In the

United States Court of Appeals

For the Seventh Circuit ____________________ 

No. 21-2325 

SAINT ANTHONY HOSPITAL, 

Plaintiff-Appellant, 

v.

THERESA A. EAGLESON, 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. 

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

____________________ 

On Petitions for Rehearing and Rehearing En Banc

____________________ 

DECIDED SEPTEMBER 8, 2022 

____________________ 
2 No. 21-2325 

Before WOOD, HAMILTON, and BRENNAN, Circuit Judges. 

On consideration of the petitions for rehearing en banc 

filed August 2, 2022 by Defendant-Appellee and Intervening 

Defendants-Appellees, no judge in active service has requested a vote on the petitions for rehearing en banc.* Judges 

Wood and Hamilton voted to deny panel rehearing; Judge 

Brennan voted to grant panel rehearing.

Accordingly, the petitions for rehearing en banc filed August 2, 2022 by Defendant-Appellee and Intervening Defendants-Appellees are DENIED. 

HAMILTON, Circuit Judge, joined by WOOD, Circuit Judge. In 

view of the petitions’ exaggerated accounts of the panel’s decision, a few comments are in order. First, the panel opinion 

imposes no new duties on either State officials or managed 

care organizations. Nor does the panel opinion offer any path 

toward monetary liability for the State of Illinois or its officials. Only injunctive relief is at stake here: possible injunctive 

relief to push State officials to comply with duties already imposed by the Medicaid Act. 

The panel recognizes the potential complexity and challenge of this case for the district court, but also its importance 

for plaintiff and other providers of health care to Medicaid 

patients, as well as for the patients themselves. The panel concluded that the case should not be dismissed on the pleadings 

but should proceed toward substantial discovery. That course 

will allow the district court to consider actual facts rather than 

* Judge St. Eve did not participate in the consideration of these petitions for rehearing en banc.
No. 21-2325 3

just allegations in weighing whether injunctive relief is appropriate and what forms it might take.

Finally, the parties and all members of the panel recognize 

that the Supreme Court may reshape applicable law in Talevski v. Health and Hospital Corp., 6 F.4th 713 (7th Cir. 2021), cert. 

granted, 142 S. Ct. 2673 (2022). While that case proceeds in the 

Supreme Court, however, the stakes of this case and the delay 

plaintiff has already experienced in the courts weigh in favor 

of allowing the case to proceed in the district court in parallel 

with the Supreme Court’s consideration of Talevski. Hence we 

are not holding these petitions but issue the mandate with this 

order denying them. 
4 No. 21-2325 

BRENNAN, Circuit Judge, dissenting from the denial of rehearing. 

I would grant panel rehearing of this case for the reasons 

stated in my concurrence in part and dissent in part, as well 

as those argued in the petitions for panel rehearing filed by 

the State of Illinois and the intervening managed care organizations (MCOs). 

A.

The full context of this dispute shows how far the majority

opinion goes.

Saint Anthony has provider contracts with the MCOs in 

the Illinois managed care program. Those contracts require 

the Hospital to submit any dispute arising under them to arbitration. So, arbitration is the path for the Hospital to secure 

relief on its payment terms. Saint Anthony asked to stay the 

arbitration of its contract and brought this lawsuit, asking that 

42 U.S.C. § 1396u-2(f) be interpreted to recognize a new statutory duty. Only then did a route appear outside of the provider contract and the bargained-for dispute resolution of arbitration.

As seen in literature about private enforcement of the 

Medicaid Act under 42 U.S.C. § 1983,1 circuit court enforcement of Medicaid provisions since Gonzaga University v. Doe, 

536 U.S. 273 (2002), has never involved § 1396u-2(f). Now, not 

only has a private right of action been recognized for the first 

time as to § 1396u-2(f)—a conclusion I agree is compelled 

1 JANE PERKINS, NAT’L HEALTH L. PROGRAM, PRIVATE ENFORCEMENT 

OF THE MEDICAID ACT UNDER 42 U.S.C. § 1983 (2021), https://healthlaw.org/wp-content/uploads/2021/07/Fact-Sheet-1983-Enforcement.pdf. 
No. 21-2325 5

under the Blessing factors—but the State is obliged under that 

Medicaid statute to proactively guarantee timely managed 

care payments to healthcare providers. That obligation is 

meant to be enforced under the arbitration clause pursuant to 

the MCO provider contracts.

I will not repeat the reasons why an administrative prerequisite that a managed care contract includes deadlines is 

so different from a privately enforceable statutory duty to 

proactively guarantee timely managed care payments. To me, 

the text of § 1396u-2(f), the silence of its neighboring statutes 

as to a duty requiring state action, and the statutory incongruence created by the majority opinion’s interpretation are revealing. They show that the text-based interpretation of 

§ 1396u-2(f), in which the district court and I engage, is at least 

plausible. 

A statute with more than one plausible interpretation of 

its text is ambiguous. Graham Cnty. Soil & Water Conservation 

Dist. v. United States ex rel. Wilson, 545 U.S. 409, 419 (2005). 

And the Supreme Court requires that before Spending Clause 

statutes impose duties on states, they must do so “unambiguously,” “speak[ing] with a clear voice,” Pennhurst State Sch. & 

Hosp. v. Halderman, 451 U.S. 1, 17 (1981), and in statutory language that is “unmistakably clear.” Gonzaga, 536 U.S. at 283 

(quoting Will v. Mich. Dep’t of State Police, 491 U.S. 58, 65 

(1989)). Adhering to these Supreme Court pronouncements, I 

would not conclude that § 1396u-2(f) imposes an enforceable 

duty. 

B.

These two petitions for rehearing articulate well the burdens, practical problems, and changes in decisionmakers
6 No. 21-2325 

resulting from the majority opinion’s interpretation of 

§ 1396u-2(f). 

The State points out the heavy burdens this decision will 

place on various players in the complex world of Medicaid. 

The interpretation of § 1396u-2(f) presents “a question of first 

impression ... with immense practical importance for Medicaid managed care programs nationwide, involving dozens of 

States and hundreds of billions of dollars in spending each 

year.” The State fears the majority opinion will “impose on 

States a huge and unprecedented obligation to duplicate the 

administrative functions that Congress intended to be fulfilled by MCOs.” The State also notes the impact this decision 

will have on federal courts to resolve the merits of “payment 

disputes between MCOs and providers as a predicate to determining whether States are liable for failing to ensure the 

MCOs are making payments on a timely basis.” Medicaid 

managed care programs “serve more than 50 million individuals and involve annual expenditures of hundreds of billions 

of dollars.” The State is concerned that “state Medicaid directors will have to decide whether to establish an administrative 

infrastructure to duplicate the claims-processing functions 

performed by MCOs or risk liability” under § 1396u-2(f). 

The MCOs are worried that this decision “funnel[s] a subset of MCO-provider payment disputes into litigation, instead 

of arbitration, [which] will severely burden all interested parties (including federal courts).” Under this decision, “federal 

judges will become the arbiters of any MCO-provider disputes that providers can frame as involving ‘systemic failure.’” The foundational question of whether providers should 

address disputes with MCOs through § 1983 claims or arbitration will arise. The MCOs lament the lack of guidance as to 
No. 21-2325 7

“whether and when there is a ‘systemic failure’ sufficient to 

justify” a § 1983 claim. Rather than “costly litigation over the 

nature and scope of claims,” the MCOs believe these disputes 

“could and should have been submitted to cost-effective arbitration.” 

The MCOs also point out the practical problems with the 

majority opinion’s reading of § 1396u-2(f). For courts to determine if the predicate for State intervention—“systemic failures by MCOs to comply with the 30/90 payment schedule”—

is satisfied, they have to determine “which claims (how 

many? what proportion?) are unpaid, paid late or paid with 

less transparency.” These “determinations fall squarely 

within the broad arbitration provision in each provider contract,” including Saint Anthony’s. 

To say the majority opinion only provides a new way under § 1983 to enforce existing obligations does not mitigate the 

substantial changes and alterations to the Medicaid landscape

this decision creates. The “new world” of an enforceable duty 

under § 1396u-2(f) will require a huge amount of adaptation, 

new systems, and working through unseen problems, as the 

obligations on various players change and decisionmaking is 

shifted away from arbitrators to federal courts.

Because this decision will create tremendous burdens and 

complex practical problems, and federal courts will now have 

to consider and decide payment disputes between MCOs and 

providers that can be framed as involving “systemic failure,” 

the proper interpretation of § 1396u-2(f) is a question of extraordinary significance which we should rehear.
8 No. 21-2325 

C.

So why not hear this case en banc? Because of the imminent possibility this area of law will change markedly. 

This case may well merit rehearing en banc. Given the burdens and change in decisionmakers, it poses “a question of 

exceptional importance” under Federal Rule of Appellate 

Procedure 35(a)(2). And under the requirements before 

Spending Clause legislation imposes a duty on a state, “the 

panel decision conflicts with a decision of the United States 

Supreme Court” under Federal Rule of Appellate Procedure 

35(b)(1)(A). 

But since this case was argued in February, and before it 

was decided in July, the Supreme Court granted certiorari in

another case from our court, Talevski v. Health & Hosp. Corp. of 

Marion Cnty., 6 F.4th 713 (7th Cir. 2021), cert. granted, 142 S. Ct. 

2673 (2022), argument scheduled for November 8, 2022. Talevski

held that nursing home residents have privately enforceable 

rights under 42 U.S.C. §§ 1396r(c)(1)(A)(ii) and (c)(2)(A) to not 

be chemically restrained for disciplinary or convenience purposes, and to not be transferred or discharged from a facility 

unless certain criteria are met. 6 F.4th at 720. 

Talevski concerned different Medicaid statutes. But one of 

the two questions presented on which the Supreme Court 

granted certiorari is broad: “[w]hether, in light of compelling 

historical evidence to the contrary, the Court should reexamine its holding that Spending Clause legislation gives rise 

to privately enforceable rights under Section 1983.” Petition 

for a Writ of Certiorari at i, Health & Hosp. Corp. of Marion Cnty. 

v. Talevski, 142 S. Ct. 2673 (2022) (No. 21-806). The Court can 

answer this question in ways that will greatly impact the 
No. 21-2325 9

decision in this case. Even Saint Anthony admits in its response to the petitions for rehearing en banc that “[i]f the Supreme Court significantly changes its precedent on Medicaid 

private rights of action, those changes could affect the majority’s opinion in this case.” 

If our court heard this case en banc, we would proceed 

parallel with the Supreme Court’s consideration of Talevski

and expend valuable court time and resources. Given the 

question presented quoted above, we would need to predict 

how the Supreme Court thinks that issue should come out, a 

task broader than the arguments before us in this case. So, en 

banc rehearing here likely would not be an efficient course 

given the grant of certiorari in Talevski. 

In the alternative, as the State suggests, I would hold these 

petitions for rehearing pending the decision in Talevski. The 

non-prevailing parties here may petition the Supreme Court

for a writ of certiorari, and even ask that Court for a stay. The 

Supreme Court may hold such a petition pending the resolution of Talevski. Given the broad and deep impact of the majority opinion, it would be best to resolve these petitions for 

rehearing with the counsel of Talevski, which could significantly change the legal landscape governing the interpretation of § 1396u-2(f). 

For these reasons, I respectfully dissent from the denial of 

panel rehearing. I would grant the petitions for panel rehearing and reconsider this decision, or in the alternative I would 

hold these petitions for rehearing subject to the outcome of 

Talevski.