The opinion of the court was delivered by: DAVID HERNDON, District Judge
Before the Court are Motions to Dismiss pursuant to Federal
Rules of Civil Procedure 12(b)(1) and 12(b)(6) submitted
separately by Defendant Centers for Medicaid and Medicare
Services ("CMS") (Doc. 47), Defendant Barry Maram (Doc. 73), and
Intervenor-Defendants Illinois Hospital Assoication, Children's
Memorial Hospital, Kenneth Hall Regional Hospital, Touchete
Regional Hospital Association, Mount Sinai Hospital, OSF
Healthcare System, and Valley West Community Hospital (Doc. 67).
Counts I through IV of Plaintiff's Second Amended Complaint arise
out of various provisions of 42 U.S.C. § 1396 and the Social Security Act. Counts V through VIII allege constitutional
violations. Count IX alleges a 42 U.S.C. § 1983 claim, and
Count X is a request for a declaratory judgment. (Doc. 39.) The
moving parties (collectively, "Defendants") argue both that the
Court lacks subject matter jurisdiction in this matter and, in
the alternative, that Plaintiff has failed to state a claim upon
which relief can be granted. Plaintiff responds in opposition.
(Docs. 64, 77, 81.) For the following reasons, the Court grants
Defendants' Motions. (Docs. 47, 67, 73.)
The Medicaid program is designed to provide medical care to
low-income individuals. 42 U.S.C. § 1395 et seq. The program is
jointly funded by the federal and state governments, and is
administered by the states pursuant to plans developed by
individual states. 42 U.S.C. § 1396a. In order to ensure
federal funding, states must submit their plans to the Secretary
of the Department of Health and Human Services (the "Secretary")
for approval. Id. Then, because the Secretary has delegated the
task of approving state plans to Defendant CMS, 42 C.F.R. §
430.14-15, CMS either approves or disapproves a state's plan.
Frequently, states opt to modify their plans via amendments
(State Plan Amendments, or "SPAs"). 42 U.S.C. § 1396(b); see
also Pharm. Research & Mfrs. of Am. v. Thompson, 313 F.3d 600,
602 (D.C. Cir. 2002). These amendments must also be submitted to
the Secretary, and automatically go into effect after ninety days
if not disapproved. 42 U.S.C. § 1316(a)(1). On February 3, 2004, the Illinois legislature passed
legislation amending its state Medicaid plan by imposing a tax on
health-care providers. (Doc. 39, p. 3.) Defendants state that
Illinois hospitals stand to gain $340 million in federal funding
as a result of this proposal, and, of this, Plaintiff stands to
gain over $540,000. (Doc. 68, pp. 4-6.) Plaintiff admits that it
will receive a net gain from the SPA.*fn1 (Doc. 64, p. 9.)
On February 6, 2004, the Illinois Department of Public Aid
("IDPA") submitted an SPA ("the SPA") to CMS for approval, as
required by federal law. 42 U.S.C. § 1396n(f); (Doc. 39, pp.
2-4). CMS approved the Illinois proposal on December 21, 2004.
(Doc. 39, p. 8.) The SPA took effect retroactively, running
from May 9, 2004 until June 30, 2005. (Doc. 8, Ex. C.)
In its Complaint, Plaintiff makes several statutory and
constitutional allegations. With regard to its statutory claims,
Plaintiff first alleges that the new tax violates 42 C.F.R. § 433.68(f)'s "hold-harmless"
provision.*fn2 Second, Plaintiff alleges that because the
percentage of Medicaid patients a hospital serves factors out of
the relevant SPA equations, the SPA violates provisions in
42 U.S.C. § 1396a and 42 U.S.C. § 1396b requiring payments to be
based on services provided to Medicaid patients. Third,
Plaintiff alleges that the SPA violates 42 U.S.C. 1396r, which
prohibits health-care providers from receiving payments in excess
of their Medicaid costs plus uninsured costs. Fourth, Plaintiff
alleges that because Medicaid usage factors out of the SPA's
equations governing payments, low-utilization Medicaid hospitals,
in some instances, receive more Medicaid funding than
high-utilization Medicaid hospitals, and therefore the SPA
violates provisions of 42 U.S.C. § 1396r,
42 U.S.C. § 1396a(13)(A), and sections 1902 and 1923 of the Social Security
Act. Plaintiff also alleges a substantive due process violation
on the ground that the SPA does not allocate Medicaid payments
based on Medicaid usage; a procedural due process violation on
the ground that Defendants failed to "follow and enforce the
requirements set forth in [several] federal regulations and
statutes" (Doc. 39, p. 14); and an equal protection claim based
on the fact that "the adjustment program was created because of, rather than in spite of, its allegedly
adverse impact on hospitals like Plaintiff." (Doc. 64, p. 14.)
Finally, Plaintiff alleges a "violation of [its]
Eleventh Amendment rights" (Doc. 39, p. 16) on the ground that Defendants'
"failure to follow the requirements mandated by federal
regulations and statutes" constitutes an Eleventh Amendment
violation. (Doc. 39, p. 16.)
Plaintiff filed its second-amended ten-count Complaint against
Defendants on March 10, 2005. Plaintiff seeks both declaratory
and injunctive relief. Counts I through IV assert Plaintiff's
statutory claims against both Defendants, while Counts V through
VIII assert Plaintiff's constitutional claims, also against both
Defendants. Count IX asserts a 42 U.S.C. § 1983 claim, and
Count X requests a declaratory judgment.
A. Lack of Subject Matter Jurisdiction
When ruling on a motion to dismiss for lack of subject matter
jurisdiction under Federal Rule of Civil Procedure 12(b)(6), a
court must accept the comp laint's well-pleaded factual
allegations as true and draw reasonable inferences from those
allegations in plaintiff's favor. Transit Exp., Inc. v.
Ettinger, 246 F.3d 1018, 1023 (7th Cir. 2001). The court must
then determine "whether relief is possible under any set of facts
that could be established consistent with the allegations."
Bartholet v. Reishauer A.G., 953 F.2d 1073, 1078 (7th Cir
1992) (citing Conley v. Gibson, 355 U.S. 41, 45-46 (1957)).
A motion to dismiss tests the sufficiency of the complaint, not its merits. Gibson v. City
of Chicago, 910 F.2d 1510, 1520 (7th Cir. 1990). A claim may
be dismissed only if it is beyond doubt that under no set of
facts would a plaintiff's allegations entitle her to relief.
Travel All over the World, Inc. v. Kingdom of Saudi Arabia,
73 F.3d 1423, 1429 (7th Cir. 1996). Nevertheless, plaintiff has the
obligation to establish jurisdiction by competent proof.
Commodity Trend Serv., Inc. v. Commodity Future Comm'n,
149 F.3d 679, 685 (7th Cir. 1998).
Article III of the U.S. Constitution extends a court's
jurisdiction only to "live" cases and controve rsies. U.S. CONST.
art. III, § 2; Murphy v. Hunt, 455 U.S. 478, 481 (1982);
Worldwide Street Preachers' Fellowship v. Peterson,
388 F.3d 555, 558 (7th Cir. 2004). "`A case is moot when the issues
presented are no longer `live' or the parties lack a legally
cognizable interest in the outcome.'" Stotts v. Com munity Unit
Sch. Dist. No. 1, 230 F.3d 989, 990 (7th Cir. 2000) (quoting
Powell v. McCormack, 395 U.S. 486, 496 (1969)). "This
requirement extends throughout the pendency of an action, not
just at the time a case is filed." ...