FL Assoc. of Rehab. Fac. v. State of FL Dept. of H ( 2000 )

[PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
________________________
FILED
No. 99-12507 U.S. COURT OF APPEALS
________________________ ELEVENTH CIRCUIT
09/01/00
D. C. Docket No. 89-00984-CV-KMM THOMAS K. KAHN
CLERK
FLORIDA ASSOCIATION OF REHABILITATION
FACILITIES, INC., UNITED CEREBRAL PALSY
ASSOCIATION OF MIAMI, INC., et al.,
Plaintiffs-Appellees,
versus
STATE OF FLORIDA DEPARTMENT OF HEALTH
AND REHABILITATIVE SERVICES,
GREGORY COLER, et al.,
Defendants-Appellants.
________________________
Appeal from the United States District Court
for the Southern District of Florida
_________________________
(September 1, 2000)
Before TJOFLAT, MARCUS, and CUDAHY,* Circuit Judges.
*
Honorable Richard D. Cudahy, U.S. Circuit Judge for the Seventh Circuit, sitting by
designation.
MARCUS, Circuit Judge:
This appeal involves difficult questions of mootness as well as the Eleventh
Amendment. Plaintiffs, providers of Medicaid services to developmentally-
disabled persons, sued various State of Florida officials seeking injunctive and
declaratory relief for alleged violations of the Boren Amendment, which
established federal standards governing state plans for reimbursing Medicaid
providers. In September 1991 the district court entered a preliminary injunction
essentially directing the Defendants to comply with the Boren Amendment. Not
until April 1999, however, did the district court enter its final order concluding that
Defendants had violated the Boren Amendment and directing Defendants to correct
their reimbursement plan prospectively as well as retrospectively to 1991. In the
meantime, Congress repealed the Boren Amendment in 1997, and Defendants
contend that before entry of judgment they had already enacted a new rate plan in
accordance with the requirements of the Boren Amendment’s successor.
Defendants argue on appeal that these developments render some or all of
Plaintiffs’ claims moot, and that in any event the relief ordered by the district court
is barred by the Eleventh Amendment to the extent it effectively requires the State
to pay money to redress pre-judgment violations. Because the Eleventh
Amendment bars retrospective relief affecting the state treasury in this case, we
2
vacate the district court’s judgment to that extent. We remand for determination of
whether Plaintiffs’ entitlement to prospective relief had become moot by the time
of judgment.
I.
Although the facts of this case are relatively straightforward, its procedural
history is anything but. Plaintiffs include the Florida Association of Rehabilitation
Facilities, Inc. and several operators of intermediate care facilities for the
developmentally disabled (“ICF/DDs”). Plaintiffs provide essential developmental
and health care services to low income persons in numerous ICF/DDs throughout
the State of Florida. A number of Plaintiffs operate and provide care in ICF/DDs
located on land owned by the State -- so-called “cluster” facilities. The care
provided in the cluster facilities is the same as that provided in the private
facilities.
Plaintiffs began this lawsuit in 1989, asserting that Defendants -- various
Florida officials responsible for formulating and administering the State’s ICF/DD
Medicaid Program -- violated federal law by failing to reimburse Plaintiffs for
reasonable costs incurred as a result of providing care and treatment to Florida’s
developmentally disabled citizens residing in ICF/DDs.1 The suit alleged as well
1
As originally pled, Plaintiffs’ suit also included claims against the Florida Department of
Health and Rehabilitative Services (“HRS”). In an order dated April 16, 1996, the district court
3
that Defendants violated federal law by reimbursing certain cluster providers
inadequately through fixed-rate contracts.2
Plaintiffs’ claims arose under the federal Medicaid program, established by
Title IX of the Social Security Act, 42 U.S.C. § 1396, et seq. This program is a
cooperative federal-state effort to furnish with public assistance people who are
unable to meet the cost of necessary medical services. Unlike major federal
entitlement programs such as Social Security, Supplemental Security Income, and
Medicare, Medicaid is not a federally-administered program with a uniform set of
statutorily-defined benefits; rather, it is a state-administered program where the
costs of services are allocated between the federal government and the states. No
state is obligated to participate in the Medicaid program. If a state opts to
participate in the Medicaid program, however, it must do so in a manner that
complies with federal statutory and regulatory requirements. See 42 U.S.C. §
1396n. Within the general framework of federal law, states that choose to
dismissed on Eleventh Amendment grounds all claims against HRS. Defendants observe that the
final judgment nevertheless extends to HRS’s successor, the State of Florida Agency for Health
Care Administration. It is not clear that the district court intended that to be so. To avoid any
confusion, we emphasize the Agency for Health Care Administration -- like its predecessor -- is
plainly entitled to Eleventh Amendment immunity. See infra at 23. Plaintiffs’ original
complaint additionally included claims against state officials in their individual capacities; those
claims were dismissed pursuant to the parties’ stipulation in the district court’s April 16, 1996
order.
2
Plaintiffs’ suit also included an Equal Protection claim which the district court never
reached.
4
participate in the Medicaid program (thus qualifying for federal financial aid
covering the medical assistance costs of eligible individuals) are granted broad
latitude in defining the scope of covered services as well as many other key
characteristics of their programs. Florida, like all other states, participates in the
Medicaid program.
At the time this suit was filed in 1989, and until October 1, 1997, the Boren
Amendment applied to the reimbursement claims at issue. The Boren Amendment
to the Medicaid Act, formerly codified at 42 U.S.C. § 1396(a)(13)(A), authorized a
“state plan to provide . . . for payment . . . of the hospital services . . . through the
use of rates . . . which the State finds, and makes assurances satisfactory to the
Secretary, are reasonable and adequate . . ..” Thus, the Amendment required that
states pay ICF/DD providers under rates “reasonable and adequate to meet the
costs which must be incurred by efficiently and economically operated facilities in
order to provide care and services in conformity with applicable State and federal
laws, regulations and quality and safety standards.” Id. The purpose of the Boren
Amendment was “to give states greater flexibility in calculating reasonable costs
and in containing the continuing escalation of those costs.” Children’s Hospital
and Health Ctr. v. Belshe, 188 F.3d 1090, 1093-94 (9th Cir. 1999) (citation and
internal quotation marks omitted), cert. denied, 120 S. Ct. 2197 (2000).
5
As the Ninth Circuit has summarized:
[T]he Boren Amendment authorizes states to develop
their own Medicaid reimbursement standards and
methodologies for payment of hospital services, but
subjects those standards and methodologies to three
general federal requirements. First, states must take into
account hospitals serving a disproportionate share of
low-income patients. Second, states must make findings
that the rates are reasonable and adequate to meet the
necessary costs of an efficiently operated hospital. And
third, states must assure Medicaid patients reasonable
access to inpatient hospital care.
Id. (citations and internal quotation marks omitted). Although the Boren
Amendment was intended to grant states greater freedom “in establishing the
methodology for their reimbursement rates, the amendment was ‘not intended to
encourage arbitrary reductions in payment that would adversely affect the quality
of care.’” Tallahassee Mem’l Reg’l Med. Ctr. v. Cook, 109 F.3d 693, 704 (11th
Cir. 1997) (citing S. Rep. No. 139, 97th Cong., 1st Sess., at 478, reprinted in 1981
U.S.C.C.A.N. 396, 744).
On September 13 1991, the district court entered a preliminary injunction in
Plaintiffs’ favor, finding specifically that Defendants, in violation of the Boren
Amendment, were not adequately reimbursing Plaintiffs for the costs of providing
ICF/DD care. The district court found that Defendants’ use of fixed-rate contracts
for payment of cluster providers (i.e., private providers of ICF/DD care in state-
6
owned facilities) also violated the Medicaid Act. The district court enjoined
Defendants from reimbursing providers at inadequate rates, making that ruling
retroactive to September 4, 1991 (the date of the preliminary injunction hearing).
The court also enjoined Defendants from reimbursing cluster providers “in a
manner other than as provided in a Rate Plan” at the “full Medicaid rate.” The
court further ordered that Defendants file by October 4, 1991 a rate plan complying
with the substantive standards of the Boren Amendment. Defendants filed a rate
plan by the required date and did not appeal the preliminary injunction.
Defendants insist that Plaintiffs never filed any objection to the new rate
plan or the rates paid under it. As best we can tell from the record, Defendants are
correct. Although Plaintiffs filed multiple motions for contempt or sanctions, only
two of those motions implicated the preliminary injunction order, and none
squarely challenged either the lawfulness of the plan or the specific rates.4
4
In January 1993 Plaintiffs moved for contempt based on Defendants’ alleged failure to
reimburse certain costs of Plaintiff Ann Storck Center. The motion was based not only on the
preliminary injunction, but also on a separate court order entered in November 1991 as well as
on the court’s inherent powers. In opposition to the motion, Defendants asserted that they were
complying with the preliminary injunction and that the relevant costs were excluded because the
Ann Storck Center’s status had changed. The motion was withdrawn in March 1993. In July
1996 Plaintiffs moved for contempt alleging that certain planned enactments by the Florida
Legislature regarding the status of private providers would violate the preliminary injunction.
Defendants countered, among other things, that the Legislature’s action did not offend the
preliminary injunction because it simply changed the status of the providers. The district court
denied the motion without prejudice, permitting Plaintiffs to renew the motion or to raise the
issue at trial. Plaintiffs never renewed the motion, and the matter was not expressly addressed in
the district court’s findings and conclusions after trial.
7
Plaintiffs contend that Defendants were always on notice of their objections to the
plan and to the State’s post-injunction reimbursement practices.
While the case remained pending before the district court (due in part to
repeated continuances sought by Defendants), the Boren Amendment was repealed
effective October 1, 1997. See Balanced Budget Act of 1997, Pub. L. 105-33, §
4711(a)(1), 111 Stat. 251, 507-08 (1997). Congress amended the Medicaid Act to
“eliminate the Boren Amendment and establish instead a [public] notice and
comment provision.” Belshe, 188 F.3d at 1093 (citation and internal quotation
marks omitted). The new provision repeals the substantive limitations of, and the
methodology set forth in, the Boren Amendment, substituting a “public process”
for determining rates.
The successor statute requires that a state plan for medical assistance:
(13) provide –
(A) for a public process for determination of rates
of payment under the plan for hospital services . . . under
which --
(i) proposed rates, the methodologies under-
lying the establishment of such rates, and justifications
for the proposed are published,
(ii) providers, beneficiaries and their
representatives, and other concerned State residents are
given a reasonable opportunity for review and comment
on the proposed rates, methodologies, and justifications,
8
(iii) final rates, the methodologies
underlying the establishment of such rates, and
justifications for such final rates are published, and
(iv) in the case of hospitals, such rates take
into account . . . the situation of hospitals which serve a
disproportionate number of low-income patients with
special needs.
42 U.S.C. § 1396a(a)(13)(A). The legislation explicitly states that the repeal has
only prospective effect and that Boren Amendment rate standards continue to
apply to payment for items and services provided on or before October 1, 1997.
Pub. L. 105-33, § 4711(d) (“This section shall take effect on the date of the
enactment of this Act and the amendments made by subsections (a) and (c) shall
apply to payment for items and services furnished on or after October 1, 1997.”).
Notably, the legislation is silent as to what standards, if any, govern the period
between October 1, 1997 and a state’s adoption of a new post-Boren rate plan
under the successor statute’s notice-and-comment procedure.
Shortly after the Boren Amendment was repealed, in August 1997,
Defendants moved for summary judgment on Plaintiffs’ claims and also to vacate
the preliminary injunction. The district court granted the motion in part, and asked
the parties for advice as to which issues remained to be litigated. Both parties
agreed that three issues remained:
9
1. Whether the method of contractual payment of cluster
providers met any federal law requirement to pay them
according to a rate plan.
2. What were the minimum requirements for state plans
after repeal of the Boren Amendment.
3. Whether cluster providers were currently being paid
pursuant to a rate plan that complied with applicable law.
In May 1998, the district court conducted a three-day bench trial on these
issues. Defendants moved in limine to bar introduction of evidence of their prior
non-compliance with the Boren Amendment and to limit the scope of the trial to
their present compliance with federal law. The district court denied the motion but
granted Defendants a standing objection to the introduction of evidence of past
non-compliance with Boren standards.
On April 11, 1999, the district court entered final judgment in favor of
Plaintiffs, stating its findings of fact and conclusions of law in a separate order.
Florida Ass’n of Rehab. Facilities, Inc. v. State of Florida Agency for Health Care
Admin., 47 F. Supp. 2d 1352 (S.D. Fla. 1999). The court ruled “that Plaintiffs
have established that the ICF/DD Rate Plan fails to adequately compensate
Plaintiffs as it is not ‘reasonable and adequate to meet the costs . . . of efficiently
and economically operated facilities,’ in violation of the Boren Amendment and 42
10
U.S.C. § 1983.” Id. at 1360.5 The court noted that “[t]he Boren Amendment was
in effect in 1989 when this lawsuit was filed, and was in effect through October 1,
1997.” Id. at 1357. Significantly, the court also concluded that even though the
Boren Amendment had been repealed effective October 1, 1997, “[t]he standards
governing reimbursement set forth in the Boren Amendment continue to apply to
this case as the State of Florida has not yet promulgated any rules or regulations, or
5
Because Defendants do not challenge the district court’s factual findings, we do not
discuss them at length here. It is useful to highlight several of those findings, however, not only
to provide further background about the case, but also to underscore the seriousness of the
problem created by Defendants’ conduct. Among other things, the district court found that
because of inadequate reimbursement by Defendants, the majority of Plaintiffs and ICF/DDs in
Florida generally operate at a loss. The court concluded that the state’s “inadequate
reimbursement detrimentally affects ICF/DDs and the quality of services received by the
residents. ICF/DDs cannot fairly compete in the marketplace in terms of salaries. Thus,
ICF/DDs lose valued and skilled employees who are able to obtain higher wages and salaries
elsewhere. ICF/DD facilities, therefore, are forced to hire individuals who may be less
experienced, but who will work for less than prevailing wages. This has had a direct and
negative impact upon the level and quality of care provided to Medicaid eligible clients treated
by ICF/DDs.” Id. at 1354-55. The court also determined that “there is a shortage of new
ICF/DD beds and there have been no applications to develop new ICF/DD beds in the past five
years. There also is a waiting list of individuals requiring ICF/DD services.” Id. at 1355. The
court found that “Defendants have not analyzed the adequacy of ICF/DD rates to meet the
reasonable and necessary costs of an efficiently operated provider . . .[and] have failed to
adequately investigate or determine whether the Rate Plan complies with federal requirements.”
Id. It found that “Defendants have admitted that the terms of the Rate Plan have caused
providers to not be reimbursed for certain costs, even when the Defendants had no proof or no
reason to believe that the provider was operating inefficiently or had incurred costs for items that
were unreasonable or unnecessary.” Id. It also found with respect to the cluster providers that
“[p]rior to 1991, Defendants did not pay cluster facilities pursuant to the Rate Plan, but instead
paid these providers on the basis of non-negotiable, fixed rate contracts that condition
reimbursement on appropriations by the State Legislature. Pursuant to these contracts, Plaintiffs
are not reimbursed for a substantial portion of their actual costs.” Id.11
enacted any legislation, replacing the Boren Amendment and continues to
reimburse ICF/DD providers under the Rate Plan.” Id.The court determined that “[t]he Rate Plan in force in the State of Florida
setting forth the terms, conditions and methodology for reimbursement of the costs
incurred by ICF/DD providers is inadequate and is inherently flawed.” Id.According to the court:
[T]he Rate Plan formulated and implemented by Defendants fails to
substantively comply with the Boren Amendment. Defendants have
failed to convincingly rebut or refute evidence introduced by the
Plaintiffs establishing that while they operate efficiently and
economically, and indeed are required to establish this by submitting
cost reports to the State, they are not reimbursed in a manner that is
“reasonable and adequate” to allow them to provide care to Florida’s
developmentally disabled population in compliance with federal laws
and regulations. . . . Defendants have also violated the Medicaid Act
because of their failure and refusal to reimburse cluster providers
pursuant to the Rate Plan. The Medicaid Act provides that the
federally required State Plan must provide for payment of ICF/MR
medical services “through the use of rates” set forth in the Plan. . . .
Neither the regulations nor the Medicaid Act contains any limitation
pursuant to a Rate Plan based on ownership of ICF/DD facilities.
Thus, cluster facilities are entitled to sufficient reimbursement.
Defendants’ continued refusal to pay cluster facilities pursuant to the
Rate Plan, therefore, violates the Boren Amendment.
Id. at 1358-59.
The district court then discussed its preliminary injunction, observing that
“[o]n September 13, 1991, . . . this Court entered a Preliminary Injunction . . . in
favor of Plaintiffs on Counts I and III of their Complaint seeking, respectively,
12
adequate and reasonable reimbursement under the Rate Plan in compliance with
the Medicaid Act, and seeking payment pursuant to the same Rate Plan, on the
same basis as ICF/DDs, to cluster providers.” Id. at 1355. The court “adopt[ed]
the findings and conclusions . . . in the Preliminary Injunction,” id., and found that
the factors of irreparable harm, relative injury to the parties, and the public interest
all continued to favor injunctive relief. Id. at 1359-60.
As a remedy, the district court ordered the following specific changes to the
reimbursement plan retroactive to September 4, 1991 (the compliance date
established retroactively in the September 13, 1991 preliminary injunction):
a. The prospective inflation index shall be the same as the
historical (target) rate which Defendants themselves selected,
i.e., DRI times 1.786;
b. Three year averaging of cost reports shall be used to
calculate rate reductions based on decreases in costs;
c. The cap on rates for new facilities of six beds or less
shall be deleted;
d. Settlement of budgeted rates for new providers shall
use an average of the relevant rate periods;
e. For providers at small facilities, rates shall be set
based on an average (or collectively) for all six bed
ICF/DDs operated by that provider;
f. The Defendants shall develop a definable standard for
an efficiently operated provider;
13
g. Increased costs related to increased needs of a
client due to changed medical, behavioral or therapeutic
needs shall be a basis for an interim rate request;
h. Cost allocations between levels of care shall be
revised (except where such a revision would reduce
reimbursement already paid to a provider);
i. The Defendants shall rebase whenever actual costs
exceed actual expenditures for 50% or more of providers
in any rate period as shown on KM Schedules of cost
reports maintained by Defendants.
Id. at 1360-61, Conclusion ¶ 2. The district court also ordered that “Defendants
shall comply with its published Rate Plan including the immediate rebasing for the
1995 rate setting period where it failed to rebase.” Id. at 1361, Conclusion ¶ 3.
Moreover, ordered the Court, “Defendants are enjoined from violation of the Boren
Amendment from September 13, 1991 until the State adopts regulations,
procedures and standards governing the reimbursement of ICF/DD providers in
place of the standards set forth in the Boren Amendment. Defendants shall amend
the Rate Plan accordingly.” Id., Conclusion ¶ 4.
On April 23, 1999, Defendants moved for reconsideration of the final order.
Defendants pointed out that in 1998, they had amended the state Medicaid rate plan
and taken it through the notice-and-comment process now required by the Boren
Amendment’s successor. The amendments had been approved effective October 1,
1998. Defendants argued that this development mooted Plaintiffs’ claims.
14
Attached to the motion was an affidavit from a state official who described the
amendment process in detail and noted that at least one of the Plaintiffs (Sunrise
Community, Inc.) had unsuccessfully challenged the new plan in the administrative
proceeding.
On July 9, 1999, the district court denied Defendants’ motion, finding that
Defendants had established no good reason for their failure to present the court
evidence of these events prior to its final judgment, and that the new evidence
would not warrant a modification of the final judgment anyway. This appeal
followed.
II.
There is no dispute about the proper standard of review. We review a
district court’s conclusions of law de novo. See Doe v. Chiles, 136 F.3d 709, 713
(11th Cir. 1998). We review a district court’s grant of injunctive relief for abuse of
discretion. See id. (citing Sun America Corp. v. Sun Life Assur. Co. of Canada, 77
F.3d 1325, 1333 (11th Cir. 1996)). We also review the disposition of a motion for
reconsideration under an abuse of discretion standard. See Region 8 Forest Service
Timber Purchasers Council v. Alcock, 993 F.2d 800, 806 (11th Cir. 1993).
III.
15
This case is made complicated by its unusual procedural posture. The
district court after granting Plaintiffs a preliminary injunction in 1991did not
conduct a trial on the merits until 1998 and did not issue a final order of
declaratory and injunctive relief until April 1999. As a result of this long lapse, the
substantive federal law underlying Plaintiffs’ claims, the Boren Amendment, was
repealed prior to trial.6 Defendants make two primary arguments, both of which
are tied to the delay between preliminary injunction and final judgment. First,
Defendants contend that the Boren Amendment’s repeal had mooted Plaintiffs’
claims by the time of final judgment. Second, they assert that the relief awarded by
the district court violates the Eleventh Amendment to the extent that it requires
payment of money from the state treasury for injuries suffered by Plaintiffs prior to
the judgment. Defendants do not appeal the merits of the district court’s factual
6
Prior to the repeal of the Boren Amendment, it was well-settled that health care
providers under a state Medicaid program could bring actions pursuant to 42 U.S.C. § 1983 for
declaratory and injunctive relief to redress ongoing violations of the Amendment. See
Tallahassee Mem’l, 109 F.3d at 702. Because Defendants and the State of Florida participate in
the Medicaid Program, which authorizes the payment of federal funds to states to defray
expenses incurred in providing medical assistance to low income individuals, and receive
matching funds from the federal government, they are obligated to comply with the requirements
of the Medicaid Act and corresponding regulations. See id. at 698-700. Accordingly, in Wilder
v. Virginia Hospital Ass’n, 496 U.S. 498, 502, 110 S. Ct. 2510, 110 L. Ed. 2d 455 (1990), the
Supreme Court held that the Medicaid Act and the Boren Amendment created a substantive
right, enforceable by health care providers, to ensure reimbursement at rates that are actually
reasonable and adequate to meet the costs of efficiently and economically operated facilities
providing care to Medicaid patients. Providers were thus permitted to sue in federal court for
injunctive relief to ensure that they were reimbursed according to “reasonable and adequate”
rates.
16
findings or conclusions of law with respect to their violation of the Boren
Amendment and federal Medicaid law. We take up Defendants’ mootness and
Eleventh Amendment objections in that order.
A.
Article III of the Constitution limits the jurisdiction of the federal
courts to the consideration of “Cases” and “Controversies.” U.S. Const. art. III, §
2. “The doctrine of mootness is derived from this limitation because an action that
is moot cannot be characterized as an active case or controversy.” Adler v. Duval
County Sch. Bd., 112 F.3d 1475, 1477 (11th Cir. 1997) (citing Church of
Scientology Flag Serv. Org. v. City of Clearwater, 777 F.2d 598, 604 (11th Cir.
1985)).
“[A] case is moot when the issues presented are no longer ‘live’ or the
parties lack a legally cognizable interest in the outcome.” Powell v. McCormack,
395 U.S. 486, 496, 89 S. Ct. 1944, 1951, 23 L. Ed. 2d 491 (1969). Put another
way, “[a] case is moot when it no longer presents a live controversy with respect to
which the court can give meaningful relief.” Ethredge v. Hail, 996 F.2d 1173,
1175 (11th Cir. 1993) (citing United States v. Certain Real & Personal Property,
943 F.2d 1292, 1296 (11th Cir. 1991)). When events subsequent to the
commencement of a lawsuit create a situation in which the court can no longer give
17
the plaintiff meaningful relief, the case is moot and must be dismissed. See Jews
for Jesus, Inc. v. Hillsborough County Aviation Auth., 162 F.3d 627, 629 (11th
Cir. 1998) (citing Pacific Ins. Co. v. General Dev. Corp., 28 F.3d 1093, 1096 (11th
Cir. 1994)). Any decision on the merits of a moot case or issue would be an
impermissible advisory opinion. See, e.g., Hall v. Beals, 396 U.S. 45, 48, 90 S. Ct.
200, 201-02, 24 L. Ed. 2d 214 (1969) (per curiam).
Plaintiffs filed suit primarily to secure reimbursement at the “reasonable and
adequate” rates required by the Boren Amendment. Defendants argue that the
repeal of the Boren Amendment now renders Plaintiffs’ suit moot. They argue that
Congress intended its repeal to prevent just this kind of suit against a state for
alleged inadequate reimbursement procedures. Defendants point to several
portions of legislative history to argue that Congress’s repeal of the Amendment
was intended to eliminate the substantive rate-setting requirements of the
Amendment (and the ample litigation attendant to those requirements) and replace
them with a strictly procedural “notice and comment” method for setting
reimbursement rates.7 Defendants therefore assert that the repeal of the
7
A review of the legislative history makes clear that Congress was indeed concerned with
the cost of health care provider suits against states and sought to curb the proliferation of such
suits. See, e.g., H.R. Rep. No. 149, 105th Cong., 1st Sess., at 1175-76.
18
Amendment effectively ended the substantive federal requirement on
reimbursement rate-setting by states -- thereby mooting Plaintiffs’ case.
We disagree as to the period prior to the repeal; indeed, Defendants do not
seriously press this point. Congress’s repeal of the Amendment empowered states
to replace their existing Boren-compliant rate plans with new rate plans not subject
to challenge based on the reasonableness and adequacy requirements of the Boren
Amendment. Congress was explicit on how this change was to occur; states were
to promulgate a rate plan and subject it to the “notice and comment” administrative
procedure. Such a new plan, however, would cover only those services and items
provided after October 1, 1997. Pub. L. 105-33, § 4711(d). Congress made clear
that the Boren Amendment still applied to payment for items and services
furnished before October 1, 1997. See id. Consequently, Plaintiffs’ request for
relief regarding services rendered prior to October 1, 1997 had not become moot
by the time the district court entered judgment in April 1999.
To the extent the district court ordered Defendants’ compliance with Boren
standards beyond the date of final judgment, the issue is less clear on this record.
The dispositive question is whether Florida has indeed passed a valid rate plan in
accordance with the requirements of the Boren Amendment’s successor. After the
district court entered final judgment, Defendants filed a motion for reconsideration,
19
asserting that as of October 1, 1998 (after trial, but prior to entry of judgment) the
State of Florida passed a new rate plan under the required “notice and comment”
procedures. On this basis, Defendants argued that the lawsuit had become moot by
the time of entry of judgment, because it would be impossible to grant prospective
relief regarding the State’s administration of the Boren-era rate plan when that plan
had been superseded and the Boren Amendment’s substantive requirements
rendered inapplicable. The district court denied Defendants’ motion, primarily on
the ground that Defendants had produced no good reason for their failure to advise
the Court of the new plan during the over six months that elapsed between the
effective date of the new plan and the entry of final judgment.8
Normally we review a ruling on a motion for reconsideration under a
deferential abuse of discretion standard. See Alcock, 993 F.2d at 806. A court
abuses its discretion, however, when it misapplies the law. See, e.g., SunAmerica,
77 F.3d at 1333 (court necessarily abuses its discretion if it “has applied an
incorrect legal standard”). When a motion for reconsideration raises a fundamental
jurisdictional issue such as mootness, the court is obliged to consider the merits of
the argument regardless of the motion’s relative untimeliness. See, e.g.,
8
Although the district court did say that it was “not convinced that the new evidence
offered by Defendants would warrant a modification of the Final Judgment,” there is no
indication that the court considered the merits of Defendants’ mootness argument or examined
what that argument meant for its jurisdiction to issue a final judgment.
20
Tallahassee Mem’l Reg’l Med. Ctr. v. Bowen, 815 F.2d 1435, 1445 n. 16 (11th
Cir. 1987) (“[q]uestions of jurisdiction” such as mootness “can appropriately be
raised at any time in the litigation”); Carr v. Saucier, 582 F.2d 14, 15-16 (5th Cir.
1978) (per curiam) (“If a controversy becomes moot at any time during the trial or
appellate process, the court involved must dismiss the suit for want of jurisdiction.
. . . Mootness arguments . . . can be pressed by any party at any time[.]”); see also
Barilla v. Ervin, 886 F.2d 1514, 1519 (9th Cir. 1989) (because a court “may not
decide the merits of a moot case, regardless of whether it was mooted before or
after the entry of judgment,” a court “cannot be divested of its obligation to
consider the issue of mootness on the ground that the timing or manner in which a
party has raised the issue is somehow procedurally improper”).
If indeed the State had properly enacted a new post-Boren rate plan by the
time of entry of final judgment, then a final order providing prospective relief with
respect to the State’s Boren-era plan would serve no purpose and that portion of
the case -- if not the entire case -- would be moot.9 Accordingly, while we share
the Plaintiffs’ and the district court’s concern with Defendants’ failure to raise this
issue promptly (a situation Defendants concede was “regrettable”), the district
9
In light of our ruling regarding Plaintiffs’ claims for retroactive relief, see infra Part
III.B, the entire case would have to be dismissed if the court lacked subject matter jurisdiction to
award prospective relief at the time of judgment.
21
court still was required to address Defendants’ mootness argument, and if that
argument had merit, to dismiss any claim for prospective relief on that ground.
That said, we are unwilling on this record to determine whether the new plan
complies with the requirements of the post-Boren statute. Defendants contend that
in conjunction with their motion for reconsideration they submitted affidavits
confirming that the State has taken the new plan through the notice-and-comment
process and that the plan fully complies with Boren’s successor statute.
Defendants also assert that Plaintiffs did not submit any affidavits of their own to
dispute these claims. Given that Plaintiffs were responding to a motion for
reconsideration, however, we attach little significance to their failure to submit
counter-affidavits. Moreover, Plaintiffs suggest (although they do not state
clearly) that the new plan may not be in compliance with the procedural
requirements of the post-Boren statute. Appellees’ Brief at 24. In these
circumstances, we think, the wisest course is to remand the case to the district court
so that it may determine in the first instance whether the new plan complied with
the requirements of Boren’s successor statute, and if so whether the lawsuit had
become moot prior to the entry of judgment in April 1999. We therefore remand to
the district court on this threshold jurisdictional issue.10
10
Even assuming Plaintiffs are correct that Florida has not validly adopted a post-Boren
rate plan, there remains a question as to what standards if any govern the post-Boren era in the
22
B.
We turn next to whether the Eleventh Amendment precluded the district
court from ordering, in essence, that the Defendants rectify improper past
payments to providers such as Plaintiffs. The Eleventh Amendment to the United
States Constitution provides: “The Judicial Power of the United States shall not be
construed to extend to any suit in law or equity, commenced or prosecuted against
one of the United States by Citizens of another State, or by Citizens or Subjects of
absence of such a plan. Defendants, for their part, assert that no federal standards govern the
interim period and thus this lawsuit is moot (at least with respect to the post October 1, 1997
period) regardless of whether a valid post-Boren plan was adopted. The district court appears to
have assumed that Boren Amendment standards continue to apply even after the Amendment’s
repeal unless and until the state adopts a valid post-Boren plan to replace its Boren-era plan. See
47 F. Supp. 2d at 1354 (“until such time as the State amends its Rate Plan in accordance with
federal requirements, the Rate Plan in effect on the effective date of repeal of the Boren
Amendment continues to apply”); 1361 (enjoining Defendants from “violation of the Boren
Amendment . . . until the State adopts regulations, procedures and standards governing the
reimbursement of ICF/DD providers in place of the standards set forth in the Boren
Amendment”). But the district court did not offer any detailed explanation for its assumption,
and we note, without deciding the issue, that courts have suggested different views on the matter.
Compare Belshe, 188 F.3d at 1095 (rejecting argument that repeal of Boren Amendment had
rendered moot a dispute about application of Boren requirements to Boren-era plan yet to be
replaced after the effective date of the repeal) with Hall v. Sullivan, Second Cir., Nos. 97-
7632(L) & 97-7642 (XAP) (Oct. 15, 1997), 129 F.3d 113 (table case) (dismissing appeal based
on parties’ agreement that their dispute about application of Boren requirements was mooted as
of the effective date of the Boren Amendment’s repeal) and HCMF Corp. v. Gilmore, 26 F.
Supp. 2d 873, 878-80 (W.D. Va. 1998), on reh’g, 85 F. Supp. 2d 643 (1999) (ruling that the
Boren Amendment’s repeal effectively precluded any claim based on Boren for services
rendered after the repeal date, even though the state had not yet passed a new plan of its own).
Given our ruling that retrospective relief here is barred by the Eleventh Amendment, see infra
Part III.B, resolving what standard applies to the post-Boren era would be unnecessary if the
district court on remand found that the Defendants had adopted a valid post-Boren plan prior to
the entry of judgment. We therefore need not and do not address now what standards govern in
the post-Boren era in the absence of a validly adopted “notice and comment” plan.
23
any Foreign State.” U.S. Const. amend. XI. The Amendment not only bars suits
against a state by citizens of another state, but also bars suits against a state
initiated by that state’s own citizens. See Edelman v. Jordan, 415 U.S. 651, 663,
94 S. Ct. 1347, 1355, 39 L. Ed. 2d 662 (1974).
Under the doctrine of Ex parte Young, 209 U.S. 123, 28 S. Ct. 441, 52 L.
Ed. 714 (1908), there is a long and well-recognized exception to this rule for suits
against state officers seeking prospective equitable relief to end continuing
violations of federal law. See Summit Med. Assocs., P.C. v. Pryor, 180 F.3d 1326,
1336-37 (11th Cir. 1999) (citing Idaho v. Coeur d’Alene Tribe, 521 U.S. 261, 269,
117 S. Ct. 2028, 2034, 138 L. Ed. 2d 438 (1997) (“We do not . . . question the
continuing validity of the Ex parte Young doctrine.”)), cert. denied, 120 S. Ct.
1287, 146 L. Ed. 2d 233 (2000). The availability of this doctrine turns, in the first
place, on whether the plaintiff seeks retrospective or prospective relief.
Ex parte Young has been applied in cases where a violation of federal law by
a state official is ongoing as opposed to cases in which federal law has been
violated at one time or over a period of time in the past. Thus, Ex parte Young
applies to cases in which the relief against the state official directly ends the
violation of federal law, as opposed to cases in which that relief is intended
indirectly to encourage compliance with federal law through deterrence or simply
24
to compensate the victim. “‘Remedies designed to end a continuing violation of
federal law are necessary to vindicate the federal interest in assuring the supremacy
of that law. But compensatory or deterrence interests are insufficient to overcome
the dictates of the Eleventh Amendment.’” Summit Med. Assocs., 180 F.3d at
1337 (quoting Papasan v. Allain, 478 U.S. 265, 277-78, 106 S. Ct. 2932, 2940, 92
L. Ed.2 d 209 (1986)). Therefore, the Eleventh Amendment does not generally
prohibit suits against state officials in federal court seeking only prospective
injunctive or declaratory relief, but bars suits seeking retrospective relief such as
restitution or damages. See Green v. Mansour, 474 U.S. 64, 68, 106 S. Ct. 423,
426, 88 L. Ed. 2d 371 (1985); Sandoval v. Hagan, 197 F.3d 484, 492 (11th Cir.
1999) (“[Individual suits that seek prospective relief for ongoing violations of
federal law . . . may be levied against state officials.”). If the prospective relief
sought is “measured in terms of a monetary loss resulting from a past breach of a
legal duty,” it is the functional equivalent of money damages and Ex parte Young
does not apply. Edelman, 415 U.S. at 669, 94 S. Ct. at 1347.
Plaintiffs’ suit originally fell within the Ex parte Young exception. Their
suit was directed against state officials in their official capacities and asked for
prospective injunctive relief to halt continuing violations of federal law. Plaintiffs
are not barred by the Eleventh Amendment from seeking enforcement, in a federal
25
court, of a federal statute which state agents have violated. Defendants, in fact, do
not argue that Plaintiffs’ suit was barred from the outset. Instead, they make a
more focused argument that much of the relief ordered by the district court is
retrospective rather than prospective. They assert that, to the extent the district
court directed them to make changes to the State’s Boren-era reimbursement plan
retroactive to September 4, 1991, it essentially required them to redress inequities
in their past reimbursement payments from 1991 to the date of final judgment
(April 1999), and potentially to reimburse Plaintiffs for those past deficiencies.
We reluctantly agree.
To begin with, we note that the judgment clearly does contemplate the
payment of state funds to redress prior inadequate reimbursements. Defendants
observe that the final judgment does not expressly require them to pay any money
or arrears in reimbursements. Technically speaking they are right. It is obvious,
however, that the entire purpose and effect of the judgment is to prescribe a set of
standards upon which Defendants are to provide reimbursement for inadequate past
and future payments, and that failure to provide such reimbursement would subject
them to sanctions by the federal district court, which expressly “retain[ed]
jurisdiction to enforce [its] Order.” 47 F. Supp. 2d at 1361. Plaintiffs view the
judgment in those terms. See Appellee’s Brief at 39 (arguing that “the Eleventh
26
Amendment does not preclude the payment of money which Defendants have
withheld improperly”). If the order were read as nothing more than an idle
declaration of Defendants’ past obligations, without any intent or authority on the
part of the district court to enforce its ruling, then the order would be a nullity and
plainly invalid on that basis alone. We decline to adopt such an unrealistic reading
of the district court’s order.
Because some of the relief ordered in the final judgment requires the State in
effect to rectify improper past payments, we see no way to distinguish the holding
of Edelman which prohibits exactly this sort of retroactive award. Edelman itself
illustrates the problem. There, a plaintiff sought declaratory and injunctive relief
against two former directors of the Illinois Department of Public Aid, alleging that
those state officials were administering the federal-state programs of Aid to the
Aged, Blind, or Disabled (AABD) in a manner inconsistent with various federal
regulations and the Fourteenth Amendment to the Constitution. The plaintiff’s
complaint charged that the defendants were improperly authorizing grants to
commence only with the month in which an application was approved and were not
including prior eligibility months for which an applicant was entitled to aid under
federal law. The complaint also alleged that the defendants were not processing
27
the applications within the applicable time requirements of the federal regulations.
The district court granted a permanent injunction requiring compliance with
the federal time limits for processing and paying AABD applicants. It also ordered
the defendants to pay retroactively benefits which would have been awarded if
defendants had complied with federal law. The Seventh Circuit reversed, holding
that this retroactive relief was barred by the Eleventh Amendment, and the
Supreme Court agreed. In this now-famous ruling, the Court articulated the
retrospective/prospective dichotomy for Eleventh Amendment caselaw:
prospective injunctive or declaratory relief can be awarded but retrospective relief
cannot. The Supreme Court explained:
[T]hat portion of the District Court’s decree which
petitioner challenges on Eleventh Amendment grounds
goes much further than any of the cases cited. It requires
payment of state funds, not as a necessary consequence
of compliance in the future with a substantive
federal-question determination, but as a form of
compensation to those whose applications were
processed on the slower time schedule at a time when
petitioner was under no court-imposed obligation to
conform to a different standard. While the Court of
Appeals described this retroactive award of monetary
relief as a form of ‘equitable restitution,’ it is in practical
effect indistinguishable in many aspects from an award of
damages against the State. It will to a virtual certainty be
paid from state funds, and not from the pockets of the
individual state officials who were the defendants in the
28
action. It is measured in terms of a monetary loss
resulting from a past breach of a legal duty on the part of
the defendant state officials.
415 U.S. at 668, 94 S. Ct. at 1358.
The district court judgment in this case effectively requires Defendants to
redress inadequate past reimbursement payments by recalibrating the rates and
paying Plaintiffs the difference out of the state treasury. But the Eleventh
Amendment bars the award of retroactive relief for violations of federal law. The
fact that harm is ongoing in the sense that Plaintiffs are continuing to suffer the
effects of Defendants’ prior failure to reimburse them adequately does not make
the relief any less retrospective. Quite simply, the Eleventh Amendment’s
immunity is triggered when an declaration or injunction effectively calls for the
payment of state funds as a form of compensation for past breaches of legal duties
by state officials. See id.; Pennhurst State School & Hosp. v. Halderman, 465 U.S.
89, 102-03, 104 S. Ct. 900, 909, 79 L. Ed. 2d 67 (1984). Such is the case here.
The district court tried to avoid this limitation by describing the relief
decreed in its final order as simply enforcing the 1991 preliminary injunction; thus,
reasoned the court, the relief was not retrospective and did not run afoul of the
Eleventh Amendment.11 We are unpersuaded. To begin with, the district court’s
11
The district court explained its relief this way:
29
reasoning cannot be squared with the command of the Eleventh Amendment as it
has been interpreted in Edelman as well as other decisions of the Supreme Court
and this Court. Moreover, even assuming that the district court’s reasoning could
be squared with binding precedent, the 1991 preliminary injunction was not
enforceable on its own terms and thus could not serve as the basis for the district
court’s retroactive relief. Finally, the district court’s judgment imposed
reimbursement obligations starkly different from and more detailed than those
contemplated by the preliminary injunction. For each of these independent
reasons, which we address in sequence below, the retrospective relief ordered by
the district court violates the Eleventh Amendment.
First, we are aware of no federal court that has upheld against Eleventh
Amendment scrutiny a final judgment requiring a state to pay money for illegal
[B]ecause compliance by the Defendants with the Preliminary
Injunction entered by this Court required expenditure of State
funds, such expenditures are ancillary to preliminary injunctive
relief entered. In this case, the Court has, since September 13,
1991, enjoined Defendants from reimbursement at inadequate rates
and reimbursing cluster providers “in a manner other than as
provided in a Rate Plan” at the “full Medicaid rate.” Defendants’
conduct, therefore, constitutes a continuing violation of the
Medicaid Act and Plaintiffs’ statutory rights. Further, the portion
of Plaintiffs’ claim relating to inadequate reimbursement occurring
since the Preliminary Injunction represents injuries arising after
Defendants were ordered to comply with the Medicaid Act and are
therefore prospective in nature.
47 F.Supp.2d at 1359-60.
30
conduct which pre-dates the judgment on the theory that the conduct violated an
earlier preliminary injunction and therefore the remedy was prospective. The
requirements imposed by the district court in its April 11, 1999 final judgment with
respect to reimbursement for services rendered prior to that date are undeniably
retrospective, and cannot be justified as merely “relating back” to the date of the
preliminary injunction. If Plaintiffs or the district court felt that Defendants had
violated the preliminary injunction, the remedy would have been to conduct a show
cause hearing and, if appropriate, to pursue civil contempt requiring Defendants to
pay rates or provide reimbursement in accordance with the injunction.12 But the
district court could not, at least in the peculiar circumstances of this case, avoid the
constraints of the Eleventh Amendment by relying on Defendants’ past violations
of the preliminary injunction to justify imposing plainly retroactive relief in its
final judgment. See Kostok v. Thomas, 105 F.3d 65, 69 (2d Cir. 1997) (“Any
claim for retroactive monetary relief, under any name, is barred . . .. When state
funds are awarded to compensate for past wrongs by state officials, the Eleventh
Amendment bars the payment as retrospective.” (citing Edelman and Green)).
12
As discussed above, supra note 4, Plaintiffs’ numerous contempt and sanctions motions
never squarely challenged the court-ordered rate plan or the rates paid under it. We offer no
opinion as to how the Eleventh Amendment might have impacted such a contempt proceeding.
31
Second, even if we assume that such a “relation back” theory could be used
to avoid the constraints of the Eleventh Amendment in some cases, here there are
more fundamental problems with the district court’s reasoning. The underlying
preliminary injunction lacked the precision and specificity necessary for it to be
enforceable prospectively from the date of its entry in 1991, let alone to serve as
the linchpin of the district court’s “relation back” theory eight years later. Fed. R.
Civ. P. 65(d) requires that a preliminary injunction be “specific in its terms” and
“describe in reasonable detail . . . the act or acts sought to be restrained.” The
district court’s preliminary injunction did not meet these criteria; on the contrary, it
accomplished little more than enjoining Defendants from violating the law. It
stated that Defendants were enjoined from “inadequately reimbursing providers of
care in the ICF/[DD] program,” and from “paying providers for services at
ICF/[DD] cluster facilities in a manner other than as provided for in a rate plan”
that “pay[s] to each provider of ICF/[DD] services at cluster facilities the full
Medicaid rate for that facility” and affords “each provider at cluster facilities all
rights and protections accompanying a rate plan governing ICF/[DD] facilities.”
The injunction order specifically declined to modify the State’s existing plan by
imposing new rates, but rather permitted Defendants themselves to file a new plan
“which complies with the substantive requirements of” the Medicaid Act.
32
This Circuit has held repeatedly that “obey the law” injunctions are
unenforceable. See, e.g., Burton v. City of Belle Glade, 178 F.3d 1175, 1200 (11th
Cir. 1999) (holding that injunction which prohibited municipality from
discriminating on the basis of race in its annexation decisions “would do no more
than instruct the City to ‘obey the law,’” and therefore was invalid); Payne v.
Travenol Labs., Inc., 565 F.2d 895, 899 (5th Cir. 1978) (invalidating injunction
that prohibited defendant from violating Title VII in its employment decisions).
The specificity requirement of Rule 65(d) is no mere technicality; “[the] command
of specificity is a reflection of the seriousness of the consequences which may flow
from a violation of an injunctive order.” Payne, 565 F.2d at 897. An injunction
must be framed so that those enjoined know exactly what conduct the court has
prohibited and what steps they must take to conform their conduct to the law. See
Meyer v. Brown & Root Constr. Co., 661 F.2d 369, 373 (5th Cir. 1981) (citing
International Longshoremen’s Assoc. v. Philadelphia Marine Trade Assoc., 389
U.S. 64, 76, 88 S. Ct. 201, 208, 19 L. Ed. 2d 236 (1967)). The preliminary
injunction in this case differs little from an “obey the law” order because it fails to
identify with adequate detail and precision how Defendants are to perform such
critical obligations as “[]adequately reimbursing providers of care” and
“compl[ying] with the substantive requirements of” the Medicaid Act.
33
Third, even if the preliminary injunction were valid and enforceable, the
injunctive relief awarded by the district court’s final order of April 11, 1999 was
not the same as that ordered by the preliminary injunction. On the contrary, the
final order imposed more expansive, and far more detailed, obligations on
Defendants for the post-September 1991 period than those imposed prospectively
in the preliminary injunction. The preliminary injunction, as noted above,
essentially enjoined the Defendants from violating the law and directed them to
submit a new rate plan that complied with the law. The final judgment went much
further, ordering ten specific alterations to the rate plan, including requirements
that Defendants use “[t]hree year averaging of cost reports . . . to calculate rate
reductions,” delete “[t]he cap on rates for new facilities with six beds or less,” set
rates for providers at small facilities based on “an average (or collectively) for all
six bed ICF/DDs operated by that provider,” and “rebase whenever actual costs
exceed actual expenditures for 50% or more of providers in any rate period as
shown on KM Schedules of cost reports maintained by Defendants.” Regardless of
whether a “relation back” theory comports with current Eleventh Amendment
doctrine, the final judgment plainly cannot relate back to an altogether different
and far less precise injunction.
34
In short, the relief ordered by the district court’s final injunction did not
become validly prospective simply because it was intended to redress past
violations of the earlier preliminary injunction.
For its conclusion the district court relied primarily on Rye Psychiatric
Hospital Center, Inc. v. Surles, 777 F. Supp. 1142 (S.D.N.Y. 1991). The court also
cited Libby v. Marshall, 653 F. Supp. 359 (D. Mass. 1986) and Bennett v. White,
865 F.2d 1395 (3d Cir. 1989). Plaintiffs likewise rely on these opinions, as well as
an unpublished ruling, Kansas Health Care Association, Inc. v. Kansas Department
of Social and Rehabilitation Services, No. 93-4045-RDR (D. Kan. May 31, 2000).
None of these decisions is binding precedent in this Circuit and none alters our
conclusion.
In Rye, the court issued a partial summary judgment ruling finding that the
defendants were providing inadequate reimbursement to the plaintiff Medicaid
provider. The plaintiff later sought a show cause order compelling the defendants
to use the proper formula to reimburse it for services rendered subsequent to the
summary judgment ruling as well as for the four years preceding that ruling. The
court began its analysis of the show cause request by highlighting the longstanding
principles we apply here. 777 F. Supp. at 1146 (“Simply put, the eleventh
amendment bars the award of retroactive relief for violations of federal law which
35
would require the payment of funds from a state treasury. . . . [T]he amendment’s
immunity is triggered when relief amounts to the payment of state funds as a form
of compensation for past breaches of legal duties by state officials.”). The court
held that granting relief for the four years preceding the summary judgment ruling
would be prohibited. Id. at 1147-51. Nevertheless, it concluded, without
elaboration, that “[t]he portion of plaintiff’s action relating to inadequate
reimbursement payments and improper rate methodologies occurring since [the
ruling] represents injuries arising after the court issued its decision. Relief for these
injuries is clearly prospective in nature.” Id. at 1147.
Rye does not help the Plaintiffs in this case. In Rye, the relief granted by the
district court for the post-summary judgment period arguably may be viewed as
prospective because the relief covered a period after a final ruling on the merits of
the plaintiff’s claim had been rendered. Moreover, the relief was granted pursuant
to a show cause application. Here, by contrast, the relief ordered by the district
court for the September 1991-April 1999 period cannot be viewed as enforcing a
prior order finally deciding the merits of Plaintiffs’ claim. At best, it enforced a
non-final determination of Plaintiffs’ claim made in connection with the preliminary
injunction order. Additionally, the district court was not considering a show cause
or contempt application, which would have been the proper vehicle for Plaintiffs to
36
seek relief for any alleged violation of the preliminary injunction. The factual
differences between Rye and this case are significant. In any event, to the extent
Rye may be read to endorse the reasoning applied by the district court in this case, it
is odds with Eleventh Amendment doctrine applied by the Supreme Court.13
In Libby, the district court found that the Eleventh Amendment did not
prohibit it from entering an injunction requiring state officials to spend state funds
to improve prison conditions in order to comply with a prior preliminary injunction
13
Kansas Health Care Association is unhelpful for many of the same reasons as Rye.
There, the district court issued a preliminary injunction in a Boren Amendment case enjoining
the operation of reimbursement rates in defendants’ Medicaid plan, directing the development of
new rates, and directing that an interim rate be paid pending the adoption of the new rates. The
injunction directed that funds equivalent to the difference between the interim rates and the old
rates be deposited into a court-supervised escrow account (a procedure to which defendants
agreed). Three months after entry of the preliminary injunction, the defendants adopted new
rates, which the plaintiffs did not challenge. Shortly before trial, Defendants moved to dismiss
on Eleventh Amendment grounds, arguing that any final judgment awarding the escrowed funds
to the plaintiffs would constitute retrospective relief. The district court (relying on the district
court’s decision in the case now before us) rejected that argument, explaining that the funds had
already been paid by the defendants and thus the final judgment would not impose any further
drain on the state treasury. The court also ruled that the payment of funds was simply ancillary
to a valid prospective injunction, and that the funds represented defendants’ “continuing
obligation” under the terms of the preliminary injunction.
Kansas Health Care Association is an unpublished opinion and carries little weight. Its
application of the retrospective/prospective distinction required by cases such as Edelman is
open to substantial debate. A court order requiring the payment of funds from the state treasury
to redress prior harm by state actors is barred by the Eleventh Amendment regardless of whether,
as an intermediate step, the funds were placed at the court’s direction into an escrow account for
the specific purpose of preserving them in order to compensate the plaintiffs. The factual
differences between that case and the case at bar also are significant. Among other things, here
Defendants did not pay any funds into escrow in compliance with the preliminary injunction, and
therefore any payment for prior inadequate reimbursements would undeniably come directly
from State coffers. Moreover, as noted above, in this case the preliminary injunction itself was
insufficient.
37
imposing a cap on the jail’s population. The court described the additional relief as
ancillary to a “substantive prospective injunction” and necessary to ensure future
compliance with the prior injunction. 653 F. Supp. at 363. Libby concerns a well-
recognized exception to the Eleventh Amendment for ancillary monetary relief.
That exception is inapposite, however, because the 1991 preliminary injunction,
besides being unenforceable, did not simply seek to regulate Defendants’ future
conduct without necessarily requiring the expenditure of funds. On the contrary,
this preliminary injunction plainly contemplated the expenditure of funds by the
State in accordance with required Boren Amendment rates. The relief awarded by
this final judgment with respect to events pre-dating the judgment cannot remotely
be described as an “ancillary” remedy necessary to ensure future compliance with
the terms of the preliminary injunction.
The Third Circuit’s opinion in Bennett v. White is inapposite as well.
Bennett involved a challenge to a state’s administration of a child support benefits
program under the auspices of the Social Security Act. The district court found,
among other things, that the defendants had improperly withheld certain payments
due to the plaintiffs. The district court declined, however, to order defendants to
make those payments. Plaintiffs challenged that ruling on appeal, asserting that
“Edelman v. Jordan should be construed as inapplicable to their suit because they
38
are not seeking the recovery of entitlements to government benefits funded by
general revenues, but only the recovery of their own property.” 865 F.2d at 1407.
The Third Circuit rejected the argument, stating that Edelman “prevents a federal
court from requiring state officers to disgorge from the state treasury even
unlawfully converted property, at least so long as the state pays for the
disgorgement.” Id. at 1408. The court suggested in dicta an exception to this
principle in instances where payments from the state treasury would be offset by
payments into the treasury by the federal government. Id.Such an exception has not been recognized by this Circuit, and cannot readily
be squared with the Supreme Court’s Eleventh Amendment jurisprudence. But
even assuming that it has any validity, it does not help the Plaintiffs here. Although
Plaintiffs speculate that the State of Florida may “financially benefit from
modifications ordered in the Final Judgment through additional federal funding,”
Plaintiffs’ Supplemental Brief at 2, there is no record evidence for this proposition,
and in any event it is of no legal consequence under the Supreme Court and this
Court’s binding precedent, which focus on whether the “judgment . . . would
implicate the state treasury,” not whether as a bottom line matter the state treasury
would be any worse off. Shands Teaching Hospital and Clinics Inc. v. Beech
Street Corp., 208 F.3d 1308, 1311 (11th Cir. 2000) (emphasis added). And
39
although in Bennett the Third Circuit declined to reverse the district court’s
decision to order back payments for improperly withheld funds in a limited set of
cases, the defendants had conceded that issue and thus no Eleventh Amendment
scrutiny was applied. Bennett does not justify the result here.
Simply put, in this case, as in Edelman, the relief would amount to direct
state reimbursement for past unlawful conduct. Although the retrospective relief
only extends back to the preliminary injunction, because the injunction was entered
almost eight years prior to final judgment, it would plainly amount to an award for
past due benefits in contravention of Edelman. The proper recourse for Plaintiffs
would have been to obtain a contempt order after Defendants failed to comply with
the district court’s preliminary injunction. The relief awarded in the final judgment
is essentially a surrogate for such a civil contempt award. Accordingly, we cannot
characterize Defendants’ reimbursement of past due payments as anything but
impermissibly retroactive. The district court lacked jurisdiction to order that
Defendants recalibrate the rates for the September 1991-April 1999 period and pay
Plaintiffs any arrears, because such relief plainly would require the payment of
money from the state treasury to redress past unlawful conduct toward the
Plaintiffs.14
14
During oral argument, we requested the parties to submit supplemental briefing on two
related issues: (1) whether the State of Florida, by accepting federal Medicaid funds, waived its
40
Eleventh Amendment immunity pursuant to the congressional power under the Spending Clause
to condition a state’s receipt of federal funds on a knowing waiver of state sovereign immunity;
and (2) the effect on this case of the Supreme Court’s decision in Wilder v. Virginia Hospital
Ass’n, 496 U.S. 498, 502, 110 S. Ct. 2510, 110 L. Ed. 2d 455 (1990). Defendants contend that
the State has not waived its Eleventh Amendment immunity by accepting Medicaid funds
because the Medicaid statute does not contain an express and unmistakable statement that
Congress intended to condition the receipt of funds on a waiver of immunity. Defendants also
contend that Wilder is inapposite because it only addressed the question of whether the Boren
Amendment is enforceable in an action by health care providers under section 1983. Plaintiffs
do not meaningfully contest either contention.
We agree with Defendants’ view on these issues. Under the Spending Clause waiver
theory, a state may waive its sovereign immunity by accepting federal funds. See Atascadero
State Hosp. v. Scanlon, 473 U.S. 234, 238 n.1, 105 S. Ct. 3142, 3145 n.1, 87 L. Ed. 2d 171(1985) (“a State may effectuate a waiver of its constitutional immunity by . . . waiving its
immunity to suit in the context of a particular federal program”); Sandoval, 197 F.3d at 492-93.
But a Spending Clause waiver requires an “unequivocal indication” by Congress that a State
accepting funds thereby waives its claim to immunity -- either “‘by the most express language or
by such overwhelming implication from the text as (will) leave no room for any other reasonable
construction.’” Edelman, 415 U.S. at 673, 94 S. Ct. at 1347 (quoting Murray v. Wilson
Distilling Co., 213 U.S. 151, 171, 29 S. Ct. 458, 464, 53 L. Ed. 742 (1909)).
The Medicaid Act contains no clear statement of intent to condition receipt of Medicaid
funds on a waiver of state sovereign immunity. Indeed, Congress has rejected the inclusion of
such a statement in the Act. In 1975 Congress amended the Act to require states to waive any
Eleventh Amendment immunity from suit for violations of the Act. See Pub. L. 94-182, § 111,
89 Stat. 1054; H.R. Rep. No. 94-1122, at 4. The provision generated tremendous opposition
from the states, however, and was repealed during the next session of Congress. Pub. L. 94-522,
90 Stat. 2540. Plaintiffs direct us to no language in the Act that represents an unequivocal
indication by Congress that states accepting federal Medicaid funds do so on condition that they
have knowingly waived their Eleventh Amendment protection.
The Supreme Court’s 1990 decision in Wilder does not affect that analysis. See
Yorktown Med. Lab., Inc. v. Perales, 948 F.2d 84, 88 (2d Cir. 1991) (noting that even after
Wilder the Boren Amendment “does not authorize retroactive suits for the recovery of
compensation due”). In Wilder, as noted above, the Supreme Court held that “the Boren
Amendment imposes a binding obligation on States participating in the Medicaid program to
adopt reasonable and adequate rates and that this obligation is enforceable under § 1983 by
health care providers.” 496 U.S. at 512, 110 S. Ct. at 2518-19. The Court did not address any
Eleventh Amendment issue, and certainly did not hold that by accepting funds under the
Medicaid Act a state waives its immunity. Moreover, the plaintiffs in Wilder were only seeking
prospective injunctive relief against state officials, see id. at 505, 110 S. Ct. at 2515, and thus no
Eleventh Amendment issue was presented (unlike here, where the district court awarded plainly
41
To the extent the district court order contemplates the payment of state funds
to remedy unlawful conduct prior to the date of the final judgment, the judgment is
prohibited by the Eleventh Amendment, and we are constrained to vacate it. This
includes all of the changes to the reimbursement plan required “retroactive to
September 4, 1991” by paragraph 2 of the district court’s Conclusion. See 47 F.
Supp. 2d at 1360. This also includes the requirement in paragraph 3 of the
Conclusion that Defendants conduct an “immediate rebasing for the 1995 rate
setting period where it failed to rebase,” and the portion of paragraph 4 which
enjoins the Defendants from violating the Boren Amendment from September 13,
1991 to the date of judgment. Id. at 1361.
We do not rule at this time on whether the prospective relief ordered by the
district court also is barred by the Eleventh Amendment. Although a federal court
is prohibited by the Eleventh Amendment from ordering a state to provide
retrospective relief, there are very limited circumstances where a court may enter an
order implicating the state treasury if such payments will be nothing more than
ancillary to compliance with a enforceable prospective injunction prohibiting future
retrospective relief). Wilder did not hold that a provider can sue under section 1983 in federal
court to obtain an order imposing retrospective relief that otherwise would be barred by the
Eleventh Amendment. Accordingly, Wilder does not dictate the outcome here.
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unlawful conduct by state officials. See, e.g., Milliken v. Bradley, 433 U.S. 267,
289, 97 S. Ct. 2749, 2762, 53 L. Ed. 2d 745 (1977); DeKalb County Sch. Dist. v.
Schrenko, 109 F.3d 680, 690-91 (11th Cir. 1997) (per curiam) (noting Eleventh
Amendment exception that “permits federal courts to enjoin state officials to
conform their conduct to the requirements of federal law, even if there is an
ancillary impact on the state treasury,” but finding that injunction at issue was
barred by the Eleventh Amendment because the obligation to make future payments
was not merely ancillary). How this exception survives more recent
pronouncements of Eleventh Amendment doctrine, and whether some portions of
the district court’s order may conceivably come within this exception, are
potentially difficult questions that need not be answered if on remand the district
court determines that any question of prospective relief had already become moot
by the time it entered final judgment. See supra at 22.15
15
Deferring resolution of this potentially unnecessary issue is consistent with the
longstanding rule that constitutional questions should not be resolved unless necessary to the
decision. See, e.g., I.A. Durbin, Inc. v. Jefferson Nat’l Bank, 793 F.2d 1541, 1553 (11th Cir.
1986). Moreover, mootness is a jurisdictional issue that must be resolved at the threshold. See
North Carolina v. Rice, 404 U.S. 244, 246, 92 S. Ct. 402, 404, 30 L. Ed. 2d 413 (1971) (“The
question of mootness is . . . one which a federal court must resolve before it assumes
jurisdiction.”). Although this Court has described the issue of Eleventh Amendment immunity
as itself one of subject matter jurisdiction, see Seaborn v. State of Florida, Department of
Corrections, 143 F.3d 1405, 1407 (11th Cir. 1998), cert. denied, 526 U.S. 1144, 119 S. Ct. 1038,
143 L. Ed. 2d 46 (1999), mootness -- like standing and ripeness -- raises an even more basic
question of jurisdiction that cannot be waived and goes to the very heart of the “case or
controversy” requirement of Article III. At least in this context, therefore, questions of mootness
ought to be resolved first. See Ainsworth Aristocrat Int’l Pty. Ltd. v. Tourism Co. of the
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We do not reach these results without misgivings. The issues raised in this
case by the Plaintiffs are extremely serious and vitally important to the large group
of developmentally-disabled persons who rely on the fair and proper administration
of the State’s Medicaid program. As we have noted, Defendants do not dispute the
district court’s findings of fact or conclusions of law, which detail at length
Defendants’ violations of the Boren Amendment and federal law. Moreover, we
acknowledge Plaintiffs’ concern that some of the long lapse between the
commencement of this case and the entry of judgment (as a result of which the basis
for the case -- the Boren Amendment -- was repealed) may be attributed to
Defendants’ repeated requests for continuances. Still, we must observe the
commands of the Eleventh Amendment and binding Supreme Court precedent,
which forbid precisely the kind of retrospective relief awarded by the district court.
In light of these circumstances, and given the time and resources that this
litigation has already entailed, we encourage the Defendants to seek a just
resolution of the Plaintiffs’ reimbursement claims. We also stress that, whatever the
relief (if any) available in federal court, our decision does not preclude the Plaintiffs
Commonwealth of Puerto Rico, 693 F. Supp. 1354, 1357 (D.P.R. 1988) (refusing to rule upon
Eleventh Amendment question after finding initially that case was moot), aff’d, 899 F.2d 852(1st Cir. 1989) (table case). Finally, declining to review this issue now permits the district court
on remand (if it concludes the case is not moot) to examine the scope of its prospective relief in
light of the Eleventh Amendment principles set forth in this opinion.
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from seeking relief that still may be available to them in the Florida state courts,
where the paramount jurisdictional concerns addressed in this opinion do not apply.
VACATED IN PART AND REMANDED IN PART.
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