Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca4-06-02108/USCOURTS-ca4-06-02108-0/pdf.json

Nature of Suit Code: 950
Nature of Suit: Contitutionality of State Statutes
Cause of Action: 

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PUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

PEE DEE HEALTH CARE, P.A., 

Plaintiff-Appellant,

v.

MARK SANFORD, in his official

capacity as the Governor of South

Carolina; ROBERT F. KERR, in his  No. 06-2108

official capacity as Director of the

South Carolina Department of

Health and Human Services; SOUTH

CAROLINA DEPARTMENT OF

HEALTH AND HUMAN SERVICES,

Defendants-Appellees. 

Appeal from the United States District Court

for the District of South Carolina, at Columbia.

Matthew J. Perry, Jr., Senior District Judge.

(3:05-cv-02917-MJP)

Argued: September 26, 2007

Decided: December 5, 2007

Before MICHAEL, GREGORY, and DUNCAN, Circuit Judges.

Affirmed by published opinion. Judge Duncan wrote the opinion, in

which Judge Michael and Judge Gregory joined. 

COUNSEL

ARGUED: Tony Ray Megna, Blythewood, South Carolina, for

Appellant. Kenneth Paul Woodington, DAVIDSON, MORRISON &

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LINDEMANN, P.A., Columbia, South Carolina, for Appellees. ON

BRIEF: Charles E. Carpenter, Jr., RICHARDSON, PLOWDEN,

CARPENTER & ROBINSON, P.A., Columbia, South Carolina, for

Appellant. William H. Davidson, II, DAVIDSON, MORRISON &

LINDEMANN, P.A., Columbia, South Carolina, for Appellees. 

OPINION

DUNCAN, Circuit Judge: 

This case raises two issues of importance to healthcare providers

who receive reimbursement from Medicaid. The first is whether

healthcare providers serving Medicaid recipients have a right to sue

state officials, under 42 U.S.C. § 1983, to enforce rights created under

the Medicaid reimbursement program at 42 U.S.C. § 1396a(bb). The

second is whether the appropriate venue for such an action can be

limited by contract. 

Pee Dee Health Care, P.A. ("Pee Dee") is a healthcare provider

qualified under the Medicaid program to serve low-income individuals in rural areas of South Carolina. As a Medicaid service provider,

Pee Dee is entitled to reimbursement payments from the state. The

Benefits Improvement and Protection Act of 2000 ("BIPA") provides

the methodology for computing those payments. To receive reimbursement payments, however, healthcare providers must first enter

into a contract with the South Carolina Department of Health and

Human Services ("SCDHHS"), the state agency responsible for the

administration of the Medicaid program in South Carolina. Each contract contains a forum-selection clause which dictates that all reimbursement claims must be pursued through state administrative and

judicial avenues. 

Pee Dee claims that the SCDHHS payment methodologies do not

comply with various provisions of BIPA. Pee Dee brought this action,

pursuant to 42 U.S.C. § 1983, in the United States District Court for

the District of South Carolina against the Governor of South Carolina,

the Director of SCDHHS and SCDHHS itself, to enforce the reimbursement provisions of BIPA. The district court dismissed the BIPA

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claim, finding venue inappropriate based on the forum-selection

clause in the provider contract between Pee Dee and SCDHHS. We

affirm, holding that even though a healthcare provider has a private

right of action under § 1983 to enforce 42 U.S.C. § 1396a(bb), Pee

Dee agreed, in the forum-selection clause, to bring such an action in

a state tribunal and is bound by that agreement. 

I.

A. The Medicaid Scheme

Medicaid is a cooperative federal-state program designed to partially compensate states for the costs of providing healthcare to needy

individuals. 42 U.S.C. § 1396. States are not required to participate in

the program, but if they choose to do so, "they must implement and

operate Medicaid programs that comply with detailed federally mandated standards." Antrican v. Odom, 290 F.3d 178, 183 n.2 (4th Cir.

2002). To qualify for federal assistance, a state must submit a comprehensive plan to the federal Secretary of Health and Human Services describing the nature and scope of the state’s Medicaid

program. 42 C.F.R. § 430.10. Each state plan must include, among its

details, a scheme for reimbursing rural health clinics ("RHCs") for

services provided to Medicaid patients.1 42 U.S.C. § 1396a(bb). 

The Medicaid Act, as amended by BIPA, Pub. L. No. 106-554,

§ 1(a)(6), 114 Stat. 2763, (codified as amended in scattered sections

of 42 U.S.C.), regulates the way in which RHCs receive reimbursement payments for the services they provide to Medicaid patients. In

general, BIPA allows for two methods of reimbursement. The first

method is a "prospective payment system" based on historicalaverage costs plus a cost-of-living factor.2

 42 U.S.C. § 1396a(bb)(2).

1BIPA imposes identical requirements regarding the reimbursement of

federally qualified health centers ("FQHCs"). Because Pee Dee only

claims to be an RHC, we focus solely on the RHC requirement. 

2Under this method, state Medicaid plans "provide for payment for

such services in an amount (calculated on a per visit basis) that is equal

to 100 percent of the average of the costs of the center or clinic of furnishing such services . . . which are reasonable . . . ." 42 U.S.C.

§ 1396a(bb)(2). 

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The second method, set forth in § 1396a(bb)(6), authorizes an "alternative payment methodology" that can take a number of forms, provided that the state and the clinic agree upon the system and it results

in payment of an amount which is at least equal to the amount authorized under the prospective payment system. 

SCDHHS is the state agency in South Carolina responsible for

administration of the Medicaid program. Healthcare providers in

South Carolina are not required to accept Medicaid patients. However, if a healthcare provider elects to treat Medicaid patients and to

seek reimbursement from SCDHHS for its services, it does so by

entering into a contract ("provider contract" or "contract") with

SCDHHS. 

The contract provides for the method and amounts of payment, as

well as for certain remedies if a healthcare provider believes it has not

been reimbursed as required by law.3 For example, the contract provides: 

A. Reimbursement 

The Rural Health Clinic (RHC) Medicaid rate for services rendered under this contract shall be determined

based upon applicable Medicare/Medicaid laws, rules

or regulations and SCDHHS policies and procedures in

accordance with Attachment 4.19-B of the State Plan

for Medical Assistance. 

J.A. 117.4

3For the purposes of this discussion, we refer to the provider contract

between Pee Dee and SCDHHS, dated as of July 1, 2004, found in the

joint appendix. J.A. 111-30. However, we note that this contract contains

the same language as the July 2001 contract. 

4South Carolina has elected to use an "alternative payment methodology" under 42 U.S.C. § 1396a(bb)(6). Attachment 4.19-B of South Carolina’s Medicaid plan explains this alternative scheme. Pee Dee’s

underlying challenge to the SCDHHS payment methodology focuses on

the language of Attachment 4.19-B. 

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Should any dispute arise under the terms of the contract, a healthcare provider agrees, as part of its decision to accept Medicaid reimbursement payments, that its "sole and exclusive remedy" regarding

such disputes would be to first file a Notice of Appeal of SCDHHS’s

action to the SCDHHS Appeals Division. J.A. 124. Upon exhaustion

of all administrative remedies, judicial review of final agency decisions is available in the state court system. S.C. Code Ann. § 1-23-

380. Such appeals are governed by Article VIII of the contract, which

provides:

If any dispute shall arise under the terms of this contract, the

sole and exclusive remedy shall be the filing of a Notice of

Appeal within thirty (30) days of the receipt of written

notice of SCDHHS’s action or decision which forms the

basis of the appeal. Administrative appeals shall be in accordance with SCDHHS’s regulations R. 126-150 et seq. . . .

Judicial Review of any final SCDHHS administrative decision shall be in accordance with § 1-23-380, Code of Laws

of South Carolina (1976), as amended. 

J.A. 1245 (emphasis added). 

Such subsequent judicial review must proceed in the venue and

location identified in Sections (R) and (S) of Article IX of the contract.6

5Regulation 126-150(B) provides that the tribunal to hear such appeals

would be the state administrative hearing system. An appeal under this

section is 

[t]he formal process of review and adjudication of Agency determinations, which shall be afforded to any person possessing a

right to appeal pursuant to statutory, regulatory, and/or contractual law; provided, that to the extent that an appellant’s appellate

rights are in any way limited by contract with the Agency or

assigned to the Agency, said contractual provision shall control.

S.C. Code Ann. Regs. 126-150(B). Section 1-23-380 provides for judicial review only in state courts—either the South Carolina Court of

Appeals or the Administrative Law Court. S.C. Code Ann. § 1-23-380.

6Following oral argument, Pee Dee filed a "Motion to Supplement

Brief of Appellant" in which it attempted to argue that Section (R) of the

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R. Venue of Actions.

Any and all suits or actions for the enforcement of the

obligations of this contract and for any and every

breach thereof, or for the review of a SCDHHS final

agency decision with respect to this contract or audit

disallowances, and any judicial review sought thereon

and brought pursuant to the S.C. Code Ann. § 1-23-380

(1976, as amended) shall be instituted and maintained

in any court of competent jurisdiction in the County of

Richland, State of South Carolina. 

S. Place of Suit 

Any action at law, suit in equity, or judicial proceeding

for the enforcement of this contract or any provision

thereof shall be instituted only in the courts of the State

of South Carolina. 

J.A. 128. 

Pee Dee, through three Medicaid-certified RHCs, provides healthcare services to low-income individuals in rural areas of South Carolina. Its services are subject to reimbursement from Medicaid funds.

Pee Dee has entered into two consecutive three-year contracts with

SCDHHS since the enactment of BIPA. Each contract contains a

forum-selection clause—Sections (R) and (S)—requiring that any

claims that arise under the terms of the contract be pursued first

through an administrative appeals process and then in state court.7

contract allows for judicial review of final agency decision "in any court

[—federal or state—] of competent jurisdiction in the County of Richland, State of South Carolina" (emphasis added). The Columbia Division

for the United States District Court for the District of South Carolina is

located in Richland County. Therefore, Pee Dee asserted that the district

court was a proper venue for this case. Because Pee Dee raised this issue

for the first time following oral argument on appeal, we deny the motion.

See Wheatley v. Wicomico County, 390 F.3d 328, 335 (4th Cir. 2004).

We also note that Sections (R) and (S) reflect an agreement to pursue

administrative appeals in a state tribunal. 

7Even though Pee Dee’s claim is couched as seeking to remedy a failure to receive a statutorily conferred benefit rather than seeking the

enforcement of a contract, Pee Dee does not dispute that its claim arises

under the terms of the contract. 

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B.

Pee Dee originally filed this action in South Carolina state court

against South Carolina Governor Mark H. Sanford, Director of

SCDHHS Robert Kerr, and SCDHHS itself (collectively "Appellees").8

Appellees answered and removed this case to federal district court.

Pee Dee filed an amended complaint asserting a federal cause of

action against Appellees under 42 U.S.C. § 1983, seeking to enforce

the reimbursement provisions of BIPA, 42 U.S.C. § 1396a(bb). Specifically, the new claim alleges that the reimbursement formula used

by SCDHHS violates Pee Dee’s statutorily conferred right to proper

reimbursement as provided under § 1396a(bb).9 Pee Dee claims that

if SCDHHS had computed payments in accordance with federal

requirements, Pee Dee would have been compensated at higher rates

than those at which it was actually paid beginning in January 2001.10

Appellees moved to dismiss Pee Dee’s new claim under BIPA

alleging that Pee Dee agreed, as part of its contract for Medicaid

reimbursement, to pursue all claims arising under the contract through

state administrative and judicial avenues. Thus, Appellees asserted

that the voluntary forum-selection clause rendered venue in federal

district court improper. 

Following arguments on the motion to dismiss, the district court

dismissed the reimbursement claim based on the forum-selection

clause. Pee Dee now appeals the dismissal of that claim arguing the

8Pee Dee originally claimed that certain proposed changes to the South

Carolina State Medicaid Plan needed to be promulgated in the State Register and submitted for approval by the General Assembly. 

9Pee Dee raised this argument with SCDHHS approximately four years

prior to initiating this suit, but never appealed the rejection of those

claims. See J.A. 108. Pee Dee has continued to accept payments that

were based on the methodology it now challenges. 

10While this appeal does not involve the merits of Pee Dee’s reimbursement claims, we note that SCDHHS maintains that the "alternative

payment methodology" under which Pee Dee has been reimbursed since

January 1, 2001 and about which Pee Dee now complains, results in a

"higher per-visit reimbursement" than the "prospective payment"

method. J.A. 144. 

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district court erred in holding that: (1) the exclusive remedy available

to Pee Dee is provided in the provider contract between Pee Dee and

SCDHHS, and (2) the claim against Appellees can only be brought

in a state tribunal due to the forum-selection clause. 

We review de novo the district court’s dismissal based on a forumselection clause. Sucampo Pharm., Inc. v. Astellas Pharma, 471 F.3d

544, 550 (4th Cir. 2006) ("[A] motion to dismiss based on a forumselection clause should be properly treated under Rule 12(b)(3) as a

motion to dismiss on the basis of improper venue."). In doing so, we

first address the issue of whether healthcare providers have a private

right of action under § 1983 to enforce § 1396a(bb). 

II.

Section 1983 imposes liability on anyone who, acting under color

of state law, deprives a person of any "rights, privileges, or immunities secured by the Constitution and laws." 42 U.S.C. § 1983. A plaintiff alleging a violation of a federal statute may sue under § 1983

unless "the statute [does] not create enforceable rights, privileges, or

immunities within the meaning of § 1983," or "Congress has foreclosed such enforcement of the statute in the enactment itself[.]"

Wright v. City of Roanoke Redev. & Hous. Auth., 479 U.S. 418, 423

(1987). 

A statute creates an enforceable right if: (1) Congress intended that

the provision in question benefit the plaintiff; (2) the right ostensibly

protected by the statute "is not so vague and amorphous that its

enforcement would strain judicial competence"; and (3) the statute

unambiguously imposes a binding obligation on the states. Blessing

v. Freestone, 520 U.S. 329, 340-41 (1997) (internal quotations omitted). In analyzing these requirements, a court must be careful to

ensure that the statute at issue contains "rights-creating language" and

that the language is phrased in terms of the persons benefitted, not in

terms of a general "policy or practice." Gonzaga Univ. v. Doe, 536

U.S. 273, 284, 287 (2002).11

11Blessing stands for the proposition that violations of rights, not laws,

give rise to § 1983 actions. Gonzaga, 536 U.S. at 283. Nevertheless, the

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Prior to the enactment of BIPA, this court considered the rights of

healthcare providers to enforce reimbursement provisions of the Medicaid Act. See Va. Hosp. Ass’n v. Baliles, 868 F.2d 653 (4th Cir.

1989), aff’d sub nom. Wilder v. Va. Hosp. Ass’n, 496 U.S. 498 (1990).

In Baliles, this court held that healthcare providers had a right actionable under § 1983 to challenge the method by which a state reimburses them for the cost of treating Medicaid patients.12 868 F.2d at

659-60. This court concluded that "the language and legislative history of [the relevant provision] impl[ied] a congressional intent to

allow providers a right of action against State failure to comply with

federal Medicaid requirements." Id. at 658. The Supreme Court,

affirming the decision, reasoned that the provision established a system for reimbursement of healthcare providers and was phrased in

terms benefitting those providers. Wilder, 496 U.S. 498, 510 (1990).

More recently, this court found that another provision of the Medicaid Act, dealing with the Medicaid waiver program created by 42

U.S.C. § 1396n(c), conferred a private right of action enforceable

under § 1983. Doe v. Kidd, 501 F.3d 348 (4th Cir. Sept. 19, 2007).

This court has also allowed a healthcare provider to pursue a § 1983

action to enforce § 1396a(bb)(5) of the Medicaid Act. Three Lower

Counties Cmty. Health Servs. v. Maryland, 498 F.3d 294 (4th Cir.

2007) (clarifying a state’s obligations under § 1396a(bb)(5) when

paying FQHCs for services they render to Medicaid patients).13

Gonzaga Court warned lower courts against interpreting Blessing "as

allowing plaintiffs to enforce a statute under § 1983 so long as the plaintiff falls within the general zone of interest that the statute is intended to

protect . . . ." Id. Therefore, nothing short of an "unambiguously conferred [individual] right" as demonstrated through "rights-creating language" can support a § 1983 action. Id. at 283, 290. That is, the language

must not focus on the person regulated, as in a provision that proscribes

a certain institutional policy or practice. Id. at 287-88. 

12At the time, the reimbursement provisions were part of the Boren

Amendment, 42 U.S.C. § 1396a(a)(13)(A) (repealed 1997), which

required reimbursement according to rates that were "reasonable and

adequate to meet the costs which must be incurred by efficiently and economically operated facilities." 

13We also note that the Second Circuit has allowed healthcare providers to pursue a § 1983 claim to enforce § 1396a(bb)(2). Cmty. Health

Ctr. v. Wilson-Coker, 311 F.3d 132 (2d Cir. 2002). 

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Pee Dee relies heavily on a First Circuit decision in support of its

assertion that a right of action exists under § 1983 to enforce

§ 1396a(bb). See Rio Grande Cmty. Health Ctr., Inc. v. Rullan, 397

F.3d 56, 74-75 (1st Cir. 2005). The Rio Grande court held that

"[t]here is an implied action under section 1983 to enforce the special

provisions of the Medicaid law dealing with FQHC reimbursement,

42 U.S.C. § 1396a(bb), as these provisions vest the FQHCs with a

federal right to proper reimbursement."14 397 F.3d at 60. However, as

Appellees point out, the focus of the "rights" analysis in Rio Grande

is on the language found in § 1396a(bb)(5), not on § 1396a(bb) as a

whole. Appellees argue that § 1396a(bb)(5), the wraparound provision that was the subject of both Three Lower Counties and Rio

Grande, is the only part of § 1396a(bb) that specifically authorizes

payment to a provider, as opposed to describing a general payment

methodology. With respect to § 1396a(bb)(1) through (4) and (6),

Appellees argue that no rights-creating language is present. Subsection (bb)(5) is the one subsection that is not cited by Pee Dee in support of its claims.

It is an issue of first impression in the federal courts whether

§ 1396a(bb), read as a whole, contains rights-creating language

phrased in terms of the persons benefitted such that it creates a right

of action under § 1983. Considering the language of § 1396a(bb) and

the case law interpreting Medicaid provisions of similar import in

14In Rio Grande, an FQHC sued the Puerto Rico Secretary of Health

under § 1983, alleging that the Secretary failed to make supplemental or

wraparound payments to make up the difference between what managed

care organizations ("MCOs") paid the FQHC and what the FQHC was

entitled to collect under the prospective payment system. 397 F.3d at 60-

62. Puerto Rico uses a managed care approach to running their Medicaid

system. Under this approach, the Medicaid agency contracts with MCOs

to service Medicaid patients. The state pays the MCO a fixed monthly

sum per Medicaid patient. The MCO then contracts with an FQHC to

actually provide the medical services to the patients. A problem arises

when the contract pays the FQHC less than the amount it should receive

under the prospective payment system. Section 1396a(bb)(5) addresses

this problem by requiring states to pay the FQHC a supplemental, or

"wraparound," payment to make up the difference between what the

MCO pays the FQHC and what the FQHC is entitled to collect under the

prospective payment system. Id.; see 42 U.S.C. § 1396a(bb)(5). 

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light of the Blessing factors, it is scarcely a stretch to conclude that

it does. 

Subsection 1396a(bb)(1) states that a "[s]tate plan shall provide for

payment for services . . . furnished by a Federally-qualified health

center and services . . . furnished by a rural health clinic in accordance

with the provisions of this subsection." (emphasis added). Subsections

(bb)(2)-(bb)(4) repeat the phrase "the state plan shall provide for payment for such services." (emphasis added). Subsection (bb)(6)(B),

which provides the option for an alternative payment methodology,

states that such methodology must "result[ ] in payment to the center

or clinic of an amount which is at least equal to the amount otherwise

required to be paid to the center or clinic under this section." (emphasis added). 

Applying the Blessing test to § 1396a(bb) as a whole, we conclude

that § 1396a(bb) gives rise to a right enforceable under § 1983. First,

Congress intended the statute to benefit RHCs such as Pee Dee: the

"state plan shall provide for payment for services . . . furnished by a

rural health clinic." § 1396a(bb)(1) (emphasis added). Second, the

use of "shall provide for payment" is not unduly vague or amorphous

such that the judiciary cannot enforce it; the provision is clear that

states must reimburse RHCs for services provided to Medicaid

patients. Third, the language unambiguously binds the states as indicated by the repeated use of "shall". 

We further find, as required by Gonzaga, that § 1396a(bb) contains

rights-creating language because it specifically designates the

beneficiaries—the RHCs—and it mandates action on the part of the

states. Moreover, § 1396a(bb) has an individual focus rather than an

aggregate focus on institutional policy or practice. Indeed, this statutory focus stands in stark contrast to the "policy or practice" language

present in the provision interpreted in Gonzaga.

15 536 U.S. at 287-88.

15The statute at issue in Gonzaga provided that "[n]o funds shall be

made available under any applicable program to any education agency or

institution which has a policy or practice of permitting the release of

education records. . . ." 536 U.S. at 279 (emphasis added). The Court

found that such language was not rights-creating; the focus of the provision was too far removed from the interests of the students allegedly benefitted by it and therefore did not "confer the sort of ‘individual

entitlement’ that is enforceable under § 1983." Id. at 287, (citing Blessing, 520 U.S. at 343). 

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Thus, we conclude that § 1396a(bb) creates an enforceable right

under § 1983.

III.

Notwithstanding our finding that a right of action exists under

§ 1983 to enforce § 1396a(bb), there is nothing in federal law prohibiting a healthcare provider from waiving the right to pursue such a

§ 1983 claim in a federal forum. On the contrary, procedural rights

under § 1983, like other federal constitutional and statutory rights, are

subject to voluntary waiver. Town of Newton v. Rumery, 480 U.S.

386, 398 (1987). 

In Town of Newton, the Supreme Court upheld a contract clause

that completely eliminated the plaintiff’s right to sue under § 1983.

See id. at 390; see also Lake James Cmty. Volunteer Fire Dept., Inc.

v. Burke County, N.C., 149 F.3d 277 (4th Cir. 1998) (upholding a

similar contractual waiver).16 The town of Newton dropped criminal

charges against the federal plaintiff in exchange for the plaintiff’s

waiver of his right to file a civil rights action, including an action

under § 1983. The Court enforced the agreement because the plaintiff

voluntarily entered into it. The Court noted that the controlling principle for determining whether a waiver clause is unenforceable is "if the

interest in its enforcement is outweighed in the circumstances by a

public policy harmed by enforcement of the agreement." Town of

Newton, 480 U.S. at 392. However, where a party "voluntarily

waive[s] his right to sue under § 1983, the public interest opposing

involuntary waiver of constitutional rights is no reason to hold [an]

agreement invalid." Id. at 394. 

This court has applied a voluntariness standard to determine the

enforceability of agreements in which a party releases possible § 1983

claims. See, e.g., Bushnell v. Rossetti, 750 F.2d 298, 301-02 (4th Cir.

1984) (allowing the release of a right to bring a § 1983 action if the

16In Lake James this court held that a volunteer fire department’s

agreement not to sue the county for approving the transfer of certain fire

protection areas to other fire departments was enforceable despite the

waiver of a constitutional right to petition the government. 149 F.3d at

280. 

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decision to release was "voluntary, deliberate, and informed") (internal quotations omitted); cf. United States v. Lemaster, 403 F.3d 216,

220 (4th Cir. 2005) (a criminal defendant may voluntarily waive constitutional procedural rights as well as statutory procedural rights

through a plea agreement). Where a party knowingly and willingly

enters into an agreement that waives a constitutional right, the agreement is enforceable so long as it does not undermine the public’s

interest in protecting the right.17 See Lake James, 149 F.3d at 278. The

Lake James court held this to be the case where the contract itself provided the basis for the right and the waiver was narrowly tailored. See

id. at 281. 

Healthcare providers in South Carolina are not required to accept

Medicaid patients. Therefore, any decision on the part of a healthcare

provider such as Pee Dee to enter into a contract for Medicaid reimbursement is voluntary. Moreover, Pee Dee has entered into a series

of contracts with SCDHHS, renewing its commitment to the terms

therein. Because Pee Dee voluntarily waived its right to bring an

action alleging improper reimbursement in federal court, the public

interest opposing involuntary waiver of constitutional rights is no reason to hold this agreement invalid. See Town of Newton, 480 U.S. at

394. 

Furthermore, the contract between Pee Dee and SCDHHS does not

completely deprive Pee Dee of a remedy, as was the case in Town of

Newton and Lake James. Pee Dee did not contract away its right to

bring an action under § 1983, but instead agreed as part of its contract

for Medicaid reimbursement that all such claims would be pursued

only through state administrative and judicial avenues. That is, Pee

Dee’s contracts do not involve a waiver of a constitutional right, but

only the ancillary right to select a federal forum to pursue a statutory

right. Given that a party can validly waive the right to sue altogether,

17In Lake James this court considered the fact that the fire department

was aware of the right it was waiving and that it voluntarily signed the

agreement with the advice of counsel. Id. at 281. Moreover, the court

found "the limited waiver that the fire department gave was not adverse

to public policy." Id. On the contrary, the court noted that it was consistent with public policy to provide reliable fire protection to the community. Id.

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including the right to sue to vindicate a constitutional right, the decision by Pee Dee to foreclose use of a federal forum for its statutory

claim does not implicate the public policy concerns noted in Town of

Newton.

IV.

Having found that healthcare providers have a right under § 1983

and that such a right can be limited by contract, we finally turn to the

issue of whether the particular forum-selection clause found in the

contract between Pee Dee and SCDHHS is enforceable. 

A forum-selection clause is "prima facie valid and should be

enforced unless enforcement is shown by the resisting party to be

‘unreasonable’ under the circumstances." M/S Bremen v. Zapata OffShore Co., 407 U.S. 1, 10 (1972). A clause is unreasonable if (1) it

was the result of "fraud or overreaching"; (2) "trial in the contractual

forum [would] be so gravely difficult and inconvenient [for the complaining party] that he [would] for all practical purposes be deprived

of his day in court"; or (3) "enforcement would contravene a strong

public policy of the forum in which suit is brought[.]" Id. at 15-18;

Allen v. Lloyd’s of London, 94 F.3d 923, 928 (4th Cir. 1996). 

Pee Dee appears to argue only that enforcement of the forumselection clause would contravene a strong public policy of the federal courts to hear federal claims. We note, however, that Medicaid

disputes are commonly heard in state administrative tribunals and no

federal policy bars state courts from hearing federal claims. Therefore, we find no reason not to enforce the forum-selection clause.

V.

Because we find that § 1396a(bb) creates an enforceable right

under § 1983, but that Pee Dee voluntarily waived its right to a federal forum by agreeing to be bound by the forum-selection clause in

its contract with SCDHHS, the judgment of the district court is

AFFIRMED.

14 PEE DEE HEALTH CARE v. SANFORD

Appeal: 06-2108 Doc: 56 Filed: 12/05/2007 Pg: 14 of 14