Facts of the Case

To qualify for federal funding under the Medicaid Act, states must submit to the Secretary of Health and Human Services a plan that establishes a system by which healthcare providers will be reimbursed. Under the Boren Amendment, the reimbursement rates must be "reasonable and adequate" to meet the costs of efficiently operated facilities.

In 1986, a group of hospitals brought sought against the state of Virginia, arguing that its reimbursement rates (which had been approved in 1982 and again in 1986 by the Secretary) were not "reasonable and adequate." The suit was brought under 42 U.S.C. 1983, which allows individuals or organizations to bring suit for the "deprivation of any rights ... secured by [federal] laws." Virginia argued that the Boren Amendment had not been intended to create a an enforceable right, but simply to provide guidelines for the Secretary to follow, and that the hospitals therefore could not bring suit under 1983. The state also argued that Congress had intended to prevent private parties from bringing suit to enforce the provisions of the Amendment. The District Court disagreed, allowing the suit to proceed. The Fourth Circuit Court of Appeals affirmed.

Question

Did the Boren Amendment create a "right" under the definition of 42 U.S.C. 1983, therefore allowing private parties to bring suit challenging the state's finding that its Medicaid reimbursement rates are "reasonable and adequate"? If such a right was created, did Congress intend to prevent private suits to enforce the it?

Conclusion

Yes and no. In a 5-to-4 decision, the Court held that the Boren Amendment clearly established a right to reasonable and adequate reimbursement rates for the hospitals. Justice William J. Brennan, Jr., writing for the majority, stated that a right exists if "the provision in question was intend[ed] to benefit the ... plaintiff." The requirement of reasonable rates was clearly intended to benefit the hospitals, so it amounted to a right under 1983. Without explicit language within the Amendment preventing private suits under 1983, or an alternative remedial scheme that would make such suits unnecessary, it was not reasonable to conclude that Congress had intended to prevent private suits to enforce the right it had created.