PUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
PEE DEE HEALTH CARE, P.A.,
Plaintiff-Appellant,
v.
MARK SANFORD, in his official
capacity as the Governor of South
Carolina; ROBERT F. KERR, in his No. 06-2108
official capacity as Director of the
South Carolina Department of
Health and Human Services; SOUTH
CAROLINA DEPARTMENT OF
HEALTH AND HUMAN SERVICES,
Defendants-Appellees.
Appeal from the United States District Court
for the District of South Carolina, at Columbia.
Matthew J. Perry, Jr., Senior District Judge.
(3:05-cv-02917-MJP)
Argued: September 26, 2007
Decided: December 5, 2007
Before MICHAEL, GREGORY, and DUNCAN, Circuit Judges.
Affirmed by published opinion. Judge Duncan wrote the opinion, in
which Judge Michael and Judge Gregory joined.
COUNSEL
ARGUED: Tony Ray Megna, Blythewood, South Carolina, for
Appellant. Kenneth Paul Woodington, DAVIDSON, MORRISON &
2 PEE DEE HEALTH CARE v. SANFORD
LINDEMANN, P.A., Columbia, South Carolina, for Appellees. ON
BRIEF: Charles E. Carpenter, Jr., RICHARDSON, PLOWDEN,
CARPENTER & ROBINSON, P.A., Columbia, South Carolina, for
Appellant. William H. Davidson, II, DAVIDSON, MORRISON &
LINDEMANN, P.A., Columbia, South Carolina, for Appellees.
OPINION
DUNCAN, Circuit Judge:
This case raises two issues of importance to healthcare providers
who receive reimbursement from Medicaid. The first is whether
healthcare providers serving Medicaid recipients have a right to sue
state officials, under 42 U.S.C. § 1983, to enforce rights created under
the Medicaid reimbursement program at 42 U.S.C. § 1396a(bb). The
second is whether the appropriate venue for such an action can be
limited by contract.
Pee Dee Health Care, P.A. ("Pee Dee") is a healthcare provider
qualified under the Medicaid program to serve low-income individu-
als in rural areas of South Carolina. As a Medicaid service provider,
Pee Dee is entitled to reimbursement payments from the state. The
Benefits Improvement and Protection Act of 2000 ("BIPA") provides
the methodology for computing those payments. To receive reim-
bursement payments, however, healthcare providers must first enter
into a contract with the South Carolina Department of Health and
Human Services ("SCDHHS"), the state agency responsible for the
administration of the Medicaid program in South Carolina. Each con-
tract contains a forum-selection clause which dictates that all reim-
bursement claims must be pursued through state administrative and
judicial avenues.
Pee Dee claims that the SCDHHS payment methodologies do not
comply with various provisions of BIPA. Pee Dee brought this action,
pursuant to 42 U.S.C. § 1983, in the United States District Court for
the District of South Carolina against the Governor of South Carolina,
the Director of SCDHHS and SCDHHS itself, to enforce the reim-
bursement provisions of BIPA. The district court dismissed the BIPA
PEE DEE HEALTH CARE v. SANFORD 3
claim, finding venue inappropriate based on the forum-selection
clause in the provider contract between Pee Dee and SCDHHS. We
affirm, holding that even though a healthcare provider has a private
right of action under § 1983 to enforce 42 U.S.C. § 1396a(bb), Pee
Dee agreed, in the forum-selection clause, to bring such an action in
a state tribunal and is bound by that agreement.
I.
A. The Medicaid Scheme
Medicaid is a cooperative federal-state program designed to par-
tially compensate states for the costs of providing healthcare to needy
individuals. 42 U.S.C. § 1396. States are not required to participate in
the program, but if they choose to do so, "they must implement and
operate Medicaid programs that comply with detailed federally man-
dated standards." Antrican v. Odom, 290 F.3d 178, 183 n.2 (4th Cir.
2002). To qualify for federal assistance, a state must submit a com-
prehensive plan to the federal Secretary of Health and Human Ser-
vices describing the nature and scope of the state’s Medicaid
program. 42 C.F.R. § 430.10. Each state plan must include, among its
details, a scheme for reimbursing rural health clinics ("RHCs") for
services provided to Medicaid patients.1 42 U.S.C. § 1396a(bb).
The Medicaid Act, as amended by BIPA, Pub. L. No. 106-554,
§ 1(a)(6), 114 Stat. 2763, (codified as amended in scattered sections
of 42 U.S.C.), regulates the way in which RHCs receive reimburse-
ment payments for the services they provide to Medicaid patients. In
general, BIPA allows for two methods of reimbursement. The first
method is a "prospective payment system" based on historical-
average costs plus a cost-of-living factor.2 42 U.S.C. § 1396a(bb)(2).
1
BIPA imposes identical requirements regarding the reimbursement of
federally qualified health centers ("FQHCs"). Because Pee Dee only
claims to be an RHC, we focus solely on the RHC requirement.
2
Under this method, state Medicaid plans "provide for payment for
such services in an amount (calculated on a per visit basis) that is equal
to 100 percent of the average of the costs of the center or clinic of fur-
nishing such services . . . which are reasonable . . . ." 42 U.S.C.
§ 1396a(bb)(2).
4 PEE DEE HEALTH CARE v. SANFORD
The second method, set forth in § 1396a(bb)(6), authorizes an "alter-
native payment methodology" that can take a number of forms, pro-
vided that the state and the clinic agree upon the system and it results
in payment of an amount which is at least equal to the amount autho-
rized under the prospective payment system.
SCDHHS is the state agency in South Carolina responsible for
administration of the Medicaid program. Healthcare providers in
South Carolina are not required to accept Medicaid patients. How-
ever, if a healthcare provider elects to treat Medicaid patients and to
seek reimbursement from SCDHHS for its services, it does so by
entering into a contract ("provider contract" or "contract") with
SCDHHS.
The contract provides for the method and amounts of payment, as
well as for certain remedies if a healthcare provider believes it has not
been reimbursed as required by law.3 For example, the contract pro-
vides:
A. Reimbursement
The Rural Health Clinic (RHC) Medicaid rate for ser-
vices rendered under this contract shall be determined
based upon applicable Medicare/Medicaid laws, rules
or regulations and SCDHHS policies and procedures in
accordance with Attachment 4.19-B of the State Plan
for Medical Assistance.
J.A. 117.4
3
For the purposes of this discussion, we refer to the provider contract
between Pee Dee and SCDHHS, dated as of July 1, 2004, found in the
joint appendix. J.A. 111-30. However, we note that this contract contains
the same language as the July 2001 contract.
4
South Carolina has elected to use an "alternative payment methodol-
ogy" under 42 U.S.C. § 1396a(bb)(6). Attachment 4.19-B of South Caro-
lina’s Medicaid plan explains this alternative scheme. Pee Dee’s
underlying challenge to the SCDHHS payment methodology focuses on
the language of Attachment 4.19-B.
PEE DEE HEALTH CARE v. SANFORD 5
Should any dispute arise under the terms of the contract, a health-
care provider agrees, as part of its decision to accept Medicaid reim-
bursement payments, that its "sole and exclusive remedy" regarding
such disputes would be to first file a Notice of Appeal of SCDHHS’s
action to the SCDHHS Appeals Division. J.A. 124. Upon exhaustion
of all administrative remedies, judicial review of final agency deci-
sions is available in the state court system. S.C. Code Ann. § 1-23-
380. Such appeals are governed by Article VIII of the contract, which
provides:
If any dispute shall arise under the terms of this contract, the
sole and exclusive remedy shall be the filing of a Notice of
Appeal within thirty (30) days of the receipt of written
notice of SCDHHS’s action or decision which forms the
basis of the appeal. Administrative appeals shall be in accor-
dance with SCDHHS’s regulations R. 126-150 et seq. . . .
Judicial Review of any final SCDHHS administrative deci-
sion shall be in accordance with § 1-23-380, Code of Laws
of South Carolina (1976), as amended.
J.A. 1245 (emphasis added).
Such subsequent judicial review must proceed in the venue and
location identified in Sections (R) and (S) of Article IX of the contract.6
5
Regulation 126-150(B) provides that the tribunal to hear such appeals
would be the state administrative hearing system. An appeal under this
section is
[t]he formal process of review and adjudication of Agency deter-
minations, which shall be afforded to any person possessing a
right to appeal pursuant to statutory, regulatory, and/or contrac-
tual law; provided, that to the extent that an appellant’s appellate
rights are in any way limited by contract with the Agency or
assigned to the Agency, said contractual provision shall control.
S.C. Code Ann. Regs. 126-150(B). Section 1-23-380 provides for judi-
cial review only in state courts—either the South Carolina Court of
Appeals or the Administrative Law Court. S.C. Code Ann. § 1-23-380.
6
Following oral argument, Pee Dee filed a "Motion to Supplement
Brief of Appellant" in which it attempted to argue that Section (R) of the
6 PEE DEE HEALTH CARE v. SANFORD
R. Venue of Actions.
Any and all suits or actions for the enforcement of the
obligations of this contract and for any and every
breach thereof, or for the review of a SCDHHS final
agency decision with respect to this contract or audit
disallowances, and any judicial review sought thereon
and brought pursuant to the S.C. Code Ann. § 1-23-380
(1976, as amended) shall be instituted and maintained
in any court of competent jurisdiction in the County of
Richland, State of South Carolina.
S. Place of Suit
Any action at law, suit in equity, or judicial proceeding
for the enforcement of this contract or any provision
thereof shall be instituted only in the courts of the State
of South Carolina.
J.A. 128.
Pee Dee, through three Medicaid-certified RHCs, provides health-
care services to low-income individuals in rural areas of South Caro-
lina. Its services are subject to reimbursement from Medicaid funds.
Pee Dee has entered into two consecutive three-year contracts with
SCDHHS since the enactment of BIPA. Each contract contains a
forum-selection clause—Sections (R) and (S)—requiring that any
claims that arise under the terms of the contract be pursued first
through an administrative appeals process and then in state court.7
contract allows for judicial review of final agency decision "in any court
[—federal or state—] of competent jurisdiction in the County of Rich-
land, State of South Carolina" (emphasis added). The Columbia Division
for the United States District Court for the District of South Carolina is
located in Richland County. Therefore, Pee Dee asserted that the district
court was a proper venue for this case. Because Pee Dee raised this issue
for the first time following oral argument on appeal, we deny the motion.
See Wheatley v. Wicomico County, 390 F.3d 328, 335 (4th Cir. 2004).
We also note that Sections (R) and (S) reflect an agreement to pursue
administrative appeals in a state tribunal.
7
Even though Pee Dee’s claim is couched as seeking to remedy a fail-
ure to receive a statutorily conferred benefit rather than seeking the
enforcement of a contract, Pee Dee does not dispute that its claim arises
under the terms of the contract.
PEE DEE HEALTH CARE v. SANFORD 7
B.
Pee Dee originally filed this action in South Carolina state court
against South Carolina Governor Mark H. Sanford, Director of
SCDHHS Robert Kerr, and SCDHHS itself (collectively "Appellees").8
Appellees answered and removed this case to federal district court.
Pee Dee filed an amended complaint asserting a federal cause of
action against Appellees under 42 U.S.C. § 1983, seeking to enforce
the reimbursement provisions of BIPA, 42 U.S.C. § 1396a(bb). Spe-
cifically, the new claim alleges that the reimbursement formula used
by SCDHHS violates Pee Dee’s statutorily conferred right to proper
reimbursement as provided under § 1396a(bb).9 Pee Dee claims that
if SCDHHS had computed payments in accordance with federal
requirements, Pee Dee would have been compensated at higher rates
than those at which it was actually paid beginning in January 2001.10
Appellees moved to dismiss Pee Dee’s new claim under BIPA
alleging that Pee Dee agreed, as part of its contract for Medicaid
reimbursement, to pursue all claims arising under the contract through
state administrative and judicial avenues. Thus, Appellees asserted
that the voluntary forum-selection clause rendered venue in federal
district court improper.
Following arguments on the motion to dismiss, the district court
dismissed the reimbursement claim based on the forum-selection
clause. Pee Dee now appeals the dismissal of that claim arguing the
8
Pee Dee originally claimed that certain proposed changes to the South
Carolina State Medicaid Plan needed to be promulgated in the State Reg-
ister and submitted for approval by the General Assembly.
9
Pee Dee raised this argument with SCDHHS approximately four years
prior to initiating this suit, but never appealed the rejection of those
claims. See J.A. 108. Pee Dee has continued to accept payments that
were based on the methodology it now challenges.
10
While this appeal does not involve the merits of Pee Dee’s reim-
bursement claims, we note that SCDHHS maintains that the "alternative
payment methodology" under which Pee Dee has been reimbursed since
January 1, 2001 and about which Pee Dee now complains, results in a
"higher per-visit reimbursement" than the "prospective payment"
method. J.A. 144.
8 PEE DEE HEALTH CARE v. SANFORD
district court erred in holding that: (1) the exclusive remedy available
to Pee Dee is provided in the provider contract between Pee Dee and
SCDHHS, and (2) the claim against Appellees can only be brought
in a state tribunal due to the forum-selection clause.
We review de novo the district court’s dismissal based on a forum-
selection clause. Sucampo Pharm., Inc. v. Astellas Pharma, 471 F.3d
544, 550 (4th Cir. 2006) ("[A] motion to dismiss based on a forum-
selection clause should be properly treated under Rule 12(b)(3) as a
motion to dismiss on the basis of improper venue."). In doing so, we
first address the issue of whether healthcare providers have a private
right of action under § 1983 to enforce § 1396a(bb).
II.
Section 1983 imposes liability on anyone who, acting under color
of state law, deprives a person of any "rights, privileges, or immuni-
ties secured by the Constitution and laws." 42 U.S.C. § 1983. A plain-
tiff alleging a violation of a federal statute may sue under § 1983
unless "the statute [does] not create enforceable rights, privileges, or
immunities within the meaning of § 1983," or "Congress has fore-
closed such enforcement of the statute in the enactment itself[.]"
Wright v. City of Roanoke Redev. & Hous. Auth., 479 U.S. 418, 423
(1987).
A statute creates an enforceable right if: (1) Congress intended that
the provision in question benefit the plaintiff; (2) the right ostensibly
protected by the statute "is not so vague and amorphous that its
enforcement would strain judicial competence"; and (3) the statute
unambiguously imposes a binding obligation on the states. Blessing
v. Freestone, 520 U.S. 329, 340-41 (1997) (internal quotations omit-
ted). In analyzing these requirements, a court must be careful to
ensure that the statute at issue contains "rights-creating language" and
that the language is phrased in terms of the persons benefitted, not in
terms of a general "policy or practice." Gonzaga Univ. v. Doe, 536
U.S. 273, 284, 287 (2002).11
11
Blessing stands for the proposition that violations of rights, not laws,
give rise to § 1983 actions. Gonzaga, 536 U.S. at 283. Nevertheless, the
PEE DEE HEALTH CARE v. SANFORD 9
Prior to the enactment of BIPA, this court considered the rights of
healthcare providers to enforce reimbursement provisions of the Med-
icaid Act. See Va. Hosp. Ass’n v. Baliles, 868 F.2d 653 (4th Cir.
1989), aff’d sub nom. Wilder v. Va. Hosp. Ass’n, 496 U.S. 498 (1990).
In Baliles, this court held that healthcare providers had a right action-
able under § 1983 to challenge the method by which a state reim-
burses them for the cost of treating Medicaid patients.12 868 F.2d at
659-60. This court concluded that "the language and legislative his-
tory of [the relevant provision] impl[ied] a congressional intent to
allow providers a right of action against State failure to comply with
federal Medicaid requirements." Id. at 658. The Supreme Court,
affirming the decision, reasoned that the provision established a sys-
tem for reimbursement of healthcare providers and was phrased in
terms benefitting those providers. Wilder, 496 U.S. 498, 510 (1990).
More recently, this court found that another provision of the Med-
icaid Act, dealing with the Medicaid waiver program created by 42
U.S.C. § 1396n(c), conferred a private right of action enforceable
under § 1983. Doe v. Kidd, 501 F.3d 348 (4th Cir. Sept. 19, 2007).
This court has also allowed a healthcare provider to pursue a § 1983
action to enforce § 1396a(bb)(5) of the Medicaid Act. Three Lower
Counties Cmty. Health Servs. v. Maryland, 498 F.3d 294 (4th Cir.
2007) (clarifying a state’s obligations under § 1396a(bb)(5) when
paying FQHCs for services they render to Medicaid patients).13
Gonzaga Court warned lower courts against interpreting Blessing "as
allowing plaintiffs to enforce a statute under § 1983 so long as the plain-
tiff falls within the general zone of interest that the statute is intended to
protect . . . ." Id. Therefore, nothing short of an "unambiguously con-
ferred [individual] right" as demonstrated through "rights-creating lan-
guage" can support a § 1983 action. Id. at 283, 290. That is, the language
must not focus on the person regulated, as in a provision that proscribes
a certain institutional policy or practice. Id. at 287-88.
12
At the time, the reimbursement provisions were part of the Boren
Amendment, 42 U.S.C. § 1396a(a)(13)(A) (repealed 1997), which
required reimbursement according to rates that were "reasonable and
adequate to meet the costs which must be incurred by efficiently and eco-
nomically operated facilities."
13
We also note that the Second Circuit has allowed healthcare provid-
ers to pursue a § 1983 claim to enforce § 1396a(bb)(2). Cmty. Health
Ctr. v. Wilson-Coker, 311 F.3d 132 (2d Cir. 2002).
10 PEE DEE HEALTH CARE v. SANFORD
Pee Dee relies heavily on a First Circuit decision in support of its
assertion that a right of action exists under § 1983 to enforce
§ 1396a(bb). See Rio Grande Cmty. Health Ctr., Inc. v. Rullan, 397
F.3d 56, 74-75 (1st Cir. 2005). The Rio Grande court held that
"[t]here 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."14 397 F.3d at 60. However, as
Appellees point out, the focus of the "rights" analysis in Rio Grande
is on the language found in § 1396a(bb)(5), not on § 1396a(bb) as a
whole. Appellees argue that § 1396a(bb)(5), the wraparound provi-
sion that was the subject of both Three Lower Counties and Rio
Grande, is the only part of § 1396a(bb) that specifically authorizes
payment to a provider, as opposed to describing a general payment
methodology. With respect to § 1396a(bb)(1) through (4) and (6),
Appellees argue that no rights-creating language is present. Subsec-
tion (bb)(5) is the one subsection that is not cited by Pee Dee in sup-
port of its claims.
It is an issue of first impression in the federal courts whether
§ 1396a(bb), read as a whole, contains rights-creating language
phrased in terms of the persons benefitted such that it creates a right
of action under § 1983. Considering the language of § 1396a(bb) and
the case law interpreting Medicaid provisions of similar import in
14
In Rio Grande, an FQHC sued the Puerto Rico Secretary of Health
under § 1983, alleging that the Secretary failed to make supplemental or
wraparound payments to make up the difference between what managed
care organizations ("MCOs") paid the FQHC and what the FQHC was
entitled to collect under the prospective payment system. 397 F.3d at 60-
62. Puerto Rico uses a managed care approach to running their Medicaid
system. Under this approach, the Medicaid agency contracts with MCOs
to service Medicaid patients. The state pays the MCO a fixed monthly
sum per Medicaid patient. The MCO then contracts with an FQHC to
actually provide the medical services to the patients. A problem arises
when the contract pays the FQHC less than the amount it should receive
under the prospective payment system. Section 1396a(bb)(5) addresses
this problem by requiring states to pay the FQHC a supplemental, or
"wraparound," payment to make up the difference between what the
MCO pays the FQHC and what the FQHC is entitled to collect under the
prospective payment system. Id.; see 42 U.S.C. § 1396a(bb)(5).
PEE DEE HEALTH CARE v. SANFORD 11
light of the Blessing factors, it is scarcely a stretch to conclude that
it does.
Subsection 1396a(bb)(1) states that a "[s]tate plan shall provide for
payment for services . . . furnished by a Federally-qualified health
center and services . . . furnished by a rural health clinic in accordance
with the provisions of this subsection." (emphasis added). Subsections
(bb)(2)-(bb)(4) repeat the phrase "the state plan shall provide for pay-
ment for such services." (emphasis added). Subsection (bb)(6)(B),
which provides the option for an alternative payment methodology,
states that such methodology must "result[ ] in payment to the center
or clinic of an amount which is at least equal to the amount otherwise
required to be paid to the center or clinic under this section." (empha-
sis added).
Applying the Blessing test to § 1396a(bb) as a whole, we conclude
that § 1396a(bb) gives rise to a right enforceable under § 1983. First,
Congress intended the statute to benefit RHCs such as Pee Dee: the
"state plan shall provide for payment for services . . . furnished by a
rural health clinic." § 1396a(bb)(1) (emphasis added). Second, the
use of "shall provide for payment" is not unduly vague or amorphous
such that the judiciary cannot enforce it; the provision is clear that
states must reimburse RHCs for services provided to Medicaid
patients. Third, the language unambiguously binds the states as indi-
cated by the repeated use of "shall".
We further find, as required by Gonzaga, that § 1396a(bb) contains
rights-creating language because it specifically designates the
beneficiaries—the RHCs—and it mandates action on the part of the
states. Moreover, § 1396a(bb) has an individual focus rather than an
aggregate focus on institutional policy or practice. Indeed, this statu-
tory focus stands in stark contrast to the "policy or practice" language
present in the provision interpreted in Gonzaga.15 536 U.S. at 287-88.
15
The statute at issue in Gonzaga provided that "[n]o funds shall be
made available under any applicable program to any education agency or
institution which has a policy or practice of permitting the release of
education records. . . ." 536 U.S. at 279 (emphasis added). The Court
found that such language was not rights-creating; the focus of the provi-
sion was too far removed from the interests of the students allegedly ben-
efitted by it and therefore did not "confer the sort of ‘individual
entitlement’ that is enforceable under § 1983." Id. at 287, (citing Bless-
ing, 520 U.S. at 343).
12 PEE DEE HEALTH CARE v. SANFORD
Thus, we conclude that § 1396a(bb) creates an enforceable right
under § 1983.
III.
Notwithstanding our finding that a right of action exists under
§ 1983 to enforce § 1396a(bb), there is nothing in federal law prohib-
iting a healthcare provider from waiving the right to pursue such a
§ 1983 claim in a federal forum. On the contrary, procedural rights
under § 1983, like other federal constitutional and statutory rights, are
subject to voluntary waiver. Town of Newton v. Rumery, 480 U.S.
386, 398 (1987).
In Town of Newton, the Supreme Court upheld a contract clause
that completely eliminated the plaintiff’s right to sue under § 1983.
See id. at 390; see also Lake James Cmty. Volunteer Fire Dept., Inc.
v. Burke County, N.C., 149 F.3d 277 (4th Cir. 1998) (upholding a
similar contractual waiver).16 The town of Newton dropped criminal
charges against the federal plaintiff in exchange for the plaintiff’s
waiver of his right to file a civil rights action, including an action
under § 1983. The Court enforced the agreement because the plaintiff
voluntarily entered into it. The Court noted that the controlling princi-
ple for determining whether a waiver clause is unenforceable is "if the
interest in its enforcement is outweighed in the circumstances by a
public policy harmed by enforcement of the agreement." Town of
Newton, 480 U.S. at 392. However, where a party "voluntarily
waive[s] his right to sue under § 1983, the public interest opposing
involuntary waiver of constitutional rights is no reason to hold [an]
agreement invalid." Id. at 394.
This court has applied a voluntariness standard to determine the
enforceability of agreements in which a party releases possible § 1983
claims. See, e.g., Bushnell v. Rossetti, 750 F.2d 298, 301-02 (4th Cir.
1984) (allowing the release of a right to bring a § 1983 action if the
16
In Lake James this court held that a volunteer fire department’s
agreement not to sue the county for approving the transfer of certain fire
protection areas to other fire departments was enforceable despite the
waiver of a constitutional right to petition the government. 149 F.3d at
280.
PEE DEE HEALTH CARE v. SANFORD 13
decision to release was "voluntary, deliberate, and informed") (inter-
nal quotations omitted); cf. United States v. Lemaster, 403 F.3d 216,
220 (4th Cir. 2005) (a criminal defendant may voluntarily waive con-
stitutional procedural rights as well as statutory procedural rights
through a plea agreement). Where a party knowingly and willingly
enters into an agreement that waives a constitutional right, the agree-
ment is enforceable so long as it does not undermine the public’s
interest in protecting the right.17 See Lake James, 149 F.3d at 278. The
Lake James court held this to be the case where the contract itself pro-
vided the basis for the right and the waiver was narrowly tailored. See
id. at 281.
Healthcare providers in South Carolina are not required to accept
Medicaid patients. Therefore, any decision on the part of a healthcare
provider such as Pee Dee to enter into a contract for Medicaid reim-
bursement is voluntary. Moreover, Pee Dee has entered into a series
of contracts with SCDHHS, renewing its commitment to the terms
therein. Because Pee Dee voluntarily waived its right to bring an
action alleging improper reimbursement in federal court, the public
interest opposing involuntary waiver of constitutional rights is no rea-
son to hold this agreement invalid. See Town of Newton, 480 U.S. at
394.
Furthermore, the contract between Pee Dee and SCDHHS does not
completely deprive Pee Dee of a remedy, as was the case in Town of
Newton and Lake James. Pee Dee did not contract away its right to
bring an action under § 1983, but instead agreed as part of its contract
for Medicaid reimbursement that all such claims would be pursued
only through state administrative and judicial avenues. That is, Pee
Dee’s contracts do not involve a waiver of a constitutional right, but
only the ancillary right to select a federal forum to pursue a statutory
right. Given that a party can validly waive the right to sue altogether,
17
In Lake James this court considered the fact that the fire department
was aware of the right it was waiving and that it voluntarily signed the
agreement with the advice of counsel. Id. at 281. Moreover, the court
found "the limited waiver that the fire department gave was not adverse
to public policy." Id. On the contrary, the court noted that it was consis-
tent with public policy to provide reliable fire protection to the commu-
nity. Id.
14 PEE DEE HEALTH CARE v. SANFORD
including the right to sue to vindicate a constitutional right, the deci-
sion by Pee Dee to foreclose use of a federal forum for its statutory
claim does not implicate the public policy concerns noted in Town of
Newton.
IV.
Having found that healthcare providers have a right under § 1983
and that such a right can be limited by contract, we finally turn to the
issue of whether the particular forum-selection clause found in the
contract between Pee Dee and SCDHHS is enforceable.
A forum-selection clause is "prima facie valid and should be
enforced unless enforcement is shown by the resisting party to be
‘unreasonable’ under the circumstances." M/S Bremen v. Zapata Off-
Shore Co., 407 U.S. 1, 10 (1972). A clause is unreasonable if (1) it
was the result of "fraud or overreaching"; (2) "trial in the contractual
forum [would] be so gravely difficult and inconvenient [for the com-
plaining party] that he [would] for all practical purposes be deprived
of his day in court"; or (3) "enforcement would contravene a strong
public policy of the forum in which suit is brought[.]" Id. at 15-18;
Allen v. Lloyd’s of London, 94 F.3d 923, 928 (4th Cir. 1996).
Pee Dee appears to argue only that enforcement of the forum-
selection clause would contravene a strong public policy of the fed-
eral courts to hear federal claims. We note, however, that Medicaid
disputes are commonly heard in state administrative tribunals and no
federal policy bars state courts from hearing federal claims. There-
fore, we find no reason not to enforce the forum-selection clause.
V.
Because we find that § 1396a(bb) creates an enforceable right
under § 1983, but that Pee Dee voluntarily waived its right to a fed-
eral forum by agreeing to be bound by the forum-selection clause in
its contract with SCDHHS, the judgment of the district court is
AFFIRMED.