United States District Court, D. New Jersey
MED. DIAGNOSTIC LABS., LLC, Plaintiff,
HORIZON HEALTHCARE SERVS., INC., et al., Defendants.
WILLIAM J. MARTINI, U.S.D.J.
Medical Diagnostic Laboratories, LLC (“MDL”)
brings this action against Horizon Healthcare of New Jersey
d/b/a Horizon N.J. Health (“HNJH”) and its
affiliates, alleging unlawful discrimination when HNJH denied
MDL's application to join its Medicaid network, in
violation of 42 U.S.C. § 1396u-2(b)(7) (the Medicaid
Act's antidiscrimination provision). This matter comes
before the Court on HNJH's Federal Rule of Civil
Procedure 12(b)(6) motion to dismiss. No oral argument was
held. Fed.R.Civ.P. 78(b). For the reasons below, HNJH's
motion to dismiss is GRANTED and MDL's
Complaint is DISMISSED WITH PREJUDICE
managed care organization (“MCO”), HNJH has a
contract with the State of New Jersey to administer its
Medicaid Program. Compl. ¶¶ 1, 8-9, ECF No. 1. MDL
is an outpatient medical laboratory specializing in tests for
sexually transmitted infections. Id. ¶¶ 2,
4. As an in-network provider for the State and its contracted
Medicaid program MCOs, MDL mainly serves high-risk
populations, such as pregnant or at-risk women of becoming
pregnant. Id. ¶¶ 6, 8-9.
alleges HNJH had no legitimate business reason to deny access
to its Medicaid network. Id. ¶ 49. As a
consequence, MDL claims the denial decision represents
unlawful discrimination because it deprives high risk HNJH
Medicaid insureds access to MDL's specialized testing
services. Id. ¶¶ 7, 11. Also, MDL claims
HNJH has yet to provide reimbursement for laboratory tests
performed on HNJH Medicaid insureds. Id. ¶ 56.
now moves to dismiss the Complaint, arguing it neither
violated federal law nor its contract with the State's
Medicaid program when it declined MDL's application to
join its Medicaid network. Mot. to Dismiss Br. 4, ECF No.
8-2. And even if HNJH's refusal of MDL's application
to join its Medicaid provider network was discriminatory
under the Medicaid Act, such violation of federal law
provides MDL no private cause of action. See Id. at
responds, arguing HNJH's unlawful network participation
decision arises under the Medicaid Act and its implementing
regulations because MCOs like HNJH cannot discriminate
against providers that serve high-risk populations. MDL
Opp'n Br. 15-19, ECF No. 9. Thus, MDL claims Congress
intended to create a private right of action that enables
providers to sue MCOs over network participation decisions.
Id. at 15. In reply, HNJH reiterates MDL has no
private right of action since Medicaid exists to benefit the
infirm whom the providers serve, rather than benefit of the
providers themselves. HNJH Reply Br. 3, ECF No. 10.
Rule of Civil Procedure 12(b)(6) provides for the dismissal
of a complaint, in whole or in part, if the plaintiff fails
to state a claim upon which relief can be granted. The moving
party bears the burden of showing that no claim has been
stated. Hedges v. United States, 404 F.3d 744, 750
(3d Cir. 2005). In deciding a motion to dismiss under Rule
12(b)(6), a court must take all allegations in the complaint
as true and view them in the light most favorable to the
plaintiff. See Warth v. Seldin, 422 U.S. 490, 501
claims the sole count in MDL's Complaint, asserting
unlawful discrimination under Section 1396u-2(b)(7) of the
Medicaid Act, must be dismissed because the provision affords
providers like MDL no private right of action. The Court
question whether a statute creates a cause of action, either
expressly or by implication, is basically a matter of
statutory construction . . . . [And] what must ultimately be
determined is whether Congress intended to create the private
remedy asserted. . . .” Transamerica Mort.
Advisors, Inc. v. Lewis, 444 U.S. 11, 16 (1979) (citing
Touche Ross & Co. v. Redington, 442 U.S. 560,
568 (1979)); see also Am. Trucking Ass'ns, Inc. v.
Del. River Joint Toll Bridge Comm'n, 458 F.3d 291,
296 (3d Cir. 2006). In the absence of express statutory
authorization, Supreme Court precedent shows continued
reluctance to create private causes of action. See Touche
Ross & Co., 442 U.S. at 560 (noting the Court will
create a private right of action only upon showing evidence
of affirmative congressional intent to do so); Cort v.
Ash, 422 U.S. 66 (1975); J.I. Case Co. v.
Borak, 377 U.S. 426 (1964). Thus, the court's
inquiry is confined to answering two questions: (1)
“who would benefit from the [Medicaid Act's
antidiscrimination provision], and “whether Congress
intended to confer federal rights upon those
beneficiaries.” Am. Trucking Ass'ns, Inc.,
458 F.3d at 297 (citing Calif. v. Sierra Club, 451
U.S. 287, 294 (1981)).
the first question, MDL cannot maintain its private cause of
action against HNJH because the Medicaid Act
antidiscrimination provision MDL relies upon is phrased in
terms of benefitting Medicaid insureds, not providers.
See Armstrong v. Exceptional Child Ctr., Inc., 135
S.Ct. 1378, 1387 (2015) (citing 42 U.S.C. § 1396u-
2(b)(7)). And as to the second question, the
“rights-creating language” in a statute to sue
over discrimination must indicate an “unmistakable
focus on the benefitted class.” See Gonzaga Univ.
v. Doe, 536 U.S. 273, 287 (2002) (citation omitted). The
Medicaid statute at issue here gives MCOs like HNJH the right
to manage their networks “to meet the needs of [their]
enrollees . . . .” 42 U.S.C. § 1396u-2(b)(7). And
that same provision falls under the heading
“Beneficiary protections.” Id. Thus, as
to providers, the statute “gives no express indication
of a desire to create a right of action to enforce the
[antidiscrimination] standard.” Am. Trucking
Ass'ns, Inc., 458 F.3d at 297.
MDL's argument that the Medicaid Act antidiscrimination
provision's implementing regulation contains a private
right to sue is without merit. That is because a federal
regulation alone cannot create a private cause of action
unless the enabling statute creates such right or else
authorizes the appropriate regulatory agency to do so.
See Three Rivers Ctr. for Indep. Living v. Hous. Auth. of
the City of Pitt., 382 F.3d 412, 424 (3d Cir. 2004)
(citing Alexander v. Sandoval, 532 U.S. 275, 291
(2001)). Therefore, because MDL has failed to show how the
Medicaid Act's antidiscrimination ...