In the

United States Court of Appeals

For the Seventh Circuit ____________________ 

No. 21-2325 

SAINT ANTHONY HOSPITAL, 

Plaintiff-Appellant, 

v.

ELIZABETH M. WHITEHORN, in her official capacity 

as Director of the Illinois Department of 

Healthcare and Family Services,

Defendant-Appellee,*

and

MERIDIAN HEALTH PLAN OF ILLINOIS, INC., et al., 

Intervening Defendants-Appellees. 

____________________ 

Appeal from the United States District Court for the

Northern District of Illinois, Eastern Division. 

On Remand from the Supreme Court of the United States.

No. 1:20-cv-02561 — Steven C. Seeger, Judge. 

____________________ 

SUBMITTED DECEMBER 29, 2023 — DECIDED APRIL 25, 2024 

____________________ 

* We have substituted the new director as the named defendant pursuant to Federal Rule of Appellate Procedure 43(c)(2). 
2 No. 21-2325 

Before WOOD, HAMILTON, and BRENNAN, Circuit Judges. 

HAMILTON, Circuit Judge. We first addressed this appeal in 

2022, when we reversed in part the district court’s dismissal 

of the case and remanded for further proceedings. Saint Anthony Hospital v. Eagleson, 40 F.4th 492 (7th Cir. 2022). Defendant petitioned for a writ of certiorari. The Supreme Court held 

the case while it considered Health & Hospital Corp. of Marion 

County v. Talevski, 599 U.S. 166 (2023), which presented similar 

issues concerning the use of 42 U.S.C. § 1983 to enforce certain 

provisions in the Federal Nursing Home Reform Act amendments to the Medicaid Act. After deciding Talevski, the Court 

granted defendant’s petition in this case, vacated our earlier 

decision, and remanded for reconsideration in light of Talevski. 143 S. Ct. 2634 (2023) (mem.). Such a “GVR” order calls for 

further thought, but it does not necessarily imply that the 

lower court’s previous result should be changed. E.g., Klikno 

v. United States, 928 F.3d 539, 544 (7th Cir. 2019); see generally 

Lawrence v. Chater, 516 U.S. 163, 166–70 (1996) (per curiam)

(discussing GVR practices). Upon remand, the parties submitted statements of position and we ordered further briefing. 

We have taken a fresh look at the appeal in light of Talevski. 

We again reverse the dismissal of plaintiff’s central claim and 

remand for further proceedings.

By way of introduction, in recent years, Illinois moved its 

Medicaid program from a fee-for-service model, where a state 

agency pays providers’ medical bills, to one dominated by 

managed care, where the state pays private insurers to pay 

medical bills for Medicaid patients. Most patients of plaintiff 

Saint Anthony Hospital are covered by Medicaid, so Saint 

Anthony depends on full, timely Medicaid payments to keep 

its doors open and provide care to patients. Saint Anthony 
No. 21-2325 3

says it is now in a dire financial state. Over four years from 

2015 to 2019, it lost roughly 98% of its cash reserves, allegedly 

because managed-care organizations (MCOs) repeatedly and 

systematically delayed and reduced payments it was owed 

for treating patients covered by Medicaid managed care. 

Saint Anthony contends in this lawsuit that Illinois officials owe it a duty under the federal Medicaid Act to act to 

push MCOs to make timely and full payments. In a thoughtful opinion, the district court dismissed the suit for failure to 

state a claim for relief. Saint Anthony Hospital v. Eagleson, 548 

F. Supp. 3d 721 (N.D. Ill. 2021). We continue to see the case 

differently, however, especially at the pleadings stage. Under 

the standards of Talevski and related precedents, Saint Anthony has alleged a viable claim for relief under 42 U.S.C. 

§ 1396u-2(f) and may seek injunctive relief under 42 U.S.C. 

§ 1983 against the state official who administers the Medicaid 

program in Illinois. We appreciate the potential magnitude of 

the case and the challenges it may present. Like the district 

judge, we can imagine forms of judicial relief that would be 

hard to justify. We can also imagine some poor ways to handle 

this case going forward in the district court. But we should 

not decide this case by assuming that the worst-case scenarios 

are inevitable.

The State has tools available to remedy systemic slow and 

short payment problems—problems alleged to be so serious 

that they threaten the viability of a major hospital and perhaps even of the managed-care Medicaid program as administered in Illinois. If Saint Anthony can prove its claims, the 

chief state official could be ordered to use some of those tools 

to remedy systemic problems that threaten this literally vital 
4 No. 21-2325 

health care program. We therefore again reverse in part the 

dismissal of the case and remand for further proceedings.

I. Factual and Procedural Background

In reviewing the grant of a motion to dismiss under 

Federal Rule of Civil Procedure 12(b)(6) for failure to state a 

claim, we accept as true all well-pled factual allegations in the 

complaint and draw all reasonable inferences in Saint 

Anthony’s favor. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). We 

are not vouching for the truth of Saint Anthony’s account of 

the facts at this point. Rather, because the defense moved to 

dismiss on the pleadings, it chose to accept for now the truth 

of Saint Anthony’s factual allegations.

A. The Illinois Medicaid Program

The federal Medicaid Act established a cooperative arrangement between the federal government and states to provide medical services to poor residents. 42 U.S.C. § 1396 et 

seq.; Bria Health Services, LLC v. Eagleson, 950 F.3d 378, 380 (7th 

Cir. 2020); see also National Federation of Independent Business 

v. Sebelius, 567 U.S. 519, 541–42 (2012). By agreeing to participate in Medicaid, a state receives financial assistance to help 

administer the program in exchange for complying with detailed statutory and regulatory requirements. Bria Health Services, 950 F.3d at 380. Those requirements are found in the 

Medicaid Act itself (Title XIX of the Social Security Act) and 

in Department of Health and Human Services (HHS) regulations. See id. at 380, 382; Rock River Health Care, LLC v. Eagleson, 

14 F.4th 768, 771 (7th Cir. 2021). 

Before discussing the relevant statutory requirements at 

issue here, it is important to understand how the Illinois 

Department of Healthcare and Family Services (HFS) 
No. 21-2325 5

administers the State’s Medicaid program. There are two 

major ways for states to pay providers for services provided 

to patients covered by Medicaid: fee for service and managed 

care. In a fee-for-service program, the state pays providers 

directly based on a set fee for a particular service. See 42 

U.S.C. § 1396a(a)(30)(A); Medicaid Program; Medicaid 

Managed Care: New Provisions, 67 Fed. Reg. 40989, 40989

(June 14, 2002). Under a managed-care program, by contrast, 

HFS contracts with MCOs (which are private health insurance 

companies) to deliver Medicaid health benefits to 

beneficiaries. See 42 U.S.C. § 1396u-2; see also 42 U.S.C. 

§ 1396b(m); 42 C.F.R. § 438 (2020). The state typically pays the 

MCO a flat fee per patient per month. The MCO then pays 

providers for services actually provided to covered Medicaid 

patients. Bria Health Services, 950 F.3d at 381, citing 305 ILCS 

5/5-30.1; see also 42 U.S.C. §§ 1396u-2, 1396b(m). Like 

insurance companies, MCOs are generally entitled to keep as 

profits the difference between the money they receive from 

the state and the amounts they pay providers for care of 

covered patients.

In recent years, Illinois has changed from fee-for-service to 

a system dominated by managed care. Illinois introduced 

managed care in its Medicaid program in 2006. In 2010, the 

State spent just $251 million on managed care. By 2019, that 

number had grown to $12.73 billion. In the meantime, the 

number of MCOs in Illinois has fallen from twelve to seven.

Federal law establishes requirements for timely Medicaid 

payments to health care providers. When a state pays claims 

directly, it must pay 90% of so-called “clean claims” within 30 

days and 99% within 90 days. See 42 U.S.C. § 1396a(a)(37)(A). 

(A “clean claim” is one for which the payor has all 
6 No. 21-2325 

information needed to determine the proper payments. Id.) 

When a state relies on MCOs to pay providers, federal law 

requires that the state’s contract with an MCO contain a provision that requires the same 30/90 pay schedule for MCO reimbursements to providers. 42 U.S.C. § 1396u-2(f). (MCOs 

and providers can opt for a different pay schedule, but Saint 

Anthony has not agreed to a different schedule with any 

MCOs.) The focus of this case is the payment schedule provision, section 1396u-2(f).1

B. Plaintiff Saint Anthony Hospital

Saint Anthony is a so-called “safety-net hospital” on the 

southwest side of Chicago. It provides health care regardless 

of patients’ financial means. See 305 ILCS 5/5-5e.1. Most Saint 

Anthony patients are on Medicaid. As the Illinois Medicaid 

system has shifted from fee for service to managed care, the 

hospital has become ever more dependent on timely 

payments from MCOs. In recent years, according to Saint 

Anthony, those payments have repeatedly arrived late, if they 

arrived at all. As of February 2020, payments of at least $20 

million were past due. The impact of late payments can be 

dramatic. In 2015, Saint Anthony had more than $20 million 

in cash on hand, which was enough to fund 72 days of 

1 In earlier stages of the case, Saint Anthony argued it was also entitled 

to relief under a separate Medicaid statute requiring a participating state 

to “provide that all individuals wishing to make application for medical 

assistance under the plan shall have opportunity to do so, and that such 

assistance shall be furnished with reasonable promptness to all eligible 

individuals....” 42 U.S.C. § 1396a(a)(8). We explained in our original opinion, however, why Saint Anthony is not entitled to relief under that clause.

40 F.4th at 515–16. That clause was not part of the Supreme Court’s review, 

and we say no more about it here.
No. 21-2325 7

operation. As the State increased its reliance on managed care, 

Saint Anthony saw its cash reserves dwindle. By 2019, Saint 

Anthony had less than $500,000 cash on hand, enough to 

cover just two days of operation. Saint Anthony’s net revenue

per patient also dropped more than 20%.

The MCO payments that eventually arrive are often for 

less than is owed. Making matters worse from Saint 

Anthony’s perspective, the payment forms it receives from 

the MCOs lack the details needed to determine just what is 

being paid and what is not. The delays and lack of clarity 

benefit the MCOs: since the State pays the MCOs flat fees per 

patient and permits them to keep the funds they do not pay

out to providers, MCOs have a powerful profit incentive to 

delay and underpay hospitals like Saint Anthony. This 

incentive under managed care is inherent and well-known. 

The need to control MCOs’ behavior to protect providers and 

patients explains why Congress included section 1396u-2(f) 

in the statutes governing managed care under Medicaid.

Saint Anthony may not be alone in its experience. Mercyhealth is a regional health-care system and the largest Medicaid provider in Illinois outside of Cook County. Illustrating 

the potential gravity of the MCO payment problems, in April 

2020, Mercyhealth announced it would stop accepting Medicaid patients covered by four of the seven MCOs in Illinois. 

Decl. of Kim Scaccia ¶ 6, Dkt. 50-1, Ex. 12. This was a drastic 

step showing the potential threat to the viability of the managed-care model for Medicaid. Mercyhealth said it took this 

step because those MCOs were delaying and underpaying it 

to the point that it was losing $30 million per year on Medicaid patients. See also David Jackson & Kira Leadholm, Insurance Firms Reap Billions in Profits While Doctors Get Stiffed for 
8 No. 21-2325 

Serving the Poor, Better Government Association (Nov. 8, 

2021), https://www.bettergov.org/news/insurance-firmsreap-billions-in-profits-while-doctors-get-stiffed-for-servingthe-poor/ (last visited April 25, 2024).2

Faced with this dire financial situation, Saint Anthony had 

two paths to seek legal relief from what it sees as systemic 

defects in the Illinois Medicaid program. One path would be 

to sue MCOs individually for violating Saint Anthony’s contractual rights to timely payment. Arbitration provisions in 

those contracts might well require arbitration for each individual claim in dispute. That path could easily involve many 

thousands of individual claims each year, though that is a 

matter for the district court to consider when it takes up the 

MCO intervenors’ effort to force all or parts of this dispute 

into arbitration. This suit represents the second path, seeking 

a court order to require Illinois officials to devise systems that 

will ensure that they perform the statutorily required oversight of MCOs’ payments to providers like Saint Anthony.

C. Procedural History

Saint Anthony filed a complaint under 42 U.S.C. § 1983 

against the director of HFS in her official capacity. (We refer 

to the director here as HFS or the State.) Count I, the only one 

relevant at this point, alleges that HFS is violating the 

2 In evaluating a Rule 12(b)(6) motion, we may consider the 

Mercyhealth information submitted by plaintiff without converting the 

motion into one for summary judgment under Rule 12(d). The information 

elaborates on and illustrates factual allegations in the complaint. E.g., 

Geinosky v. City of Chicago, 675 F.3d 743, 745 n.1 (7th Cir. 2012).

Mercyhealth also reportedly worked out a compromise with one MCO,

Molina, under which it continued to care for Molina-covered Medicaid 

patients. Decl. of Kim Scaccia ¶ 9, Dkt. 50-1, Ex. 12. 
No. 21-2325 9

Medicaid Act, including section 1396u-2(f), by failing to ensure that MCOs meet the timely payment requirements. Saint 

Anthony seeks injunctive relief directing HFS to require the 

MCOs to comply with the 30/90 payment rule, to use transparent remittance forms, and if necessary, to require the State 

to cancel a contract with an MCO that continues to fail to comply with the timely payment requirements.3

HFS moved to dismiss Saint Anthony’s complaint under 

Federal Rule of Civil Procedure 12(b)(6) for failure to state a 

claim. Its chief argument was that none of the statutory provisions grant Saint Anthony any rights enforceable under section 1983, and that even if they did, the factual allegations 

failed to state a plausible claim for relief. The district court 

agreed and dismissed the case. 548 F. Supp. 3d 721 (N.D. Ill. 

2021).

While the motion to dismiss was pending, Saint Anthony 

moved to supplement its complaint by adding a due process 

claim. HFS responded to Saint Anthony’s request, arguing 

that the new claim would fail on the merits. The district court 

denied Saint Anthony the opportunity to file a reply to defend 

its proposed claim on the merits. Then, four days after granting the motion to dismiss, the district judge denied the motion 

to supplement because he thought it was futile and that the 

entire case should be concluded by granting the motion to dismiss.

3 Saint Anthony also moved for a preliminary injunction. The district 

court granted limited discovery before suspending in part actions related 

to the preliminary injunction motion while it resolved a discovery dispute. 

The court then granted the motion to dismiss and denied the preliminary 

injunction motion as moot.
10 No. 21-2325 

In the district court, four MCOs were granted leave to 

intervene as defendants. The MCOs asked the court to stay 

the lawsuit and compel arbitration. One MCO (Meridian) 

demanded arbitration with Saint Anthony, but that 

proceeding was stayed because Meridian had not followed 

the proper procedures to invoke arbitration. The district court 

later denied the MCOs’ motions as moot after granting the 

motion to dismiss. 

Saint Anthony appealed the district court’s dismissal and 

the denial of the motion to supplement. We first address Saint 

Anthony’s asserted right to timely payment under section 

1396u-2(f). To evaluate Saint Anthony’s claim, we address in 

Part II-A the standard for invoking section 1983 under Spending Clause statutes like the Medicaid Act. We consider in Part 

II-B the Talevski standard and then in Part II-C walk through 

each of the so-called Blessing factors. In Part II-D, we turn to 

whether Congress established an alternative remedial scheme 

incompatible with the application of section 1983. We conclude by addressing in Part III the district court’s denial of 

plaintiff’s motion to supplement its complaint and the question of arbitration, which the MCOs ask us to resolve before 

the district court has done so. 

II. A Right to Timely Payments 

The central issue here is whether 42 U.S.C. § 1396u-2(f) 

grants a right to providers like Saint Anthony that is privately 

enforceable through section 1983. We conclude that the statute imposes on the State a duty to try to ensure that the MCOs 

actually pay providers in accord with the 30/90 pay schedule—not merely that the contracts between the MCOs and 

HFS include clauses that say as much on paper. Congress imposed this affirmative duty on the State for the benefit of 
No. 21-2325 11

health care providers like plaintiff. Congress provided sufficiently clear signals that this is both a duty for the State and a 

right for providers. Saint Anthony thus has a right under section 1396u-2(f) that is enforceable under section 1983. The 

right entails having state officials address MCOs’ systemic 

failures to provide timely and transparent payments.

A. The Standard for Invoking Section 1983 

We again emphasize that we are reviewing the grant of a 

motion to dismiss under Federal Rule of Civil Procedure 

12(b)(6) for failure to state a claim. We begin by accepting all 

well-pleaded factual allegations as true and drawing all reasonable inferences in Saint Anthony’s favor. Iqbal, 556 U.S. at 

678. 

The analysis for possible enforcement of federal statutory 

rights under section 1983 is familiar. “Section 1983 creates a 

federal remedy against anyone who, under color of state law, 

deprives ‘any citizen of the United States ... of any rights, 

privileges, or immunities secured by the Constitution and 

laws.’” Planned Parenthood of Indiana, Inc. v. Comm’r of Indiana 

State Dep’t of Health, 699 F.3d 962, 972 (7th Cir. 2012), quoting 

42 U.S.C. § 1983. This language “means what it says,” Maine 

v. Thiboutot, 448 U.S. 1, 4 (1980), and “authorizes suits to enforce individual rights under federal statutes as well as the 

Constitution.” City of Rancho Palos Verdes v. Abrams, 544 U.S. 

113, 119 (2005). “‘Laws’ means ‘laws,’ no less today than in 

the 1870s....” Talevski, 599 U.S. at 172. 

Yet not all statutory benefits, requirements, or interests are 

enforceable under section 1983. The Medicaid Act is an exercise of Congress’s power under the Spending Clause. Talevski

reinforced earlier precedents allowing rights under Spending 
12 No. 21-2325 

Clause legislation to be enforced under section 1983 but set a 

“demanding bar” for reliance on section 1983: “Statutory provisions must unambiguously confer individual federal rights.” 

599 U.S. at 180, citing Gonzaga University v. Doe, 536 U.S. 273, 

280 (2002). Talevski summarized the Court’s approach for determining when a statutory provision enacted under the federal spending power creates a right, privilege, or immunity 

enforceable under section 1983: 

Gonzaga sets forth our established method 

for ascertaining unambiguous conferral. Courts 

must employ traditional tools of statutory construction to assess whether Congress has “unambiguously conferred” “individual rights 

upon a class of beneficiaries” to which the plaintiff belongs. [536 U.S.] at 283, 285–286; see also 

Rancho Palos Verdes v. Abrams, 544 U.S. 113, 120 

(2005). Notably, it must be determined that 

“Congress intended to create a federal right” for

the identified class, not merely that the plaintiffs 

fall “within the general zone of interest that the 

statute is intended to protect.” Gonzaga, 536 

U.S., at 283 (emphasis deleted). This paradigm 

respects Congress’s primacy in this arena and 

thus vindicates the separation of powers. Id., at 

286. 

We have held that the Gonzaga test is satisfied where the provision in question is 

“‘phrased in terms of the persons benefited’” 

and contains “rights-creating,” individual-centric language with an “‘unmistakable focus on 

the benefited class.’” Id., at 284, 287 (emphasis 
No. 21-2325 13

deleted). Conversely, we have rejected § 1983 

enforceability where the statutory provision 

“contain[ed] no rights-creating language”; had 

“an aggregate, not individual, focus”; and 

“serve[d] primarily to direct the [Federal Government’s] distribution of public funds.” Id., at 

290. 

Talevski, 599 U.S. at 183–84; accord, Blessing v. Freestone, 520 

U.S. 329, 340 (1997) (plaintiff seeking redress for alleged violation of federal statute through a section 1983 action “must 

assert the violation of a federal right, not merely a violation of 

federal law”). It is not enough to fall “within the general zone 

of interest that the statute is intended to protect” to assert a 

right under section 1983. Gonzaga, 536 U.S. at 283. Congress 

must have “intended to create a federal right,” id., and “the statute ‘must be phrased in terms of the persons benefited’ with 

‘an unmistakable focus on the benefited class.’” Planned 

Parenthood of Indiana, 699 F.3d at 973, quoting Gonzaga, 536 

U.S. at 284. 

Without the later guidance from Talevski, we and the district court had framed our earlier analyses under the so-called 

Blessing factors, taken from Blessing v. Freestone. Before diving 

in further, we need to address the status of Blessing and its 

factors after Talevski. Defendants argue that Talevski effectively 

displaced or even overruled Blessing. As noted, Talevski wrote 

that “Gonzaga sets forth our established method for ascertaining unambiguous conferral” of statutory rights that can support relief under section 1983. 599 U.S. at 183. That passage 

appeared in Talevski as the Court began to evaluate whether 

the disputed Medicaid provisions conferred federal rights. 
14 No. 21-2325 

Talevski did not cite Blessing in that portion of the opinion, nor 

did it disapprove of Blessing. 

We do not see a fundamental difference between the Talevski/Gonzaga standard for unambiguous conferral of rights enforceable under section 1983 and the first and third Blessing

factors, which require an intended benefit for the plaintiff and 

a binding obligation on the states. 520 U.S. at 340–41. Or to be 

more precise, we do not see a difference that would change 

the outcome of this case. Talevski teaches that “courts must 

employ traditional tools of statutory construction to assess 

whether Congress has ‘unambiguously conferred’ ‘individual 

rights upon a class of beneficiaries’ to which the plaintiff belongs.” 599 U.S. at 183, quoting Gonzaga, 536 U.S. at 283, 285–

86. 

Given the way this case has evolved and the Court’s instruction to reconsider in light of Talevski, the most prudent 

course is to analyze the key statutory provisions first under 

the instructions of Talevski. We do so next in Part II-B. Then, at 

some risk of redundancy, in Part II-C, we analyze the question 

again using the Blessing factors. In Part II-D, we consider 

whether Congress established another remedial scheme incompatible with using section 1983 in disputes like this.

B. Applying the Talevski Standard

We start with the text of section 1396u-2(f), the provision 

central to this appeal: 

Timeliness of payment; adequacy of payment 

for primary care services. A contract under section 1396b(m) of this title with a medicaid managed care organization shall provide that the organization shall make payment to health care 
No. 21-2325 15

providers for items and services which are subject to the contract and that are furnished to individuals eligible for medical assistance under 

the State plan under this subchapter who are enrolled with the organization on a timely basis 

consistent with the claims payment procedures 

described in section 1396a(a)(37)(A) of this title, 

unless the health care provider and the organization agree to an alternate payment schedule....

Section 1396u-2(f) cross-references sections 1396b(m) and 

1396a(a)(37)(A). Section 1396b(m) describes the State’s contract with an MCO. Section 1396a(a)(37)(A) declares that a 

State plan for medical assistance must ... 

(37) provide for claims payment procedures which 

(A) ensure that 90 per centum of claims for payment (for which no further written information or 

substantiation is required in order to make payment) made for services covered under the plan 

and furnished by health care practitioners through 

individual or group practices or through shared 

health facilities are paid within 30 days of the date 

of receipt of such claims and that 99 per centum of 

such claims are paid within 90 days of the date of 

receipt of such claims.... 

§ 1396a(a)(37)(A). We agree with Saint Anthony that section 

1396u-2(f) grants providers a right to State procedures that 

will ensure timely payment from the MCOs. 
16 No. 21-2325 

1. Statutory Text

The State’s strongest argument against plaintiff’s reliance 

on section 1983 is that section 1396u-2(f) does not use the term 

“right” or an equivalent, and that the State has done its job by 

ensuring that plaintiff has contractual rights it can enforce directly against MCOs. The absence of the word “right” is not 

conclusive, however. As noted, both Talevski and Gonzaga

teach that courts “must employ traditional tools of statutory 

construction to assess whether Congress has ‘unambiguously 

conferred’ ‘individual rights upon a class of beneficiaries’ to 

which the plaintiff belongs.” Talevski, 599 U.S. at 183, quoting 

Gonzaga, 536 U.S. at 283, 285–86. 

To begin, providers like Saint Anthony are the intended 

beneficiaries of the prompt payment term in section 1396u2(f). The text requires states to ensure that the state’s contracts 

with MCOs “shall provide” that the MCOs “shall make payment to health care providers ... on a timely basis....” 42 U.S.C. 

§ 1396u-2(f) (emphasis added). No one benefits more directly 

from a requirement for timely payments to providers than the 

providers themselves. Cf. BT Bourbonnais Care, LLC v. Norwood, 866 F.3d 815, 821 (7th Cir. 2017) (“Who else would have 

a greater interest than the [nursing facility operators] in the 

process ‘for determination of rates of payment under the 

[state] plan for ... nursing facility services’?” (second alteration and omission in original) (quoting 42 U.S.C. 

1396a(a)(13)(A)).4

4 In our original decision, we rejected the State’s argument that the 

term “health care providers” includes practitioners but not hospitals. 

40 F.4th at 505–06. The State has not pressed the point further on remand, 

so we do not address it further in this opinion. 
No. 21-2325 17

Section 1396u-2(f) grants providers a right, not merely a 

generalized benefit. It is here that we disagree with the district 

court. In granting the motion to dismiss, the court invoked 

Gonzaga, asserting that providers received only “a generalized 

‘benefit’” from section 1396u-2(f), which “isn’t good enough” 

to constitute a right enforceable under section 1983. Saint 

Anthony Hospital, 548 F. Supp. 3d at 734, quoting Gonzaga, 536 

U.S. at 283. The district court concluded that section 1396u2(f) “itself does not entitle providers to much of anything, and 

does not contain any ‘explicit rights-creating terms.’” Id., 

quoting Gonzaga, 536 U.S. at 284. For its part, the State seems 

to adopt something like Justice Holmes’ theory of contract, 

under which one party is free to breach as long as it is willing 

to pay damages to the other party. The State is claiming an 

unfettered right to decide whether to assert its contractual 

rights against MCOs, leaving providers like Saint Anthony to 

fend for themselves as best they can in the face of systemic 

and disabling breaches by MCOs. 

We read the statute differently, considering the statutory 

text and its context and history. We read the Medicaid Act in 

general and section 1396u-2(f) in particular as ensuring that 

providers like plaintiff have contractual rights against MCOs, 

but also federal rights to have state officials use the State’s 

contractual rights and do their jobs by implementing procedures and systems to ensure that MCOs actually make the 

promised timely payments.

Gonzaga provides a useful contrast regarding rights-creating language. In Gonzaga, a former student sued the university and an employee under section 1983 for allegedly violating his rights under the Family Educational Rights and Privacy Act (FERPA). Part of the statutory language at issue 
18 No. 21-2325 

directed the Secretary of Education that “‘[n]o funds shall be 

made available’ to any ‘educational agency or institution’ 

which has a prohibited ‘policy or practice’” of permitting the 

release of education records without parents’ written consent. 

Gonzaga, 536 U.S. at 287 (alteration in original), quoting 20 

U.S.C. § 1232g(b)(1); see also § 1232g(b)(2). That prohibited 

activity is allegedly what occurred in the case. 

The Supreme Court concluded that Congress did not 

grant an individual whose interests were violated under 

FERPA a right enforceable through section 1983. Because the 

statutory provisions did not have an individualized focus, 

they failed Blessing factor one: “[The] provisions further speak 

only in terms of institutional policy and practice, not individual instances of disclosure. Therefore, as in Blessing, they have 

an ‘aggregate’ focus, they are not concerned with ‘whether the 

needs of any particular person have been satisfied,’ and they 

cannot ‘give rise to individual rights.’” Gonzaga, 536 U.S. at 

288 (internal citation omitted), quoting Blessing, 520 U.S. at 

343–44. The Court also highlighted that the Secretary of Education could take away funds only if the university did not 

substantially comply with the statutory requirements. This fact 

contributed to the understanding that the focus was on systemwide performance rather than individual instances of improper disclosure. Gonzaga, 536 U.S. at 279, 281–82. Finally, 

since FERPA’s provisions spoke only to the Secretary and directed him or her to withdraw funding from schools that had 

a “prohibited policy or practice,” the Court determined that 

their focus was “two steps removed from the interests of individual students and parents.” Id. at 287 (internal citation 

and quotation marks omitted). The provisions therefore failed 

to confer an individual right enforceable under section 1983.
No. 21-2325 19

The opposite is true here. Section 1396u-2(f) is concerned 

with whether the needs of particular persons and entities—

providers like Saint Anthony—have been satisfied. The statutory text specifies that the State “shall provide” that MCOs 

“shall make payment to health care providers ... on a timely 

basis.” 42 U.S.C. § 1396u-2(f). The focus of section 1396u-2(f) 

is not “two steps removed” from the interest of providers. Its 

focus is directly on the interest Saint Anthony asserts here: ensuring that providers receive timely payment from MCOs. 

And the provision is not concerned only with whether MCOs 

in the aggregate pay providers on the 30/90 pay schedule, but 

whether individual providers are receiving the payments in 

the timeframe promised. 

We see this in the provision’s close attention to providerspecific exemptions from the 30/90 pay schedule. Section 

1396u-2(f) says that its mandate applies “unless the health 

care provider and the organization agree to an alternate payment schedule.” It establishes a personal right to timely payment, which all providers are entitled to insist upon. Cf. 

Planned Parenthood of Indiana, 699 F.3d at 974 (Medicaid state 

plan requirement permitting all eligible recipients to receive 

medical assistance from the provider of their choice established “a personal right to which all Medicaid patients are entitled” but, implicitly, need not accept (emphasis added)). Either way, the focus is on the individual provider. The focus is 

not on whether MCOs in the aggregate substantially comply 

with the timely payment requirement. Section 1396u-2(f) is 

thus not just a benchmark for aggregate performance.

That conclusion finds support in our precedents under

other Medicaid provisions. Section 1396a(a)(10)(A) provides 

that “[a] State plan for medical assistance must ... provide ... 
20 No. 21-2325 

for making medical assistance available ... to [] all [eligible] 

individuals.” We have held that the provision confers private 

rights to individuals enforceable under section 1983. See Miller by Miller v. Whitburn, 10 F.3d 1315, 1319–20 (7th Cir. 1993); 

accord, Bontrager v. Indiana Family & Social Services Admin., 

697 F.3d 604, 607 (7th Cir. 2012) (reaffirming Miller’s rights 

analysis after Blessing and Gonzaga). In Miller, we found it significant that the State was required to provide medical assistance to all eligible individuals. 10 F.3d at 1319. The same is 

true here, but with respect to timely payments to providers. 

2. Context and History

The context and history of section 1396u-2(f) support finding a right enforceable under section 1983. Context and history are standard tools in construing statutes, of course, and 

Talevski and Gonzaga instruct courts to use them in answering 

such questions about applying section 1983. 599 U.S. at 183; 

536 U.S. at 283–86. 

Under the original fee-for-service model of Medicaid 

reimbursement, the State is responsible for making prompt 

payments to providers at reasonable rates. The 30-day/90-

percent schedule for payments by MCOs in section 1396u-2(f) 

is incorporated from section 1396a(a)(37)(A), which imposes 

that mandatory schedule on State payments in the fee-forservice system. The State has no discretion to avoid making 

payments on that schedule, and that provision grants 

enforceable rights to providers like Saint Anthony. A few 

years before Congress adopted section 1396u-2(f) for 

managed care systems, the Supreme Court had decided 

Wilder v. Virginia Hospital Ass’n, 496 U.S. 498 (1990). Wilder

held that the Boren Amendment, which required States to pay 

Medicaid providers rates that were “reasonable and adequate 
No. 21-2325 21

to meet the costs of an efficiently and economically operated 

facility,” created rights enforceable under section 1983 with 

declaratory and injunctive relief to require state officials’ 

compliance. Id. at 510, 524. 

Congress later repealed the Boren Amendment, but the 

reasoning of Wilder extends to the statutory provision 

governing the timing of payments of those rates, the fee-forservice prompt payment rule of section 1396a(a)(37)(A). See, 

e.g., Appalachian Regional Healthcare v. Coventry Health & Life 

Insurance Co., 970 F. Supp. 2d 687, 697–99 (E.D. Ky. 2013) 

(denying summary judgment for state officials in section 1983 

case to enforce section 1396u-2(f)); accord, Pee Dee Health Care, 

P.A. v. Sanford, 509 F.3d 204, 211–12 (4th Cir. 2007) (following 

Wilder and allowing use of section 1983 to enforce another 

Medicaid payment requirement under fee-for-service model); 

New Jersey Primary Care Ass’n v. New Jersey Dep’t of Human 

Services, 722 F.3d 527, 539–43 (3d Cir. 2013) (allowing use of 

section 1983 to enforce another Medicaid payment 

requirement under managed care); Community Health Care 

Ass’n of New York v. Shah, 770 F.3d 129, 157 (2d Cir. 2014)

(same); Rio Grande Cmty. Health Ctr., Inc. v. Rullan, 397 F.3d 56, 

74–75 (1st Cir. 2005) (same). 

Section 1396u-2(f) and the other statutory provisions that 

enabled the dramatic expansion of managed care use in state 

Medicaid programs were part of legislation enacted seven 

years after Wilder, in the Balanced Budget Act of 1997, Pub. L. 

No. 105-33, 111 Stat. 251 (1997). Managed-care provisions began with section 4701 of the Act. 111 Stat. at 489. Section 

1396u-2(f) was part of section 4708(c) of the Act. 111 Stat. at 

506. Given the timing, when Congress extended the prompt 

payment rules of section 1396a(a)(37)(A) to managed care in 
22 No. 21-2325 

section 1396u-2(f), providers like Saint Anthony already had 

a recognized right to prompt payments. Under Wilder, they 

could enforce that right under section 1983 with declaratory 

and injunctive relief. We are aware of no indication that Congress intended to cut back on those rights in 1997 when it enacted section 1396u-2(f) to extend the prompt payment rule to 

managed care. 

Talevski shows that courts should pay attention to statutory context when addressing these questions. A good example was the treatment of the requirement in Talevski that a 

nursing home give a resident and his or her family advance 

notice that the home intends to discharge the resident. That 

statutory requirement is not phrased in terms of a “right” to 

such notice. The Court observed, however, that it is “[n]estled 

in a paragraph” with the heading “transfer and discharge 

rights.” 599 U.S. at 184–85. The requirement for notice is also 

phrased in terms of the resident’s welfare, health, and needs, 

lending further and ultimately sufficient weight to the conclusion that the notice requirement was enforceable under section 1983. Id. at 185. 

The prompt payment rule for managed care at issue here

has similar indications of enforceable rights. In the Balanced 

Budget Act of 1997, which adopted section 1396u-2(f) and so 

many other managed care provisions, section 4708(c) was entitled: “Assuring Timeliness of Provider Payments.” 111 Stat. 

at 506. This language signaled that Congress intended section 

1396u-2(f) to “assure,” i.e., to guarantee, timely payment to 

providers. That language of assurance further supports recognizing a right enforceable under section 1983.

That understanding is also consistent with later congressional action. In 2009 Congress enacted 42 U.S.C. § 1396u-2(h) 
No. 21-2325 23

as part of the American Recovery and Reinvestment Act of 

2009. See Pub. L. No. 111-5, 123 Stat. 115, § 5006(d) (2009). 

That subsection established special rules for “Indian enrollees, Indian health care providers, and Indian managed care 

entities.” 123 Stat. at 507. Relevant to our purposes, section 

1396u-2(h)(2)(B) cross-references section 1396u-2(f) and describes it as the “rule for prompt payment of providers”:

(2) Assurance of payment to Indian health care 

providers for provision of covered services

Each contract with a managed care entity 

under section 1396b(m) of this title or under 

section 1396d(t)(3) of this title shall require 

any such entity, as a condition of receiving 

payment under such contract, to satisfy the 

following requirements:

... 

(B) Prompt payment

To agree to make prompt payment (consistent with rule for prompt payment of providers under section 1396u–2(f) of this title) 

to Indian health care providers that are 

participating providers with respect to 

such entity....

42 U.S.C. § 1396u-2(h)(2)(B) (emphasis added). 

We recognize that Wilder may lie close to the outer edge of 

the line for section 1983 cases under Spending Clause legislation. Nevertheless, the Court was invited in Talevski to overrule Wilder and chose not to do so. Recognizing section 1396u2(f) as creating rights enforceable under section 1983 does not 
24 No. 21-2325 

push the logic of Wilder or Talevski itself any further than the 

Court has already taken it. 

Section 1396u-2(f) gives providers like plaintiff a right to 

have state officials do their jobs by assuring that MCOs make 

timely payments. Section 1396u-2(f) mandates that the State’s 

contracts with the MCOs require the MCOs to pay providers 

on the 30/90 pay schedule. The State, however, asserts that 

section 1396u-2(f) does not impose a duty on the State even to 

try to ensure that MCOs actually do what their contracts say. 

The State’s theory is that the statute requires only that a provision in the paper contract specify the timely payment obligation. The State may then, at its unfettered discretion, try to 

ensure the MCOs’ compliance—or not. If MCOs fail to pay 

providers according to the 30/90 pay schedule, no matter how 

blatantly and systematically, the State contends it is free to do 

nothing. It may choose to leave providers to do their best to

try to enforce their own contractual rights. In HFS’s view, 

nothing in section 1396u-2(f) requires the State itself to do anything more to ensure prompt payment. Put differently, if the 

contract between an MCO and the State contains a clause ensuring timely payment for providers on the 30/90 pay schedule, the State contends it has met its duty under section 1396u2(f), regardless of actual performance. 

We do not read section 1396u-2(f) as permitting such a 

hands-off approach. Nor would a reasonable state official 

deciding whether to accept federal Medicaid money have 

expected she could take that hands-off approach to MCO 

payments to providers. Again, when interpreting statutes for 

these purposes, Talevski and Gonzaga teach us to “employ 

traditional tools of statutory construction to assess whether 

Congress has ‘unambiguously conferred’ ‘individual rights’”
No. 21-2325 25

enforceable under section 1983. Talevski, 599 U.S. at 183, 

quoting Gonzaga, 536 U.S. at 283, 285. 

When interpreting statutes, often the “meaning—or 

ambiguity—of certain words or phrases may only become 

evident when placed in context.” King v. Burwell, 576 U.S. 473, 

486 (2015), quoting FDA v. Brown & Williamson Tobacco Corp., 

529 U.S. 120, 132 (2000). We must read texts “in their context 

and with a view to their place in the overall statutory 

scheme.” Id., quoting Brown & Williamson, 529 U.S. at 133; see 

also Davis v. Michigan Dep’t of Treasury, 489 U.S. 803, 809 

(1989) (“[S]tatutory language cannot be construed in a 

vacuum. It is a fundamental canon of statutory construction 

that the words of a statute must be read in their context and 

with a view to their place in the overall statutory scheme.”). 

And to the extent possible, we must “ensure that the statutory 

scheme is coherent and consistent.” Ali v. Federal Bureau of 

Prisons, 552 U.S. 214, 222 (2008). That’s what the Supreme 

Court did in both Talevski, finding several rights of patients 

under the Medicaid Act enforceable under section 1983, and

in Gonzaga, rejecting such rights claims under FERPA. 

Interpreting section 1396u-2(f) as only a “paper” requirement conflicts with these principles of statutory interpretation. HFS is correct that Congress intended MCOs to “assume 

day-to-day functions previously performed by States under a 

traditional fee-for-service model.” Appellee HFS’s Br. at 30. 

But Congress did not intend for MCOs to go unsupervised. 

It has long been obvious to all that under the managedcare system of Medicaid, MCOs have a powerful incentive to 

delay payment to providers for as long as possible and ultimately to underpay to maximize their own profits. It’s a classic agency problem: MCOs are expected to act in the 
26 No. 21-2325 

providers’ interests, but their interests are not the same. Regarding timely payments, they are in direct conflict.

The Medicaid Act contains several provisions to counteract that problem in addition to section 1396u-2(f). They help 

inform our understanding of the particular provision in dispute here.

The Act imposes reporting and oversight responsibilities 

on states that opt for the managed care model. For example, 

section 1396b(m)(2)(A)(iv) requires a state’s contract with an 

MCO to permit the state “to audit and inspect any books and 

records” of an MCO related to “services performed or determinations of amounts payable under the contract.” Section 

1396u-2(c)(2)(A)(i) further specifies that a state’s contract with 

an MCO must “provide for an annual (as appropriate) external independent review” of the “timeliness” of MCO “services for which the organization is responsible,” including 

payments. The Medicaid Act thus requires HFS to take steps 

to monitor MCO payment activities to gather performance 

data and to understand how the system is functioning. 

The Act further specifies that a state must establish 

provisions for imposing “intermediate sanctions” against an 

MCO—short of cancelling an entire, major contract—that the 

state can use when an MCO underperforms. 42 U.S.C. 

§ 1396u-2(e). The State can put an MCO on a performance 

plan, for example. As discovery in this case revealed, HFS has 

taken that step with CountyCare, an MCO, after CountyCare 

paid only 40% of claims within 30 days and only 62% of claims 

within 90 days. The CountyCare case turned up evidence of 

the agency problem in action. The State found that 

CountyCare’s Medicaid money was improperly diverted 
No. 21-2325 27

from the Medicaid program to pay other county government 

bills rather than health care providers.5

In such a case, where an MCO has “repeatedly failed to 

meet the requirements” of its contract with the State and the 

requirements in section 1396u-2, “the State shall (regardless 

of what other sanctions are provided) impose the sanctions 

described in subparagraphs (B) and (C) of paragraph (2).” 

42 U.S.C. § 1396u-2(e)(3). Subparagraph (B) details the appointment of temporary management to oversee the MCO. 

42 U.S.C. § 1396u-2(e)(2). Subparagraph (C) permits individuals enrolled with the MCO to terminate enrollment without 

cause. Id.

Federal Medicaid regulations add to the State’s responsibilities here. For instance, 42 C.F.R. § 438.66(a) (2016) provides: “The State agency must have in effect a monitoring system for all managed care programs.” Section 438.66(b)(3) 

specifies that the State’s monitoring system “must address all 

aspects of the managed care program, including the performance of each MCO ... in ... [c]laims management.” It’s hard 

to imagine a more central aspect of claims management than 

timely payments. Saint Anthony alleges here that HFS is failing even to collect the required data on the timeliness of MCO 

payments.

These responsibilities support the conclusion that Congress imposed on states a duty to ensure that the right to 

5 As with the information mentioned above in note 2 about 

Mercyhealth, we may also consider the CountyCare information in 

evaluating the Rule 12(b)(6) motion without converting the motion into 

one for summary judgment. The information elaborates on and illustrates 

factual allegations in the complaint. E.g., Geinosky, 675 F.3d at 745 n.1. 
28 No. 21-2325 

timely payment in section 1396u-2(f) is honored in real life. 

The State argues here that Congress intended to leave the issue of real-life effectiveness to the unfettered discretion of 

state and federal oversight authorities. But Congress chose 

language that makes timely payment more than just a paper 

requirement that would allow state officials to put the terms 

in their MCO contracts and then forget about them, leaving 

providers to fend for themselves. 

The more coherent reading of the statute as a whole is that 

Congress intended the State to engage in these reporting and 

oversight responsibilities, and, if it becomes evident that 

MCOs are systematically not paying providers on a timely basis, to impose on the State an obligation to act under section 

1396u-2(f) to secure providers’ rights. These mandatory oversight responsibilities would make little sense if that were not 

the case. The provision’s mandatory language, coupled with 

the additional oversight and reporting responsibilities, supports the reading that section 1396u-2(f) must be doing more 

than imposing merely the formality of contract language. Providers’ right to timely payment must exist in reality. Section 

1396u-2(f) defines the minimum terms of the provider’s right 

to timely payment and is provider-specific. It uses “individually focused terminology,” Gonzaga, 536 U.S. at 287, unmistakably “phrased in terms of the persons benefited.” Id. at 284, 

quoting Cannon v. University of Chicago, 441 U.S. 677, 692 n.13 

(1979). 

C. The Blessing Factors

The foregoing analysis under Talevski is sufficient to support our bottom-line decision here. We reach the same result 

by applying the so-called “Blessing factors,” which both we 

and the district court used to frame our earlier opinions: 
No. 21-2325 29

We have traditionally looked at three factors 

when determining whether a particular statutory provision gives rise to a federal right. First, 

Congress must have intended that the provision 

in question benefit the plaintiff. Second, the 

plaintiff must demonstrate that the right assertedly protected by the statute is not so vague and 

amorphous that its enforcement would strain 

judicial competence. Third, the statute must unambiguously impose a binding obligation on 

the States. In other words, the provision giving 

rise to the asserted right must be couched in 

mandatory, rather than precatory, terms. 

Blessing, 520 U.S. at 340–41 (internal citations and quotations 

omitted). Under Blessing, if these three elements are satisfied, 

“the right is presumptively enforceable under section 1983.” 

Talevski v. Health & Hospital Corp. of Marion County, 6 F.4th 713, 

720 (7th Cir. 2021), aff’d sub nom. Health & Hospital Corp. of 

Marion County v. Talevski, 599 U.S. 166 (2023). A defendant 

may overcome this presumption by showing that Congress 

shut the door to private enforcement, a question we address 

below in Part II-D. See Talevski, 599 U.S. at 186–89, citing 

among other cases Gonzaga, 536 U.S. at 284, and n.4, and

Blessing, 520 U.S. at 347–48. 

As we explained in our original opinion, section 1396u-2(f) 

grants providers a right to timely payment from the MCOs 

that the State must safeguard because the right satisfies all 

three Blessing factors. 40 F.4th at 505–14. First, providers are 

the intended beneficiaries of section 1396u-2(f). Second, enforcing the 30-day/90-percent pay schedule would not strain 

judicial competence. Third, the statute unambiguously 
30 No. 21-2325 

imposes a binding obligation on the State. We address each 

point in turn.

1. Factor One: Intended Beneficiaries

The first Blessing factor asks whether Congress intended 

section 1396u-2(f) to benefit providers like Saint Anthony and 

whether it intended that benefit to be a right, as distinct from 

a generalized entitlement. Both answers are yes.

On these questions, the Blessing test is congruent with the 

test set forth in Talevski and Gonzaga. First, providers are the 

intended beneficiaries of section 1396u-2(f). The text requires 

MCOs to contract that they “shall make payment to health 

care providers ... on a timely basis....” 42 U.S.C. § 1396u-2(f) 

(emphasis added). No one benefits more directly from a requirement for timely payments to providers than the providers themselves. Cf. BT Bourbonnais Care, 866 F.3d at 821 (“Who 

else would have a greater interest than the [nursing facility 

operators] in the process ‘for determination of rates of payment under the [state] plan for ... nursing facility services’?” 

(second alteration and omission in original) (quoting 42 

U.S.C. § 1396a(a)(13)(A)). 

In applying the first Blessing factor, we also conclude that 

section 1396u-2(f) grants providers a right, not merely a generalized benefit, for the reasons explained above at pages 17–

28. We need not repeat that discussion here. At bottom, section 

1396u-2(f) defines the minimum terms of the provider’s right 

to timely payment and is provider-specific. It uses “individually focused terminology,” Gonzaga, 536 U.S. at 287, unmistakably “phrased in terms of the persons benefited,” id. at 284, 

quoting Cannon, 441 U.S. at 692 n.13, and satisfies Blessing factor one.
No. 21-2325 31

2. Factor Two: Administration

Blessing factor two requires a plaintiff to show that the 

right assertedly protected by the statute is not so vague and 

amorphous that its enforcement would strain judicial 

competence. Blessing, 520 U.S. at 340–41. This factor is not 

expressly a part of the Supreme Court’s approach in Talevski

and Gonzaga, but it surely is implicit. We doubt the Court 

would approve a section 1983 remedy to enforce a right so

vague and amorphous as to strain judicial competence. 

The State does not appear to have contested in this appeal 

whether section 1396u-2(f) satisfies this standard, nor could 

it. Saint Anthony argues that the State has been violating its 

right to timely payment by failing to abide by section 1396u2(f)’s statutory mandate of trying to ensure that the MCOs are 

paying providers in line with the 30-day/90-percent pay 

schedule. Determining whether payments met the 30/90 pay 

schedule is “administrable,” “fully capable of judicial resolution,” and “falls comfortably within the judiciary’s core interpretative competence.” Planned Parenthood of Indiana, 699 F.3d 

at 974. 

3. Factor Three: Obligation

The third Blessing factor asks whether section 1396u-2(f) 

unambiguously imposes a binding obligation on HFS. This 

requires answering two subsidiary questions: (1) what is 

HFS’s duty under the statute, and (2) is that duty mandatory? 

In a typical private right dispute, the emphasis is on the 

second question. See, e.g., BT Bourbonnais Care, 866 F.3d at 

822. Section 1396u-2(f) plainly contains mandatory language: 

“A [State] contract ... with a medicaid managed care organization shall provide that the organization shall make payment 
32 No. 21-2325 

to health care providers ... on a timely basis....” 42 U.S.C. 

§ 1396u-2(f) (emphasis added). The double use of “shall” rebuts the notion that the State’s obligation is anything less than 

mandatory. For the reasons we explained above at pages 17–

28, section 1396u-2(f) satisfies the third Blessing factor.

4. Counterarguments

a. An Ambiguous Contract?

HFS counters that the duty imposed by section 1396u-2(f) 

is at the very least ambiguous. HFS relies on Pennhurst State 

School & Hospital v. Halderman, 451 U.S. 1, 17 (1981), which 

taught that Congress may impose conditions on grants of federal money only if it does so “unambiguously” and “with a 

clear voice.” In HFS’s view, if Congress wanted to impose the 

significant duty on states that Saint Anthony advocates, it 

should have done so more explicitly. Section 1396u-2(f) is not 

a clear statement, it’s ambiguous, and therefore cannot carry 

the weight Saint Anthony gives it. So says HFS. 

We think Congress spoke sufficiently clearly here. The 

clear-statement rule explains that “States cannot knowingly 

accept conditions of which they are ‘unaware’ or which they 

are ‘unable to ascertain.’” Arlington Central School Dist. Bd. of 

Educ. v. Murphy, 548 U.S. 291, 296 (2006), quoting Pennhurst, 

451 U.S. at 17. Talevski, particularly the portion addressing 

pre-transfer notice rights, shows that courts can use ordinary 

tools of statutory construction to decide whether Congress 

was sufficiently clear. See 599 U.S. at 184–86. The Court has 

made similar points in applying similar clear statement rules. 

In authorizing a waiver of federal sovereign immunity, for example, “Congress need not ‘make its clear statement in a single section’ adopted at a single moment in time.” Department
No. 21-2325 33

of Agriculture Rural Development Rural Housing Service v. Kirtz, 

601 U.S. 42, 54 (2024), quoting Kimel v. Florida Bd. of Regents, 

528 U.S. 62, 76 (2000). “[W]hat matters is whether Congress 

has authorized a waiver of sovereign immunity that is ‘clearly 

discernible’ from the sum total of its work.” Id. at 54–55, quoting Lac du Flambeau Band of Lake Superior Chippewa Indians v. 

Coughlin, 599 U.S. 382, 388 (2023). 

To determine whether Congress spoke clearly to create 

rights in this case, “we must view [section 1396u-2(f) and the 

Medicaid Act] from the perspective of a state official who is 

engaged in the process of deciding whether the State should 

accept [Medicaid] funds and the obligations that go with 

those funds.” Murphy, 548 U.S. at 296. 

A reasonable state official planning to launch a managedcare program would have understood that the state would 

have to try to ensure that providers receive prompt payment 

from MCOs. Such an official would not reasonably have concluded that Congress intended that the “rule for prompt payment of providers” be only a proverbial paper tiger. See 

§ 1396u-2(h)(2)(B) (describing section 1396u-2(f) as the “rule 

for prompt payment of providers”). That conclusion would 

conflict with the state’s oversight and reporting obligations 

and its enforcement duties under the Medicaid Act.

b. Remedies and State Discretion in Enforcement

HFS also argues that section 1396u-2(f) cannot impose this 

duty on the State because it “would negate[] section 1396u2(e)’s express grant to States of discretion to seek termination 

of an MCO’s contract for violating section 1396u-2[f] or its 

contract with the State.” Appellee HFS’s Br. at 27. The 
34 No. 21-2325 

argument highlights a key issue in this appeal and one that 

helps explain our disagreement with the district court. 

Saint Anthony requested several forms of relief in its complaint. One of those was canceling a contract with an MCO 

that fails to pay on time after State intervention. HFS argues 

that forcing it to cancel a contract with an MCO because it did 

not meet the 30/90 pay schedule would infringe on the State’s 

discretion to decide when it will terminate such a contract, 

which is expressly preserved by the statute. See § 1396u2(e)(4)(A) (“In the case of a managed care entity which has 

failed to meet the requirements of this part or a contract under 

section 1396b(m) or 1396d(t)(3) of this title, the State shall have 

the authority to terminate such contract....”). In HFS’s view, 

that means section 1396u-2(f) cannot impose a duty on HFS

to ensure providers receive timely payment because it might 

require HFS to take action that is expressly reserved to its discretion.

We are inclined to agree with HFS that a district court 

could not force the State to cancel a contract with an MCO. 

Canceling a contract with any one of the seven MCOs in Illinois might well cause a “massive disruption” to the State’s 

Medicaid program. Appellee HFS’s Br. at 28. HFS and only 

HFS has the discretion to decide when and why it will invite 

that type of disruption. Section 1396u-2(e)(4)(A) is clear on 

that point. See also 42 C.F.R. § 438.708 (when states can terminate an MCO contract) and § 438.730 (CMS can sanction an 

MCO by denying payment). To the extent that Saint Anthony 

requests such relief, we doubt the district court has authority 

to impose it, though we need not answer that question definitively at this stage, on the pleadings. Perhaps sufficiently 

egregious facts might convince us otherwise, but that 
No. 21-2325 35

question about a worst-case scenario can be addressed if and 

when it actually arises and matters. 

c. The Scope of Judicial Remedies

Continuing with the theme of assuming the worst, HFS 

also argues that reading this duty into section 1396u-2(f) 

would lead to the district court acting effectively as the Medicaid claims processor for the State. In the State’s parade of 

horribles, that’s the prize-winning float. Given the practical 

difficulties in judicial enforcement that would come with recognizing a duty here, HFS contends, such a duty could not be 

what Congress intended. We agree that any form of retaillevel relief, i.e., requiring the district court to adjudicate issues 

at the claim-by-claim level, would strain judicial resources 

and seem to conflict with the arbitration clauses in the contracts between the MCOs and Saint Anthony. A process that 

required a district judge to micro-manage claims would be inappropriate here. 

These two limits on remedies in a section 1983 action—not

turning the district court into a claims processor and not cancelling an MCO contract—do not persuade us, however, that 

we should affirm dismissal and deny all relief on the theory 

that the State has no duty at all to ensure timely payment under section 1396u-2(f). As noted, HFS can take a number of

other steps at the system level to address chronically late 

and/or short payments by MCOs. Those actions could include 

a variety of “intermediate sanctions” under section 1396u2(e)(2). Those and other actions would neither force the State 

to cancel an MCO contract nor turn the district court into a 

claims processor. If Saint Anthony can prove its claims of systemic delay and/or underpayment, we are confident that the 
36 No. 21-2325 

district court could craft injunctive relief to require HFS to do 

something to take effective action. 

We draw helpful guidance on these issues of potential 

equitable relief from O.B. v. Norwood, 838 F.3d 837 (7th Cir. 

2016). There, we affirmed a preliminary injunction against the 

HFS director in a suit brought by Medicaid beneficiaries who 

sought to enforce sections of the Medicaid Act requiring the 

State to find nurses to provide home nursing for children enrolled in Medicaid. HFS argued in O.B. that it had no obligation to find nurses (or to act at all). Id. at 842. We rejected that 

argument: 

Certainly the defenses thus far advanced by 

HFS are weak. The primary defense is that nothing in the Medicaid statute “required [HFS] to 

ensure that Plaintiffs would receive medical 

care from nurses in their homes.” But it was HFS 

that decided that home nursing was the proper 

treatment for O.B., the other named plaintiffs, 

and the other members of the class.

Id. at 840 (alteration in original). 

We recognized in O.B. the difficulties state officials faced 

in providing the needed nurses. There was no guarantee that 

compliance with the injunction would solve the plaintiffs’ 

problems. In affirming the preliminary injunction, though, we 

explained that the injunction “should be understood simply 

as a first cut: as insisting that the State do something rather 

than nothing to provide in-home nursing care for these children.” Id. at 842; see also id. at 844 (Easterbrook, J., concurring) 

(“All a district court can do in a situation such as this is require 

[the State] to start trying.”). If Saint Anthony can prove its 
No. 21-2325 37

claims of systemic delay and/or underpayment, the same is 

true here. 

The State decided to switch from a fee-for-service model 

where the State itself was responsible for making timely and 

adequate payments to providers, to a Medicaid program 

dominated by managed care. The State cannot now claim it 

has no obligation to ensure that Medicaid providers serving 

patients under that program receive timely payment. O.B. instructs that where HFS has a duty, a district court may order 

it to do something when that duty is not being met, at least as 

a first cut. Id. at 842. The court may then need to supervise the 

effects of the injunction and the State’s response and adjust 

the court’s orders as circumstance and equity may require. 

The district court should not let the perfect become the enemy 

of the good, nor should the possibility that a first cut at an 

injunction might not work sufficiently justify a denial of any 

relief at all. 

To be clear, we are not suggesting that an injunction 

ordering the State officials literally to do only “something” 

would be sufficient. Federal Rule of Civil Procedure 

65(d)(1)(C) requires an injunction to “describe in reasonable 

detail ... the act or acts restrained or required.” At the same 

time, we have often recognized that district courts have 

substantial equitable discretion in crafting injunctions so that 

they are both understandable by those enjoined and effective 

to accomplish their purposes. Eli Lilly & Co. v. Arla Foods, Inc., 

893 F.3d 375, 384–85 (7th Cir. 2018); H-D Michigan, LLC v. 

Hellenic Duty Free Shops S.A., 694 F.3d 827, 843 (7th Cir. 2012), 

citing Russian Media Group, LLC v. Cable America, Inc., 598 F.3d 

302, 307 (7th Cir. 2010). If Saint Anthony can prove systemic 

failures by MCOs to comply with the 30/90 payment schedule 
38 No. 21-2325 

with reasonably transparent payment information, we would 

expect the district court to explore with the parties what steps 

State officials could reasonably be expected to take to correct 

those systemic failures before framing an appropriate and 

effective injunction. And if such an injunction later needed to 

be modified based on experience, the district court would 

have ample power to do so at the request of a party or on its 

own motion.

O.B. also makes clear that a district court can craft injunctive relief within its equitable powers and discretion even in 

circumstances where some more drastic remedial measures 

may be off the table. See O.B., 838 F.3d at 844 (Easterbrook, J., 

concurring) (identifying certain forms of relief that were off 

limits while also instructing the district judge to try different 

things and to “keep tabs on what is happening and adjust the 

injunction as appropriate” to secure relief for plaintiffs); accord, Rizzo v. Goode, 423 U.S. 362, 376–77 (1976) (“Once a right 

and a violation have been shown, the scope of a district court’s 

equitable powers to remedy past wrongs is broad, for breadth 

and flexibility are inherent in equitable remedies.” (internal 

quotations and citation omitted)). Federal Rule of Civil Procedure 54(c) offers relevant guidance here, providing that any 

final judgment other than a default judgment “should grant 

the relief to which each party is entitled, even if the party has 

not demanded that relief in its pleadings.”

The converse is also true. If a complaint demands relief 

that is not available, the improper demand does not poison 

the well to defeat relief to which the party is otherwise entitled. If Saint Anthony succeeds on the merits of its claims, we 

believe the district court here will be able to craft a remedy to 
No. 21-2325 39

push the State toward complying with its duty to provide for 

timely and transparent payments to Saint Anthony.

We recognize that part of the rationale for adopting the 

managed-care model was to ease the State’s administrative 

burden. Measures that would force HFS to take a more aggressive oversight role could reduce some of the administrative benefits the State hoped to gain by the switch to managed 

care. As we have explained, however, the Medicaid Act permits states to shift major Medicaid duties to MCOs but does 

not allow States to wash their hands of effective oversight. On 

the contrary, the Medicaid Act in general, and section 1396u2(f) in particular, show that Congress recognized the troubling financial incentives inherent in a managed-care system 

and the need for effective oversight of MCOs and their treatment of providers’ claims for payment. Recall that the Act requires the State’s contracts with MCOs to include audit and 

inspection of MCO books and records, as well as annual external reviews of payment timeliness. The Act also requires 

the State to have available intermediate sanctions, short of 

cancelling the entire contract, that can be deployed if an MCO 

underperforms. 

Saint Anthony alleges here that HFS is falling far short on 

those oversight and monitoring duties. HFS cannot avoid 

those duties altogether on the theory that Saint Anthony also 

asked for certain remedies that might not be available in this 

section 1983 action. If the State cannot manage to carry out 

those oversight and monitoring duties, an effective remedy to 

enforce the requirements would honor the bargain struck 

when Illinois accepted funding for Medicaid in the first place. 

If Saint Anthony can prove its allegations, we do not view 

the judicial choice as a binary either-or: either the district 
40 No. 21-2325 

court must prepare to take over day-to-day claims management, or no judicial relief is available at all. The case is difficult, but the judicial options are not so limited. 

First, the Medicaid Act and the relevant contracts recognize that perfection is not required. That much is clear from 

the 30/90 pay schedule itself: pay 90% of clean claims within 

30 days and 99% within 90 days. 

Second, HFS itself seems to be able to tell the difference 

between minor problems and systemic ones, and there is reason to think it can identify systemic measures that can be effective without having HFS (let alone the district court) take 

over day-to-day claims management. As noted above, for example, HFS took action against CountyCare based on data 

showing that CountyCare “was not regularly meeting” the 

30/90 pay schedule. Decl. of Robert Mendonsa ¶ 16, Dkt. 86-

10. HFS investigated, demanded that CountyCare adopt a 

“Corrective Action Plan,” and reported that a few months after adopting such a plan, CountyCare “significantly reduced 

the number of outstanding claims that [were] older than 90 

days.” Id. ¶¶ 17–21. We need not and should not adopt a 

mathematical definition of “systemic” failures at the pleadings stage. That problem can await further factual development. (To use a metaphor often used in the law, a person can 

usually tell the difference between being in mountains, in foothills, or on a plain even if there is not a sharp boundary between mountains, foothills, and plains.)

For these reasons, we conclude that section 1396u-2(f) satisfies the third Blessing factor because the State has a binding 

obligation to try to ensure prompt payment for providers 

from MCOs. 
No. 21-2325 41

D. An Alternative Remedial System?

Since section 1396u-2(f) satisfies the Talevski requirement 

of an unambiguous statutory right and the three Blessing factors, the right to prompt payment is presumptively enforceable under section 1983. Talevski, 599 U.S. at 186. The Medicaid 

Act includes no express prohibition on enforcement under 

section 1983. The State contends, however, that a section 1983 

remedy is implicitly barred because it would be incompatible 

with remedies available under the Medicaid Act itself. As the 

Court in Talevski explained, the burden is on the defendant to 

make such a showing. 599 U.S. at 186; accord, Gonzaga, 536 

U.S. at 284 n.4. This is a “difficult showing.” Blessing, 520 U.S. 

at 346. 

Talevski explained that in the three cases where the Court

has found that more specific statutory and administrative remedial schemes were incompatible with section 1983, the statutes (a) had their own statute-specific private rights of action, 

(b) had specialized administrative procedures for those remedies, and (c) offered remedies more limited than those under 

section 1983. 599 U.S. at 189–90, citing Rancho Palos Verdes v. 

Abrams, 544 U.S. 113 (2005), Smith v. Robinson, 468 U.S. 992 

(1984), and Middlesex Cty. Sewerage Auth. v. Nat’l Sea Clammers 

Ass’n, 453 U.S. 1 (1981). None of those features are present in 

this case. That fact weighs heavily against finding implicit incompatibility here.

Still, if the MCOs are failing to abide by the contractual 

terms, says HFS, Saint Anthony should just enforce its own 

contracts with them. And providers like Saint Anthony are in 

the best position to “enforce their right to timely payment directly under their contracts with MCOs.” Appellee HFS’s Br. 

at 29. As HFS sees the matter, there is no need to permit 
42 No. 21-2325 

section 1983 actions to achieve Congress’s goal of enabling 

Medicaid providers to receive timely payment.

A contractual remedy may offer some prospect of relief to 

a provider like Saint Anthony. But HFS has not convinced us 

that Congress meant to leave providers on their own, or with 

only such help as state officials choose to provide. In other 

words, HFS has not shown that “allowing [section] 1983 actions to go forward in these circumstances ‘would be inconsistent with’” a “carefully tailored [Congressional] scheme.’” 

Blessing, 520 U.S at 346, quoting Golden State Transit Corp. v. 

City of Los Angeles, 493 U.S. 103, 107 (1989); accord, Talevski, 

599 U.S. at 190. Rather, Congress intended the State’s entire

Medicaid plan to ensure timely payment to providers. If, as 

Saint Anthony alleges, the plan has been failing to meet this 

requirement, repeatedly and systematically, we would not be 

surprised if provider-MCO arbitrations would do little to correct that problem on a systemic basis.

There is good reason to doubt that contractual remedies 

alone can vindicate the provider’s right to prompt payment. 

Saint Anthony files many thousands of Medicaid claims each 

year. If most claims are not paid on time, Saint Anthony’s option under the contract is to sue the MCO and/or to submit 

each claim for arbitration. Many other Medicaid providers 

across Illinois might need to do the same with each of the 

seven MCOs. That avenue represents a claim-by-claim adjudication on the individual provider-MCO level, across many 

thousands of claims, all in their own arbitrations. It’s not immediately obvious that this dispute-resolution system would 

even be manageable, let alone superior to a systemic solution 

implemented by HFS. At the very least, we are not persuaded 

that Congress, implicitly through the contractual model, 
No. 21-2325 43

created “a comprehensive enforcement scheme that is incompatible with individual enforcement under [section 1983].”

Gonzaga, 536 U.S. at 285 n.4, quoting Blessing, 520 U.S. at 341; 

accord, Talevski, 599 U.S. at 190–91. 

To sum up on the central question, for all of these reasons, 

we conclude that section 1396u-2(f) satisfies Talevski, Gonzaga, 

and Blessing and confers on plaintiff a right enforceable under 

section 1983 to have state officials use their powers to assure 

timely payments by MCOs. Saint Anthony has plausibly alleged a violation of the right that could, if proven, support injunctive relief. We therefore reverse the district court’s dismissal of this claim. 

We emphasize again, as in our earlier decision, that we are 

deciding this case only on the pleadings. This is a hard case 

with high stakes for the State, for Medicaid providers, and 

especially for Medicaid patients. There is one genuine binary 

choice in this case: whether to affirm dismissal of Saint 

Anthony’s claims under section 1983 for failure to state a 

claim—no matter how egregious and systemic the MCOs’ 

slow payments, no matter how little the State has done to 

ensure timely payments, and no matter how devastating the 

effects of the delays on Saint Anthony and its patients. The 

stakes for Saint Anthony are measured in millions of dollars. 

Looking more broadly, managed care contracts under 

Medicaid—with their inherent incentives to slow payments to 

providers—now control more than half of all Medicaid 

spending, hundreds of billions of dollars a year. Millions of 

Americans depend on that system for their health care.

Accordingly, we recognize the potential magnitude of the 

case. We also recognize the challenges it may present to the 

district court. If it turns out that resolving this dispute would 
44 No. 21-2325 

actually require the district court to analyze each late claim, 

effectively taking on the role of the State’s Medicaid claims 

processors, or that effective relief could come only by canceling a contract with an MCO, then we may face a different situation. But we do not know at this point what direction the 

course of this litigation will take. 

We should not decide today whether Saint Anthony has 

alleged a viable claim by assuming only the worst-case litigation scenarios will materialize down the line. If Saint Anthony 

can support its factual allegations about systematically late 

and inadequate payments, we expect the district court has 

sufficiently broad and flexible equitable discretion to fashion 

effective relief. The corrective action plan that HFS demanded 

from CountyCare may provide a starting point, adaptable to 

the circumstances of different MCOs.

III. Additional Issues

We have two issues left to discuss: the district court’s denial of Saint Anthony’s motion to supplement its complaint, 

and a possible stay in favor of arbitration. 

A. Plaintiff’s Motion to Supplement the Complaint

While the motion to dismiss was pending in the district 

court, Saint Anthony moved to supplement its complaint with 

a claim for deprivation of property without due process of 

law. Saint Anthony alleged HFS violated its due process 

rights in two ways, both related to payment transparency: 

(1) by failing to notify Saint Anthony of the amounts being 

paid for services provided to Medicaid beneficiaries in the 

fee-for-service program; and (2) by failing to require MCOs to 

provide such notice in the managed-care program. Four days 
No. 21-2325 45

after the district court dismissed the existing complaint, the 

court denied Saint Anthony’s motion to supplement.

As a preliminary matter, there is an academic question 

whether this request should be construed as a motion to supplement under Federal Rule of Civil Procedure 15(d) or a motion to amend under Rule 15(a). Saint Anthony’s motion 

sought to add allegations concerning both post-complaint 

events (most appropriate as a 15(d) supplement) and some 

pre-complaint events that came to light in discovery (most appropriate under 15(a)). The distinction between 15(a) amendments and 15(d) supplements is not important here. District 

courts have essentially the same responsibilities and discretion to grant or deny motions under either subsection. See 

Glatt v. Chicago Park District, 87 F.3d 190, 194 (7th Cir. 1996) 

(“[T]he standard is the same.”); see also 6A Charles Alan 

Wright & Arthur R. Miller, Federal Practice and Procedure

§ 1504 (3d ed. Supp. 2023) (lack of formal distinction between 

the two is “of no consequence,” and leave should be freely 

granted when doing so will promote economic and speedy 

disposition of entire controversy and will not cause undue delay or unfair prejudice to other parties).

Ordinarily, “a plaintiff whose original complaint has been 

dismissed under Rule 12(b)(6) should be given at least one opportunity to try to amend her complaint before the entire action is dismissed. We have said this repeatedly.” Runnion ex 

rel. Runnion v. Girl Scouts of Greater Chicago & Northwest Indiana, 786 F.3d 510, 519 (7th Cir. 2015) (collecting cases). The decision to deny the plaintiff such an opportunity “will be reviewed rigorously on appeal.” Id. “Unless it is certain from the 

face of the complaint that any amendment would be futile or 

otherwise unwarranted, the district court should grant leave 
46 No. 21-2325 

to amend after granting a motion to dismiss.” Id. at 519–20, 

quoting Barry Aviation Inc. v. Land O'Lakes Municipal Airport 

Commission, 377 F.3d 682, 687 (7th Cir. 2004). Reasons for 

denying leave to amend include “futility, undue delay, prejudice, or bad faith.” Kreg Therapeutics, Inc. v. VitalGo, Inc., 919 

F.3d 405, 417 (7th Cir. 2019). 

The district court used a procedure here that ran a high 

risk of error. Saint Anthony requested leave to add the due 

process claim after minimal discovery and before the court 

ruled on the pending motion to dismiss. The court entered a 

minute order recognizing that “Rule 15(a)(2) provides that the 

‘court should freely give leave when justice so requires.’” It 

then ordered HFS to respond, even permitting an oversized 

brief. HFS responded by arguing the merits of the due process 

claim, saying in essence that the proposed amendment or supplement would be futile. 

Futility could be a good reason to deny the amendment or 

supplement, but then the district court took a wrong turn. It 

denied Saint Anthony an opportunity to file a reply defending 

the merits of its proposed due process claim. The court then 

denied Saint Anthony’s motion on futility grounds. This unusual procedure thus denied Saint Anthony a fair opportunity to defend the merits of its supplemental claim—only to 

lose on the supposed lack of merit. That procedure amounted 

to an abuse of discretion.

Other aspects of the district court’s decision on that motion also point toward reversal. For instance, Saint Anthony’s 

request to supplement the complaint occurred early in the 

lawsuit. See Abu-Shawish v. United States, 898 F.3d 726, 738 

(7th Cir. 2018) (“The usual standard in civil cases is to allow 

defective pleadings to be corrected, especially in early stages, at 
No. 21-2325 47

least where amendment would not be futile.” (emphasis 

added)). The district court did not find bad faith by Saint Anthony or prejudice to HFS. 

The district court denied the motion in part because it concluded the new claim would expand the scope and nature of 

the case, which the court thought was “otherwise over.” We 

do not find this rationale persuasive, especially after we have 

concluded that the case is not otherwise over. The due process 

claim against the State pertains to the lack of transparency in 

the Medicaid remittances, based at least in part on new information produced in the limited discovery. Saint Anthony alleged problems with the remittances in its original complaint, 

as HFS acknowledges. The new claim added issues related to 

the fee-for-service aspects of Illinois Medicaid, but that fact 

alone was not reason enough to deny leave so early in the life 

of a case and before discovery was in full swing. Courts 

should not be surprised, and should not respond rigidly, 

when discovery in a complex case turns up evidence to support a new theory for relief or defense. 

In addition, by denying the motion to amend or supplement, the district court put Saint Anthony at risk of serious 

and unfair prejudice. To the extent the district court might 

have thought that the due process claim should be presented 

in a separate lawsuit, Saint Anthony could face serious problems with claim preclusion. See Arrigo v. Link, 836 F.3d 787, 

798–80 (7th Cir. 2016).6

6 In Arrigo, the first district court denied plaintiff’s motion to amend 

the complaint to add a related claim, and we affirmed. Then, when the 

plaintiff tried to bring the claim in a new action, the second district court 

dismissed it. We upheld that decision, asserting that “allowing Arrigo to 

proceed here would result in the very prejudice and inefficiency that the 
48 No. 21-2325 

At this stage of the proceedings, the only arguable ground 

for denying Saint Anthony’s request to supplement its complaint would have been futility on the merits. The district 

court did say that it “ha[d] doubts about the legal sufficiency 

of Saint Anthony’s proposed new claim.” As noted above, the 

denial of a plaintiff’s first attempt at leave to amend or supplement “will be reviewed rigorously on appeal.” Runnion, 

786 F.3d at 519. Doubts on the merits do not show futility. See, 

e.g., id. at 519–20; Bausch v. Stryker Corp., 630 F.3d 546, 562 (7th 

Cir. 2010) (“Generally, if a district court dismisses for failure 

to state a claim, the court should give the party one opportunity to try to cure the problem, even if the court is skeptical 

about the prospects for success.”). We thus reverse the denial 

of Saint Anthony’s motion to supplement its complaint.

denial of the untimely amendment, which we upheld, was intended to 

avoid.” 836 F.3d at 800. We also stressed that “[t]o rule otherwise would 

undermine the principles animating the doctrines of res judicata and claim 

splitting, as well as our decision upholding on appeal the denial of the 

motion for leave to amend.” Id. In that sense, by prohibiting the supplemental claim here, the district court might have also prevented Saint Anthony from bringing that claim in a future case, all without the opportunity for Saint Anthony to defend the merits of the claim. HFS argues that 

Saint Anthony’s concerns are misplaced because the district court implied 

that Saint Anthony could bring its due process claim in a future action. It 

is true that a district court can expressly reserve a claim for future adjudication, see, e.g., Sklyarsky v. Means-Knaus Partners, L.P., 777 F.3d 892, 896 

(7th Cir. 2015); 18 Wright & Miller § 4413, but such an exception requires 

the second court to conclude the first court adequately preserved the 

claim. One could understand why such assurances from HFS, including 

its post-argument letter promising to forgo a claim preclusion defense in 

a separate lawsuit, might provide Saint Anthony limited comfort, especially since the district court’s stated rationale was based at least in part 

on a supposed lack of merit. 
No. 21-2325 49

B. Arbitration

The remaining issue is whether we should stay the case in 

favor of arbitration, as the intervening MCOs have requested. 

A necessary aspect of Saint Anthony’s claim against HFS is 

showing that the MCOs systematically miss the 30/90 pay 

schedule. The MCOs dispute that allegation, however. They 

argue that under the contracts, each allegedly late claim presents a factual dispute that must be resolved in arbitration before Saint Anthony’s case against HFS can proceed on the 

merits.

The district court did not address this issue. We declined 

to address it in the first instance when this appeal was first 

before us, and we do so again now. Both HFS and the MCOs 

have their distinct obligations to ensure timely payment for 

providers. While factual issues related to the MCOs appear 

intertwined with Saint Anthony’s claim against HFS, they do 

not foreclose Saint Anthony’s section 1983 action. Faced with 

chronic late payments, Saint Anthony is entitled to seek relief 

against HFS as well as against the MCOs.

* * * 

To sum up, Saint Anthony has alleged a viable right under 

42 U.S.C. § 1396u-2(f) to have HFS act to try to ensure timely 

payments from MCOs, and that right is enforceable in this 

section 1983 action against the HFS director. We REVERSE the 

dismissal of Count One. We AFFIRM the dismissal of Count 

Two, which sought to use section 1983 to assert rights under

section 1396a(a)(8). We REVERSE the denial of Saint Anthony’s motion to supplement, we DECLINE to stay the proceedings in favor of arbitration, and we REMAND for proceedings consistent with this opinion. 
50 No. 21-2325 

BRENNAN, Circuit Judge, dissenting. The Supreme Court recently underscored when a private right of action is cognizable under 42 U.S.C. § 1983: a statute must contain explicit 

rights-creating, individual-centric language. Health and Hosp. 

Corp. of Marion Cty. v. Talevski, ___ U.S. ___, 143 S. Ct. 1444, 

1457 (2023). The provision of the Medicaid Act at issue here, 

42 U.S.C. § 1396u-2(f), contains no such language. Even more, 

conferring a privately enforceable right under this statute 

would conflict with and defeat the contractual enforcement 

scheme Congress created for state monitoring and sanction of 

managed care organizations. Medicaid’s timely-payment provision does not enable Saint Anthony and other providers to 

sue Illinois to enforce it, so I respectfully dissent.

I 

Much of this case’s relevant factual background has not 

changed since our court’s last decision. St. Anthony Hosp. v. 

Eagleson, 40 F.4th 492 (7th Cir. 2022). Saint Anthony maintains 

that it has not received timely Medicaid payments from multiple managed care organizations (MCOs). Yet, the hospital

wants to address this dispute outside the means set forth in 

its contracts with those MCOs. Saint Anthony continues to argue that it can sue Illinois under 42 U.S.C. § 1396u-2(f) and 42 

U.S.C. § 1983, forcing the state to proactively ensure that 

MCOs issue timely payments to hospital providers.

This dispute returns to us, though, with the applicable 

rules emphasized. The Supreme Court granted Illinois’s petition for a writ of certiorari, vacated this court’s original judgment in this case, and remanded for our reconsideration in 

light of Talevski. Eagleson v. St. Anthony Hospital, 143 S. Ct. 

2634, 2634 (2023). 
No. 21-2325 51

In Talevski, the Court considered whether certain provisions of the Federal Nursing Home Reform Act (FNHRA) 

could be enforced via a private right of action under § 1983. 

Revisiting and explaining the requirements governing 

whether statutory provisions are enforceable under § 1983, 

the Court ruled that the two FNHRA provisions at issue “unambiguously create § 1983-enforceable rights.” Talevski 143 S. 

Ct. at 1450. At the jump, the Court noted the particularly “demanding bar” that must be met: “Statutory provisions must 

unambiguously confer individual federal rights.” Id. at 1455

(emphasis in original). And Gonzaga Univ. v. Doe, 536 U.S. 273 

(2002), “sets forth our established method for ascertaining unambiguous conferral.” Id. at 1457. The Court then described 

the Gonzaga test.

Under Gonzaga, courts must use “traditional tools of statutory construction to assess whether Congress has ‘unambiguously conferred’ ‘individual rights upon a class of beneficiaries’ to which the plaintiff belongs.” Id. (quoting Gonzaga, 

536 U.S. at 283, 285–86). The statute in question must be 

“phrased in terms of the persons benefited and contain[] 

rights-creating, individual-centric language with an unmistakable focus on the benefited class.” Id. (quotations marks 

omitted). If a statute contains the requisite language to mount 

this “significant hurdle,” the statute “secures § 1983-enforceable rights.” Id. (cleaned up).

Applying this test, the Court in Talevski concluded that the 

provisions of FNHRA at issue contained unambiguous, 

rights-creating, individual-centric language. Those provisions—concerning unnecessary restraint of nursing home residents and predischarge notice—“reside in 42 U.S.C. § 1396r, 
52 No. 21-2325 

which expressly concerns requirements relating to residents’ 

rights.” Id. (emphasis in original) (cleaned up). 

The Court began with the unnecessary-restraint provision, 

which “requires nursing homes ‘to protect and promote ... 

[t]he right to be free from ... any physical or chemical restraints imposed for purposes of discipline or convenience 

and not required to treat the resident’s medical symptoms.’” Id.

at 1458 (emphasis in original) (quoting 42 U.S.C. 

§ 1396r(c)(1)(A)). The exceptions within that provision contain additional language “sustain[ing] the focus on individual 

residents,” including permissive use of restraints “to ensure 

the physical safety of the resident or other residents.” Id. (emphasis in original) (quoting 42 U.S.C. § 1396r(c)(1)(A)(ii)(I)). 

FNHRA’s predischarge-notice provision, the Court noted, 

contains “more of the same.” Id. That provision, included in a 

paragraph “concerning ‘transfer and discharge rights,’” id.

(emphasis in original) (quoting 42 U.S.C. § 1396r(c)(2)), mandates that nursing homes “must not transfer or discharge [a] 

resident,” prior to fulfillment of certain preconditions. 42 

U.S.C. § 1396r(c)(2)(A) (emphasis added). Any exceptions to

the predischarge-notice provision maintain the required “unmistakable focus on the benefited class” that Gonzaga demands. Talevski, 143 S. Ct. at 1457. For example, discharges or 

transfers of nursing home residents must be “necessary to 

meet the resident’s welfare.” Id at 1458. (emphasis in original) 

(quoting 42 U.S.C. § 1396r(c)(2)(A)). Because “[t]he unnecessary-restraint and predischarge-notice provisions use clear 

‘rights-creating language,’ speak ‘in terms of the persons benefited,’ and have an ‘unmistakable focus on the benefited 

class,’” the Court concluded that those particular provisions 
No. 21-2325 53

are presumptively enforceable under § 1983. Id. at 1458–59 

(quoting Gonzaga, 536 U.S. at 284, 287, 290). 

But “[e]ven if a statutory provision unambiguously secures rights, a defendant ‘may defeat t[he] presumption by 

demonstrating that Congress did not intend’ that § 1983 be 

available to enforce those rights.” Id. at 1459 (quoting Rancho 

Palos Verdes v. Abrams, 544 U.S. 113, 120 (2005)). Such an intention can be expressed (1) explicitly in the text of the statute 

creating the right, or (2) implicitly by showing that Congress 

“creat[ed] ‘a comprehensive enforcement scheme that is incompatible with individual enforcement under § 1983.’” Id.

(quoting Rancho Palos Verdes, 544 U.S. at 120). To determine 

whether Congress implicitly intended to prevent enforcement 

through § 1983, the relevant “question is whether the design 

of the enforcement scheme in the rights-conferring statute is 

inconsistent with enforcement under § 1983.” Id. That is, do 

the statute’s text and context evince congressional intent for 

“a statute’s remedial scheme to ‘be the exclusive avenue

through which a plaintiff may assert his claims.’” Id. (emphasis in original) (citation omitted). 

Applying these precepts, the Court in Talevski “discern[ed] 

no incompatibility between the FNHRA’s remedial scheme 

and § 1983 enforcement of the rights that the unnecessary-restraint and predischarge-notice provisions unambiguously 

secure.” Id. at 1460. This was because FNHRA “lacks any indicia of congressional intent to preclude § 1983 enforcement, 

such as an express private judicial right of action or any other 

provision that might signify that intent.” Id. Rather, the Court 

deemed FNHRA unlike other statutes it had previously examined, which “required plaintiffs to comply with particular 

procedures and/or to exhaust particular administrative 
54 No. 21-2325 

remedies under the statute’s enforcement scheme” before filing suit. Id. at 1461 (quotation marks omitted) (discussing 

Middlesex Cty. Sewerage Auth. v. Nat’l Sea Clammers Ass’n, 453 

U.S. 1 (1981); Rancho Palos Verdes; and Smith v. Robinson, 468 

U.S. 992 (1984)). “[I]n all three cases, § 1983’s operation would 

have thwarted Congress’s scheme ... circumvented the statutes’ presuit procedures, and would have also given plaintiffs 

access to tangible benefits as remedies that were unavailable 

under the statutes.” Id. (quotation marks omitted).

The Court concluded, “the test that our precedents establish leads inexorably to the conclusion that the FNHRA 

secures the particular rights that Talevski invokes without 

otherwise signaling that enforcement of those rights via 

§ 1983 is precluded as incompatible with the FNHRA’s remedial scheme.” Id. at 1462.1

II

Applying this Gonzaga framework here, § 1396u-2(f) is not 

enforceable under § 1983. The text and context of the provision do not unambiguously confer an individually enforceable right. See Pennhurst State Sch. and Hosp. v. Halderman, 451 

U.S. 1, 17 (1981) (holding that Congress must speak “unambiguously ... with a clear voice” in Spending Clause 

1 The majority opinion in Talevski cites Blessing v. Freestone, 520 U.S. 

329 (1997), only once, and without further discussion, for the proposition 

that some statutes will permit § 1983 enforcement alongside a detailed enforcement regime so long as they are not incompatible. 143 S. Ct. at 1460. 

The only other mention of Blessing in Talevski is in a dissenting opinion, agreeing with the majority “that there is no room for ‘a multifactor 

balancing test to pick and choose which federal requirements may be enforced by § 1983 and which may not.’” Id. at 1484 (Alito, J., dissenting) 

(quoting Gonzaga, 536 U.S. at 286).
No. 21-2325 55

legislation—like the Medicaid Act—before imposing obligations on the states). Even if it did, such a right is inconsistent 

with the Medicaid Act’s contractual enforcement scheme.

A 

Section 1396u-2(f), referred to as the timely-payment provision, governs contracts between states and MCOs. It states 

in relevant part:

A contract under section 1396b(m) of this title 

with a Medicaid managed care organization 

shall provide that the organization shall make 

payment to health care providers ... on a timely 

payment basis consistent with the claims payment procedures described in section 

1396a(a)(37)(A) of this title, unless the 

healthcare provider and the organization agree 

to an alternate payment schedule ... .

Section 1396a(a)(37)(A) provides a default payment schedule 

to be included in contracts between states and MCOs, requiring MCOs to furnish payment to providers for 90% of clean 

claims within 30 days and 99% of clean claims within 90 days.

Section 1396u-2(f) does not grant providers like Saint Anthony an individual enforcement right. Neither § 1396u-2(f) 

nor § 1396a(a)(37)(A) contains the clear, rights-creating language necessary to show that Congress “manifests an ‘unambiguous’ intent to confer individual rights” upon providers to 

pursue private enforcement of the timely-payment provision 

under § 1983. Gonzaga, 536 U.S. at 273–74 (quoting Pennhurst, 

451 U.S. at 17). 

Unlike the unnecessary-restraint and predischarge-notice 

provisions in Talevski, which expressly granted nursing home 
56 No. 21-2325 

residents specific rights, § 1396u-2(f) and § 1396a(a)(37)(A) do 

not mention rights. Nor does the timely-payment provision 

impose any duty on states (or grant providers a corresponding right) to guarantee that MCOs consistently make prompt 

payments. The provision requires only that a state’s contract 

with an MCO contain language that payments will comply 

with either § 1396a(a)(37)(A)’s 30-day/90-day payment schedule or some agreed upon alternative.

Saint Anthony responds by citing to the only two Supreme 

Court cases since Pennhurst to hold that a Spending Clause 

statute confers a § 1983-enforceable right. See Wright v. Roanoke Redevelopment and Housing Authority, 479 U.S. 418 (1987), 

and Wilder v. Virginia Hosp. Ass’n, 496 U.S. 498 (1990). 

Wright addressed whether a rent ceiling statute for lowincome housing appended by amendment to the Housing Act 

of 1937 was § 1983-enforceable. 479 U.S. at 419. The dispute 

arose when the Housing Authority allegedly overcharged for 

utilities, which the statute defined as part of a tenant’s rent. 

Id. at 420–21. The relevant statute read, “[a] family shall pay 

as rent for a dwelling unit assisted under this chapter” 

amounts defined by statute. Id. at 420 n.2. As Gonzaga

acknowledged, the Court held in Wright that the rent ceiling 

statute was enforceable under § 1983 because “Congress 

spoke in terms that ‘could not be clearer’ and conferred entitlements ‘sufficiently specific and definite to qualify as enforceable rights.’” 536 U.S. at 280 (quoting Wright, 479 U.S. at 

432). The Court also found persuasive the Housing Act’s lack 

of procedure “by which tenants could complain to [Housing 

and Urban Development] about the alleged failures of [a public housing authority] to abide by [the Act’s rent-ceiling provision].” Wright, 479 U.S. at 426. 
No. 21-2325 57

In Wilder, the Court set out to answer whether the Boren 

Amendment to the Medicaid Act—a reimbursement provision—could be enforced by a private cause of action under 

§ 1983. 496 U.S. at 501–02. As Gonzaga recognized, the Court 

in Wilder analogized the Boren Amendment to Wright’s rentceiling provision, as both “explicitly conferred specific monetary entitlements upon the plaintiffs.” Gonzaga, 536 U.S. at 

280. In addition, regulations requiring states to adopt an appeals procedure for individual providers to obtain review of 

reimbursement rates was not “sufficiently comprehensive to 

demonstrate a congressional intent to withdraw the private 

remedy of § 1983.” Wilder, 496 U.S. at 522. 

Saint Anthony argues that the statutes at issue in Wright 

and Wilder—which contain less precise language than 

§ 1396u-2(f) and omit the term “rights” altogether—still 

conferred a § 1983-enforceable right. But Wright and Wilder

predate Gonzaga’s requirement that a statute must contain explicit “rights-creating” language to unambiguously confer a 

private cause of action under § 1983. Gonzaga, 536 U.S. at 284, 

287. The two cases also predate the Court’s “reject[ion of] attempts to infer enforceable rights from Spending Clause statutes.” Gonzaga, 536 U.S. at 281; see also Suter v. Artist M., 503 

U.S. 347, 363 (1992) (holding that a provision in the Adoption 

Assistance and Child Welfare Act of 1980 is not § 1983-enforceable); Rancho Palos Verdes, 544 U.S. at 127 (holding that 

limitations on local zoning authority included in the Telecommunications Act of 1996 do not confer an individual enforcement right under § 1983). These more recent cases reaffirm 

that “the typical remedy for state noncompliance with federally imposed conditions is not a private cause of action for 

noncompliance but rather action by the Federal Government 
58 No. 21-2325 

to terminate funds to the State.” Gonzaga, 536 U.S. at 280 

(quoting Pennhurst, 451 U.S. at 28). 

Without any rights-creating, individual-centric language 

in § 1396u-2(f), the majority opinion turns to three other provisions of the Medicaid Act, looking for an unambiguous conferral of a § 1983-enforceable right. But if other statutes are 

needed to show that the timely-payment provision is not ambiguous, how did Congress “unambiguously confer” the 

claimed individual right within “the provision in question?” 

Talevski, 143 S. Ct. at 1457. These three other provisions—

§ 1396u-2(c)(2)(A)(i), § 1396u-2(h)(2)(B), and 

§ 1396b(m)(2)(A)(iv)—also do not extend as far as the majority option concludes. 

The first, § 1396u-2(c)(2)(A)(i), requires certain language in 

state contracts with MCOs. The contracts must “provide for 

an annual ... external independent review ... of the quality of 

outcomes and timeliness of, and access to, the items and services for which the organization is responsible under the contract.” 42 U.S.C. § 1396u-2(c)(A)(i). This says nothing about 

rights, much less anything about the focus of this suit: MCO 

payments to providers.2

The second, § 1396u-2(h)(2)(B), is a timely-payment provision that applies to contracts between states and MCOs 

concerning managed-care programs for Indian health care 

providers. It requires that MCOs “agree to make prompt 

2 An argument that “items and services” can be construed to mean 

payments is defeated by language elsewhere. That phrase refers to the 

medical services and supplies provided by providers to the individuals 

they treat. See, e.g., 42 U.S.C. §§ 1396u-2(a)(5)(B)(4), 1396u-2(d)(1)(A)(ii), 

1396u-2(e)(1)(A)(i), 1396u-2(h)(4)(D).
No. 21-2325 59

payment” to Indian health care providers “consistent with” 

§ 1396u-2(f)’s rule for prompt payment. 42 U.S.C. § 1396u2(h)(2)(B). So, it operates exactly as § 1396u-2(f), just in the Indian health care context. It requires contracts between states 

and MCOs to contain language dictating that MCO payments 

to providers will comply with the 30-day/90-day payment 

schedule or with some other agreed upon schedule.

The majority opinion also notes that this second statute, 

§ 1396u-2(h)(2)(B), refers to § 1396u-2(f) as the “rule for 

prompt payment of providers.” For my colleagues, such a title 

supports a conclusion that Congress intended § 1396u-2(f) to 

guarantee timely payment to providers by imposing a binding obligation on states to enforce MCO payment schedules. 

“But headings and titles are not meant to take the place of the 

detailed provisions of the text. Nor are they necessarily designed to be a reference guide or a synopsis.” Brotherhood of R. 

R. Trainmen v. Balt. & O.R. Co., 331 U.S. 519, 528 (1947). This 

title is especially unhelpful because it does not clarify whether 

§ 1396u-2(f) is an administrative requirement that a managed 

contract included deadlines, or a rule that imposes a privately 

enforceable, managerial duty on states to guarantee all MCO 

payments are timely.3 A passing reference in § 1396u2(h)(2)(B) to the provision in dispute fails to alter the plain 

meaning of the text in § 1396u-2(f). 

3 The same critique applies to the majority opinion’s reliance on the 

title of § 4708(c) of the Balanced Budget Act of 1997—“Assuring Timeliness of Provider Payments.” Pub. L. No. 105-33, 111 Stat. 251, 506. In fact, 

reliance on section titles in the Balanced Budget Act may point towards a 

determination that § 1396u-2(f) is merely an administrative requirement.

Section 4708 itself is entitled “Improved Administration.” Id.
60 No. 21-2325 

The third, § 1396b(m)(2)(A)(iv), mandates specific provisions in state contracts with MCOs. It requires these contracts 

to “provide[] that ... the State ... shall have the right to audit 

and inspect any books and records” of MCOs “pertain[ing] ... 

to services performed or determinations of amounts payable 

under the contract.” 42 U.S.C. § 1396b(m)(2)(A)(iv). This provision expressly mentions a “right.” But it is Illinois’s right—

not any individual provider’s—to audit and inspect MCO 

books and records. And as discussed below, this provision is 

more congruent with the Congressionally created, contractbased enforcement scheme through which states may monitor MCO compliance and sanction bad actors.

Relying on these three other Medicaid provisions proves 

too much. Granting states oversight of MCOs could serve several purposes, but one of them is not to legislatively require 

Illinois to enforce the prompt payment provision through anything other than the contractual enforcement mechanisms 

provided in the Medicaid Act. See infra II.B. Imposing reporting and oversight responsibilities does not show that 

Congress prescribes a privately enforceable duty on states to 

guarantee that healthcare providers are timely paid. None of 

these statutes contains any language meeting the requirements of Gonzaga. 

The majority opinion also turns to circuit precedent interpreting another Medicaid statute, § 1396a(a)(10)(A). That provision requires state plans for medical assistance to “provide 

... for making medical assistance available ... to [] all individuals” who meet certain eligibility requirements. Twice this 

court has concluded that that provision confers a right enforceable under § 1983. In Miller by Miller v. Whitburn, 10 F.3d 

1315, 1318 (7th Cir. 1993), this court held that Medicaid 
No. 21-2325 61

recipients have a right of action to “challenge the reasonableness of a state’s decision regarding the medical necessity of a 

life saving procedure.” After Blessing and Gonzaga, the holding in Miller was reaffirmed in Bontrager v. Indiana Family & 

Social Services Admin., 697 F.3d 604, 607 (7th Cir. 2012). 

But these precedents do not bear the weight the majority 

opinion would have them carry. Though Bontrager reaffirmed 

Miller, the Blessing test was top of mind. See id. (“Generally,

we consider three factors to determine if a statute creates an 

enforceable right.”). And Miller relied on Wilder and the same 

three factors that became the Blessing test. 10 F.3d at 1319–20. 

But we now know—not just generally, but after a vacate and 

remand of our previous decision in this same case—that Gonzaga’s text-rooted approach is to be applied to identify 

whether a statute grants a § 1983-enforceable right. Talevski, 

143 S. Ct. at 1457. So, Miller and Bontrager do not help the hospital. 

Rather than apply the Gonzaga test as explained in Talevski, 

Saint Anthony argues that (1) Talevski did not overrule 

Blessing, and (2) our court’s original ruling, particularly its application of the Blessing factors to find an individually enforceable right in § 1396u-2(f), is consistent with Talevski.4 The 

majority opinion agrees with the first proposition. And 

though it now supplies a Gonzaga analysis, the majority opinion accedes to the second by continuing to apply the Blessing 

factors.

4 Saint Anthony now asserts in its Supplemental Reply Brief that this

court’s original decision “applied the same rule as Talevski.” If that was 

correct, there would have been no need for a GVR.
62 No. 21-2325 

Saint Anthony’s first point is correct—Talevski does not say 

that Blessing is no longer good law.5 But Saint Anthony’s second assertion falters. Even if a marginalized Blessing survives, 

Talevski expressly and repeatedly looks to and applies Gonzaga

and its principles—not Blessing—to decide whether a federal 

statute confers a § 1983-enforceable right. “Gonzaga sets forth 

our established method for ascertaining unambiguous conferral.” Talevski, 143 S. Ct. at 1457. After Talevski, Blessing and its 

factors are severely diminished as a means to determine 

whether there is a privately enforceable right. In Gonzaga the 

Court named Blessing as an example of past Supreme Court 

opinions “suggest[ing] that something less than an unambiguously conferred right is enforceable by § 1983.” 536 U.S. at 

282. Gonzaga “reject[ed] the notion” that the law “permit[s] 

anything short of an unambiguously conferred right to support a cause of action brought under § 1983.” Id. at 283; see also 

id. at 286 (addressing separation of powers concerns and stating, “we fail to see how relations between the branches are 

served by having courts apply a multifactor balancing test to 

pick and choose which federal requirements may be enforced 

by § 1983 and which may not.”). 

Saint Anthony also characterizes Talevski and Gonzaga as 

“best understood as reformulating Blessing factors 1–2 into a 

single statement that captures the plaintiff benefit and clear 

5 Doubts exist about Blessing’s continued validity post-Talevski. Fed. L.

Enf’t Officers Ass’n v. New Jersey, 93 F.4th 122, 128–130, n.4 (3d Cir. 2024) 

(applying Gonzaga and holding that the Law Enforcement Officers Safety 

Act of 2004 confers an individually enforceable right to qualified retired 

law enforcement officers under § 1983, conducting Blessing analysis in a 

footnote, and noting that “recent Supreme Court authority casts doubt 

upon the continued application of the Blessing factors.”). 
No. 21-2325 63

right factors” and “clarifies that the Blessing standard requires 

the court to find that Congress granted a ‘right’ and not just a 

‘benefit.’” The majority opinion views the Blessing standard 

otherwise, as my colleagues “do not see a fundamental difference between the Talevski/Gonzaga standard ... and the first 

and third Blessing factors.” Regardless of what may survive of 

Blessing, neither the text nor context of §1396u-2(f) grants a 

§ 1983-enforceable right.

The inquiry should end here. The timely-payment provision does not satisfy the Gonzaga requirements, reaffirmed in 

Talevski. Section 1396u-2(f)’s text does not contain “rights-creating, individual-centric language” from which to conclude 

that Congress unambiguously conferred a privately enforceable right under § 1983. 

B

Even if the text of § 1396u-2(f) unambiguously secures 

rights actionable under § 1983, those rights would be incompatible with the comprehensive, contractual enforcement 

scheme of the Medicaid Act. That Act contains no express prohibition against enforcement of the timely-payment provision 

under § 1983. So, the relevant “question is whether the design 

of the enforcement scheme in the rights-conferring statute is 

inconsistent with enforcement under § 1983.” Talevski, 143 S. 

Ct. at 1459. That is, do the statute’s text and context evince 

congressional intent for “a statute’s remedial scheme to ‘be the 

exclusive avenue through which a plaintiff may assert his 

claims.’” Id. (emphasis in original) (citation omitted). 

As noted above, Congress grounded the state-MCO relationship in contract. Under its Spending Clause power, Congress imposes many requirements that must be included in 
64 No. 21-2325 

state contracts with MCOs. Along with those requirements, 

Congress provides states with an enforcement mechanism 

that requires MCO compliance with those contracts. This

mechanism gives states broad discretion in how they enforce 

the contractual obligations of MCOs.

The mechanism for this discretionary enforcement is 

§ 1396u-2(e). It requires states to establish certain “intermediate sanctions” before entering into a contract with any MCO. 

42 U.S.C. §§ 1396u-2(e)(1)(A), (e)(2)(A)–(E). A state “may impose” these sanctions when an MCO acts in a manner prohibited under the section 42 U.S.C. § 1396u-2(e)(1)(A)(i)–(v). And 

where an MCO fails to meet its contractual obligations, states 

“have the authority to terminate such contract[s].” 42 U.S.C. 

§ 1396u-2(e)(4)(A).

For my colleagues, more is required than § 1396u-2(e)’s 

contractual enforcement mechanism to rebut the presumption that § 1396u-2(f) confers an enforceable right for prompt 

payment to providers. That is because, they posit, this mechanism lacks the characteristics that Talevski said show incompatibility with § 1983. Those characteristics are the inclusion 

of “statute-specific private rights of action,” requiring compliance with particular administrative remedies before filing suit 

under that right of action, that “offered fewer benefits than 

those available under § 1983.” Talevski, 143 S. Ct. at 1461 (citing Rancho Palos Verdes, 544 U.S. at 120–23; Smith, 468 U.S. at 

1008–1013, and Sea Clammers, 453 U.S. at 6–7, 19–21). In those 

three cases, “§ 1983’s operation would have thwarted Congress’s scheme coming and going: It would have circumvented the statutes’ presuit procedures, and would have also 

given plaintiffs access to tangible benefits as remedies that 

were unavailable under the statues.” Id. (cleaned up).
No. 21-2325 65

But the Medicaid statutory scheme here includes these 

characteristics, and § 1983’s operation here would thwart 

Congress’s scheme. Section 1396u-2(f) enables a healthcare 

provider like Saint Anthony to privately enforce their contractual rights against MCOs directly through arbitration or litigation. Recall that Saint Anthony has a direct vehicle to press 

its arguments about nonpayment of claims. The hospital has 

contracts with MCOs, each of which contains a bargained-for 

arbitration clause. And even before the initiation of dispute 

resolution, either in the courts or before an arbitrator, a state 

has the Congressionally provided tools described above—intermediate sanctions and, if necessary, termination of its contract with an MCO. To also provide a § 1983-enforceable right 

would give providers a new benefit (a “systemic” remedy, as 

the majority opinion crafts it) that is not otherwise available.

The contractual enforcement mechanism provided to 

states cannot stand alongside the § 1983-enforceable right 

Saint Anthony divines for itself. Such a right would strip the 

discretion Congress has provided to Illinois to decide for itself 

when and how it will enforce an MCO’s contractual obligation. To find a § 1983-enforceable right here would render the 

contractual scheme superfluous. See Smith 468 U.S. at 1011 

(finding “it difficult to believe” that the [Education of the 

Handicapped Act’s] comprehensive procedures and guarantees plus Congress’s “express efforts” to give local and state 

agencies the primary responsibility to provide accommodations to handicapped children rendered a § 1983-enforceable 

right anything other than “superfluous”); see also Antonin 

Scalia & Bryan A. Garner, READING LAW: THE INTERPRETATION 

OF LEGAL TEXTS 174–79 (2012) (“If possible ... every provision 

is to be given effect ... None should needlessly be given an 

interpretation that causes it ... to have no consequence”).
66 No. 21-2325 

C 

Finding a § 1983-enforceable right within the text of 

§ 1396u-2(f) refuses to accept the burdens this holding will 

place on Illinois and the judiciary. Creating and conferring 

this individual right will turn trial courts into “de facto Medicaid claims processors for states,” regardless of an attempt to 

limit the holding to systemic MCO noncompliance—a limit 

discussed nowhere in § 1396u-2(f) or surrounding provisions. 

See St. Anthony Hosp. v. Eagleson, 40 F.4th 492, 522 (7th Cir. 

2022) (Brennan, J., dissenting), cert. granted, judgment vacated 

sub nom. Eagleson v. St. Anthony Hosp., 143 S. Ct. 2634 (2023). 

Before even reaching the merits of a provider’s § 1396u-2(f) 

claims, district courts will need to decide what is and what is 

not a “systemic” failure to provide timely payment to providers—without any statutory or judicial directive.

The majority opinion promises district courts that they 

will not need to “adjudicate issues at the claim-by-claim 

level”—a task my colleagues concede “would strain judicial 

resources and seem to conflict with the arbitration clauses in 

the contracts between the MCOs and Saint Anthony.” But a 

district court cannot decide if an MCO has violated this new 

“systemic” standard if it does not examine claims for 

untimely payments on the merits. Whether the payment 

schedule even applies to a group of payment claims cannot be 

decided without evaluating the nature, timeliness, and merits 

of those claims, rendering district courts the new Medicaid 

claims processors for the states. 

Moreover, without inspecting whether the individual 

claims are being paid on time, a district court has no metric 

by which to gauge the effectiveness of, or a state’s compliance 

with, injunctions designed to ensure timely payment. 
No. 21-2325 67

Pointing to O.B. v. Norwood, 838 F.3d 837 (7th Cir. 2016), the 

majority opinion highlights that all the district court must 

require is that the State do “something.” But my colleagues 

recognize that such a remedy is appropriate only “[i]f Saint 

Anthony can prove its claims of systemic delay and/or underpayment,” which necessarily involves adjudicating the underlying claims on the merits.6 

The majority opinion requires district courts to perform 

the arduous task of deciphering whether a healthcare provider has met an unclear standard. It is not shy about what 

success looks like here for Saint Anthony and future litigants: 

requiring states to “devise systems” to ensure MCO compliance. What those “systems” look like or how they operate is 

anybody’s guess—Congress did not speak to them in the contract-based enforcement scheme it enshrined in statute. As a 

consequence, “day-to-day” functions and enforcement are returned to the states—the precise type of fee-for-service management that MCOs were designed to avoid.

* * * 

In sum, the majority opinion’s interpretation of § 1396u2(f) finds no support in the statute’s text, contravenes other 

provisions of the Medicaid Act, and misapplies governing 

6 O.B. is distinguishable. There, the statutory text of 42 U.S.C. 

§ 1396a(a)(10)(A) imposed a duty on the State to make “medical assistance” available, which this court determined included providing nurses 

for children. 838 F.3d at 842–43. Here, there is no textual mooring for this 

holding that states have a privately enforceable duty to ensure healthcare 

providers are timely paid in instances where MCOs are systemically delaying payments. See also id. at 843–44 (Easterbrook, J. concurring) (noting 

the district court’s injunctive order requiring the states to do something to 

find nurses “does not supply any detail,” and “[t]he Supreme Court has 

reversed injunctions that read like this one”). 
68 No. 21-2325 

Supreme Court precedent. In those rare cases in which this 

court has recognized a private right of action under Medicaid, 

none has imposed a duty on states as broad in scope, ongoing 

in nature, and difficult to enforce as here.7 Nor has any other 

federal circuit ever recognized a state’s privately enforceable 

duty to guarantee timely payment under § 1396u-2(f). Jane 

Perkins, Private Enforcement of the Medicaid Act Under Section 

1983, NAT’L. HEALTH L. PROGRAM 5–7 (July 16, 2021), 

https://bit.ly/2XaCtDY. To find such a new and expansive 

duty under § 1396u-2(f) stretches that statute, doing so in the 

context of Spending Clause legislation where Congress must 

“unambiguously” confer an individual right. 

III

I also see no abuse of discretion in the district court’s denial of Saint Anthony’s motion to supplement its complaint 

under Federal Rule of Civil Procedure 15(d).

The relevant language of Rule 15(d) provides that “[o]n 

motion and reasonable notice, the court may, on just terms, 

permit a party to serve a supplemental pleading setting out 

7 See, e.g., BT Bourbonnais Care, LLC v. Norwood, 866 F.3d 815, 824 (7th 

Cir. 2017) (holding that 42 U.S.C. § 1396a(a)(13)(A) creates a privately enforceable duty on states to provide a public process with notice and opportunity to comment as outlined in § 1396a(a)(13)(A)); O.B., 838 F.3d at 

842–43 (holding that provisions in the Medicaid Act impose a privately

enforceable duty on states to take affirmative steps to locate and provide 

home nurses for children that the Illinois Department of Healthcare and 

Family Services have approved for home nursing); Planned Parenthood of 

Ind., Inc. v. Comm’r of the Indiana State Dept. of Health, 699 F.3d 962, 974 (7th

Cir. 2012) (holding that 42 U.S.C. § 1396a(a)(23) creates a privately enforceable “right to receive reimbursable medical services from any qualified 

provider”); Bontrager, 697 F.3d at 607–08 (reaffirming Miller, 10 F.3d at

1318). 
No. 21-2325 69

any transaction, occurrence, or event that happened after the 

date of the pleading to be supplemented.” Supplemental complaints are meant to “bring[] the case up to date.” 6A CHARLES 

ALAN WRIGHT & ARTHUR R. MILLER, FEDERAL PRACTICE AND 

PROCEDURE § 1504 (3d ed.). Our review is for an abuse of discretion, which we find “only if no reasonable person would 

agree with the decision made by the trial court.” Lange v. City 

of Oconto, 28 F.4th 825, 842 (7th Cir. 2022) (quoting Smith v. 

Hunt, 707 F.3d 803, 808 (7th Cir. 2013)). 

Saint Anthony’s supplemental complaint sought to do 

more than bring the case up to date. As discussed previously, 

St. Anthony Hosp., 40 F.4th at 526–28 (Brennan, J., dissenting),

the hospital asked to add an entirely new due process claim

centered on the transparency of both the managed care program and Illinois’s separate fee-for-service program. The latter program was not part of the original case, and this request 

was raised after the parties had engaged in expedited discovery. Saint Anthony, in its original complaint, had previously 

included an entire section challenging the lack of transparency in the MCOs’ dealings with providers, and made no 

mention of the fee-for-service program. 

The district court correctly described the state of the case: 

the addition of this claim would have required expeditions 

into “whole new frontiers of discovery,” including Saint Anthony’s claim involving the Medicaid fee-for-service program. “The court not only may but should consider ... 

whether the claim could have been added earlier; and the burden on the defendant of having to meet it.” Glatt v. Chicago 

Park Dist., 87 F.3d 190, 194 (7th Cir. 1996). The district court 

did that here. Given this case’s already huge scope—the total 

value of the state’s contracts with the seven MCOs is $63 
70 No. 21-2325 

billion, the largest single procurement in Illinois history—and 

its highly technical subject matter, reasonable persons could 

agree with its decision not to vastly expand the suit. Lange, 28 

F.4th at 842. So, the district court did not abuse its discretion 

in denying Saint Anthony’s desire to engage in this expedition.

For these reasons, I respectfully dissent.