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October 26, 1989

SUSAN S. SUTER, Director of the Illinois Department of Public Aid, et al., Defendants

Milton I. Shadur, United States District Judge.

The opinion of the court was delivered by: SHADUR


 Illinois Health Care Association and Heartland Manor Nursing Center, Inc. originally sued both Illinois Department of Public Aid Director Susan Suter ("Suter") and United States Secretary of Health and Human Services Louis Sullivan ("Secretary"), *fn1" asserting a number of violations of the Medicaid Act ("Act"), 42 U.S.C. §§ 1396-1396s. *fn2" Suter and Secretary were sued only in their official capacities.

 Suter and Secretary filed separate motions to dismiss under Rule 12(b) (6). This Court's August 4, 1989 memorandum opinion and order, 719 F. Supp. 1419, 1989 U.S. Dist. LEXIS 9771 (N.D.Ill.) (the "Opinion"), granted Secretary's motion, citing lack of subject matter jurisdiction. However, Opinion, slip op. at 19-20 deferred resolution of Suter's motion pending further briefing by the parties on the threshold question of whether the recent decision in Will v. Michigan Department of State Police, 491 U. S. 58, 105 L. Ed. 2d 45, 109 S. Ct. 2304 (1989) has rendered Section 1983 unavailable to plaintiffs here.

 It is now clear that Will does not bar plaintiffs' Section 1983 claim. But an even newer development now counsels the further deferral of a final ruling on Suter's motion. Before that new consideration is dealt with, this opinion addresses the topic left open by the Opinion. *fn3"

 Will and the Eleventh Amendment

 Will, 109 S. Ct. at 2312 says flatly:

Neither a State nor its officials acting in their official capacities are "persons" under § 1983.

 Without more, that unqualified assertion would render Suter -- wearing her official-capacity hat -- immune to plaintiffs' present action. But Will, id. at 2311 n. 10 restores what the quoted sentence seems to take away: It imports familiar principles of Eleventh Amendment jurisprudence to provide an exception to the apparently rigid and restrictive definition of "persons." Calling on the fiction (originally expounded in Ex parte Young, 209 U.S. 123, 52 L. Ed. 714, 28 S. Ct. 441 (1908)) that any state official who violates constitutional rights is perforce stripped of his or her official character and is thus no longer protected by the sovereign's immunity, Will's n. 10 (citations omitted) says:

Of course a State official in his or her official capacity, when sued for injunctive relief, would be a person under § 1983 because "official capacity actions for prospective relief are not treated as actions against the State." . . . This distinction is "commonplace in sovereign immunity doctrine," . . . and would not have been foreign to the 19th-century Congress that enacted § 1983. . . .

 Thus the operative question becomes whether plaintiffs' prayer for declaratory judgment falls into the category of actions seeking prospective relief, allowable under Section 1983 by Will's n. 10 and under the Eleventh Amendment by Ex parte Young, or into the disallowed category of actions seeking to tap the State treasury. By now it is familiar doctrine that the line between such allowed and disallowed actions is not one between night and day -- for the simple fact that the sought-after relief will have adverse fiscal consequences for the sovereign will not automatically bar the claim ( Edelman v. Jordan, 415 U.S. 651, 667-68, 39 L. Ed. 2d 662, 94 S. Ct. 1347 (1974)). Instead a court must look beneath the surface of plaintiffs' declaratory judgment claim to determine its true objectives in the terms made dispositive by Ex parte Young and its progeny.

 Edelman, id. at 668 has made it plain that no matter how it is labeled, any relief that amounts to a damage award will be barred by the Eleventh Amendment. Had plaintiffs here sought reimbursement for the claimed past underpayments stemming from Suter's allegedly illegal reimbursement scheme, this Court would have had to dismiss their claim. But plaintiffs have made it equally clear that such is not their intention, nor would such reimbursement automatically flow from their success on the merits. As plaintiffs would have it, a declaration by this Court to the effect that Suter is violating the specified provisions of the Act -- that the Illinois Medicaid nursing home payment system does not meet the federal standards -- would leave several options open to Suter. Plaintiffs' current Mem. 3-4 lists three such options in these terms:

1. Withdraw from the Medicaid program and design a health and welfare system for indigents that is not subject to federal regulation and which can be wholly ...

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