Saint Anthony Hospital v. Eagleson

Dist. Ct. erred in dismissing for failure to state cause of action plaintiff-hospital’s section 1983 action, alleging that defendants-Illinois officials administering Medicaid program owed duty to plaintiff under section 1396u-2(f) of Medicaid Act to take action to require managed-care organizations (MCOs) to make timely payments (i.e., payment of 90 % of “clean claims” within 30 days and 99 % of said claims within 90 days) to plaintiff for medical care provided by plaintiff to Medicaid patients. Plaintiff asserted that MCOs had systemically delayed payments and paid less on claims than what was owed, and that MCOs had powerful incentive to delay and underpay medical providers such as plaintiff. Section 1396u-2(f) requires State to audit and inspect MCOs’ books and records and to try to ensure prompt payment of claims by MCOs to medical providers. As such, Ct of Appeals found that plaintiff could proceed on instant claim under section 1396u-2(f), where plaintiff’s right to prompt payment was enforceable under section 1983. Result is same even if certain proposed remedies, such as cancellation of contract with MCO, were not feasible. Dist. Ct. did not err, though, in finding that plaintiff could not seek similar relief under section 1396a(a)8 of Medicaid Act, because said section, unlike section 1396u-2(f), did not contain any right-creating language for medical providers.