Dorothy Harris, Legal Guardian of Willie M. Washington Suzanne K. Balikci, Legal Guardian of Jennie Lillian Schankowski and Mary Ruffin, Legal Guardian of Issac Ruffin, on Behalf of Themselves and All Other Similarly Situated Individuals [Certified Class Action] v. Janet Olszewski, Director of the Michigan Department of Community Health, L.F., Legal Guardian of J.H., Individually and on Behalf of All Other Similarly Situated Individuals [Certified Class Action] v. Janet Olszewski, Director of the Michigan Department of Community Health and Paul Reinhart, Director of Michigan's Medical Services Administration

In these consolidated appeals, Michigan's Department of Community Health (the "department" or "State") urges us to reverse the district court's entry of summary judgment against it in two cases brought under 42 U.S.C. § 1983 on behalf of a class of Michigan residents. The district court enjoined the department from enforcing a single-supplier contract for all incontinence products to Michigan's Medicaid recipients. On appeal, the department challenges the district court's holdings that: (1) Medicaid's freedom-of-choice provision, 42 U.S.C. § 1396a(a)(23)(A), confers a private right on individuals enforceable under § 1983 and (2) the State's single-source contract violates the freedom-of-choice provision because incontinence products are not "medical devices" as that term is used in the relevant statute, § 1396n(a)(1)(B). We agree that Medicaid's freedom-of-choice provision creates a private right that may be enforced under § 1983. But we disagree that the phrase "medical devices" is unambiguous and that the agency's interpretation—that medical devices may include incontinence products—is ineligible for Chevron deference. We thus reverse the judgment of the district court.

A cooperative federal-state program, Medicaid authorizes the Federal Government to provide funds to participating States to administer medical assistance to individuals "whose income and resources are insufficient to meet the costs of necessary medical services." 42 U.S.C. § 1396. The State of Michigan participates in Medicaid and administers its program through the department.

At stake in these appeals is Michigan's method of supplying certain incontinence products through its Medicaid program. The relevant incontinence products include adult, child, and youth diapers and briefs as well as disposable incontinence shields, liners and underpads as well as incontinence catheters, accessories, syringes, skin barriers and enema units.

In 1997, the department and Binsons Home Medical Care signed a contract providing that Binsons would be the sole provider of incontinence products for some of Michigan's Medicaid recipients.

In 2004, after undergoing a competitive-bidding process, the department entered into a new contract designating J & B Medical as the single-source provider of incontinence products to all of Michigan's Medicaid recipients.

On June 28, 2004, Dorothy Harris filed a complaint in the United States District Court for the Eastern District of Michigan, seeking certification of a class consisting of all individuals who, like her, are eligible for Medicaid benefits in Michigan and may require use of incontinence products. Harris sought declaratory and injunctive relief under § 1983 and claimed that the department's single-source-provider contract violated Medicaid's freedom-of-choice provision. On July 1, 2004, another beneficiary, L.F., filed a similar complaint, after which the court consolidated the two cases.

On November 1, 2004, the district court granted summary judgment for the plaintiffs. As pertinent here, the court held that Medicaid's freedom-of-choice provision "creates private rights" enforceable under § 1983. D. Ct. Op. at 9-17. It then held that the freedom-of-choice provision, 42 U.S.C. § 1396a(a)(23)(A), requires States to allow eligible individuals to obtain "medical assistance" from any qualified provider. Although the Medicaid statute contains an exception to the freedom-of-choice provision for providers of "medical devices," 42 U.S.C. § 1396n(a)(1)(B), the court held that this phrase does not include incontinence products. The department timely appealed.

Section 1983 creates a cause of action against any person who, under color of state law, deprives "any citizen of the United States . . . of any rights, privileges, or immunities secured by the Constitution and laws." 42 U.S.C. § 1983. Although § 1983 authorizes lawsuits to enforce federal statutory rights, Maine v. Thiboutot, 448 U.S. 1, 4, 100 S.Ct. 2502, 65 L.Ed.2d 555 (1980), it "does not provide an avenue for relief every time a state actor violates a federal law," City of Rancho Palos Verdes v. Abrams, 544 U.S. 113, 125 S.Ct. 1453, 1458, 161 L.Ed.2d 316 (2005). Consistent with the terms of § 1983, a claimant must demonstrate that the underlying statute creates enforceable "rights" because "it is rights" after all, "not the broader or vaguer `benefits' or `interests,' that may be enforced under" the statute. Gonzaga Univ. v. Doe, 536 U.S. 273, 283, 122 S.Ct. 2268, 153 L.Ed.2d 309 (2002).

In ascertaining "whether Congress intended to create a federal right" in the freedom-of-choice provision, id., the Court has directed us to look at three factors, see Blessing v. Freestone, 520 U.S. 329, 340-41, 117 S.Ct. 1353, 137 L.Ed.2d 569 (1997); see also Westside Mothers v. Haveman, 289 F.3d 852, 862-63 (6th Cir. 2002). "First, Congress must have intended that the provision in question benefit the plaintiff." Blessing, 520 U.S. at 340, 117 S.Ct. 1353. In answering this initial inquiry, courts look for a statutory right or "individual entitlement," Gonzaga, 536 U.S. at 287, 122 S.Ct. 2268, that is "unambiguously conferred," id. at 283, 122 S.Ct. 2268, by the use of "rights-creating language," id. at 284 n. 3, 122 S.Ct. 2268. An "aggregate focus" unconcerned "with whether the needs of any particular person have been satisfied," id. at 288, 122 S.Ct. 2268 (internal quotation marks omitted), is insufficient; the statute must be "phrased in terms of the persons benefited," id. at 284, 122 S.Ct. 2268, and use "individually focused terminology," id. at 287, 122 S.Ct. 2268. "Second, the plaintiff must demonstrate that the right assertedly protected by the statute is not so vague and amorphous that its enforcement would strain judicial competence." Blessing, 520 U.S. at 340-41, 117 S.Ct. 1353 (internal quotation marks omitted). "Third, the statute must unambiguously impose a binding obligation on the States. In other words, the provision giving rise to the asserted right must be couched in mandatory, rather than precatory, terms." Id. at 341, 117 S.Ct. 1353.

These three inquiries do not end the matter, however. "Even after" a plaintiff demonstrates "that the federal statute creates an individually enforceable right in the class of beneficiaries to which he belongs[,] . . . there is only a rebuttable presumption that the right is enforceable under § 1983." City of Rancho Palos Verdes, 125 S.Ct. at 1458 (internal quotation marks omitted). "The defendant may defeat this presumption by demonstrating that Congress did not intend that remedy for a newly created right" by pointing to "evidence of such congressional intent [that] may be found directly in the statute creating the right, or inferred from the statute's creation of a comprehensive enforcement scheme that is incompatible with individual enforcement under § 1983." Id. (internal quotation marks omitted); see also Wilder v. Va. Hosp. Ass'n, 496 U.S. 498, 508, 110 S.Ct. 2510, 110 L.Ed.2d 455 (1990).

Gauged by this test, Medicaid's freedom-of-choice provision creates enforceable rights that a Medicaid beneficiary may vindicate through § 1983. "A State plan for medical assistance," the provision says,

must . . . provide that [ ] any individual eligible for medical assistance (including drugs) may obtain such assistance from any institution, agency, community pharmacy, or person, qualified to perform the service or services required (including an organization which provides such services, or arranges for their availability, on a prepayment basis), who undertakes to provide him such services.

42 U.S.C. § 1396a(a)(23) (emphasis added).

First, in giving "any individual eligible for medical assistance" a free choice over the provider of that assistance, the statute uses the kind of "individually focused terminology" that "unambiguously confer[s]" an "individual entitlement" under the law. Gonzaga, 536 U.S. at 283, 287, 122 S.Ct. 2268. And by saying that "[a] State plan . . . must . . . provide" this free choice, the statute uses the kind of "rights-creating," id., "mandatory language," see Westside Mothers, 289 F.3d at 863, that the Supreme Court and our court have held establishes a private right of action. It is also clear that the right is vested "in the class of beneficiaries to which [plaintiffs] belong[ ]," City of Rancho Palos Verdes, 125 S.Ct. at 1458, namely individuals eligible for Medicaid coverage. The freedom-of-choice provision, in other words, "gives recipients the right to choose among a range of qualified providers[ ] without government interference." O'Bannon v. Town Court Nursing Ctr., 447 U.S. 773, 785, 100 S.Ct. 2467, 65 L.Ed.2d 506 (1980) (emphasis removed); cf. Gonzaga, 536 U.S. at 279, 287, 122 S.Ct. 2268 (holding that the Family Educational Rights and Privacy Act of 1974 (FERPA) does not "confer enforceable rights" under § 1983 because "[u]nlike the individually focused terminology of Titles VI and IX (`no person shall be subjected to discrimination'), FERPA's provisions speak only to the Secretary of Education, directing that `no funds shall be made available' to any `educational agency or institution' which has a prohibited `policy or practice'"); Blessing, 520 U.S. at 333, 343, 117 S.Ct. 1353 (holding that Title IV-D of the Social Security Act "does not give individuals a federal right to force a state agency to substantially comply with" its terms because "the requirement that a State operate its child support program in `substantial compliance' with Title IV-D was not intended to benefit individual children and custodial parents, and therefore it does not constitute a federal right" enforceable under § 1983).

Second, while there may be legitimate debates about the medical care covered by or exempted from the freedom-of-choice provision, the mandate itself does not contain the kind of vagueness that would push the limits of judicial enforcement. Whether a state plan provides an individual with the choice specified in the provision is likely to be readily apparent, and the parties here do not dispute that the department's single-source contract fails to provide that choice.

Third, the "must . . . provide" language of the provision confirms that the statute is "couched in mandatory, rather than precatory, terms." Blessing, 520 U.S. at 341, 117 S.Ct. 1353. The department does not argue otherwise.

Nor do other provisions of the Medicaid Act explicitly or implicitly foreclose the private enforcement of this statute through § 1983 actions. The Medicaid Act does not provide other methods for private enforcement of the Act in federal court. Cf. Smith v. Robinson, 468 U.S. 992, 1011-12, 104 S.Ct. 3457, 82 L.Ed.2d 746 (1984) (recognizing that a § 1983 action "would. . . render superfluous most of the detailed procedural protections outlined in the statute"); Middlesex County Sewerage Auth. v. Nat'l Sea Clammers Ass'n, 453 U.S. 1, 20, 101 S.Ct. 2615, 69 L.Ed.2d 435 (1981) ("[W]hen a state official is alleged to have violated a federal statute which provides its own comprehensive enforcement scheme, the requirements of that enforcement procedure may not be bypassed by bringing suit directly under § 1983.") (internal quotation marks omitted); see also City of Rancho Palos Verdes, 125 S.Ct. at 1459 ("We have found § 1983 unavailable to remedy violations of federal statutory rights in two cases: Sea Clammers and Smith. Both of those decisions rested upon the existence of more restrictive remedies provided in the violated statute itself" and "in all of the cases in which we have held that § 1983 is available for violation of a federal statute, we have emphasized that the statute at issue, in contrast to those in Sea Clammers and Smith, did not provide a private judicial remedy (or, in most of the cases, even a private administrative remedy) for the rights violated.").

That the Federal Government may withhold federal funds to non-complying States is not inconsistent with private enforcement. See Wilder, 496 U.S. at 521-22, 110 S.Ct. 2510 (holding that although the Medicaid Act "authorizes the Secretary to . . . curtail federal funds to States whose plans are not in compliance with the Act, . . . [t]his administrative scheme cannot be considered sufficiently comprehensive to demonstrate a congressional intent to withdraw the private remedy of § 1983"). Neither is the Act's requirement that States "grant[ ] an opportunity for a fair hearing before the State agency to any individual whose claim for medical assistance under the [State] plan is denied," 42 U.S.C. § 1396a(a)(3), inconsistent with a private action under § 1983, cf. Wilder, 496 U.S. at 520-22, 110 S.Ct. 2510.

Our conclusion, moreover, comports with decisions of the Supreme Court, our court and other courts of appeals that have recognized privately enforceable rights under § 1983 stemming from similar statutory language in the Medicaid Act. See, e.g., id. at 510, 524, 110 S.Ct. 2510 (holding that 42 U.S.C. § 1396a(a)(13)(A)—requiring that a state plan for medical assistance must provide for "payment . . . of the hospital services, nursing facility services, and services in an intermediate care facility for the mentally retarded provided under the plan"—confers health-care providers with an enforceable right under § 1983 because it is expressly "phrased in terms benefitting health care providers"); Westside Mothers, 289 F.3d at 856 (holding that 42 U.S.C. § 1396d(a)(4)(B)—requiring States to provide certain periodic services "for individuals who are eligible under the plan"—creates a cause of action under § 1983 for eligible individuals); Sabree v. Richman, 367 F.3d 180, 190, 192 (3d Cir. 2004) (holding that 42 U.S.C. § 1396a(a)(8)—requiring that a state Medicaid plan must "provide that all individuals wishing to make application for medical assistance under the plan shall have opportunity to do so, and that such assistance shall be furnished with reasonable promptness to all eligible individuals"—creates an enforceable right under § 1983); Bryson v. Shumway, 308 F.3d 79, 88 (1st Cir.2002) (same); Doe v. Chiles, 136 F.3d 709, 715-16 (11th Cir.1998) (same).

In arguing to the contrary, the department urges us to follow two district court decisions. In the first of these decisions, M.A.C. v. Betit, 284 F.Supp.2d 1298, 1307 (D.Utah 2003), the court concluded that "the freedom of choice provisions do not contain the unambiguous rights-creating language of Gonzaga" without explaining why the language discussed above is not "rights-creating." Because the district court did not explain why the mandatory "must . . . provide" language, 42 U.S.C. § 1396a(a)(23), and the "individual entitlement" language of the provision, Gonzaga, 536 U.S. at 287, 122 S.Ct. 2268, do not satisfy Gonzaga's requirements for a § 1983 action, we do not find the court's reasoning persuasive. Also unpersuasive is the second decision, Watson v. Thorne, No. 03-227-JE, 2004 WL 1445113, 2004 U.S. Dist. LEXIS 12855 (D.Or. June 24, 2004), which is unpublished and which does not address the freedom-of-choice provision.

The department next argues that another provision of the Act, § 1396n(a), shows that Congress did not intend to create privately enforceable rights. "A State," that provision says, "shall not be deemed to be out of compliance with the requirements of . . . [the freedom-of-choice provision] solely" because it has taken various cost-saving measures, including entering into "arrangements through a competitive bidding process . . . for the purchase of laboratory services . . . or medical devices." 42 U.S.C. § 1396n(a). That § 1396n(a) carves out services and products otherwise covered by § 1396a(a)(23), however, by no means establishes that the latter section does not create a right of action. One section (§ 1396a(a)(23)) creates an individual statutory entitlement, namely freedom of choice; the other (§ 1396n) creates exceptions to that right. Compare Gonzaga, 536 U.S. at 284 & n. 3, 122 S.Ct. 2268 (holding that Title IX of the Education Amendments of 1972, 20 U.S.C. § 1681(a)(1), creates individually enforceable rights) with 20 U.S.C. § 1681(a)(3)-(9) (creating several statutory exemptions from these rights).

The department next contends that even if a private right of action exists to enforce the freedom-of-choice provision, that right extends only to services and does "not extend . . . to items that a health-care entity may use when providing services." Dep't Br. at 17 (emphasis added). "[O]n its face," the department reasons, § 1396a(a)(23) guarantees the right to choose among "providers of services" and concludes that because "suppliers of incontinence products are not providing services per se, Congress did not intend individuals to have free choice among suppliers of incontinence items." Dep't Br. at 17. But as other provisions and regulations show, the dichotomy proposed by the department does not exist. The "medical assistance" to which freedom of choice applies does not extend only to services, as § 1396a(a)(23) says the freedom-of-choice provision applies to and "includ[es] drugs." And the Act defines "medical assistance" as "payment of part or all of the cost of . . . home health care services," 42 U.S.C. § 1396d(a)(7), which the regulations define as including "medical supplies, equipment and appliances" that are required for use in the recipient's home, 42 C.F.R. § 440.70(b)(3). Incontinence products that patients use in their homes under their physicians' orders thus are fairly covered by § 1396a(a)(23)'s grant of freedom of choice over "medical assistance."

Finally, the department argues that Caswell v. City of Detroit Housing Commission, 418 F.3d 615 (6th Cir.2005), compels a contrary conclusion. In Caswell, we held that because no "specific statutory provision" in the relevant Act, as opposed to a regulation implementing the Act, conferred the individual right the plaintiff sought to enforce, he could not pursue his claim under § 1983. Id. at 620. Caswell also recognized that recent Supreme Court precedent (particularly Gonzaga and Sandoval) had "cabined" our prior holding that § 1983 "creates a federal cause of action for the violation of a federal regulation." Id. at 618 (emphasis added); see id. ("`[L]anguage in a regulation may invoke a private right of action that Congress through statutory text created, but it may not create a right that Congress has not. . . . Agencies may play the sorcerer's apprentice but not the sorcerer himself.'") (quoting Sandoval, 532 U.S. at 291, 121 S.Ct. 1511).

Seizing on this language from Caswell, the department submits that because plaintiffs have supported their position that the term in the statute ("home health services," 42 U.S.C. § 1396d(a)(7)) includes incontinence products by pointing to a term in a regulation ("medical supplies," 42 C.F.R. § 440.70), "only [the] regulation" establishes the necessary "bridge between `services' and `supplies,'" Dep't Resp. to Dep't of Health and Human Servs. (HHS) Amicus Br. at 4. The analogy is inapt. In Caswell, neither the plaintiff nor the court could identify any statutory provision that conferred the right at issue. Here, the authoritative regulation merely supplements the right identified in a specific statutory provision: the freedom-of-choice provision, § 1396a(a)(23)(A). A term in that provision, "medical assistance," is further defined in another statutory provision, § 1396d(a)(7), which states that "medical assistance" includes "home health care services." Plaintiffs' claim thus is not based on 42 C.F.R. § 440.70 alone; that regulation simply confirms that these statutory terms include incontinence supplies. The problem at issue in Sandoval, moreover, was that the regulations the parties sought to enforce did "not simply apply" statutory rights "since they indeed forb[ade] conduct that [the statute] permit[ted]." 532 U.S. at 285, 121 S.Ct. 1511. Consequently, "the private right of action to enforce" the statute did "not include a private right to enforce the[ ] regulations," id., because "a private plaintiff may not bring a suit based on a regulation against a defendant for acts not prohibited by the text of the statute," id. at 286, 121 S.Ct. 1511 (internal quotations marks and brackets omitted).

Customarily, by contrast, "regulations applying [a statute's ban on conduct] are covered by the cause of action to enforce that section" because "[s]uch regulations, if valid and reasonable, authoritatively construe the statute itself, and it is therefore meaningless to talk about a separate cause of action to enforce the regulations apart from the statute." Id. at 284, 121 S.Ct. 1511 (citations omitted); see also Ability Ctr. of Greater Toledo v. City of Sandusky, 385 F.3d 901, 906 (6th Cir. 2004) ("[I]f the regulation simply effectuates the express mandates of the controlling statute, then the regulation may be enforced via the private cause of action available under that statute.") (citing Sandoval, 532 U.S. at 284, 121 S.Ct. 1511). Because "[a] Congress that intends the statute to be enforced through a private cause of action intends the authoritative interpretation of the statute to be so enforced as well," Sandoval, 532 U.S. at 284, 121 S.Ct. 1511, Sandoval does not undermine § 1983 enforcement here, see id. (citing cases "involv[ing] regulations of [this] type," including National Collegiate Athletic Association. v. Smith, 525 U.S. 459, 468, 119 S.Ct. 924, 142 L.Ed.2d 929 (1999) (regulation defining who is a "recipient" under Title IX) and School Board of Nassau County. v. Arline, 480 U.S. 273, 279-81, 107 S.Ct. 1123, 94 L.Ed.2d 307 (1987) (regulations defining the terms "physical impairment" and "major life activities" in § 504 of the Rehabilitation Act of 1973)). Other courts, including this one, have reached a similar conclusion. See Ability Ctr. of Greater Toledo, 385 F.3d at 907 (holding that because the regulation at issue "effectuates a mandate" of a statute, it is "therefore enforceable through the private cause of action available under the statute"); S.D. v. Hood, 391 F.3d 581, 607 (5th Cir.2004) (holding that because "the rights-creating language relied upon by the plaintiff is contained in the statute itself," because "the regulations implementing the statute, and defining `home health care services' to include `medical supplies,' [including 42 C.F.R. § 440.70] are authoritative interpretations of the statute and are enforceable by § 1983" and because "[HHS] has interpreted the `home health care services' category as specifically including such supplies," "the federal statutory right asserted by the plaintiff is enforceable under § 1983").

Having resolved the threshold right-of-action question against the State, we turn to the question whether the State permissibly treated incontinence products as "medical devices" under the exception to the freedom-of-choice provision, 42 U.S.C. § 1396n(a)(1)(B). "A State," the exception says, "shall not be deemed to be out of compliance with the requirements of . . . [the freedom-of-choice provision] solely by reason of the fact that the State . . . has entered into . . . arrangements through a competitive bidding process . . . for the purchase of . . . laboratory services . . . or medical devices if the Secretary has found that . . . adequate . . . devices will be available under such arrangements." Id. (emphasis added).

Chevron, U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984), sets forth a familiar two-part inquiry for assessing an agency's construction of a statute that it administers. First: has Congress "directly spoken to the precise question at issue"? Id. at 842, 104 S.Ct. 2778. If it has, "that is the end of the matter; for the court, as well as the agency, must give effect to the unambiguously expressed intent of Congress." Id. at 842-43, 104 S.Ct. 2778. Second: is "the agency's answer [ ] based on a permissible construction of the statute"? Id. at 843, 104 S.Ct. 2778. If so and if Congress has given the agency authority to interpret the statute, a federal court will defer to the agency's interpretation.