Maine suing Obamacare earlier than normally expected

Much sooner than normally expected, the state of Maine has asked the U.S. Court of Appeals for the First Circuit to force the Obama Administration to allow Maine to reduce the amount it spends on Medicaid in a way that violates Obamacare.

A month ago we reported on Maine’s threat to sue the Obama Administration if HHS would not allow Maine to reduce the amount it spends on Medicaid.

The Obama Administration has now chosen to call Maine’s bluff. In a letter dated August 31, 2012 from Marilyn Tavenner, Acting Administrator of the Centers for Medicare and Medicaid Services (CMS), to Maine Governor, Paul LePage, Tavenner notified Maine that CMS would not answer Maine’s request by September 1st ultimatum.

Maine had been willing to hold off its lawsuit if the Obama Administration would have agreed to pay Maine’s share of the disputed Medicaid costs after October 1st while considering Maine’s request. Tavenner’s letter ignores this proposal.

We’ve stated before that Maine has a solid case once it gets to court. But we have wondered how Maine expected to take its case to federal court after only a month.

Normally, a state cannot ask federal courts to intervene on a Medicaid dispute until the state has “exhausted” its “administrative remedies.” Under Maine’s circumstances, that typically means giving the Department of Health and Human Services 90 days to respond to its request, plus an additional 90 days if HHS asks for additional information. Then, if HHS rules against the state, the process to ask HHS to reconsider can take close to 6 months.

In all, it may be a whole year before a state in Maine’s situation can appeal to the federal courts.

So, how does the state of Maine think it can ask the First Circuit for a ruling after only 31 days? The answer is found in one sentence of Maine’s “Motion for Injunctive Relief”:

The federal statute does not provide a remedy of recoupment from the Federal Department of Health and Human Services (“DHHS”) if a state pays out its own funds resulting from an incorrect or delayed decision.

The federal statute that requires Maine to first use all available administrative remedies provides no way for Maine to recoup state funds due to a “delayed or incorrect decision.” This problem is compounded by Maine’s Constitution which requires it to balance its budget.

Essentially, the Obama Administration has backed Maine into a corner by choosing not to work to resolve its dilemma. Maine has no alternative than to ask the federal courts to intervene.

It looks like this lack of alternatives may allow Maine to battle Obamacare in federal court a year early.