St. Anthony Hospital at 2875 W. 19th St.
St. Anthony Hospital's lawsuit challenging slow payment by Illinois Medicaid plans can go forward, following a divided federal appeals court ruling yesterday.
The nonprofit Chicago safety-net hospital sued the Illinois Department of Healthcare & Family Services, or HFS, over allegations the state failed to adequately oversee the seven insurance companies it contracted as managed-care organizations.
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St. Anthony claims it is missing more than $20 million in payments from these insurers and seeks an injunction to compel them to process outstanding claims.
The appellate ruling states that with Illinois having moved much of its Medicaid program from fee-for-service to managed care, private insurers are paying medical bills for Medicaid patients.
The decision "reaffirms the hospital's right to bring suit to require the State to do a better job in managing the Medicaid system, so that we can continue to serve patients who depend on Medicaid for their healthcare," St. Anthony President and CEO Guy Medaglia said in a statement.
"We expect the appeals court decision to (reinforce) the need for the state and the managed care organizations to address the problem that caused us to bring suit," he continued. "Late payments and lack of payment transparency are critical problems for safety net hospitals like Saint Anthony that primarily serve Medicaid patients. This decision, and the state's efforts it should generate, will benefit all providers of Medicaid services, and the patients they serve."
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HFS, the Illinois attorney general's office and Medicaid managed care plan Meridian Health Plan of Illinois did not respond to requests for comment.
As most patients of St. Anthony are covered by Medicaid, the hospital "depends on full, timely Medicaid payments to keep its doors open and provide care to patients," the ruling states. "St. Anthony 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."
Judges David Hamilton and Diane Wood of the three-judge panel said the lawsuit could proceed, stating providers like St. Anthony have a right to sue through section 1983 of the Civil Rights Act of 1871, which protects individuals' federal rights against illegal actions by state officials and allows parties to sue to protect those rights.
"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 (day) pay schedule — not merely that the contracts between the MCOs and HFS include clauses that say as much on paper," the opinion said.
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"St. Anthony thus has a right . . . that is enforceable under section 1983. The right entails having state officials address MCOs’ systemic failures to provide timely and transparent payments," the ruling continued.
The ruling came after last year's Supreme Court decision that Medicaid beneficiaries have the right to sue state agencies in a separate case involving a former nursing home resident's lawsuit over a Marion County, Ind., nursing home's alleged violations of federal patient protection laws.
The third appellate judge, Michael Brennan, dissented, contending that the provision of the federal Medicaid Act at issue does not contain language conferring a right to sue.
"Medicaid’s timely payment provision does not enable St. Anthony and other providers to sue Illinois to enforce it, so I respectfully dissent," Brennan wrote.
Brennan also said the majority's ruling opened Illinois and the courts up to a huge legal burden, turning trial courts into “de facto Medicaid claims processors for states.”
District courts, he wrote, 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.
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