In the United States Court of Appeals For the Seventh Circuit ____________________ No. 21‐2325 SAINT ANTHONY HOSPITAL, Plaintiff‐Appellant, v. THERESA A. EAGLESON, in her official capacity as Director of the Illinois Department of Healthcare and Family Services, Defendant‐Appellee, and MERIDIAN HEALTH PLAN OF ILLINOIS, INC., et al., Intervening Defendants‐Appellees. ____________________ Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 1:20‐cv‐02561 — Steven Charles Seeger, Judge. ____________________ ARGUED FEBRUARY 15, 2022 — DECIDED JULY 5, 2022 ____________________ Before WOOD, HAMILTON, and BRENNAN, Circuit Judges. HAMILTON, Circuit Judge. In recent years, Illinois has moved its Medicaid program from a fee‐for‐service model, 2 No. 21‐2325 where a state agency pays providers’ medical bills, to one dominated by managed care, where private insurers pay medical bills. Most patients of plaintiff Saint Anthony Hospi‐ tal are covered by Medicaid, so Saint Anthony depends on Medicaid payments to provide care to patients. Saint An‐ thony says it is now in a dire financial state. Over the last four years, it has lost roughly 98% of its cash reserves, allegedly because managed‐care organizations (MCOs) have repeat‐ edly and systematically delayed and reduced Medicaid pay‐ ments to it. Saint Anthony contends in this lawsuit that Illinois offi‐ cials owe it a duty under the federal Medicaid Act to remedy the late and short payments. In a thoughtful opinion, the dis‐ trict court dismissed the suit for failure to state a claim for re‐ lief. Saint Anthony Hospital v. Eagleson, 548 F. Supp. 3d 721 (N.D. Ill. 2021). We see the case differently, however, espe‐ cially at the pleadings stage. We conclude that Saint Anthony has alleged a viable claim for relief under 42 U.S.C. § 1396u‐ 2(f) and may seek injunctive relief under 42 U.S.C. § 1983 against the state official who administers the Medicaid pro‐ gram in Illinois. We appreciate the potential magnitude of the case and the challenges it may present. Like the district judge and Judge Brennan, we can imagine forms of judicial relief that would be hard to justify. We can also imagine some poor ways to handle this case going forward in the district court. But we need not and should not decide this case by assuming that the worst‐case scenarios are inevitable. The State has tools available to remedy systemic slow pay‐ ment problems—problems alleged to be so serious that they threaten the viability of a major hospital and even of the man‐ aged‐care Medicaid program as administered in Illinois. If No. 21‐2325 3 Saint Anthony can prove its claims, the chief state official could be ordered to use some of those tools to remedy sys‐ temic problems that threaten this literally vital health care program. We therefore reverse in part the dismissal of the case and remand for further proceedings. I. Factual and Procedural Background In reviewing the grant of a motion to dismiss under Fed‐ eral Rule of Civil Procedure 12(b)(6) for failure to state a claim, we accept all well‐pleaded allegations as …
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