ok will call the next case of the morning number sixteen to a six nine one legacy community health services for says smith and the district courts to injunctions relating to and out of network services are improper or at least severely overbroad now there are a number of issues in this case including threshold issues of standing in a private right of action would like to address all of those today with the court's permission i'd like to begin with the out of network injunction the reason being i would like to make sure that it receives the emphasis it deserves as it's the element that really does the most damage well actually that's the easiest when providing the in works services and to the stent that the injury complained of is the cancellation of its contract with texas children's that cannot be redress by any injunction from this court the district court injunction has not and could not order texas children's to resume contracting with with legacy and furthermore the state's regulations in that area do not or the state's roles in that area do not create an absolute barrier to such a contract in fact seventeen other eight a few agencies or more i believe there are more since since the record was established in this case remain contracted with texas children subsection seven services but that was different than emergency services out of network services there are two were not ok but they would have standing as to that when they so for the out of network services on the theory that the district court ended up with which is this theory that it doesn't matter if these out of network services are subsection seven or not we just the state always has to to provide a reimbursement under that theory and you know the state wouldn't really  services but nevertheless weren't being your trust by the state you contend that they're well but that's not the way the district court either though the district court i would argue alternately render judgment on grounds that were much broader than what legacy was originally asking well i mean we can that doesn't mean they don't have standing here right so ultimately the way it ended up on the out of network claims i don't want to contest that there would be ok standing on that all right so that that's your basic argument this court which is operating on the background of several out of circuit decisions finding a right to full payment under the provision asserted here but no other court has found an unambiguously conferred right as g to a certain payment procedure or certain incentive structure and since the out of circuit cases were decided the supreme court plurality in armstrong wrote to express doubt as to whether providers are intended beneficiaries of the medicaid act at all and the circumstance that the court was looking at there was the state plan must provide payment sufficient to the list providers so that care and services are available that's exactly the kind of incentives question that what the scope of that cause of action is is something to be decided once they get into court under ninety three i don't quite understand how that how that how that deprives them of right well there's a cost of action generally there's some overlap for to be sure on that issue and the saving knowledge of the tension that exists with the out of circuit cases however based on going saga which is the most recent supreme court opinion on this i mean the one hundred eighty three cause of action is is being construed very narrow the by the supreme court under its current jurisprudence and since those out of circuit cases were decided the indication from armstrong is that we should construe it even more narrowly when we're looking at providers is that that is a fine distinction that's being made but in light of the recent case law and the narrowness of the the an ambiguous right that must be conferred that has to be the right that the plaintiff is actually asserting in the case and here they're not asserting their right to full payment of a p p s or a they've gotten for all the in services they are asserting a right to be paid in a certain way and for the state to maintain certain incentive structures same condition on all the m c o's at the same time i didn't just do it in houston or just with those folks to legacy this is all at the same time and it was done as part of the uniform managed care contract so the state's position and so it's a state record does at least does not show any other f a q a c that has been dropped from a contract so there's this was implemented state wide through the contracts assumed because of the state's position that that second subsection b b five does allow the state to do this and basically there are a number of conditions of managed care of better that are managed through those uniform contracts and then in turn the m c e o would need to go to all the f d a she's a contract with and change those contracts which it did and turn next to the in network claims there are no further questions on section eight hundred eighty three and texas is in network reimbursement procedure eliminating the need for wrap around payments does not violate section thirteen six a b b five for three reasons first the plain text of b b five and its companion provision thirteen any six b into a nine do not prohibit this approach and i apologize for all the the long numbers in these sites and second the c m s guidance letters that legacy relies on acknowledge that the act is silent on this point and they are not entitled to chevron deference and third legacy offers only policy reasons why texas a system violates the medicaid act but the statute does not address these concerns and in practice legacy has not presented any evidence of a systemic problem with a few h c contracting had paid not whether there had been a determination primary care the state said that it could only be a supplemental payment if there had been a better payment the first place so they had no obligation to insure payment and  simply made it to where it wasn't going to come let's after legacy had already been terminated that's right ok right so anyway so the texas law does not the one that was in effect does not  suffer from the defect that texas is trying to pay less than it's obliged to under federal law that's right and if the court is looking at spa sixteen zero two than the new one that i mean the state concedes that that language is not in there and if  wouldn't affect the state's overall payment system or obligations and that would be a much narrower injunction than what the district court issued which was to say that wraparound payments must always be given and the state can never impose a ceiling or the safety never asked for more than the floor and i need to take you back on stant well never mind it'll come up later sure and turning to the second the market rate and only one other court has looked at the squarely and that's the three lower counties court and they're the fourth circuit expressly helmet that that provision says nothing about a ceiling or precise can grow  and in fact in that case if you a c was alleging that a minimum state rate that was higher than that floor was in place and as a result united healthcare and m c e o wouldn't contract with it and the fourth circuit said well this may be true subsection nine does not address three lower counties concerned and that's the same here we have to look at the statutory text it provides a floor it says nothing about a ceiling or trying the second point i'll just briefly restate is that the c m s guidance letters that legacy is relying on these are letters to state medicaid directors they're not entitled to chevron deference and they furthermore acknowledge the textual silence  over existing practices this resulted in a very rapid expansion and texas children decided to terminate that contract both in both of them are private parties who are free to to make their own business decisions and that's what happened here  do you do you does the state know anything about legacy is a business entity i don't want to waste my time asking you questions not in particular i mean i think it was basically what legacy has done is they've they've you go from a medicaid provider that's operating in the usual managed care for him work to being an f u h c without their actually being an expansion of service different well the difference is that the the terms and reimbursement  deserts with of course restores you've got areas that don't have any clinics and so it's to incentivize clinics going into new areas providing service to people who didn't have it before in texas children is based on their affidavits they decided that right mr waters  highly regulated system like this and specifically mentioned in the statute and countless places in the medicaid act it has to operate within this medicaid system again creating that private understand what your injury if you were paid what you were supposed to be paid your injury has got to be that your your contract was terminated is that right the contract was terminated for the very reasons that were and viewed in that way wouldn't you have to how can that injury be redressed in other words even if you were to win on some sort of declaratory judgment or the injunction the court  granted without getting your contract back what good does that do legacy is this the contract is the media that action that happened brown was there any other do that was not the i mean you got paid what you were entitled to and there was no need for wraparound but there was no wrap around payment that you thought  and not to create a disincentive to result in the very harm that we're talking about the texas children's health plan terminated not and with due respect to opposing counsel to say that circumstances but those are and that with the reason i was terminated but that's just like what you're saying just now raises questions of fact we're not all knows we're dealing with a log redress federal formula right and that again gets to the point of the statutes is to integrate the two programs together and when and it's still taxed still fifty percent higher than according to the state create they have to contract with the medicaid program for all intents and you're saying is the legacy now frozen out of the market it cannot be an effort because this payment because of this allegedly illegal payment a i think legacy is certainly lost a lot of money as a result of the upset created by this charming nation well because you're out of network and you continue to service these people as we have to separate three issues you have statutory requirements that are specifically designed to ensure that this situation doesn't happen and that you have a terminations like this and they're home and the government the state points out of this is high rate high rate is the very reason why congress separated these two payments and i will say if the state wanted to do what they're doing there's a very clear d decisions that with managed care what the state is doing is hiring outside vendor to manage its program to negotiate with health care providers to get the best rates and to get  statute ought to say because all it says is the state shall provide for payment it doesn't say by whom for payment to the center of a supplemental payment equal to the amount if any providers including the health centers are negotiating over here at arm's length the only reason you have that if if the state was correct there would be no reason first cause not if it was basically the state to regulate the rates thought that was wary proprietor was being terminated by the state of louisiana and had one of the arguments in the case was that provider not exhausted through many within the medicare or medicaid program  said that they will be paid not only in this manner but in this way and if the states don't want to are you saying affirmatively that there is no internal administrative procedure through medicare through provision if you require i mean you are required to pay more for emergency services but why should you worry about being an m c e o at all if everything is required to be paid according your  i'd like to make two points one deals with the in network issue and then the other deals with the other network issue so with regard to in network i just want to be clear that we need to distinguish what the statute permits the state to do in terms of flexibility it's given which undeniably it allows states to set up a set of a system where m c o's would negotiate a rate that's less and the state provides a wrap around payment that's permitted to the states but nothing in the text prohibits what texas is doing and ultimately is this court has has held in louisiana case the state has flexibility to administer its medicaid program except to the extent it runs afoul of the medicaid act there's just nothing in this t federal agency has has kind of been back and forth with the state on this because don't forget this has been in place since two thousand and eleven even though the spa wasn't approved until two thousand and sixteen since two thousand and eleven texas has been submitting every year  approach that has been proposed by several states involves payments of a capitation payment that includes the state's best estimate of one hundred percent of the reasonable costs in return the m t o is required to make payments to f k f q eight cs well if a understands the reasons for this approach our view is that such reimbursement approaches are not consistent with the b b a and therefore violate the and i don't recall the trussing of in the brief well in your in your brief you said that it was only a policy guidance and that it was entitled to know more than our deference and it was inconsistent with the flexibility of the statute that's right all that is true the it's not a sundering even if that true can the state bind itself to something that's you know narrower than or less flexible than the statute and did the state do so that's an issue that was not briefed before the court so i'm i would need to potentially submit some briefing on you can on th net whatever you want i mean i mean to me to me the question at least the question i'm hearing is i thought mr mr waters gave a pretty impressive substantiation of the fact that that letter is incorporated don't believe it was briefed so i would need to see that to look at that language and if they did i would still argue that the nature of the understanding between c m s and h h s he had changed over proper avenue do you agree that there is no possible internal remedy for legacy through eighty eight i believe that is correct although it also was not briefed ok ok court's permission i'd like to very briefly just note that the out of network claim does provide a perfect starting point for discussing the issue of the section three thirty funs and the overlap of these two programs and basically under medicaid to the service provided still has to be a covered service and that was acknowledged by the other courts shahr new jersey primary care etc and here the subsection