Here's a really short one from the U.S. Court of Appeals for the Fourth Circuit. Not published, so even shorter than you might expect.
In Virginia Hospital & Healthcare Ass'n v. Kimsey, No. 20-2176 (Mar. 1, 2022), the court rejected the Commonwealth's argument that the sole remedy for a takings claim is just compensation.
The plaintiff challenged a statute which limited their ability to obtain reimbursement for medical services rendered to Medicaid patients, which instead keys reimbursement to the patients' diagnoses. According to the plaintiffs, this scheme leaves them holding the financial bag in situations were they render services that the statute deems avoidable because of the final diagnosis.
The complaint alleges a regulatory taking, because the statute "denies just compensation for federally-mandated emergency services by predicating reimbursements on the final diagnosis only - and not on the services actually provided," and for reimbursing at only 1/2 the usual rate for those patients readmitted to the hospital. Slip op. at 8.
The district court dismissed, agreeing with the Commonwealth's argument that the sole remedy for a taking is just compensation, and the relief sought here - prospective injunctive relief (the way to plead around 11th Amendment limitations on damage remedies) cannot be granted. The court concluded, "[a]s long as an adequate provision for obtaining just compensation exists, there is no basis to enjoin the government's action effecting a taking." Slip op. at 10. Because they may bring an action to recover compensation, they are "foreclosed from seeking injunctive relief." Id. The court dismissed for lack of standing.
The Fourth Circuit reversed. After first acknowledging that in Knick, the Supreme Court noted that, "[s]o long as the property owner has some way to obtain compensation after the fact, governments need not fear that courts will enjoin their activities[,]" the Fourth Circuit held that the plaintiffs here are arguing that they're asking to enjoin the Commonwealth from denying compensation. That, the court concluded, is a different matter because they are not seeking to enjoin "the taking itself." Slip op. at 13.
"We're not trying to force you to pay us damages for changing the reimbursement rules, we're trying to stop you from withholding money that you should be paying us" is how the argument goes. That's a fine distinction, for sure. But one which the Ninth Circuit approved a short time ago, for example.
Here, the Commonwealth has a duty to pay the full amount (as required, the plaintiffs allege, by federal law), and the Commonwealth isn't living up to that obligation. Thus, the injunction isn't really seeking to enjoin the taking, just enjoin the failure to provide compensation. Ah, got it.
The Fourth Circuit also noted that the district court had not actually identified any alternative cause of action (the district court probably meant that the plaintiff could have sought just comp via a Virginia-law inverse condemnation lawsuit in state or federal court, but didn't actually say so).
Vacated and remanded.
Virginia Hospital & Healthcare Ass'n v. Kimsey, No. 20-2176 (4th Cir. Mar. 1, 2022) (unpub.)
