A federal judge has cleared the way for yet another group of lawsuits demanding the financially-troubled state of Illinois be forced to more promptly process and pay Medicaid claims, saying federal law allows Medicaid recipients and, by extension, health care agencies to sue the state for failing to abide federal law requiring the payment of Medicaid claims “with reasonable promptness.”

On June 7, U.S. District Judge Elaine E. Bucklo, ruling in Chicago, rejected the attempt by state officials to dismiss the consolidated legal actions brought in the fall of 2016 and in early 2017 by dozens of Medicaid patients, nursing homes and others reliant on Medicaid payments from the state.

The lawsuits all name Felicia Norwood, director of the Illinois Department of Healthcare and Family Services, as a defendant, in her official capacity. And all of the plaintiffs are represented by attorney Katie Z. Van Lake, of the firm of SB2 Inc., of Harrisburg, Pa.

According to the lawsuits, the individual plaintiffs have racked up large bills with nursing homes and other health providers, and the state has not properly processed and paid their claims for reimbursement, dating back to 2014, in some cases.

The lawsuits accuse the IDHFS of failing to establish a program to efficiently evaluate the patients’ eligibility for Medicaid and pay their claims, effectively placing the burden on the patients to establish eligibility for those payments, which the lawsuits say violates federal law.

In response, the IDHFS, represented by Illinois Attorney General Lisa Madigan’s office, argued the plaintiffs – and particularly, the nursing homes and other institutional plaintiffs – lacked the ability under the law and the Constitution to sue the state over this issue.

The state cited the 11th Amendment, which largely forbids federal courts from stepping into disputes between a state and its citizens.

Judge Bucklo, however, noted courts have upheld the authority of federal judges to order states to abide by federal law, such as the federal Medicaid law.

“While a federal court cannot order a state to pay retrospective damages, it can require a state officer to prospectively comply with federal law, even when that compliance might require the state to expend funds,” Bucklo wrote. “This is what plaintiffs seek here.”

Further, the judge said she believed the institutional plaintiffs could bring their claims, as the individual patient plaintiffs had effectively authorized the providers to act as their representatives in dealing with the state agency to promptly collect Medicaid payments they alleged were theirs by legal right.

While the state argued the law only allowed the patients to authorize the nursing homes and other institutional plaintiffs to act as their representatives in dealing directly with the state, the judge said this interpretation of the law was “restrictive.”

“There is no indication that the words ‘with the agency’ were included in the regulatory text to limit authorized activities to those internal to the applicable agency,” the judge wrote. “Litigation arguably involves ‘matters with the agency’ as well. A beneficiary’s legal claim that an agency has deprived her of Medicaid benefits, for instance, is a matter in dispute with that agency.”

Finally, she said, federal law has established a right to promptly-paid Medicaid benefits for those who qualify – and thus, under federal law and case law, plaintiffs have “a private right of action … to enforce federally-protected individual rights arising under federal statutes and the Constitution.”

“Nothing in the statutory text suggests that this commitment to reasonable promptness was just aspirational or conditional,” the judge said.  “An enforceable right … therefore exists.”

The decision arrived the same day another Chicago federal judge sidestepped – for now – ordering the state to prioritize the payment of billions of dollars’ worth of unpaid Medicaid claims. On June 7, U.S. District Judge Joan Lefkow essentially gave state officials and a host of health providers until June 20 to reach a deal under which the state would pay back a “substantial” portion of the Medicaid bills the providers say they are owed.

In that order, Judge Lefkow chided the state for fully funding its worker payroll and debt obligations, while skimping on otherwise required payments to health care services providers under Medicaid.

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Organizations in this Story

Illinois Department of Healthcare and Family Services
201 South Grand Avenue East
Springfield, IL - 62704

SB2
1426 North 3rd Street
Harrisburg, PA - 17102

State of Illinois
301 S 2nd Street
Springfield, IL - 62707

U.S. District Court for the Northern District of Illinois
219 S Dearborn St
Chicago, IL - 60604

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