Transcript

IN THE SUPREME COURT OF THE UNITED STATES

OTIS R. BOWEN, SECRETARY OF HEALTH AND HUMAN SERVICES, ET AL., Petitioners, v. MASSACHUSETTS; and MASSACHUSETTS, Petitioner, v. OTIS R. BOWEN, SECRETARY OF HEALTH AND HUMAN SERVICES, ET AL.,

No. 87-712, No. 87-929

April 20, 1988

The above-entitled matter came on for oral argument before the Supreme Court of the United States at 11:09 a.m.

APPEARANCES:

ROY T. ENGLERT, ESQ., Assistant to the Solicitor General, Department of Justice, Washington, D.C.; on behalf of the Federal Petitioners/Respondents.

THOMAS A. BARNICO, ESQ., Assistant Attorney General of Massachusetts, Boston, Massachusetts; on behalf of State Respondent/Petitioner.

PROCEEDINGS

CHIEF JUSTICE REHNQUIST: Mr. Englert, you may proceed whenever you are ready.

ORAL ARGUMENT OF ROY T. ENGLERT, JR., ESQ. ON BEHALF OF FEDERAL PETITIONERS/RESPONDENTS

MR. ENGLERT: Thank you, Mr. Chief Justice, and may it please the Court:

This case presents jurisdictional questions. The Grant Appeals Board of the Department of Health and Human Services disallowed $11.3 million in federal financial participation under the Medicaid program to the Commonwealth of Massachusetts. The Commonwealth challenged that disallowance in the United States District Court for the Commonwealth of Massachusetts claiming that that court has jurisdiction. Our position is that the United States Claims Court has jurisdiction.

The Court of Appeals agreed with each side in part. We petitioned this Court to review the Court's partial assertion of jurisdiction, and the Commonwealth cross-petitioned to review the Court's partial refusal to exercise jurisdiction. The petition and cross-petition were both granted.

By way of background, this case arises from two audits covering the years 1978 to 1982 of Massachusetts expenditures at intermediate care facilities for the mentally retarded.

Applying a longstanding HHS regulation, the auditors determined that Massachusetts had improperly claimed Medicaid reimbursement for certain educational services that the State Department of Education was required to pay for. $11.3 million in federal financial participation was disallowed, and that is a small fraction of the total federal financial participation for Massachusetts at these facilities in the years in question.

As was its right, Massachusetts challenged that disallowance in the Grant Appeals Board, an entity created by regulation in 1973 to review disallowances on behalf of the Secretary. The Grant Appeals Board upheld the disallowances. The money has since been recouped by reducing certain Medicaid grants to Massachusetts in subsequent years.

In response to the GAB decisions, Massachusetts filed complaints for judicial review in the District Court. The Commonwealth recognized that there is no statute providing specifically for judicial review of disallowance decisions.

The complaints did assert that 5 U.S.C 702, part of the Administrative Procedure Act, waives the sovereign immunity of the United States, and permits this kind of action to proceed in District Court.

The District Court said that it had jurisdiction. The District Court disagreed with the Grant Appeals Board decisions in their entirety, and said that the Commonwealth was entitled to federal financial participation for all of these services, and entered a judgment reversing the Grant Appeals Board.

We appealed, and argued among other things that the District Court had entered a money judgment against the United States without any applicable waiver of sovereign immunity that permitted such a judgment.

The problem with using 5 U.S.C. 702 as the applicable waiver of sovereign immunity is that that statute applies only to actions "seeking relief other than money damages". We contend that the $11.3 million at issue here is money damages.

Now it is important to understand that we were not arguing that the Grant Appeals Board decisions were unreviewable. Rather our position was that the Tucker Act which does waive sovereign immunity for money judgments permitted an action in the United States Claims Court.

QUESTION: Now Mr. Englert, there is a split of authority, is there not, in Courts of Appeal about whether money damages means compensatory damages or whether it refers to the Tucker Act, any money relief question?

MR. ENGLERT: There is a split in the circuits, yes.

QUESTION: And the Court of Appeals for the District of Columbia takes the view that money damages does not mean what you say it means in that statute?

MR. ENGLERT: That is correct. That court actually stands along among the Courts of Appeal.

QUESTION: So that is really the crux of what we need to focus on, I suppose, in this case.

MR. ENGLERT: That is correct. That is the crux of the issue presented by the Commonwealth's cross-petition, and we think that it is really the crux of the issue presented by our petition, too.

That question is addressed rather squarely in the legislative history of the 1976 amendments to the APA. When Congress used the phrase money damages, it meant monetary relief as opposed to declaratory injunctive mandamus relief.

QUESTION: Why do you suppose that Congress did not use language like is used in the Tucker Act if they intended it to mean the same thing?

MR. ENGLERT: Well, there actually is no language in the Tucker Act that refers to money damages. The Tucker Act is a very old statute. And the limitations on the powers of the Claims Court under the Tucker Act have been inferred from the surrounding context, and not directly from the language of that statute. It is a very broadly written statute.

In any event, I think that Congress took a proposal that was given to it by the Administrative Conference, a proposal that is backed up by numerous memoranda that often refer to all forms of monetary relief being excluded from the proposal.

The Administrative Conference happened to use the words money damages, words that are not unnatural to use to describe all forms of monetary relief, and those are the words that Congress enacted.

QUESTION: Well, I guess that Judge Bork in his opinion for the CADC found some legislative history the other way.

MR. ENGLERT: Very little, Your Honor. He relied almost entirely on a single reference to grant-in-aid programs in the House report and the Senate report. That reference is a part of a long list of actions in which sovereign immunity had been asserted in the past and might not be asserted in the future under the APA amendments. Not every grant-in-aid lawsuit has to be an action seeking the payment of money by the federal government.

QUESTION: Well, let me ask you on that point.

Does a state in the position of Massachusetts have any ability to prevent recoupment by the government during the appeals process, so that they would not be in the position of needing to ask for the money back?

MR. ENGLERT: Some states have succeeded in preventing recoupment, albeit under an assertion of jurisdiction that we think is invalid. We think that they have no proper means to prevent recoupment.

QUESTION: So in your view as a practical matter, a state will always be in the position of having to seek money damages in effect, and always be channeled to the Court of Claims in any of these grant programs. So that when they want an interpretation of the statutory language, in the government's view, they are always going to be channeled to the Court of Claims.

MR. ENGLERT: No, Your Honor. Suppose the Secretary promulgated a new regulation. And before that ever took effect, if it were to take effect January 1, 1989, and on April 20, 1988, the state brought a prospective challenge to that regulation. Say the Secretary did something outrageous like promulgating a regulation saying that there will be no further reimbursement for intermediate care facilities for the mentally retarded period.

There is no accrued monetary claim in that case, and there is not going to be an accrued monetary claim during the initial pendency of the lawsuit. And we have no problems letting the District Courts address that and grant a declaratory relief.

QUESTION: Would you have trouble with just a declaratory judgment that says here is the situation, we are in disagreement with the government on this issue, we do not ask for an injunction now, or any money, or anything else, we just want a judgment, and we think that the Secretary will live up to the judgment?

MR. ENGLERT: If they do not want money.

QUESTION: Well, they do not ask for it. But if there is a judgment, they are probably then going to go to the Court of Claims, and the legal issue will have been settled.

MR. ENGLERT: But the ordinary rules of res adjudicata, as we understand them, preclude that kind of claims splitting, first getting your judgment in one court, and then bringing a separate claim in another court.

QUESTION: I am just asking you, would you object just to declaratory judgment?

MR. ENGLERT: Standing alone, we would not. Although we would object if they were then successful in transforming that into a money judgment for past due money in the Claims Court, yes.

QUESTION: What is the District Court who gets something like that supposed to do, I recall confronting this on the D.C. Circuit, are you supposed to deem that to include a claim for monetary relief or not.

You know, the usual rule, what court you are in is to be adjudged on the basis of the complaint, right, and a complaint is deemed to be amended to show that you get all of the relief that the proof entitles you to.

And when you are asking for a declaratory judgment in a matter where it is clear that the effect of that declaratory judgment will entitle you to money, I assume that without any amendment of the complaint at all that the court that enters the declaratory judgment ought to enter an order for the money relief as well, should it not?

MR. ENGLERT: I think that is right.

QUESTION: So really what you say is that the state can bring the action if they specifically disclaim any desire for monetary relief. Not just bring it purely for a declaratory judgment, but say we are asking for a declaratory judgment, and we waive all right for monetary relief.

MR. ENGLERT: We do think that that is the better view. And alternative view would be to say that the state may bring the claim, but is foreclosed from later seeking money. But we think that the view that you just stated is the better approach.

QUESTION: But there is a way to do it?

MR. ENGLERT: There is a way to do it, yes.

QUESTION: So you think that the government, if there was a declaratory judgment which you did not object to, you think that the government would then still refuse to refund the money, if it had been adjudged finally in a court that the Secretary had been wrong all the way?

MR. ENGLERT: If we thought that the state had brought the action in District Court to secure District Court jurisdiction over an action that should have been in the Claims Court if the state wanted money, I think that we might very well take that position.

QUESTION: Well, the state did not ask for money. It even disclaims. It did not want any money.

MR. ENGLERT: Well, if they say that they do not want any money, we are not going to give them any money.

QUESTION: Even though you had been unlawful all the way?

MR. ENGLERT: Again if the state said that it did not want it and secured jurisdiction in that manner, we would not see any reason.

QUESTION: Well, Mr. Englert, there is some legislative history, as you have acknowledged, that indicates that Congress did expect these grant-in-aid programs to be decided in the District Courts and the Courts of Appeal.

MR. ENGLERT: Well, as I say, there is a single reference to grant-in-aid programs in both committee reports.

Justice O'Connor, not all changes to administration of grant-in-aid programs involve seeking money from the federal government. A good example is Bowen v. Kendrick, which this Court heard just last month. That certainly is a challenge to the federal government's administration of the grant-in-aid program. There is a contention that the statute under which that program is administered violates the establishment clause.

QUESTION: Oh, yes. But most of these issues come up and involve money. That is why the states are worried about it, and that is why the grantees are worried. And there is certainly some indication that Congress thought that these issues were better resolved in the crucible of the Federal District Courts and the Courts of Appeal where they can give a considered judgment to these questions. And to channel all of that stuff to the Claims Court just seems to me to be a very troublesome view of the matter.

MR. ENGLERT: I must respectfully disagree with you in several respects. Certainly, the Claims Court and the Federal Circuit can give considered judgment to these things.

QUESTION: Mr. Englert, would you speak up just a little bit. I am having trouble hearing.

MR. ENGLERT: I am sorry. Certainly, the Claims Court and its Appellate Court, the Federal Circuit, can give considered judgment to these matters. There is nothing less competent about the Claims Court and the Federal Circuit than about the District Courts and the regional Courts of Appeal.

QUESTION: No, but it is often very helpful, of course, to have different Circuit Courts of Appeal focusing in on some very tough issues that we get.

MR. ENGLERT: That is correct, of course, Your Honor. But also, the whole purpose of the Claims Court and the Federal Circuit is to centralize certain matters.

QUESTION: That can happen under the Tucker Act, too, do not forget that. Below $10,000, even if it is under the Tucker Act, it will arise in the District Courts.

MR. ENGLERT: But then will go to the Federal Circuit.

QUESTION: Will go to the Federal Circuit. But you will have District Courts other than the Claims Court.

QUESTION: But pursuing Justice O'Connor's point a little bit. This case involves a problem really peculiar to Massachusetts, because they have a difference between the Department of Education and the Department of Mental Health and how they handle certain things.

Is this not one of those kinds of cases where there is perhaps some benefit in having the regional circuits which perhaps have a better understanding of the various states within their circuits handling governmental matters such as this, having them. I understand that you want to have the statute interpreted according to the intent of Congress.

But from a practical standpoint, does it not make a lot of sense to have this kind of case in the regional circuit rather than in the Court of Claims?

MR. ENGLERT: Well, there are policy arguments that can be made to some of these cases in various places. There are also policy arguments that can be made in favor of centralizing all large money claims against the United States in one court. And that is what we think that the Tucker Act and the APA dovetail to do. The APA waiver specifically excludes actions for money damages.

QUESTION: Well, it is not all that clear. It applies to all actions seeking relief other than money damages. And I am not sure if one reads that language literally and you have an action which seeks a declaratory judgment which is relief other than money damages and also seeks money damages, that a literal reading of the language would not necessarily foreclose jurisdiction.

MR. ENGLERT: A literal reading of that language would not necessarily by itself foreclose jurisdiction.

QUESTION: That is right.

MR. ENGLERT: But there are two other things that work here. One is the overall intent of Congress, which we do think is to put money cases in one place and non-money cases in the other. And the other is Section 704, which allows a non-statutory review which is what we have here only when there is no other adequate remedy in a court. And a money action in the Claims Court certainly is an adequate remedy in the circumstances of this case.

The Court of Appeals, which did not address Section 704, thought that it was appropriate to entertain the so-called declaratory aspects of this case. It affirmed what it called a declaratory judgment, merely because the Grant Appeals Board decisions are precedents.

That is the only significant prospective effect, as the Court called it, that there was that justified the splitting of the claim into two courts. But all judicial decisions are precedents. The Claims Court decision on the money claim would be a precedent. And if the Claims Court agreed with Massachusetts, the Grant Appeals Board decision would be reversed just as effectively as it was by the District Court.

The remedy that exists in the Claims Court is perfectly adequate. And it is for that reason that on the issue in our petition, the claim splitting issue, that we think that it is quite clear.

QUESTION: Now you rely primarily on 704 rather than 702.

MR. ENGLERT: On that issue, that is correct. And also, our overall perception of the intent of Congress, which has one statute which has been on the books since 1887 that allows money actions to be brought against the federal government, and another statute that excludes money damages with a lot of legislative history backing it up.

QUESTION: But is it not true as a matter of history that in some of these cases that the government did not take the position that you are taking now, that they allowed some of these cases to go forward in the District Courts outside of the Court of Claims?

MR. ENGLERT: That is correct, the issue was not addressed.

QUESTION: It was not as obvious as it is now.

QUESTION: Did the government raise this argument at the District Court level in this case?

MR. ENGLERT: Yes, but.

QUESTION: Yes, but what?

MR. ENGLERT: The Secretary has decided as a matter of policy not to pursue objections to jurisdiction in this case. Of course, that is not something that we could not bind the court to accept jurisdiction by making that unfortunate statement, and it was resolved on the merits by the District Court.

QUESTION: Mr. Englert, let me also ask you whether you think that the 704 adequate remedy question or determination should be made case by case or on the basis of categories of things?

MR. ENGLERT: I do not think that it can be made in an absolute sense for any and all cases for all times. Certainly, there are categories of cases. And we think that grant disallowance cases involving crude monetary claims are a category of cases in which that Claims Court remedy will in all cases, we would think, be adequate.

QUESTION: Even though prospective relief is sought?

MR. ENGLERT: Even though prospective relief is sought.

QUESTION: And even though you might have changing administrations, and new administrators, and different policies in the future. And you just think that people ought to be foreclosed from getting that prospective relief order.

MR. ENGLERT: Yes. Because it is not the government's position that matters, but it is the court's position that matters. And when the Claims Court in adjudicating the money claim decides an issue of law, that is binding upon the federal government in all future dealings with the same party.

The Claims Court is a perfectly competent court to address these issues, as it has in Medicare cases, and in other kinds of judicial review actions in the past.

QUESTION: Where is the legislative history referring to grant-in-aid cases that you were discussing with Justice O'Connor earlier, that came up in what context?

MR. ENGLERT: Page eight of the Senate report, and also page nine of the virtually identical House report. The sentence is, "The doctrine has been invoked in hundreds of cases each year concerning," the doctrine meaning the doctrine of sovereign immunity, "has been invoked in hundreds of cases each year concerning agricultural regulations, governmental employment, tax investigations, postal rate matters, administration of labor legislation, control of subversive activities, food and drug regulation, and administration of federal grant-in-aid programs."

QUESTION: But that assuredly was not invoked in money claims under grant-in-aid programs. I mean it is impossible to interpret it to be referring to any invocation when there had been a money claim. Money claims in grant-in-aid programs would have come under the Tucker Act, even before this amendment to the APA, right?

MR. ENGLERT: That would have been our position, yes.

QUESTION: So I do not see how it gives you any problem at all. You see to acknowledge that it gives you some problem.

MR. ENGLERT: Well, we have acknowledged that Judge Bork rested his entire analysis on that snippet of legislative history. And we acknowledge that many grant-in-aid cases would involve money claims.

But our position is, Justice Scalia, is that the Tucker Act would have been the appropriate vehicle for money claims in grant-in-aid cases before and after the amendment.

QUESTION: And this reference must mean pre-issuance challenge to regulations, which is how a lot of grant-in-aid claims come up, of course. But then when the regulations are proposed and finally adopted, someone takes them up to challenge them or tries to.

MR. ENGLERT: I think that is a proper construction. In candor, I have to say that you can trace that reference back to two cases cited in Professor Cramton's memorandum for the Administrative Conference. And those were not preenforcement challenges to regulations. They were, as we read them, challenges to deferral of action on grant applications by the Department of Health, Education and Welfare. That is how we read them. Our opponents read them differently.

QUESTION: Yes, I recall that the briefs seem to disagree on that point.

Did the claim for the money relief here precisely track the claim for injunctive and prospective relief? It would seem to me that sometimes in the grant-in-aid programs that the state would be objecting to an overall interpretation of a regulation and see prospective relief. And then there would some discrete instances where they would want money back. And it would seem to me that the two might not track each other.

MR. ENGLERT: I am not sure that such cases would arise, but that would be a different case from this one. This one is a case, Justice Kennedy, in which the only prospective effect that the Court of Appeals identified was that the Grant Appeals Board stood as precedence. And the only prospective relief that any court granted is what the Court of Appeals called so much of the judgment below as constitutes a declaratory judgment that the Secretary's blanket special education exclusion is in excess of statutory authority.

In other words, that was the underlying issue that the Claims Court would have resolved, and the District Court did resolve, but the Claims Court would have resolved if this money case had been brought there in the first place.

QUESTION: The First Circuit said that in the Claims Court that its judgment would be collateral estoppel.

Do you accept that proposition, can the government be collaterally estopped?

MR. ENGLERT: Well, the government can be collaterally estopped under the Stauffer Chemical and Montana cases.

QUESTION: So if the First Circuit is correct, then there is estoppel in the Claims Court, you concede that?

MR. ENGLERT: No. We think that the usual rule is that when an action is brought in one court, and then a separate claim is split from that and brought in a separate court, that the Plaintiff loses all right to proceed on that separate claim. It is complicated here, because the Plaintiff --

QUESTION: No. I am saying that let us assume for the moment that we affirm the First Circuit and its reasoning.

Would you then concede that you are collaterally estopped in the Claims Court?

MR. ENGLERT: No.

QUESTION: I did not think so.

MR. ENGLERT: I doubt that we would have a lot of luck in the Claims Court, that we would not concede the point.

QUESTION: Well, res adjudicata certainly would not apply if the Court did not have jurisdiction to enter the money judgment.

MR. ENGLERT: Well, of course. But the premise of Justice Kennedy's question was that this Court affirmed the First Circuit in its reasoning.

QUESTION: Well, it set aside the money judgment, did it not?

MR. ENGLERT: The Court did set aside the money judgment.

QUESTION: On the grounds that?

MR. ENGLERT: On the grounds that our analysis of the legislative history of the Administrative Procedure Act is correct. That the court to enter money judgments against the United States is the Claims Court. And that the other than the money damages provision of the APA excludes this action from District Court jurisdiction.

QUESTION: May I ask you a question. Maybe it is a little out of line. But supposing we granted cert to review the merits of the issue as well as the jurisdictional questions. And we had decided that (a) that the Court of Appeals did have jurisdiction to decide the legal issue and that they were right on that issue, and then we said nothing about the money.

Would not the government pay the money to the state, or would they take this position that there is a legal defense, and we will not pay even though the state was entitled to it?

MR. ENGLERT: Well, the problem would not be collateral estoppel.

QUESTION: It is not just collateral estoppel. It is really how one thinks that the government should operate when the Supreme Court of the United States has held that they violated the law. Often, we used to have cases where we would not enjoin the state. We entered declaratory judgments on the assumption that the state would accept the rule of law.

But the government, you are telling me, if I understand you correctly, that the executive department says, well, they do not have a legal right to get it, even though we have no legal right to retain it, so we are going to make them litigate for it?

MR. ENGLERT: Justice Stevens, I said in the context of a question whose underlying premise was the state brought an action in which it disclaimed the right to monetary relief. It was so important to the state to get into the District Court rather than the Claims Court, that the state was willing to forego.

QUESTION: My hypothesis was this very case, and we only decided the issue that they decided. And your position is that the government would still keep the money, if I understand you.

In this case, the Court of Appeals has held that the regulatory decision made by the Secretary was erroneous and violated the statute. And if we had affirmed that on the merits and did not say anything about money, you are suggesting to me that the Secretary would not pay the state the money.

MR. ENGLERT: In the context of this case in which the state has never made any secret of the fact that it wants the money, and this Court accepted jurisdiction and held against us; no, of course, we would pay the money.

QUESTION: You would. You would not then make the collateral estoppel. You would not say, well, they would split their cause of action, even though they go to Court of Claims. I thought that you were saying that we would make the defense that this cause of action is split, and they cannot get relief.

MR. ENGLERT: The point, Justice Stevens, is that we might make the collateral estoppel argument, but we would be foolish to reargue the merits in the Claims Court, which of course would be bound by this Court's disposition of the merits.

QUESTION: But my point is that if you are wrong on the merits regardless of the technicalities of whether there is collateral estoppel or not. I mean we are talking about government decisions. We are not talking about private litigation between private parties. The executive department says that they still want to keep the money, as I understand it.

MR. ENGLERT: Justice Stevens, my answer to the questions about collateral estoppel is that we would argue against collateral estoppel, so that we could relitigate in the Claims Court.

QUESTION: That is why I asked you if we had decided, whether you would still do that. So there would be nothing more to relitigate on the merits.

MR. ENGLERT: Right, and we would pay.

QUESTION: You would?

MR. ENGLERT: Yes. I would like, if I may, reserve the balance of my time.

CHIEF JUSTICE REHNQUIST: Thank you, Mr. Englert.

We will hear now from you, Mr. Barnico.

ORAL ARGUMENT BY THOMAS A. BARNICO, ESQ. ON BEHALF OF STATE RESPONDENT/PETITIONER

MR. BARNICO: Mr. Chief Justice, and may it please the Court:

The importance of Circuit Court review that was discussed earlier in the argument is not as Mr. Englert suggests just a question of a policy preference. In fact, as one of the Justices has pointed out and one of the amicus briefs has addressed, there is a certain familiarity that Circuit Courts develop with a given state's Medicaid plan and disputes that might arise either between states or between the Secretary and the state in this case.

But the more important point that I wish to address on that score is that Congress has provided evidence that it believes that the Circuit Court's role is important in these cases.

And that is, and it cannot be disputed here, is that when Congress addressed the question of judicial review of disputes between the Secretary and the states under the Medicaid program, that it expressly authorized states to bring petitions to the Circuits Courts to review instances in which the Secretary has found that states, or their plans, or their amendments to their state plans are not in compliance with the Medicaid Act.

QUESTION: Now what provision of the statute is that that you are relying on?

MR. BARNICO: Mr. Chief Justice, that is 42 U.S.C. 1316(a)(3).

QUESTION: And where is that in your brief?

MR. BARNICO: That appears in the appendix of the brief, the statutory appendix to the brief, Your Honor.

QUESTION: XII.

MR. BARNICO: That is correct, Your Honor.

And the point that we wish to make is that for jurisdictional purposes, that as we try to determine congressional intent over these actions. There is no significant difference between the action of the Secretary involved here and the kind of action that arises when the Secretary finds that the state or an amendment to a plan does not comply with the Medicaid Act.

QUESTION: But that is often true of the cases that go to the Claims Court and to the Federal Circuit under the Tucker Act. The jurisdiction is not based on subject matter. It is based on whether there is a monetary claim. They have a wide diversity of subject matters. They get into every kind of issue that you can imagine.

So I do not see what this proves. It just proves that this litigation like all other litigation can arise in either of those courts.

MR. BARNICO: But, Your Honor, it proves more than that. Because here, as the Secretary points out, there is a lack of a specific statute providing for review of disallowances. We turn to the statutory context to determine under what statute that a state can bring an action, and under what statute that Congress has waived sovereign immunity.

And that judgment is formed partially by the statute that governs the waiver in this Section 702, but it is also governed by the overall statutory context.

Because if the Secretary is correct, it means that Congress somehow chose to divert cases such as ours, the disallowance cases, from the local courts, the District Courts and the Circuit Courts, and send them to a more specialized centralized forum like the Claims Court and like the Federal Circuit. And we think that is a reading of the statutory context that cannot be supported.

QUESTION: Of course, 41 U.S.C 1316 sends you to the Court of Appeals.

MR. BARNICO: That is right.

QUESTION: You did not go to the Court of Appeals. You went to the District Court. You are going to the District Court anyway. I mean that is just a statutory provision dealing with quite different situations.

MR. BARNICO: There is a reason why we went to the District Court.

MR. BARNICO: Because you had to. Because this is a special statute. The APA reads that where there is a special statute, that you go to the court that the special statute proscribes. And in the absence of a special statute, you go to District Court. It was not a strategic determination on your part.

You had to go there, did you not?

MR. BARNICO: Not entirely, Your Honor. In this case, we went to the District Court. Because as I said, it was the result of earlier litigation with the Secretary over the question of whether a given dispute between the states and the Secretary was a compliance matter or a disallowance matter.

In those cases that were litigated all over the country, Circuit Courts roughly determined that certain questions that arose under the program were indeed compliance matters. But in those cases, the Secretary represented to the various Circuit Courts of Appeal around the country that he would not contest District Court jurisdiction over the same cases.

So it was not surprising that in this case that not only did we identify 702 as the source of the waiver, but that we proceeded in the District Courts. It was upon the Secretary's representation to the First Circuit that he would not contest District Court jurisdiction over the same case.

QUESTION: Insofar as 1316 is concerned, it seems to me that it hurts you more than it helps you. It is a statement by the Congress that you can go directly to the Circuit Courts if you have a question of interpretation at the outset. You begin your argument with 1316, and it seems to me that that is not a very strong point.

MR. BARNICO: Well, Your Honor, it is. Because it is not simply a question at the outset. Compliance matters could be as close to this case as the following example. That is if we had not provided these services to the mentally retarded in the past and we proposed to amend our Medicaid plan to include these services and made it the basis for a specific amendment, and the Secretary denied the amendment on the same ground that he invoked here, that is that when we train people to eat that that is education in nature and outside of the scope of the Act.

Now in that event, we would have had an appeal to the Circuit Court on the same record testing the question of whether the Secretary had erroneously read the Medicaid Act to exclude those services.

And furthermore, Your Honor, those cases could also implicate money as well. Because under the Secretary's regulations, if you are successful through the administrative process and we presume through the judicial process in successfully overturning the denial of an amendment, you are entitled to a lump sum covering the services back to the time that the amendment was submitted.

So with all respect, Your Honor, it does not merely address situations where the state wishes to identify a legal issue at the threshold and litigate that question before any injury occurs.

QUESTION: You are entitled to a lump sum under 1316?

MR. BARNICO: No, Your Honor.

QUESTION: Where do you get the lump sum?

MR. BARNICO: The lump sum, Your Honor, is mentioned in 45 CFR 201.3.

QUESTION: That is a regulation.

MR. BARNICO: It is a regulation. But you know, this also implicates the previous response of my brother to the question of a District Court action which merely tests the validity of a regulation.

By way of background, one of the reasons why these disallowance cases are growing is that the Secretary chooses to implement policy judgments through the disallowance mechanism rather than to specifically state through regulations what services are covered and which are not.

And so when the Court considered the case a few terms ago of Connecticut, a similar Connecticut state agency against the Secretary, Connecticut cited the same sort of broad disallowance that carried a prospective effect and implications for further services given by that state.

So it may be well for Mr. Englert to say that in the abstract that certain cases can still proceed when states challenge regulations under a particular grant-in-aid program, but it is very much part of this record that the disallowance procedure is used for far different purposes than a technical audit or the adjustment of an accounting error.

It is used, as both of the lower courts found, to make prospective coercive judgments about the scope of the Medicaid Act. The states are forced at that point to decide that once they receive that first disallowance and while they are still in the administrative process before the Grant Appeals Board, the states are forced to make a judgment about whether they should continue to provide those services knowing that they have an exposure, that the millions of dollars that they spent could well be disallowed at some indeterminate time in the future.

And faced with that kind of situation and that kind of relationship, it is important that we be able to go to the District Courts to secure declaratory and injunctive relief that would bind the parties in our future relationship.

The Court of Appeals, if I might just read one excerpt from the decision, said that the Commonwealth's requested injunction is not specific to the retrospective 1978-1982 reimbursement disallowed by the Secretary. Rather, it stretches into the future as does the legal relationship between the parties. And that is the relief that we sought, and that is the relief that our complaint sets out.

QUESTION: Do you think that the government would not have been bound with respect to its future action on the same matter had you gotten your judgment from the Federal Circuit under the Tucker Act instead from the Court of Appeals here?

MR. BARNICO: I would not expect to act as if they were bound in the same way. I think that Your Honor is suggesting that --

QUESTION: The same issue involving the same party with the case?

MR. BARNICO: Your Honor, I think the point is whether the effect of stare decisis alone in such a context would be enough. And I do not think that their past conduct gives us that kind of assurance. And as a matter of law, I think that it is different as well.

As a matter of record before this Court, the Secretary has in disallowances that have followed the Massachusetts disallowance, and have followed the opinion of the First Circuit in this case, simply disagreed with the First Circuit and disallowed reimbursement to I believe it is Utah and Tennessee.

QUESTION: But in a system when you go to regional Courts of Appeals, that is understandable. I think that Justice Scalia's hypothesis was if you go to the Federal Circuit, that presumably all of these kinds of cases are going to the Federal Circuit. So the government would not be entitled to say, well, that may be the rule in Massachusetts, but it is not in Utah. If the Federal Circuit says that it handles these cases, that is going to be the rule for the whole United States.

MR. BARNICO: Well, I would still distinguish that from that binding order. And it may well be the difference between relief that we consider essential and what the Secretary deems as adequate. The point about the Federal Circuit --

QUESTION: It is not the Secretary, it is the statute. The statute says that you can get into the District Court only if there is no other adequate remedy.

MR. BARNICO: That is correct.

QUESTION: It is not his judgment about what is adequate, but rather it is the Congress' and ultimately the courts, I suppose.

MR. BARNICO: That is right. At the threshold, there is a disagreement between some of the circuits and the Secretary's interpretation of Section 704. But I understand that there is a statutory basis for that point.

The points addressed in the briefs though thoroughly, I believe, is that in many respects that the Claims Court will not be able to provide the declaratory and injunctive relief that the beneficiaries and states believe would be necessary to govern the relationship in such programs.

QUESTION: Well, Mr. Barnico, in this case now, the District Court did not issue an injunction, is that right?

MR. BARNICO: The District Court entered a judgment that said that the decision of the Secretary was reversed.

QUESTION: It did not enter an injunction, did it?

MR. BARNICO: No.

QUESTION: And you take the position that to be adequate that the relief requires an injunction, and that is why it does not meet the standards of 704 and should not go to the Court of Claims, right?

MR. BARNICO: Yes, Your honor.

QUESTION: And yet you ask us at the same time to reinstate the judgment of the District Court which did not issue an injunction.

So how in this case do you find that it was not adequate?

MR. BARNICO: In this case, we do not necessarily say that the relief would be inadequate. To the extent that in such cases that our first position will always be that we will expect the Secretary to abide by a judgment of reversal, and whatever declaration of law accompanies the reversal.

QUESTION: So in this case, the relief in the Court of Claims might well be adequate and the Court of Appeals for the Federal Circuit?

MR. BARNICO: Well, not necessarily, Your Honor. Because the Court of Appeals entered relief is much more in the nature of an injunction than the District Court.

But my second point would be that in this case that we were content with the judgment of reversal, but we asked for more. And there was no indication from any court that we were not entitled to more. But as we tried to respectfully tried to suggest in the brief, upon such a reversal, we judged that to be adequate in the absence of some action by the Secretary that he will not abide.

Now as one of our briefs at the petition stage suggested, it is going to be the District Court that we will want to go to for a coercive order in the event that the Secretary does not abide by the reversal and by the declaration of law that accompanies the reversal.

QUESTION: No one in your client's position is going to ask in the District Court for money damages. And there will just be requests for a declaratory judgment and prospective relief, and no request for money damages. And there is no other forum. There is not a forum in the Court of Claims just to go get declaratory judgments.

MR. BARNICO: No. The Claims Court would throw out, I imagine, a case that sought only declaratory relief.

QUESTION: Exactly.

MR. BARNICO: Now the discussion -- excuse me.

QUESTION: Well, we are sort of confronted with how to interpret that Tucker Act. Not in just this context, but elsewhere.

What is the line that you are drawing as to what does not constitute monetary relief, is it just in this narrow area of benefits denied by the government, or is it whenever you come to District Court in any case and do not ask for money, but just ask for a declaratory judgment or an injunction? I mean that would be disastrous.

MR. BARNICO: In the latter case, you could not go to the District Court for declaratory and injunctive relief that is prohibited by some other statute. That is one of the other limitations that the Secretary identifies.

QUESTION: It is not prohibited anywhere else. It is just that you have a claim for money damages. And you would chose instead to apply for a declaratory judgment that the Secretary owes you money.

Would you allow that?

MR. BARNICO: Well, it would depend on the context, Your Honor. In the grant-in-aid context, I think that you are referring to really a rule that the First Circuit set out, in the sense that they would measure the amount of prospective relief.

Now we do not happen to agree with that approach. But in the grant-in-aid context, at least the District Court would be able to rely on the legislative history of the APA that identified the grant-in-aid programs as one example of the kind of case that they wished to have brought in the District Courts.

QUESTION: But they are surely just an example. I mean the government's proposal has the advantage of being a clear line. I am not sure what your line is, except that grant-in-aid things are covered. But you cannot draw the line there.

Is what you are saying that as long as you do not ask for money, that you do not have to go to the Claims Court or what, what is the line that you want us to adopt?

MR. BARNICO: Well, the line relies on a couple of factors. I cannot draw it as clearly as what I consider to be the simplistic line of any case that happens to involve money belongs in the Claims Court. But on the other hand, there are identifiable factors.

QUESTION: These are jurisdictional questions. The worst thing in the world to waste time litigating is whether you should have been in the Claims Court or in the District Court. And it does not just arise at the District level, but then you have to decide which of the two Courts of Appeal that you should have gone to. It is very complicated.

MR. BARNICO: Your Honor, I could not agree more about the waste of time. And it is only complicated by changes of position by the government, I might add.

But in any event, I suggest that the Court has already identified at least one of the factors in its own consideration of the Tucker Act. I am thinking of the case of the U.S. v. Mottaz, where the Court made a fairly strong statement that the complaint is an important aspect of a judgment of a court about jurisdiction. So at least the Court would consider what kind of cases made by the Plaintiff and what relief is requested.

QUESTION: Well, Mr. Barnico, I take it that you do not urge the adoption of the line drawn by the Court of Appeals in the District of Columbia Circuit, that money damages refers to a sum of money used as compensatory relief, you are not urging that line?

MR. BARNICO: No, we are not, but we are urging something similar. The brief refers to what we call non-monetary relief. And there is no dispute that the District Court is available for such relief.

I do not think that the District of Columbia Circuit had anything different in mind when it said that when a court makes a judgment that an administrator has violated the law that it is making a specific remedy when it orders or its judgment requires that administrator to turn over the money.

I think that the kind of relief and the line that we suggest is in the same nature and produces the same result. But I think that the decision of the District of Columbia Circuit had more to do with prying a certain kind of monetary relief away from the term money damages.

QUESTION: Can your test be stated in one sentence?

MR. BARNICO: Cases brought for injunctive and declaratory relief against adjudicatory decisions under grant-in-aid programs are within the jurisdiction of the District Courts under the waiver of sovereign immunity contained in Section 702.

QUESTION: And what if they include a prayer for money judgment against the government?

MR. BARNICO: Then the rule takes more than one sentence, I am afraid. And it is that when the Court considers that complaint in its entirety against the overall statutory context of the subject matter, that it makes a determination that the District Court is the court that will hear such a case.

QUESTION: Well, why should not the District Court just say do you want to stay in this court or not; and if you do, you better withdraw your claim for money damages?

MR. BARNICO: Well, that is similar. That would depend, Your Honor, on whether it is merely --

QUESTION: That just really raises the question of whether the Court of Appeals was correct.

MR. BARNICO: And it raises the question of whether the state is going to be required to make a binding waiver of any monetary recovery.

QUESTION: It does not have to have a binding waiver. The District Court just says I am going to entertain this claim for money damages, I do not have jurisdiction to do that.

MR. BARNICO: And it may require that litigant to simply drop whatever prayer that suggests the money judgment.

QUESTION: What kind of prayer suggests that, by the way. You know, there is the boilerplate at the end of every complaint which says as such other relief as may be appropriate.

What is money damages are appropriate, is that a prayer for money damages?

MR. BARNICO: I do not think that it would be a prayer enough to defeat the jurisdiction of the District Court, no.

QUESTION: Do you think that everybody would think that, to adopt a rule like that or something, can we train pleaders to put in or not put in that provision?

MR. BARNICO: No. And pleaders are often faced with different kinds of pressures. And in this case, the complaint was written before we knew that the Tucker Act even applied to or could be argued that it could be applied to such a case.

Now the last point that I would like to make today has to do with the relationship between the Federal Circuits on the one hand and the Circuit Courts of Appeal on the other.

Congress intended that the Federal Circuit and the Claims Court have a specialized subject matter. The Federal Courts Improvement Act that was enacted by Congress in 1982 demonstrates that Congress has always sought to preserve the Circuit Courts of Appeals as courts of general jurisdiction in terms of subject matter.

The legislative history of that Act, we think, is very important to the case, and provides a further statutory context to decide our case. There was no indication in the legislative history of the Federal Courts Improvement Act that suggests that Congress ever believed that the Federal Circuit would become a national forum for resolution of questions under the Social Security Act.

QUESTION: But Congress could have just as easily, and I think that the government argues here, have allocated jurisdiction on the basis that we want all claims for money judgment against the government to be tried in the Claims Court and go to the Federal Circuit.

Now that means that the Federal Circuit will be expounding on lots of different areas of the law, but that the unifying factor would be the money judgment against the government.

MR. BARNICO: That is his competing argument on intent. And it is there that there is authority for the proposition that Congress intended to centralize some cases or cases involving money according to the Solicitor, and that we happen to fall in those cases.

My point is that that rubs right up against Congress' express intent to keep the Circuit Courts of Appeal available for the kind of general questions of important social policy like the Social Security Act.

QUESTION: Of course, your position means that the government can go around every Circuit relitigating the same issue.

MR. BARNICO: And apparently, they are doing it in this very case.

QUESTION: Well, I know that. In a way, it is strange that the government wants to be able to litigate it only once.

MR. BARNICO: Well, they must have their reasons. But I think that their result is inconsistent with judgments that Congress has made about the subject matters of the cases that will arise and be heard by the courts that were created in 1982.

Finally, I should make the point that the Court has previously identified at least one consequence of litigating in the Claims Court. And that is that when you litigate in the Claims Court, that ordinarily you litigate in Washington.

And for the Court to adopt the view of the Solicitor in this case is to impute to Congress the intent that beneficiaries or states who have disputes with the Secretary that involve money under the Medicaid Act will be litigating their cases in Washington. And we do not think that that is an intent that is supported by any of the legislative history.

QUESTION: Does Massachusetts has an office here in Washington?

MR. BARNICO: I believe that the Governor has a small office.

QUESTION: I think that most states do. I do not think that that would be so horrible.

MR. BARNICO: I think that the point is much more important as to the beneficiaries, Your Honor. And it is made by an amicus brief in that respect.

QUESTION: If it is under $10,000, they can bring the suit in District Court.

MR. BARNICO: The little Tucker Act applies. But many of the class actions that are brought by legal service organizations on behalf of those beneficiaries, some of which happen to involve the states as Defendants, would ordinarily involve more money than that.

In conclusion, Congress waived sovereign immunity for these cases, and there is no question about that. But Congress did not intend to centralize cases such, and courts created in 1982 have no expertise in this particular area. Congress intended that we could bring these cases in our local District Courts, and this Court should so hold.

Thank you very much.

CHIEF JUSTICE REHNQUIST: Thank you, Mr. Barnico.

Mr. Englert, you have three minutes remaining.

ORAL ARGUMENT BY ROY T. ENGLERT, JR. ESQ. ON BEHALF OF FEDERAL PETITIONERS/RESPONDENTS - REBUTTAL

MR. ENGLERT: Thank you, Mr. Chief Justice.

If a District Court said to the Plaintiff, drop your monetary claims so that you can stay here, with the intent that the Plaintiff would recover money at the end of the day, we think that is a vast conscious evasion of the jurisdictional scheme that Congress has created. We also think that it is precluded by Section 704. Because the person who wants that money can pursue his action for that money in the Claims Court.

The Claims Court and Federal Circuit are not and never have been specialized subject matter courts. The Tucker Act is not subject matter specific. There are limitations on what actions can brought under the Tucker Act, but they depend on the form of the relief sought and whether there exists a money mandating statute, not on general subject matter. The Tucker Act like the APA cuts across all subject matters.

Finally, I do not think that it is relevant to any issue before this Court whether the states have to come to Washington to litigate or not. But for what it is worth. 28 U.S.C. 44 allows the Federal Circuit to sit anywhere that any Court of Appeals can sit. 28 U.S.C. 173 allows the Claims Court to sit anywhere in the nation.

Thank you.

CHIEF JUSTICE REHNQUIST: Thank you, Mr. Englert.

The case is submitted.

(Whereupon, at 12:05 p.m., the case in the above-entitled matter was submitted.)