U.S. 423, 432, 434-35 (1982)

(Younger abstention appropriate where plaintiff sought to enjoin

ongoing state administrative attorney disciplinary proceedings);

Moore v. Sims, 442 U.S. 415, 423 (1979) (Younger abstention

appropriate in context of state child removal proceedings due to

allegations of child abuse); Trainor v. Hernandez, 431 U.S. 434,

444 (1977) (Younger applies to state proceeding to recover

-23-
fraudulently obtained welfare payments); Huffman, 420 U.S. at 603-

05 (Younger abstention appropriate where plaintiff challenged

ongoing state civil nuisance proceedings); Esso Standard Oil Co.,

389 F.3d at 217-18 (using Younger to require abstention in case

where environmental board brought state administrative proceedings

against gasoline station owner seeking to fine it).

A second situation where Younger abstention has been seen

as appropriate in civil cases is in those situations uniquely in

furtherance of the fundamental workings of a state's judicial

system. Middlesex County, 457 U.S. at 432-33; see Pennzoil, 481

U.S. 1, 13 (1987) (Younger extends to challenge to post-judgment

appeal bond); Juidice v. Vail, 430 U.S. 327, 335-36 (1977) (Younger

applies to state's enforcement of civil contempt proceedings). It

is unclear exactly how far this second rationale extends, although

it is related to the coercion/enforcement rationale.9

9
Juidice and Middlesex County were both coercive enforcement
cases brought by the state against an individual; they simply
happened to involve, as well, fundamental interests of the state's
judicial system. Even the Supreme Court's furthest extension of
the type of proceedings to which Younger applies, in Pennzoil Co.,
involved this sort of coercive context. Although the underlying
state action involved two private parties, Texaco lost the case,
faced an $11 billion judgment, and was forced under Texas law to
either pay the judgment immediately, before appeal, or put up a
huge bond at least equal to the amount of the judgment. 481 U.S.
at 4-5. Texaco brought suit in federal court to challenge those
bond provisions: it was the "importance to the States of enforcing
the orders and judgments of their courts" that was sufficient to
bring Younger considerations into play. Id. at 13. Texaco's
challenge involved a "challenge[] to the processes by which the
State compels compliance with the judgments of its courts." Id. at
13-14.

-24-
 Neither of the two core rationales that the Supreme Court

has used in extending Younger to certain civil proceedings applies

here. This is not an enforcement proceeding brought by the state

or an agency against Loiza; in fact Loiza filed suit against the

Secretary in order to force the Commonwealth to fulfill its federal

statutory obligations. Nor are the fundamental workings of the

state's judicial system (like its contempt process or method of

enforcing judgments) put at risk by the relief asked of the federal

court. As well, the Supreme Court has made it clear that it has

never "remotely suggest[ed]" that every pending state proceeding

between a state and a private plaintiff justifies abstention if

that private plaintiff then sues the state in federal court.

Moore, 442 U.S. at 423 n.8.

The case is close to New Orleans Public Serv., Inc.

(NOPSI) v. Council of New Orleans, 491 U.S. 350 (1989), where the

Supreme Court refused to abstain on Younger grounds. NOPSI, a

public utility, sought a rate increase from the New Orleans City

Council due to increased costs. When such an increase was denied,

NOPSI filed suit both in federal district court and in state court,

in both instances seeking to have the Council order set aside and

the Council enjoined to approve a rate increase. Id. at 355-58.

The Supreme Court held that Younger abstention did not apply to

this type of state proceeding, which was a mere "state judicial

proceeding reviewing legislative or executive action," because

-25-
"[s]uch a broad abstention requirement would make a mockery of the

rule that only exceptional circumstances" justify abstention. Id.

at 368. Perhaps, the Court noted, in some cases a state

administrative enforcement proceeding could be seen as the

proceeding to which Younger attached, with the state court

proceeding merely serving as a continuation of this administrative

enforcement proceeding. Id. at 368-69; see also Maymo-Melendez,

364 F.3d at 35. But such a theory could not work in NOPSI, where

the ratemaking before the City Council was not a judicial but

rather a legislative proceeding. 491 U.S. at 371.

Here, the state court action, like that in NOPSI, is

judicial review of executive action, rather than an enforcement

proceeding. As well, there was no administrative enforcement

proceeding before the Commonwealth health agency that triggered the

review. In fact there was no administrative proceeding at all

involving Loiza; the state and federal challenges are to the

Secretary of Health's failure to implement a PPS, as federal law

requires. The state proceedings here do not trigger Younger

abstention requirements.

For a second (and somewhat related) reason as well,

Younger abstention is inappropriate in this case. Younger applies

only when the relief asked of the federal court "interfere[s]" with

the state proceedings. See Quackenbush, 517 U.S. at 716. In

Younger itself, the "interference" was the attempt to enjoin the

-26-
pending state criminal proceeding from going forward. See Younger,

401 U.S. at 41. The principle, of course, is somewhat broader:

interference also clearly exists where the plaintiff is seeking a

declaratory judgment that a prosecution, or the statute serving as

its basis, is illegal or unconstitutional. See Samuels v. Mackell,

401 U.S. 66, 72 (1971). Interference is thus usually expressed as

a proceeding that either enjoins the state proceeding or has the

"practical effect" of doing so. See, e.g., Gilbertson v. Albright,

381 F.3d 965, 977-78 (9th Cir. 2004).

There is no interference with the state court proceedings

in this case. The federal injunction that Loiza obtained in

federal court is an injunction to make the state Medicaid agency

perform certain acts required by federal law; it is not an

injunction that would stop the state court from proceeding

independently against the state Medicaid agency as well, nor is it

inconsistent with any of the Commonwealth court orders. The

Commonwealth court relief sought concerned the full creation of a

PPS and an accounting of sums due. The Commonwealth court issued

a December 18, 2003 partial judgment stating that section 330 grant

funds could not be deducted from PPS payments (this was later

partially reversed, but only after the federal preliminary

injunction had been issued). The federal court issued an order

granting emergency, interim relief to Loiza in a way that was

-27-
consistent with the earlier state court partial judgment because it

also did not allow section 330 grant funds to be deducted.

Normal res judicata effects of federal actions on state

actions -- which are possible here -- are of course not enough to

trigger Younger. The Court noted in NOPSI that the federal

proceeding "may well affect, or for practical purposes pre-empt, a

future -- or, as in the present circumstances, even a pending --

state-court action," yet still held Younger abstention

inappropriate. NOPSI, 491 U.S. at 373. Another way of stating

this is that the mere possibility of inconsistent results in the

future is insufficient to justify Younger abstention. This must be

the rule, otherwise the principles of Colorado River, which

normally apply in the circumstances of parallel federal and state

litigation, would be overrun by the Younger doctrine.

Colorado River abstention

Except in the very limited instances where some other

form of abstention (such as Younger) applies, abstention of the

federal courts in cases involving parallel federal and state

proceedings is only appropriate in the "exceptional" circumstances

laid out in Colorado River Water Conservation Dist., 424 U.S. at

818-20.

Given the "virtually unflagging obligation of the federal

courts to exercise the jurisdiction given them," and absent the

"weightier considerations" that animate the other abstention

-28-
doctrines, the circumstances permitting abstention under Colorado

River for reasons of "wise judicial administration" are quite

"limited" and indeed "exceptional." Id. at 818. "Only the

clearest of justifications will warrant dismissal." Id. at 819;

see also Currie v. Group Ins. Comm'n, 290 F.3d 1, 10 (1st Cir.

2002) ("There must be some extraordinary circumstances" in order

for a federal court to abstain on Colorado River grounds). Thus,

the district court's discretion whether to dismiss a case on

Colorado River grounds should be heavily weighted against

dismissal. KPS & Assocs., Inc., 318 F.3d at 10.

We have developed a list of factors -- which is not meant

to be exclusive -- for when Colorado River abstention might be

appropriate. Courts have considered the following:

(1) whether either court has assumed jurisdiction over a
res; (2) the [geographical] inconvenience of the federal
forum; (3) the desirability of avoiding piecemeal
litigation; (4) the order in which the forums obtained
jurisdiction; (5) whether state or federal law controls;
(6) the adequacy of the state forum to protect the
parties' interests; (7) the vexatious or contrived nature
of the federal claim; and (8) respect for the principles
underlying removal jurisdiction.

Id. No one factor is meant to be determinative, but rather courts

must make a "carefully considered judgment taking into account both

the obligation to exercise jurisdiction and the combination of

factors counselling against that exercise." Colorado River, 424

U.S. at 818; see Moses H. Cone Mem. Hosp. v. Mercury Constr. Corp.,

460 U.S. 1, 16 (1983); KPS & Assocs., 318 F.3d at 10.

-29-
 No factor weighs strongly in favor of abstention here.

It is true that the state case was filed before the federal case.

However, the question of priority was meant to be looked at in a

"pragmatic, flexible manner[,] with a view to the realities of the

case at hand" and should focus on how much "progress has been made

in the two actions." Moses H. Cone, 460 U.S. at 21. Here, the

state court case has been moving quite slowly. The relief granted

here by the federal court has far more limited purposes and can be

carried out far more quickly: it is designed solely to provide an

interim prospective payment to Loiza while a comprehensive PPS is

being created.

Also, we note that the federal action was not filed or

pursued as a reaction to an adverse state court action, which would

be a factor that weighs heavily in favor of abstention. See Cruz,

204 F.3d at 23-24. The partial state judgment issued on December

18, 2003, was, in fact, highly favorable to Loiza.

There are other crucial factors that weigh against

abstention here. This case involves the interpretation of a

complicated area of federal law (Medicaid); there appear to be no

state law issues. There is no reason to defer to the state court's

interpretation of the legal issues involved. See Currie, 290 F.3d

at 11 (stay of federal action on Colorado River grounds when case

involved complicated state law issues that, if decided in a certain

way by state courts, might resolve the federal action). Moreover,

-30-
Loiza and the other FQHCs had an entirely reasonable explanation

for why they would want to file actions simultaneously in federal

and state courts. Because of Eleventh Amendment immunity, claims

for retroactive compensation can only be filed in Puerto Rico

Commonwealth court. It is true that prospective relief also could

have been sought in the Commonwealth courts. However, it is

reasonable for Loiza to want the federal courts to devise

prospective relief, given the federal courts' greater familiarity

with the Medicaid Act.

The district court did not abuse its discretion in

refusing to dismiss or stay the claim on Colorado River grounds.

IV.

Section 1983

The Secretary next argues that there is no cause of

action to enforce this provision of the federal Medicaid law under

42 U.S.C. § 1983. Not so; a § 1983 action does lie for an FQHC to

enforce the Secretary's obligation to make wraparound payments

under 42 U.S.C. § 1396a(bb).

Section 1983 imposes liability on anyone who, acting

under color of state law, deprives a person of any "rights,

privileges, or immunities secured by the Constitution and laws."

42 U.S.C. § 1983. Not all violations of federal law give rise to

§ 1983 actions: "[the] plaintiff must assert the violation of a

federal right, not merely a violation of federal law." Blessing v.

-31-
Freestone, 520 U.S. 329, 340 (1997) (emphasis in original). Such

a right must be "unambiguously conferred" by the statutory

provision at issue. Gonzaga Univ. v. Doe, 536 U.S. 273, 283

(2002).

The Supreme Court, in Blessing, has laid out a three-part

test to act as guidance in determining whether a provision creates

a "right" that is enforceable under § 1983: 1) whether Congress

intended that the provision in question benefit the plaintiff, 2)

whether the right supposedly protected by the statute is vague and

amorphous so that its enforcement would strain judicial competence,

and 3) whether the provision unambiguously imposes a binding

obligation on the States. See Blessing, 520 U.S. at 340-41. This

test is merely a guide, however, as the ultimate inquiry is one of

congressional intent. See Bryson v. Shumway, 308 F.3d 79, 88 (1st

Cir. 2002). Gonzaga tightened up the Blessing requirements. It

did not precisely follow the Blessing test but rather relied on

several somewhat different factors in determining whether a right

existed: whether the provision contains "rights-creating language,"

whether the provision had an aggregate as opposed to an

individualized focus, and the other sorts of enforcement provisions

that Congress has provided for. See Gonzaga, 536 U.S. at 287-90.10

10
We apply the more recent analysis used in Gonzaga rather than
the Blessing test. But it is evident from our analysis that the
three factors in the Blessing test are all met: Congress did intend
for the provision to benefit Loiza as a FQHC, the provision is not
unduly vague or amorphous, and the provision does bind the states.

-32-
 We start by considering post-Gonzaga precedent in this

circuit determining whether Medicaid provisions are enforceable

under § 1983. In Bryson, we held that a provision, 42 U.S.C. §

1396a(a)(8), stating that state Medicaid plans must provide that

medical assistance "shall be furnished with reasonable promptness

to all eligible individuals" was enforceable by Medicaid recipients

under § 1983. 308 F.3d at 88-89. We utilized the Blessing test

and noted that the provision included the benefitted class,

"eligible individuals," within its terms, that the provision was

not vague, and that the "shall" language was intended to bind the

states. Id.

On the other hand, in Long Term Care Pharmacy Alliance v.

Ferguson, 362 F.3d 50 (1st Cir. 2004), this court held that a

different provision, 42 U.S.C. § 1396a(30)(A), was not enforceable

by a group of Medicaid providers suing for higher reimbursement

rates under § 1983. The provision states that the state plan must

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

42 U.S.C. § 1396a(a)(30)(A). The provision contained no "rights-

creating language," identified no "discrete class of

-33-
beneficiaries," focused on the state as a regulated entity rather

than any individuals protected, and set out broad, general goals.

See Ferguson, 362 F.3d at 56-57.11

The provision that Loiza is seeking to enforce is the

wraparound requirement for FQHCs, 42 U.S.C. § 1396a(bb)(5), which

reads as follows:

(A) In general
In the case of services furnished by a [FQHC] . . .
pursuant to a contract between the center or clinic and
a managed care entity . . ., the State plan shall provide
for payment to the center or clinic by the State of a
supplemental payment equal to the amount (if any) by
which the amount determined under [the earlier paragraphs
describing the PPS payment system] of this subsection
exceeds the amount of the payments provided under the
contract.
(B) Payment schedule
The supplemental payment required under subparagraph (A)
shall be made pursuant to a payment schedule agreed to by
the State and the [FQHC] . . ., but in no case less
frequently than every 4 months.

Id. This provision meets the tests laid out by the Supreme Court

for determining whether a "right" was created that is enforceable

under § 1983.

The provision mentions a specific, discrete beneficiary

group within the statutory text -- the FQHCs. It is "phrased in

11
In the same opinion, however, the court assumed that a
different provision, 42 U.S.C. § 1396a(a)(13)(A) (State plan should
provide "for a public process for determination of rates of payment
under the plan for hospital services, nursing facility services,
and services of intermediate care facilities"), was enforceable
under section 1983 because it contained "rights-creating language"
and was narrowly written with a discrete class of beneficiaries in
mind. Ferguson, 362 F.3d at 56-57.

-34-
terms of the persons benefitted." Gonzaga, 536 U.S. at 284

(quoting Cannon v. Univ. of Chicago, 441 U.S. 677, 692 n.13

(1979)); see also Bryson, 308 F.3d at 88. The precise language at

issue, that the state plan "shall provide for payment to the center

. . . by the State of a supplemental payment," 42 U.S.C. §

1396a(bb)(5)(A), is rights-creating language because it is

mandatory and has a clear focus on the benefitted FQHCs, rather

than the regulated states. See Gonzaga, 536 U.S. at 279, 287

(language stating that "[n]o funds shall be made available under

any applicable program to any educational agency or institution

which has a policy or practice of permitting the release of

education records" was not rights-creating because the "focus is

two steps removed from the interests of individual students and

parents"); see also Rabin v. Wilson-Coker, 362 F.3d 190, 201-02 (2d

Cir. 2004) (finding rights-creating language in provision, 42

U.S.C. § 1396r-6, stating that "each State plan approved under this

subchapter must provide that each family which was receiving [AFDC]

in at least 3 of the 6 months immediately preceding the month in

which such family becomes ineligible for such aid . . ., remain

eligible for assistance under the plan . . . during the immediately

succeeding 6-month period").

As well, the statute speaks in individualistic terms,

rather than at the aggregate level of institutional policy or

practice. Nothing like the "policy or practice" language present

-35-
in the provision interpreted in Gonzaga exists here. See Gonzaga,

536 U.S. at 288; see also Rabin, 362 F.3d at 201. The mere fact

that all the Medicaid laws are embedded within the requirements for

a state plan does not, by itself, make all of the Medicaid

provisions into ones stating a mere institutional policy or

practice rather than creating an individual right. See 42 U.S.C.

§ 1320a-2 ("In an action brought to enforce a provision of this

chapter [which includes the Medicaid statutes], such provision is

not to be deemed unenforceable because of its inclusion in a

section of this chapter requiring a State plan or specifying the

required contents of a State plan."); Rabin, 362 F.3d at 201-02.

Additionally, the commands of § 1396a(bb) are written in

highly specific terms. The language here is extremely clear and

narrow: it tells a state exactly how to calculate the wraparound

and it gives a maximum duration (4 months) between wraparound

payments. There is thus less danger of disparate outcomes or of a

right being too vague to easily enforce, as noted in Ferguson, 362

F.3d at 58.

One circuit court, albeit without discussing the issue,

has recently allowed a § 1983 action to go forward based on

violations of 42 U.S.C. § 1396a(bb). See Cmty. Health Ctr. v.

Wilson-Coker, 311 F.3d 132, 136 (2d Cir. 2002).12 We conclude that

12
As well, several courts in other circuits, after Gonzaga,
have allowed actions to go forward under § 1983 using similar
provisions of the Medicaid law. See, e.g., Rabin, 362 F.3d at 201-

-36-
a private action can be brought by an FQHC under section 1983 to

enforce 42 U.S.C. § 1396a(bb).

V.

We finally consider whether the district court abused

its discretion in determining that the traditional requirements for

a preliminary injunction had been met and ordering relief. Our

review of approval or denial of a preliminary injunction is for

abuse of discretion. See McClure v. Galvin, 386 F.3d 36, 41 (1st

Cir. 2004). Many issues have not been challenged on appeal. For

example, the Secretary does not argue that the district court's

refusal to allow the deduction of section 330 grant funds was

error, and we do not address this issue despite Loiza's urging that

02; S.D. v. Hood, 391 F.3d 581, 602-06 (5th Cir. 2004) (considering
42 U.S.C. § 1396a(a)(10)(A)(i): "A State plan must provide for
making medical assistance available, including at least the care
and services listed in [certain paragraphs], to all individuals
[who meet certain eligibility criteria]."); Gean v. Hattaway, 330
F.3d 758, 772-73 (6th Cir. 2003) (considering 42 U.S.C. §
1396a(a)(3): A state plan must "provide for granting an opportunity
for a fair hearing before the State agency to any individual whose
claim for medical assistance under the plan is denied or is not
acted upon with reasonable promptness"). The Seventh Circuit, in
Bruggeman v. Blagojevich, 324 F.3d 906, 911 (7th Cir. 2003),
refused to allow a § 1983 action to go forward under 42 U.S.C. §
1396a(a)(19), which says that state Medicaid plans must "provide
such safeguards as may be necessary to assure that eligibility for
care and services under the plan will be determined . . . in a
manner consistent with simplicity of administration and the best
interests of the recipients." That provision is far more general
than the one at issue here, and unlike the provision here is
written with a policy bent that does not demonstrate an intent to
directly benefit any discrete group.

-37-
we reach it. We consider only those challenges raised by the

Secretary on appeal.

Traditionally, the test for a preliminary injunction has

four factors: 1) a likelihood of success on the merits, 2)

irreparable harm to the plaintiff should preliminary relief not be

granted, 3) whether the harm to the defendant from granting the

preliminary relief exceeds the harm to the plaintiff from denying

it, and 4) the effect of the preliminary injunction on the public

interest. See, e.g., Matrix Group Ltd. v. Rawlings Sporting Goods

Co., 378 F.3d 29, 33 (1st Cir. 2004).

Likelihood of success on the merits

The Secretary makes two broad-based challenges to Loiza's

likelihood of prevailing on the merits. First, he argues that

Loiza has not shown a likelihood of success on the merits because

the relief sought by Loiza in fact corresponds to the period 2000-

2003, and thus constitutes retroactive compensation barred by the

Eleventh Amendment. Edelman v. Jordan, 415 U.S. 651, 668-71

(1974). This statement is false: the plaintiffs' complaint in the

federal case seeks only prospective injunctive and declaratory

relief, not damages for past wrongs, and the district court's

preliminary injunction only covers the prospective period.

Second, the Secretary argues that he had already

established the methodology of the PPS plan, largely as a result of

the parallel state case, and so the federal case was moot. See,

-38-
e.g., Granite State Outdoor Adver., Inc. v. Town of Orange, 303

F.3d 450, 451 (2d Cir. 2002) ("In order to establish that there is

a likelihood of success on the merits, . . . the movant must

establish that the case is not likely to be moot."). Not so. The

Secretary's own witness (the auditor Marrero) admitted that no

wraparound payments had ever been made by Puerto Rico to Loiza or

the other FQHCs. The Commonwealth essentially has admitted that it

has not been in compliance with federal Medicaid law. It is

undisputed that Loiza had not yet received the first quarter 2004

wraparound payment at the time of the preliminary injunction.

Irreparable injury, balance of harms, public interest

Loiza has adequately shown the presence of irreparable

harm if preliminary relief were not granted. "Irreparable injury"

in the preliminary injunction context means an injury that cannot

adequately be compensated for either by a later-issued permanent

injunction, after a full adjudication on the merits, or by a later-

issued damages remedy. See, e.g., C. Wright et. al., 11A Federal

Practice & Procedure § 2948.1, at 149 (2d ed. 1995) ("[I]f a trial

on the merits can be conducted before the injury would occur there

is no need for interlocutory relief."); D. Dobbs, 1 Law of Remedies

§ 2.11(2), at 260 (2d ed. 1993). Loiza adequately demonstrated

that sort of irreparable harm here. Its witness, the accountant

Colon, testified that Loiza had fallen eight or nine months behind

on its mortgage and that foreclosure proceedings were about to

-39-
begin. See, e.g., Doran v. Salem Inn, Inc., 422 U.S. 922, 932

(1975) (threat of substantial loss of business and certainly

bankruptcy qualified as the sort of irreparable harm needed to

support preliminary injunction).

The Secretary argues, however, that Loiza has not shown

any causation between its financial woes and the Secretary's

failure to pay wraparound. This too is incorrect. Colon testified

that the FQHCs' sources of revenue were fourfold: program income

from paying customers or those with private insurance, MCO

payments, the wraparound, and section 330 revenue. There was

further testimony that program income was not substantial, that MCO

payments were generally well below FQHC costs, and that the MCOs

had not been making payments to Loiza for the past few months. It

is not unreasonable to jump from here to a conclusion that the lack

of wraparound payments -- which are supposed to cover for any

deficiencies in MCO payments -- was a key cause of Loiza's

financial difficulties.

Finally, on the balance of harm and public policy prongs,

we see nothing unreasonable in the district court's finding that

forcing the Commonwealth government to make a prospective interim

payment to a single FQHC would have no substantial impact on the

Commonwealth fisc, particularly as much of the Medicaid money is

ultimately federal. The Secretary argues that granting this relief

has interfered with the PPS that he is in the process of

-40-
establishing. However, the granting of an interim payment, using

a rough methodology based on the work of the state's own expert

while a permanent PPS is being established, can hardly be

considered substantial interference with the creation of that

permanent system. Finally, we fully agree with the district

court's point that any shut down of Loiza would adversely affect

hundreds of Medicaid patients.

There was no abuse of discretion in the granting of this

preliminary injunction.

VI.

The district court's grant of the March 31, 2004

preliminary injunction in Loiza's favor is affirmed. Costs are

awarded to Loiza.

-41-