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[Bumped up to Thursday for visibility.]
* This puts the comptroller in a pretty darned tough spot, making her choose between violating state statutes, state judicial orders or federal court orders…
A Chicago federal judge has stopped short, so far, of ordering the state of Illinois to place a premium on paying the health insurance organizations, hospitals and others the $2 billion it is estimated the state owes under unpaid Medicaid bills.
However, on Wednesday, the judge said the position taken by the so-called managed care organizations is “reasonable” and indicated she did not similarly find it reasonable for the state to skimp on Medicaid payments while fully funding its monthly payroll and debt repayments.
“…Compliance with a state statute does not excuse failure to comply with a federal consent decree,” U.S. District Judge Joan Lefkow wrote in her June 7 order. “Although the court means no disrespect to the Comptroller, who faces an unenviable situation, it finds that minimally funding the obligations of the decrees while fully funding other obligations fails to comply not only with the consent decrees, but also with this court’s previous orders.”
For now, however, the judge ordered the state and the MCOs to continue negotiating over the next two weeks to reach a payment agreement.
Should they fail to strike an acceptable deal by June 20, however, she said either party could return to court for further proceedings.
* From the legal team representing the plaintiffs…
The court noted that Illinois chose to prioritize certain core priority payments—including pension payments, debt services, K-12 education, safety net medical providers, and state employee salaries—that are paid in full each month. The plaintiffs argued that then, only if the state has dollars left, would it make payments to Medicaid, imperiling the entire program by putting access to care, provider enrollment, managed care participation, and the solvency of Illinois’s health care safety net at risk.
The order came after a court hearing on June 6, 2017 when attorneys from the Sargent Shriver National Center on Poverty, Legal Council for Health Justice, and Goldberg Kohn returned to federal court to hold the State of Illinois accountable to reimburse medical providers statewide for Medicaid-funded care.
Some medical providers in Illinois have been delaying payment of salaries, taking out additional business loans, and facing closure or staff layoffs. Thomas Yates, executive director for Legal Council for Health Justice says, “This ruling reaffirms the importance of Medicaid to more than three million Illinois residents, the majority of whom are children, elderly, disabled, or members of low-wage working households, who rely on this program for essential medical care.”
Shriver Center president John Bouman warns, “We are now seeing the very real threat to the vital functions of government caused by the failure to produce a budget. The policy disputes now blocking the budget should be fought out on some other battlefield. Carrying out and paying for the vital functions should be the first priority of governing.”
* From the comptroller…
In accordance with Judge Lefkow’s ruling, our attorneys will continue discussions with attorneys for the plaintiffs.
The lack of a budget for the last two years has created a situation in which we now have more court-ordered and state-mandated payments than we have revenues to cover them.
The real solution to this crisis is a comprehensive budget plan passed by the General Assembly and signed by the Governor. Now.
*** UPDATE *** Pritzker campaign…
“Bruce Rauner is the governor of this state and the courts should not have to do his job for him,” said JB Pritzker. “It is Bruce Rauner’s constitutional duty to propose a balanced budget, but for the past three years he has consistently refused to do so. As Rauner holds this state hostage, the backlog of bills continues to grow and the fiscal crisis deepens. Courts are left with no choice but to pick winners and losers of state resources. In reality, all Illinoisans are losing under our failed governor. This is a manufactured crisis and the people of Illinois deserve so much better. It is time for a governor with courage, who will sit at the negotiating table, bring people together, and get our state a balanced budget.”
posted by Rich Miller
Thursday, Jun 8, 17 @ 7:47 am
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===“…Compliance with a state statute does not excuse failure to comply with a federal consent decree,” U.S. District Judge Joan Lefkow wrote in her June 7 order. “Although the court means no disrespect to the Comptroller, who faces an unenviable situation, it finds that minimally funding the obligations of the decrees while fully funding other obligations fails to comply not only with the consent decrees, but also with this court’s previous orders===
Harsh and raw to the realities.
It would NOT be sound politically for any side to try to make hay out of this decree, given how that paragraph is framed.
Tough to be the Comptroller right now. Even tougher being Staff explaining to her Crew the monetary realities that the math will dictate.
Comment by Oswego Willy Wednesday, Jun 7, 17 @ 7:04 pm
== It would NOT be sound politically for any side to try to make hay out of this decree, given how that paragraph is framed. ==
WICS 20 on Facebook is spinning it as an order to increase payments. When you go to their actual story, it has the actual facts.
Comment by RNUG Wednesday, Jun 7, 17 @ 7:23 pm
===WICS 20 on Facebook is spinning it as an order to increase payments. When you go to their actual story, it has the actual facts.===
That’s disappointing to the story, given the reality of what the facts and judge said.
Ugh.
Comment by Oswego Willy Wednesday, Jun 7, 17 @ 7:31 pm
== The lack of a budget for the last two years has created a situation in which we now have more court-ordered and state-mandated payments than we have revenues to cover them. ==
THAT, right there, is the whole ball game. Not enough revenue.
Wonder what would happen if the GA did nothing but pass a tax increase, sends it to Rauner, and he veto’ed it?
Comment by RNUG Wednesday, Jun 7, 17 @ 7:37 pm
== That’s disappointing to the story, given the reality of what the facts and judge said. ==
We’ll, last I knew it was owned by Sinclair Broadcasting, which is definitely on the conservative side. Draw your own conclusions from that fact.
Comment by RNUG Wednesday, Jun 7, 17 @ 7:40 pm
===We’ll, last I knew it was owned by Sinclair Broadcasting, which is definitely on the conservative side. Draw your own conclusions from that fact.===
The spin and Facebook post is what “ownership” would like the story to be… the story is what the facts clearly say.
It’s like the Anti-Click Bait
“Here’s the story, but be lazy and take our take”
Yikes, bud.
Comment by Oswego Willy Wednesday, Jun 7, 17 @ 7:48 pm
I’m puzzled why WICS misrepresented the story. If anyone has time to spell that out for me, I’d sure appreciate it. I’d read this story first, so when I saw the WICS lead, I wondered if I’d misread this post. Read theirs, and found I hadn’t. How does it benefit the conservative agenda to state the order was to increase Medicaid payments?
Comment by CCP Hostage Wednesday, Jun 7, 17 @ 7:53 pm
–“…Compliance with a state statute does not excuse failure to comply with a federal consent decree,” U.S. District Judge Joan Lefkow wrote in her June 7 order. “Although the court means no disrespect to the Comptroller, who faces an unenviable situation, it finds that minimally funding the obligations of the decrees while fully funding other obligations fails to comply not only with the consent decrees, but also with this court’s previous orders.”–
Now that’s something that should scare the heck out of bondholders. A federal judge is not impressed with state statutes mandating an irrevocable continuing appropriation. She wants her orders obeyed.
Here’s the deal, governor, with that political strategy of manufacturing a crisis: once they start, you don’t know which way they’re going to bounce.
Comment by wordslinger Wednesday, Jun 7, 17 @ 7:58 pm
==In accordance with Judge Lefkow’s ruling, our attorneys will continue discussions with attorneys for the plaintiffs.==
It’s nice to see that attorney billings continue on unabated in the midst of crisis.
Comment by Responsa Wednesday, Jun 7, 17 @ 8:13 pm
== How does it benefit the conservative agenda to state the order was to increase Medicaid payments? ==
Got to have somebody to blame for all that “wasted” money and for the coming tax increase … either poor people or the Federal court system.
Comment by RNUG Wednesday, Jun 7, 17 @ 8:22 pm
The MCOs were given a $800 million payment just a couple months ago. Other vendors would have loved to get a piece of that I am sure. Talk about looking a gift horse in the mouth.
Comment by Anonymous Wednesday, Jun 7, 17 @ 8:42 pm
===Talk about looking a gift horse in the mouth.===
No.
Monies are owed. It’s not anything close to a gift.
Judge Lefkow doesn’t see any of this as gifts. It appears Judge Lefkow is “confused” to why monies aren’t going where they were ordered.
No gifts.
Comment by Oswego Willy Wednesday, Jun 7, 17 @ 8:48 pm
Thank you RNUG. I shoulda known somehow it was going to be someone else’s fault.
Comment by CCP Hostage Wednesday, Jun 7, 17 @ 9:05 pm
This is the plan….from the moment he realized he couldnt twist arms.
Comment by Blue dog dem Wednesday, Jun 7, 17 @ 9:35 pm
The butchers bill is due for Illinois
Comment by Honeybear Thursday, Jun 8, 17 @ 7:01 am
So those vendors get paid, and other Vendors such as myself, who is/are a small business, & who pays our own healthcare bills, at full boat retail terrible coverage as we all know how much healthcare insurance costs, and then we do not get paid? So it’s ok we loose our insurance? And have no healthcare… While we participate in taxes and such to cover portions of those costs as residence of this state, and have no funds from not being paid by the State as a State Vendor??
Lord of the flies..
Not reasonable
Comment by sharkette Thursday, Jun 8, 17 @ 8:16 am
Wordslinger - Serious question: why should bondholders be scared (or at least -that- scared)? Illinois can’t go bankrupt (and Congress isn’t passing some sort of exception for us a la Puerto Rico). It has the resources to pay eventually.
Comment by lake county democrat Thursday, Jun 8, 17 @ 8:18 am
I wish I could believe this development would force a real negotiation to get to a real budget deal. Sigh.
Comment by Montrose Thursday, Jun 8, 17 @ 8:35 am
== Wordslinger - Serious question: why should bondholders be scared (or at least -that- scared)? ==
Not -word- but we could end up like Arkansas during the Great Depression. Some bondholders weren’t paid for years. Yes, in that case they were eventually made whole but it took a long time. Also like what is currently happening to some bondholders in Puerto Rico.
Generally, you buy bonds for the dividend / interest cash flow they generate. If you are highly leveraged (in other words, you borrowed money to buy the bonds), you could end up in a world of hurt: no money coming in, still need to make the payments, and you can’t sell the bonds at full value because they aren’t paying.
Comment by RNUG Thursday, Jun 8, 17 @ 8:49 am
No way Medicaid should have priority over State Employee health insurance provider bills. We pay our premiums. Those bills must be paid first.
Comment by Employee Thursday, Jun 8, 17 @ 8:57 am
Maybe the Govs office should have not signed contracts for providers?
Comment by Anonymous Thursday, Jun 8, 17 @ 9:06 am
JB’s campaign is definitely being active. I see a lot more responses (attacks) from his campaign than any of the other’s.
Comment by Perrid Thursday, Jun 8, 17 @ 9:11 am
== No way Medicaid should have priority over State Employee health insurance provider bills. We pay our premiums. Those bills must be paid first. ==
Employee health insurance has not been a priority for many, many years. The State, when it had a budget, never budgeted enough to cover even a full year, let alone address catching up the backlog there. The various proposed budget had state employee health insurance cuts, so it was only going to get worse.
Comment by RNUG Thursday, Jun 8, 17 @ 9:14 am
Perrid - Yep JB seems to be going after Rauner while the other Dems seem to be going after JB.
Comment by Seats Thursday, Jun 8, 17 @ 9:15 am
That still begs the question. Paying employees should still be in first priority over Medicaid. Not sure why providers are still signing up as network providers in State plan but since they are, I trust they know they must wait and are being advised accordingly by CMS before contract renewal.
Comment by Employee Thursday, Jun 8, 17 @ 9:30 am
Seems like consent decrees need to be paid before state statutes since they are judges’ orders…until someone sues the comptroller for not making statute-required payments.
At that point, consent decree ordered payments will be greater than the money on hand. At that point, could anyone be held in contempt of a court order?
Comment by Robert the Bruce Thursday, Jun 8, 17 @ 9:39 am
RNUG - thanks, your insights are always appreciated.
Comment by lake county democrat Thursday, Jun 8, 17 @ 9:41 am
== Paying employees should still be in first priority over Medicaid. ==
Why? There is a precedent of the State delaying payments up to 2 years or so. To date, no has successfully sued over it.
If you have a winning argument, I’d like to hear it.
Comment by RNUG Thursday, Jun 8, 17 @ 9:54 am
It’s a moral argument, though it means nothing in the court system. At best, payments should be made as accrued. There should be no bumping of Medicaid payments ahead of payments to providers serving employees actually paying premiums for their care.
Comment by Employee Thursday, Jun 8, 17 @ 11:03 am
@- RNUG - Thursday, Jun 8, 17 @ 9:54 am:
== Paying employees should still be in first priority over Medicaid. ==
Why? There is a precedent of the State delaying payments up to 2 years or so. To date, no has successfully sued over it.
If you have a winning argument, I’d like to hear it.
More complications. There are federal regulations regarding time frames for paying employees. Not paying employees could lead to another federal judge contradicting or a federal appeals court overruling Judge Lefkow. This is going to be like determining who gets seats in the lifeboats as Rauner deliberately sinks the ship.
Comment by DuPage Thursday, Jun 8, 17 @ 11:08 am
Agree. This entire scenario is a mess and we hope Lefkow’s ruling will prod Rauner into his senses. 2-year property tax freeze will at least get parties through the election.
Comment by Employee Thursday, Jun 8, 17 @ 11:12 am
== There are federal regulations regarding time frames for paying employees. … ==
Agreed there are rules on salary. But we were talking about paying employee health insurance claims, which is a bit different.
Comment by RNUG Thursday, Jun 8, 17 @ 11:22 am
Stop paying the debt service. LOL.
No, I am actually serious.
Comment by Juvenal Thursday, Jun 8, 17 @ 11:32 am
What is Rauner or any of his superstars saying about this decision?
Comment by Flynn's mom Thursday, Jun 8, 17 @ 12:27 pm
LCD, if you try the google, you’ll find that Illinois bonds are taking a beating in the market today due to the judge’s ruling.
The only thing Illinois had going for it in the market was the irrevocable continuing appropriation — bonds get paid first and in full. A federal judge yesterday put that state law in doubt.
It’s a big deal.
That’’s the thing about Rauners strategy of unleashing chaos — by definition, it’s uncontrollable.
Comment by wordslinger Thursday, Jun 8, 17 @ 1:07 pm
== ’ll find that Illinois bonds are taking a beating in the market today due to the judge’s ruling. ==
Wonder who is buying at the fire sale prices? Could it be Rauner and the 1.4%ers trust funds?
Comment by RNUG Thursday, Jun 8, 17 @ 1:22 pm
===For now, however, the judge ordered the state and the MCOs to continue negotiating over the next two weeks to reach a payment agreement.===
Considering that the RFP for moving almost all Medicaid clients in Illinois to Managed Care from Fee for Service is currently being negotiated, I am sure that this ruling brings more “flavor” to the conversations.
Comment by BIG R. Ph. Thursday, Jun 8, 17 @ 2:03 pm
For you “don’t pay the debt” fans, there’s the immediate problem of junk status for years, and the follow-on problem of defaults and payment penalties on interest rate swaps made around IL debt.
What a huge mess.
Comment by Arthur Andersen Thursday, Jun 8, 17 @ 2:30 pm
For you “don’t pay the debt” fans, there’s the immediate problem of junk status for years, and the follow-on problem of defaults and payment penalties on interest rate swaps made around IL debt.
What a huge mess indeed.
Comment by Arthur Andersen Thursday, Jun 8, 17 @ 2:31 pm