Opinion ID: 6497990
Heading Depth: 2
Heading Rank: 2

Heading: Rights Analysis

Text: With this background in mind, here is the text of section 1396u‐2(f), the provision central to this appeal: 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 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 or‐ ganization 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…. 42 U.S.C. § 1396u‐2(f). The statutory language cross‐refer‐ ences sections 1396b(m) and 1396a(a)(37)(A). Section 1396b(m) describes the State’s contract with an MCO. Section 3 While this case involves a right under section 1983, not an implied private right of action, Gonzaga clarified that “the inquiries overlap in one meaningful respect—in either case we must first determine whether Con‐ gress intended to create a federal right.” 536 U.S. at 283. 14 No. 21‐2325 1396a(a)(37)(A) declares that a “State plan for medical assis‐ tance 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 re‐ quired in order to make payment) made for services covered under the plan and furnished by health care prac‐ titioners through individual or group practices or through shared health fa‐ cilities 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 timely payment from the MCOs that the State must safeguard because the right satisfies all three Blessing factors. Also, there is no alternative remedy that would be incompatible with individual enforcement under section 1983. As we explain next in applying the Blessing fac‐ tors, providers are the intended beneficiaries of section 1396u‐ 2(f), enforcing the 30/90 pay schedule would not strain judi‐ cial competence, and the statute unambiguously imposes a binding obligation on the State. In addition, while private con‐ tract remedies may oﬀer an alternative path to enforcement for individual claims, that path does not foreclose enforce‐ ment under section 1983. It is also far from clear that contract No. 21‐2325 15 remedies, including arbitration, could provide systemic relief that may be sought more sensibly from state oﬃcials under section 1983. We address each point in turn.
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. We conclude that both answers are yes. 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.” § 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. Nor‐ wood, 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 altera‐ tion and omission in original)). To resist this conclusion, HFS asserts that the term “health care providers” includes practitioners but not hospitals. The district judge did not adopt this argument, nor do we. Section 1396u‐2(f) cross‐references section 1396a(a)(37)(A), which re‐ quires that states pay “practitioners” on the 30/90 pay sched‐ ule. See Illinois Council on Long Term Care v. Bradley, 957 F.2d 305, 306, 308 (7th Cir. 1992). “Practitioners” in that context means individual providers as opposed to institutional ones like Saint Anthony. HFS thus argues that since section 1396u‐ 2(f) requires states to ensure MCOs pay providers “consistent 16 No. 21‐2325 with the claims payment procedures described in section 1396a(a)(37)(A),” section 1396u‐2(f) adopts the 30/90 pay schedule requirement only as to “practitioners.” In the State’s view, holding that section 1396u‐2(f) applies to hospitals as well would exceed rather than be consistent with what section 1396a(a)(37)(A) requires. The argument is not persuasive. HFS reasons that Con‐ gress implicitly and indirectly defined “providers” nar‐ rowly—just for purposes of section 1396u‐2(f)—through a cross‐reference to section 1396a(a)(37)(A) that describes a state’s payment obligations to practitioners in a fee‐for‐ser‐ vice program. That is an improbably subtle reading. A more persuasive reading of the statutory text is that Congress in‐ voked only the payment procedures in section 1396a(a)(37)(A), not the beneficiaries of that provision. The statutory text ex‐ plains that payment must be made “on a timely basis con‐ sistent with the claims payment procedures described in section 1396a(a)(37)(A) of this title.” § 1396u‐2(f) (emphasis added). Those procedures include the 30/90 pay schedule. Congress knows how to use cross‐references for a defini‐ tional purpose in the Medicaid Act. See, e.g., § 1396u‐ 2(a)(1)(B)(i) (“[A] medicaid managed care organization, as de‐ fined in section 1396b(m)(1)(A) of this title….”); § 1396u‐ 2(b)(2)(A)(i) (“[T]o provide coverage for emergency services (as defined in subparagraph (B))….”). That is not what oc‐ curred here. The language is suﬃciently plain here, United States v. Melvin, 948 F.3d 848, 851–52 (7th Cir. 2020), and the plain meaning of “health care provider” includes hospitals. Cf. 42 U.S.C. § 1395w–25(d)(5) (enacted as part of the Bal‐ anced Budget Act of 1997). No. 21‐2325 17 HFS’s position is also inconsistent with the provision’s purpose as shown in additional statutory language. Section 1396u‐2(f) was part of the same Balanced Budget Act of 1997. See Pub. L. No. 105‐33, 111 Stat. 251 § 4708(c) (1997). Section 4708(c) is entitled: “Assuring Timeliness of Provider Pay‐ ments.” This language signals that Congress intended section 1396u‐2(f) to assure, i.e., to guarantee, timely payment to pro‐ viders. That understanding is consistent with later congres‐ sional action. In 2009 Congress enacted 42 U.S.C. § 1396u‐2(h) 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 enrol‐ lees, Indian health care providers, and Indian managed care entities.” § 1396u‐2(h). Relevant to our purposes, section 1396u‐2(h)(2)(B) cross‐references section 1396u‐2(f) and de‐ scribes 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 un‐ der 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 pay‐ ment of providers under section 1396u– 2(f) of this title) to Indian health care 18 No. 21‐2325 providers that are participating pro‐ viders with respect to such entity…. § 1396u‐2(h)(2)(B) (emphasis added). Given this evidence, it would seem odd to construe a pro‐ vision Congress intended to assure timeliness of provider payment as not applying to many providers, as HFS advo‐ cates. That would appear to defeat the statute’s evident pur‐ pose in most cases. We decline to read the text in such a man‐ ner. Quarles v. United States, 139 S. Ct. 1872, 1879 (2019) (“We should not lightly conclude that Congress enacted a self‐de‐ feating statute.”). If the text required such a result, that would be one thing, but we should not adopt such an improbable reading of the text to reach such an odd result. In applying the first Blessing factor, we next conclude that section 1396u‐2(f) grants providers a right, not merely a gen‐ eralized benefit. It is here that we disagree with the district court. In granting the motion to dismiss, the court determined that section 1396u‐2(f) failed the first Blessing factor. 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 sec‐ tion 1396u‐2(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. We read the statute diﬀerently. Gonzaga provides a useful contrast regarding rights‐creating language. In Gonzaga, a for‐ mer student sued Gonzaga University and an employee un‐ der section 1983 for allegedly violating his rights under the No. 21‐2325 19 Family Educational Rights and Privacy Act (FERPA). Part of the statutory language at issue directed the Secretary of Edu‐ cation that “[n]o funds shall be made available’ to any ‘edu‐ cational 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 (al‐ teration in original), quoting 20 U.S.C. § 1232g(b)(1); see also § 1232g(b)(2). That prohibited activity is allegedly what oc‐ curred 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 individ‐ ual 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 287–88 (internal citation omitted), quoting Blessing, 520 U.S. at 343–44. The Court also highlighted that the Secretary of Edu‐ cation 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 sys‐ temwide performance rather than individual instances of im‐ proper disclosure. Finally, since FERPA’s provisions spoke only to the Secretary and directed him 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 (citation omitted). The provisions therefore failed to con‐ fer an individual right enforceable under section 1983. 20 No. 21‐2325 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 statu‐ tory 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: en‐ suring 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 provider‐ specific 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 pay‐ ment schedule.” It establishes a personal right to timely pay‐ ment, 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 estab‐ lished a personal right “to which all Medicaid patients are en‐ titled” but, implicitly, need not accept (emphasis added)). Ei‐ ther 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 the Medicaid statutes. Section 1396a(a)(10)(A) provides that “[a] State plan for medical assistance must … provide … for No. 21‐2325 21 making medical assistance available … to all [eligible] indi‐ viduals.” We have held that the provision confers private rights to individuals enforceable under section 1983. See Mil‐ ler 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 af‐ ter Blessing and Gonzaga). In Miller, we found it significant that the State was required to provide medical assistance to all eli‐ gible individuals. The same is true here, but with respect to timely payments to providers that do not opt out of the 30/90 pay schedule. And in Wilder, the statute, like the statute here, required states to provide for payment to health care provid‐ ers: “a state plan” must ensure “‘payment … of the hospital services, nursing facility services, and services in an intermedi‐ ate care facility for the [recipients] under the plan.’” 496 U.S. at 510 (omission in original), quoting 42 U.S.C. 1396a(a)(13)(A) (1982 ed., Supp. V). The Supreme Court concluded that this statutory language granted rights to health care providers en‐ forceable under section 1983. See id. at 524. Wilder may lie close to the outer edge of the line for section 1983 cases under Spending Clause legislation, but recognizing the rights‐creat‐ ing language in section 1396u‐2(f) does not push that logic any further. At bottom, section 1396u‐2(f) defines the minimum terms of the provider’s right to timely payment and is provider‐spe‐ cific. 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), and satisfies Blessing factor one. 22 No. 21‐2325
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 compe‐ tence.” Talevski, 6 F.4th at 719. HFS does not appear to contest whether section 1396u‐2(f) satisfies this standard, nor could it. Saint Anthony argues that the State violated its right to timely payment by failing to abide by section 1396u‐2(f)’s statutory mandate of trying to ensure that the MCOs are pay‐ ing providers in line with the 30/90 pay schedule. Determin‐ ing whether payments met the 30/90 pay schedule is “admin‐ istrable,” “fully capable of judicial resolution,” and “falls comfortably within the judiciary’s core interpretative compe‐ tence.” Planned Parenthood of Indiana, 699 F.3d at 974.
The third Blessing factor asks whether section 1396u‐2(f) unambiguously imposes a binding obligation on HFS. This requires answering two questions: (1) what is HFS’s duty un‐ der 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) contains mandatory language, how‐ ever: “A [State contract] … with a medicaid managed care or‐ ganization shall provide that the organization shall make pay‐ ment 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. But what exactly is the State’s obligation here? No. 21‐2325 23 Section 1396u‐2(f) requires the State’s contracts with the MCOs to require that the MCOs pay providers on the 30/90 pay schedule. HFS asserts, and the partial dissent agrees, 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. HFS’s theory is that the statute requires only that a provision in the paper contract specify the timely payment obligation. The State can then sue MCOs for breach of contract if they fail to pay providers according to the 30/90 pay schedule, and providers are entitled to enforce their own contractual rights as they see fit. In HFS’s view, nothing in section 1396u‐2(f) requires the State itself 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 pro‐ viders on the 30/90 pay schedule, the State contends it has met its duty under section 1396u‐2(f), regardless of actual perfor‐ mance. We do not read section 1396u‐2(f) as permitting such a hands‐oﬀ approach. Nor would a reasonable state oﬃcial de‐ ciding whether to accept federal Medicaid money have ex‐ pected she could take that hands‐oﬀ approach to MCO pay‐ ments to providers. 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 stat‐ utory 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 24 No. 21‐2325 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). Interpreting section 1396u‐2(f) as only a “paper” require‐ ment conflicts with these principles of statutory interpreta‐ tion. 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’s Br. at 30. But Congress did not intend for MCOs to go unsupervised. It has long been obvious to all that under the managed‐care system of Medicaid, MCOs have a powerful incentive to delay pay‐ ment 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 providers’ interests, but their interests are not the same. Regarding timely pay‐ ments, 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 statute also imposes reporting and oversight respon‐ sibilities on states. For example, section 1396b(m)(2)(A)(iv) re‐ quires 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 speci‐ fies 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 re‐ quires HFS to take steps to monitor MCO payment activities No. 21‐2325 25 to gather performance data and to understand how the sys‐ tem is functioning. The Medicaid Act further specifies actions a state can take when an MCO underperforms. See § 1396u‐2(e). The State can put an MCO on a performance plan, for example. As discov‐ ery in this case revealed, HFS took this step recently 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 prob‐ lem in action. The State found that CountyCare’s Medicaid money was improperly diverted from the Medicaid program to pay other county government bills rather than health care providers.4 In such a case, if an MCO has “repeatedly failed to meet the requirements” of its contract with the State and the re‐ quirements in section 1396u‐2, “the State shall (regardless of what other sanctions are provided) impose the sanctions de‐ scribed in subparagraphs (B) and (C) of paragraph (2).” § 1396u‐2(e)(3). Subparagraph (B) details the appointment of temporary management to oversee the MCO, and subpara‐ graph (C) permits individuals enrolled with the MCO to ter‐ minate enrollment without cause. § 1396u‐2(e)(2)(B)–(C). Federal Medicaid regulations add to the State’s responsi‐ bilities here. For instance, 42 C.F.R. § 438.66(a) (2016) pro‐ vides: “The State agency must have in eﬀect a monitoring 4 As with the information mentioned above 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 allega‐ tions in the complaint. E.g., Geinosky, 675 F.3d at 745 n.1. 26 No. 21‐2325 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 perfor‐ mance 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 simply failing to collect the required data on the timeliness of MCO payments. These responsibilities support the conclusion that Con‐ gress intended for states to try to ensure that the right to timely payment in section 1396u‐2(f) is honored in real life. The timely payment rule is more than a paper requirement. 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 ba‐ sis, then the State would have an obligation to act under sec‐ tion 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 lan‐ guage. Providers’ right to timely payment must exist in prac‐ tice. HFS counters, and the partial dissenting opinion agrees, that the duty imposed by section 1396u‐2(f) is at the very least ambiguous. HFS points to Pennhurst State School & Hospital v. Halderman, 451 U.S. 1, 17 (1981), which taught that Congress can impose conditions on grants of federal money only if it does so “unambiguously” and “with a clear voice.” In HFS’s No. 21‐2325 27 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 An‐ thony gives it. So says HFS. We appreciate the point, but we think Congress spoke suf‐ ficiently 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 District Board of Education v. Murphy, 548 U.S. 291, 296 (2006), quoting Pennhurst, 451 U.S. at 17. To deter‐ mine whether Congress spoke clearly in this case, we “must view [section 1396u‐2(f) and the Medicaid Act] from the per‐ spective 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.” Id. Any state oﬃcial planning to launch a managed‐care 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” would be only a proverbial paper tiger. See § 1396u‐2(h)(2)(B) (describing section 1396u‐2(f) as the “rule for prompt pay‐ ment of providers”). That position conflicts with the State’s oversight and reporting obligations and its enforcement du‐ ties under the Medicaid Act. HFS also argues that section 1396u‐2(f) cannot impose this duty on the State because it “would negate[] section 1396u‐ 2(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’s Br. at 27. The argument 28 No. 21‐2325 highlights a key issue in this appeal and one that helps explain our disagreement with the district court and the partial dis‐ sent. Saint Anthony requested several forms of relief in its com‐ plaint. 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 § 1396u‐ 2(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 the State to ensure providers receive timely payment because it might require the State to take action that is expressly re‐ served 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 Illi‐ nois might well cause a “massive disruption” to the State’s Medicaid program. Appellee’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), 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 No. 21‐2325 29 facts might convince us otherwise, but that question about a worst‐case scenario can be addressed if and when it actually arises and matters. Continuing with the theme of assuming the worst, HFS and the partial dissent also argue that reading this duty into section 1396u‐2(f) would lead to the district court acting eﬀec‐ tively as the Medicaid claims processor for the State. In a pa‐ rade 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 retail‐level relief, i.e., requiring the district court to adjudi‐ cate 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 pro‐ cess that required a district judge to micro‐manage claims would be inappropriate here. These two limits on remedies in a section 1983 action do not persuade us, however, that we should aﬃrm dismissal on the theory that the State has no duty at all to ensure timely payment under section 1396u‐2(f). HFS can take other steps at the system level to address chronic late and/or short pay‐ ments by MCOs. Those 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 sys‐ temic delay and/or underpayment, we are confident that the 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 eq‐ uitable relief from O.B. v. Norwood, 838 F.3d 837 (7th Cir. 2016). There, we aﬃrmed a preliminary injunction against 30 No. 21‐2325 Illinois oﬃcials in a suit brought by Medicaid beneficiaries who sought to enforce diﬀerent 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). We rejected that argument: Certainly the defenses thus far advanced by HFS are weak. The primary defense is that noth‐ ing 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 chil‐ dren.” 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 claims of systemic delay and/or underpayment, the same is true here. The State decided to switch 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. in‐ structs that where HFS has a duty, a district court may order No. 21‐2325 31 it to do something when that duty is not being met, at the first cut. The court may then need to supervise the eﬀects of the injunction and the State’s response and adjust the court’s or‐ ders 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 or‐ dering the State oﬃcials literally to do only “something” would be suﬃcient. Federal Rule of Civil Procedure 65(d)(1) 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 equita‐ ble discretion in crafting injunctions so that they are both un‐ derstandable 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 Me‐ dia 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 with reasonably transparent payment information, we would expect the dis‐ trict court to explore with the parties what steps the State of‐ ficials 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 mod‐ ified 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 injunc‐ tive relief within its equitable powers and discretion even in circumstances where some more drastic remedial measures 32 No. 21‐2325 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); ac‐ cord, 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 Proce‐ dure 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, of course. If a party demands relief in its pleadings that is not available, such a 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 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 ag‐ gressive oversight role could reduce some of the administra‐ tive benefits the State hoped to gain by the switch to managed care. As we have explained, however, the Medicaid Act per‐ mits 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 shows that Congress recog‐ nized the troubling financial incentives inherent in a man‐ aged‐care system and the need for eﬀective oversight. Recall No. 21‐2325 33 that the Medicaid Act requires the State to audit and inspect MCO books and records, to perform annual external reviews of payment timeliness, and to implement sanctions if an MCO is underperforming. 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. The partial dissent also criticizes our focus on systemic failures and judicial relief to address such failures, arguing that there is no textual basis for that focus. The partial dissent portrays the choice as an either‐or: either the district 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 statute and the relevant contracts recognize that perfection is not re‐ quired. 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 rea‐ son to think it can identify systemic measures that can be ef‐ fective without having HFS (let alone the district court) take over day‐to‐day claims management. As noted above, for ex‐ ample, 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 34 No. 21‐2325 “Corrective Action Plan,” and reported that a few months af‐ ter 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 plead‐ ings stage. That problem can await further factual develop‐ ment. (To use a metaphor often used in the law, a person can usually tell the diﬀerence between being in mountains, in foot‐ hills, or on a plain even if there are no sharp boundaries be‐ tween mountains, foothills, and plains.) For these reasons, we conclude that section 1396u‐2(f) sat‐ isfies the third Blessing factor because the State has a binding obligation to try to ensure prompt payment for providers from MCOs.
Since section 1396u‐2(f) satisfies the three Blessing factors, the right to prompt payment is presumptively enforceable un‐ der section 1983. Talevski, 6 F.4th at 720. HFS can rebut this presumption by “showing that Congress specifically fore‐ closed a remedy under § 1983 … expressly, through specific evidence from the statute itself, or impliedly, by creating a comprehensive enforcement scheme that is incompatible with individual enforcement under § 1983[.]” Id. (alteration and omission in original), quoting Gonzaga, 536 U.S. at 284 n.4. HFS has not identified any express language in the Medicaid Act foreclosing private rights enforcement. HFS relies instead on the implicit approach, which is a “diﬃcult showing.” Bless‐ ing, 520 U.S. at 346. If the MCOs are failing to abide by the contractual terms, says HFS, Saint Anthony should just enforce its own contracts No. 21‐2325 35 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’s Br. at 29. As HFS sees the matter, there is no need to permit section 1983 actions to “achieve Congress’s goal of enabling Medicaid pro‐ viders to receive timely payment.” Id. A contractual remedy may oﬀer some prospect of relief to a provider like Saint Anthony. But HFS has not convinced us that “allowing [section 1983] actions to go forward in these circumstances ‘would be inconsistent with’” a “carefully tai‐ lored [Congressional] scheme.’” Blessing, 520 U.S at 346, quot‐ ing Golden State Transit Corp. v. City of Los Angeles, 493 U.S. 103, 107 (1989). Rather, Congress intended the State’s Medi‐ caid plan to ensure timely payment to providers. If, as Saint Anthony alleges, the plan has been failing to meet this re‐ quirement, repeatedly and systematically, we would not be surprised if provider‐MCO arbitrations would do little to cor‐ rect 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 op‐ tion 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 adju‐ dication on the individual provider‐MCO level, across many thousands of claims, all in their own arbitrations. It’s not im‐ mediately 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 36 No. 21‐2325 that Congress, implicitly through the contractual model, cre‐ ated “a comprehensive enforcement scheme that is incompat‐ ible with individual enforcement under [section 1983].” Gon‐ zaga, 536 U.S. at 285 n.4. For these reasons, we conclude that section 1396u‐2(f) sat‐ isfies Blessing and contains a right to timely payment that is enforceable under section 1983. Saint Anthony has plausibly alleged a violation of such a right that would support a claim for relief. We therefore reverse the district court’s dismissal of this claim. We emphasize that this decision is based on the pleadings. This is a hard case with high stakes for the State, Medicaid providers, and Medicaid beneficiaries. We also recognize the potential magnitude of the case and the challenges it may pre‐ sent to the district court. If it turns out that resolving this dis‐ pute would actually require the district court to analyze each late claim, eﬀectively taking on the role of the State’s Medi‐ caid claims processors, or that eﬀective relief could come only by canceling a contract with an MCO, then we may face a dif‐ ferent situation. But we do not know at this point what direc‐ tion the course of this litigation will take. HFS has not con‐ vinced us that we must decide whether Saint Anthony has al‐ leged a viable claim today by assuming only the worst‐case scenarios will emerge down the line. If Saint Anthony can support its factual allegations about systematically late and inadequate payments, we believe the district court could ex‐ ercise its 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. No. 21‐2325 37