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supremacy clause

Dan Liljenquist and State Level Medicaid Reform


If you’ve ever attended one of his “fiscal reality” town hall meetings, you’ll notice the passion with which Senator Dan Liljenquist talk about entitlement reform.  He’ll tell you it’s what pulled him out of the private sector and into politics.  You can hear the excitement in his voice when he talks about how Rhode Island — the bluest of all blue states — enacted sweeping pension reform legislation this past year to forestall a fiscal collapse.  And you feel his real frustration when he speaks about the fact that a “mid-level bureacrat” is holding up Utah’s Medicaid waiver request over small proposed co-pay increases.

Liljenquist has built quite a name for himself as the state level entitlement reform guy nationwide.  It’s what he does, and, thus far, he appears to have done it in impressive fashion.  So these days, he’s the guy that other people talk to when they want to do it, too.

But despite all the notoriety, I suspect there are quite a few people, especially here in Utah, that don’t understand what exactly it is that Liljenquist has done when it comes to entitlements.  So I wanted to put up this post summarizing the nature of Liljenquist’s Medicaid reforms here in Utah, and then offer some brief thoughts on the future of state-level Medicaid reform (and how it may tie in with Liljenquist’s future political plans, which may be the worst kept secret in Utah).

What’s Been Done

Liljenquist’s reform efforts were prompted by some alarming numbers.  In the case of his Medicaid reforms, it was the accelerating growth of Medicaid as a percentage of Utah’s budget.

Medicaid, though jointly implemented by the federal government and the states, is a federal program.  And the federal government sets uniform eligibility requirements for state Medicaid programs, while each state (with significant federal funding assistance, of course) is left to meet those requirements with its state level programs.  The continually soaring cost of health insurance — whether employer-funded and privately purchased — together with the difficult economy has led to a rapid rise in eligibility for benefits.  As a result, states are being forced to budget ever larger shares of their shrinking (or stagnant) revenue streams to meet the increased demand.  And Obamacare, when fully implemented in 2014, will expand eligibility even further.  These days, Medicaid expenses are growing fast enough, and becoming large enough, that they legitimately threaten to crowd out other important state services, including public education.

So, what to do?

Well, the federal government could grant limited waivers to Medicaid eligibility requirements for states who need them.  But it won’t.

Kathleen Sebelius (President Obama’s Secretary of Health and Human Services) has made clear that states cannot expect any flexibility with Medicaid when it comes to eligibility; the current federal administration is not about to let Utah, or any other state, reduce eligibility requirements, even (and maybe especially) in the middle of a recession.  And the two most reviled statutes in recent memory (at least from the right side) — the stimulus and Obamacare — both contain provisions protecting Medicaid eligibility.

Although Utah cannot control the number of people who are eligible for Medicaid benefits from the state level, Sebelius has suggested that states — as they have been in the past — will be given some flexibility when it comes to the nature of benefits themselves, and that’s the starting point for Liljenquist’s proposals.

The essence of Liljenquist’s reforms involve limiting costs by (1) tying Medicaid expenses to budget growth and (2) changing treatment incentives.  These two components are designed to reduce total cost as well as to make expenses predictable in relation to each year’s revenue (which obviously fluctuates due to a number of different factors).

According to Liljenquist, Utah’s current Medicaid model — a combination of managed care and fee for service — incentivizes overtreatment by hospitals and physicians, and, more importantly, irresponsible overuse by Medicaid recipients (e.g., unnecessary trips to the emergency room).  Liljenquist proposes moving Utah’s Medicaid system to a managed care+ philosophy designed to encourage more cost effective treatment.  Here are the highlights:

  • The state would allocate what amounts to block grants of its Medicaid funds to groups of healthcare providers known as Accountable Care Organizations (“ACOs”) on a statistically calculated (based on disease rates and risk profiles) per patient basis.
  • Each patient would be assigned what’s called a “medical home,” and a healthcare provider would be assigned to manage that patient’s care.  Patients would have a limited ability to choose their initial ACO and would have an option to switch ACOs once per year during an open enrollment period.
  • The ACOs would profit from Medicaid to the extent they facilitate effective and responsible treatment for their patients; since Medicaid payments would no longer be tied to specific treatment services provided, Liljenquist’s reforms would reduce the incentive to over treat for profit.
  • The state would offer some incentives, such as reduced co-pays or even cash rewards, for ACOs and patients who take advantage of preventative treatment options.
  • The system seeks to avoid the potential incentive to under treat patients by requiring that ACOs maintain a quality of treatment equivalent with that provided under the current system.
  • Compensation for services provided would remain in line with compensation under the current system; any expected savings would be generated by a relative predominance of more preventative and cost-effective treatment options.
  • The state would infuse some predictability into Medicaid funding by tying it to budget growth going forward.  In years where there is a surplus, the surplus would be put into a rainy day fund.  In years where enrollment growth exceeds expectations, benefits would be reduced across the board according to a predetermined schedule.
  • The state would seek modest increases in co-pay requirements for certain health services for those on Medicaid.

The Utah legislature’s fiscal analysts office estimates that the proposed reforms would result in savings of $770 million over the first seven years they’re implemented.

Liljenquist’s reform effort is just beginning, and can’t be implemented without permission from the U.S. Department of Health (USDHHS) and Human Services.  The specific reform bill, S.B. 180, passed unanimously by the Utah legislature during the 2011 session, required the Utah Department of Health to develop the specific details of a reform plan, and submit a request for waiver to USDHHS, which it did on July 1, 2011.  The waiver request is available online, for those interested in getting down into the details.  If the waiver request is granted in time, the initial reforms are set to be implemented in July 2012.

Where Do We Go From Here?  And What’s the Future for State Level Medicaid Reform?

Liljenquist’s proposed reforms are an attempt to work within the present system, frustrating as that system may be for reformers.  And Utah’s new approach does seem promising.  Of course, only time will tell whether the projected cost savings are realized and whether the quality of treatment for patients on Medicaid remain high.  But what Utah is proposing to do, while not wholly innovative, is a significant step forward in deal with the problems created by partially-funded federal mandates that result in unpredictable expenses.

But ultimately, thanks to that pesky Supremacy Clause, state level Medicaid reform can only get you so far.  Furthermore, you can never be certain that the reforms will be enduring, as they are subject not only to Congressional changes in course (see, e.g., Obamacare), but also to a somewhat unpredictable bureaucracy, subject to changes in approach based on the four-year Presidential election cycle.  Finally, there is the oft-cited concept as the states as laboratories of democracy for federal policy; the irony in this case is that if state reforms are successful in providing effective care at a reduced cost, they might serve as models for National Health 2.0 — “Hey, Utah’s got this great approach to effective cost, statewide government funded health care, let’s try it nationwide!”  Indeed, when I started investigating Liljenquist’s proposal, I thought to myself, if this works are well as they say it’s going to, it sounds like something that could go national and be, relatively speaking, cost effective.

All this reminds us, simply, is that Medicaid, despite the promise of state reforms, is a federal program, and real, fundamental change must happen at the federal level.  The drivers of the Medicaid problem are eligibility and benefit standards, and, as a result, the basic components of real, substantive reform involves dealing with questions of eligibility and tiered-benefits, not just increased effectiveness in treatment and care delivery (which treat the symptoms).

The premise of Medicaid is about setting creating a safety net and setting a basic floor for those who can’t afford health care coverage.  I think that’s a good thing, and I think that it’s probably something that should be done on a national level.  This is, after all, all about people and not about states — and a person is a person, no matter what state they live in.  But if Medicaid is going to continue to be implemented and significantly funded by the states, the overall national structure needs to provide, at minimum, necessary flexibility for states with vastly different budgetary needs and obligations and populations with different health profiles.

That can’t be done from a state legislature, no matter how many great ideas you’ve got.  The future of Medicaid reform is not at the state level.  Liljenquist knows that, and I suspect it’s a big part of what’s informing his future career plans.

Utah Supreme Court Justices Confront Subject Matter Jurisdiction and Legislative Intent in In re: Baby E.Z.

I originally posted this on my law firm’s website,, but am cross-posting it here because, although it’s more legal than political, it crosses over (plus, I get more readers on this blog).  Enjoy, and comment, please!

The Utah Supreme Court released a very interesting opinion this morning, one that deserves careful consideration from attorneys who practice before Utah’s courts — In re: Baby E.Z, 2011 UT 38 __ P.3d ___.  The case involved yet another unwed father’s challenge to his former partner’s decision to adopt his biological child without his consent.  Forgive me if I largely ignore the merits of this case and focus instead on issues more interesting to legal-nerd types:  the Court’s treatment of subject matter jurisdiction and the legitimacy of electronic lexicons in the search for ordinary meaning and legislative intent.

I will take a brief moment to note that the Utah Supreme Court unanimously rejected the unwed biological father’s challenge to the adoption.  If you’re more interested in the merits of the case, Nate Burdsal of Avery Burdsal & Fale, maintains an Adoption Law Blog where he comments on these types of decisions.

Now, on to the stuff likely only interesting to hard core legal nerds :)


Subject Matter Jurisdiction

The primary issue in the case was the extent to which a federal statute, the Parental Kidnapping Prevention Act, 28 U.S.C. § 1738A (2006), (“PKPA”) denied Utah’s state courts subject matter jurisdiction over the adoption proceeding and required enforcement of an out-of-state custody determination.  The PKPA was enacted primarily to ensure that states were required to give full faith and credit to the custody determinations of other states.  As part of accomplishing this goal, the PKPA contains the following provision, which was at the center of this appeal:

A court of a State shall not exercise jurisdiction in any proceeding for a custody or visitation determination commenced during the pendency of a proceeding in a court of another State where such court of that other State is exercising jurisdiction consistently with the provisions of this section to make a custody or visitation determination.

28 U.S.C. § 1738A(g) (2006).

On its face, this provision seems to be unusually clear, especially for a federal statute.  A state court is supposed to refrain from prosecuting a “custody . . . determination” proceeding if another state is already in the midst of a custody determination proceeding.  But, as is the case with so many legal issues, things immediately begin to get fuzzy.

The unwed biological father in this case argued that this provision divested Utah court of subject matter jurisdiction over the Utah adoption proceeding, because he had previously initiated a custody determination proceeding in Virginia.  In essence, he said that Utah courts had no authority to proceed with the adoption and were required, pursuant to federal law, to leave the case to Virginia to decide, and to give effect to the result reached by the Virginia courts.

The fact that the unwed biological father framed his challenge to the Utah court’s authority as a challenge to the district court’s subject-matter jurisdiction is especially significant, given that he did not challenge the district court’s jurisdiction over the case until the case was up on appeal.  Ordinarily, appellate courts will not rule on arguments that were not made before the district court.  There are a number of reasons for this rule, and it’s well justified.  ”Just trust me,” as Jimmy Carter would say.

But there are also exceptions, the most significant of which is a challenge to the subject-matter jurisdiction over the court over the dispute, which can be raised at any time, even (as was the case here) for the first time on appeal.  So, to be much more concise, the only way the unwed biological father was going to get the Utah Supreme Court to consider his argument was to frame it as a challenge to subject-matter jurisdiction, which his attorney did.

Here’s where things get interesting.  The first question the court had to decide was whether an adoption case was a “custody . . . determination.”  This is one area where Justice Lee split with the majority.  The majority opinion, authored by Justice Parrish, had little trouble determining that an adoption — which involved the permanent placing of a child with a set of parents — was also a determination of custody.  But this conclusion put Justice Parrish in a bit of a difficult position in relation to the result she eventually reached.  She had to explain why, even though the PKPA applied, Utah courts could exercise jurisdiction despite the seemingly clear bar of the PKPA.

Justice Parrish reasoned as follows.  She determined that the PKPA was not about stripping subject-matter jurisdiction at all.  Instead, it was about refraining from “exercising” subject-matter jurisdiction.  In order for a court to refrain from exercising jurisdiction, it has to have jurisdiction in the first place, right?.  In effect, she viewed the statutory language as a command for state courts to abstain from exercising jurisdiction when a court of one of their sister states is already doing so.  Because this was not an issue of lack of subject matter jurisdiction (which, again, can be raised at any time, even for the first time on appeal), she simply determined that the unwed biological father had waived his right to challenge the jurisdiction of Utah’s courts by not arguing the issue to the district court before he appealed.

In making her decision, Justice Parrish referenced another interesting recent Utah Supreme Court decision: Johnson v. Johnson, 2010 UT 28.  In the Johnson case, the Court dealt with a subject-matter jurisdiction challenge to a divorce decree.  Although the case has a very interesting backstory, suffice it to say that it involved a couple who pretended to be married for 30 plus years (without ever being married, either officially, or at common law) and then, despite never having married, proceeded to file for divorce.  In their divorce proceeding, both parties represented to the district court that they were, in fact, married, and the court accordingly entered the divorce decree.  Based on what appears to be buyer’s remorse regarding the property settlement terms of the decree, the ex-non-husband(?) immediately began a 10-year battle to have the decree voided based on lack of subject matter jurisdiction.  His argument?  A district court has no subject-matter jurisdiction to enter a divorce for parties who aren’t actually married.  The Utah Supreme Court responded as follows:

Because parties can raise subject matter jurisdiction at any time during a proceeding, it makes sense to cabin the issues that fall under the category of subject matter jurisdiction.  For this reason, most of our cases that have addressed subject matter jurisdiction have considered the authority of the court to adjudicate a class of cases, rather than the specifics of an individual case.

Johnson v. Johnson, 2010 UT 28, ¶ 10 (emphasis added).

According to the Court, because the district court clearly had authority to adjudicate divorce cases, it had subject matter jurisdiction over the Johnson case — which, despite ultimately being meritless, was nonetheless in the general “class” of divorce cases over which the district court indisputably had jurisdiction.  The Court acknowledged that, had the district court known the parties were not married, it should not have granted a divorce, but said that this fact did not affect the authority of the district court over the dispute.  As a result, it is possible, in Utah, for someone to essentially waive their right to contest a non-married divorce on the grounds that they were never married.  Contemplate that one for a while (P.S. — I think it’s the correct result).

Likewise, in In re: Baby E.Z., Justice Parrish reasoned that,  even though, had the unwed biological father timely raised the PKPA before the district court, the court would have had to refrain from exercising jurisdiction, this does not mean that the Court lacked jurisdiction over the case.

Justice Lee disagreed with the majority’s reasoning, though he concurred in the result.  He contended that the Johnson decision did not control this case.  The Johnson case involved a determination of whether Utah’s own statutory grant of jurisdiction to district courts reached so far as to allow them to adjudicate cases that the facts ultimately didn’t merit the relief sought.  In re: Baby E.Z., in contrast, was not about defining the extent to the statute’s own grant of subject matter jurisdiction, but involved interpretation of a federal statute — supreme over state law pursuant to the Supremacy Clause.  The ultimate question was not whether Utah’s district courts had jurisdiction over the general “class” of adoption cases, but what does the federal law say about the ability of the district court to entertain this particular case:

I do not believe that the court’s construction of the PKPA follows from our holding Johnson v. Johnson, or similar cases.  Nor can I agree that athe question in this case is “whether the district court has authority to adjudicate the general class of cases to which this case belongs.”  The dispositive question with respect to forfeiture is not whether the district court has subject-matter jurisdiction over the class of cases governed by the PKPA.  Instead, we must determine what the PKPA means when it directs the state courts not to “exercise jurisdiction in any proceeding for a custody of visitation determination commenced during the pendency of a proceeding in a court of another state.”  The resolution of that question necessarily involves a determination the type of jurisdiction implicated by this “exercise” formulation — specifically, whether the PKPA’s prohibition goes to the competency of the court to hear a class of cases (subject-matter jurisdiction) or to the propriety of the court’s exercise of its powers based on the parties’ contacts and connections with the forum (personal or territorial jurisdiction).

Justice Lee is absolutely correct on this point and has made an important contribution to the Utah Supreme Court’s jurisdictional jurisprudence.  Justice Lee’s opinion, even though only a concurrence, draws a clear line between how to treat cases dealing solely with a state’s own grant of subject matter jurisdiction to its courts and federal statutes that may speak in terms of jurisdiction.  It also provides a helpful reminder that attorneys should go beyond the word “jurisdiction” and consider (as they should in every statutory construction case) the precise nature of the legislature’s intent — even if the legislature may have used words that seem to have acquired a single, ordinarily accepted meaning.  Attorneys take note, and use the case law and argue appropriately.

Justice Lee finished his analysis, ultimately determining that the statutory language of the PKPA — even though it spoke in terms of “jurisdiction” — strongly suggested that it was not intended to divest state courts of subject-matter jurisdiction in certain adoption cases, but was instead a practical rule of comity and efficiency — similar to venue provisions or abstention doctrines.  Accordingly, Justice Lee reached the same endpoint as the majority on this issue — determining that the unwed biological father had waived his right to contest the adoption.


Means of Ascertaining Legislative Intent

The second interesting thing that comes out of In re: Baby E.Z. is how the Court divided on the question of the legitimacy of a means of searching for legislative intent.  Justice Lee, in addition to determining that the PKPA did not speak to the question of subject-matter jurisdiction, also determined (and argued the point very persuasively, in my opinion) that it did not even apply to this case because an adoption was not a “custody . . . determination.”  In reaching this conclusion, Justice Lee use a somewhat unusual tool in service of his quest for legislative intent:

Granted, there are dictionary definitions of the term “custody” that are broad enough to encompass the notion of adoption.  But the definitions sweep in uses of “custody” that cannot conceivably by encompassed by the PKPA, such as the total public funds in the custody of the state treasurer; a trustee’s “custody” of the res of a trust; or the state’s “custody” of unclaimed property.  Other dictionaries define the family-law term “custody” more narrowly, with reference to custody determinations made pursuant to a divorce.  Thus, though dictionary definitions may be helpful in determining the range of possible meanings of the term “custody,” they cannot identify which of those meaning is intended or more likely to be understood in a particular linguistic or statutory context.  A proper interpretation of meaning in the midst of a range of definitions requires a consideration of the use of the term in its relevant context.

In the context of contemporary usage, by far the most common family-law sense of the word “custody” occurs in the setting of a divorce.  The word “custody” is some ten times more likely to collocate with the word “divorce” than with the word “adoption” in contemporary usage.  A similar lresult holds for the use of “custody” by this Court and the Utah Court of Appeals.  From the passage of the PKPA in 1980, the court’s of this state used the term “custody” most often in its divorce context.  Even in those cases in which the terms “custody” and “adoption” co-occur, they typically are used distinctly to refer to different legal proceedings.  Consequently, if the interpretation of the PKPA is “a contest between probabilities of meaning,” I would find that the custody proceedings covered by the Act are limited to proceedings resulting in the modifiable custody orders of a divorce.  We need not assume that the legislature intends to use statutory terms consistent with their most common meaning.  But evidence tha a given meaning of a term is the most common in a given context undermines the contention that a contrary interpretations must be inferred from the statute’s “plain language.”

This is really interesting stuff.  Certainly, quantitative analysis regarding word pairings doesn’t generally make (has it ever made?) appearances in Utah Supreme Court opinions.  Indeed, both Justice Parrish (in an unusually forceful manner) and Justice Durrant expressed concern about Justice Lee’s approach to ascertaining legislative intent.

This prompted Justice Lee to respond with a spirited defense of his tactic (even this abridged version is long, but well worth reading):

Both the majority and Justice Durrant in his separate concurrence object to my reliance on liguistic data from an electronic corpus in analyzing the comparative usage of different possible meanins of the term custody in the PKPA, contending that such analysis is “of little analytical or persuasive value.”

. . .

As noted above, I share the view that we should not blindly attribute to every statutory term its most frequent meaning.  Such an approach would be arbitrary and would lead to statutory incoherence.  This is not the approach I have articulated, and not the one I have followed in my consideration of corpus linguistic data.

Still, I cannot imagine how we can have a meaningful conversation about the “ordinary” meaning of a statutory terms without asking how a given term is most commonly used in a given context.  This, after all, is what the term “ordinary” meaning when used in a linguistic setting.  I do not suggest that the question of comparative frequency of different sense is necessarily a dispositive one (even when, as above, that comparison examines the use of two competing senses in the relevant context).  But I think the question of comparative usage is at least relevant, particularly where the inquiry into the statute’s meaning is probabilistic.

When faced with an undefined statutory term, judges have traditionally looked to dictionaries to determine ordinary meaning.  Where the dictionary presents more than one possible meaning, as is often the case, judges seldom provide a rationale for selecting among the alternatives; nor do they explain why one dictionary definition is more “ordinary” than the other.  This suggests that such determinations are intuitive rather than principled.  But dictionaries and our own intuition may not tell us how words are ordinarily used. and out reliance on both to determine the ordinary meaning of a statutory term in a particular context is problematic.

. . .

By trusting in dictionaries and out intuitions to reveal ordinary meaning, we are setting both to tasks they are ill-suited to perform.  Dictionaries, while revealing a range of possible meaning of a word, can never tell us how a word is commonly or ordinarily used in a given context.  I recognize that determining the ordinary meaning of statutory terms using data from an electronic corpus presents its own set of problems.  But the alternative is opacity — an intuitive judgment that is justified on the basis of sources that do not stand for the proposition for which they are cited.  In this respect “citing to dictionaries creates a sort of optical illusion, conveying the existence of certainty — or ‘plainness’ — when appearance may be all there is.”

Some Thoughts

I’d love to get others thoughts on this, but here are some of my own (ill-formulated as they are at this point).  First, on Justice Lee’s remarks regarding dictionaries.  When it comes to the “ordinary meaning” of words or phrases, I don’t think that judges make decisions based on dictionary definitions.  Of course, Justice Lee is a judge, so what do I know? :)  Instead, they make decisions on based on their intuition (to use Justice Lee’s word) and experience (to use something a bit more charitable) regarding a word’s ordinary meaning.  After all, a word’s ordinary meaning should be something you just know, right?  I mean, do we even need to cite to a dictionary when we’re talking about an “ordinary” meaning?

Why, then, do judges cite dictionaries so much?  As Justice Lee correctly notes, even though dictionary definitions are numbered, there’s no definition specifically marked “O,” for “ordinary.”  Although it’s nothing more than my own personal opinion, I think judges cite dictionaries primarily because they feel like they’ve always got to cite something — even when they’re talking about ordinary meanings.  It’s ingrained in the legal culture, and is generally not a bad thing.  But it can get ridiculous.  For example, if, in a piece of legal writing, you’re making a claim that Utah winters are cold, you cite to weather data.  Need to establish the proposition that a full-grown oak tree is tall?  Better cite to a arborist’s publication.  This is drilled into you from the very beginning of law school, from the very first time you submit a paper lacking a cite for what seems to you to be a completely obvious assertion — and someone reviewing your paper tells you, “Consider adding a cite for the proposition that Wilt Chamberlain is tall.”

Ultimately, what I’m saying is that, in my opinion, judges don’t rely on dictionaries to determine ordinary meaning.  The rely on dictionaries for the necessary citation in support of their own conception about a word’s ordinary meaning, or even its meaning in a specific context.  Is this sense, dictionaries can perform the function of eliminating some proposed ordinary meanings — if you can’t find a dictionary definition to support your intuition as to ordinary meaning, then you’ve probably got it wrong.  But other than that, dictionaries just provide some basic level of support for the intuitive or experiential conclusions, which is really what the judge is basing their conclusion on.  Let me be clear:  I’m not saying this is an illegitimate way of making decisions.  After all, “the life of the law has not been logic, but experience” right?  It’s just the way I think it is.

Justice Lee is asking for judges to at least consider an alternative approach — resort to empirical measurements of word usage in specific contexts.  He would emphasize that it’s designed to just be one approach among many, but one that trades the opacity of intuition and personal experience for the transparency of replicable empirical analysis.  It’s an interesting, and potentially valuable suggestion.  But it’s also one fraught with some risk.

When we’re talking about ordinary meaning, what is a person’s (even a judge’s) “intuition” or “personal experience” when compared with statistical data having a 95 percent confidence interval?  Can Justice Lee’s approach just really be one more approach among many, or, if it gains acceptance, is it destined to become the one and only valid or legitimate means of determining ordinary meaning in context?  In this case, the other Justices weren’t convinced and Justice Lee used other sources of legislative intent to reach his conclusion.  But one still has to wonder . . . .  Furthermore, is the more quantitative approach really that much more accurate or transparent when compared to intuition to justify that kind of potential primacy, intended or not?  Do legislatures expect that their statutes will be interpreted this way?  Are we simply searching for certainty that’s not there?

It seems as though there’s a real risk that this type of quantitative analysis can overrun the more intuitive or experiential conclusions, even if it’s not intended to.  So, ultimately, I don’t think it’s a case of trading dictionaries for contextual lexicons.  I think moving this way potentially involves a fundamental change in approach.  It may be merited, or maybe not.  It’s something that deserve careful consideration.

What are your thoughts?