On August 14, 2014, a three judge panel for the Eleventh Circuit Court of Appeals upheld a district court's dismissal of a small, rural hospital's challenge of a federal law requiring hospitals to accept the Medicare rate as compensation when treating federal detainees.

In Baker County Medical Services, Inc. v. U.S. Attorney General, No. 13-13917, 2014 WL 3954005 (11th Cir. Aug. 14, 2014), a 25-bed hospital sued various federal agencies in the United States District Court for the Middle District of Florida seeking a declaratory judgment that 18 U.S.C. § 4006(b)(1), which imposes the Medicare rate as full compensation for medical services provided to federal detainees (the "reimbursement statute"), was an unconstitutional taking in violation of the Fifth Amendment. Id. at *1. The hospital argued that it was forced to provide emergency medical care to federal detainees and accept reimbursement at a rate less than its actual costs. Id. The district court dismissed the hospital's complaint with prejudice and found that the hospital's obligation to treat federal detainees stemmed from the hospital's voluntary participation in Medicare and the Emergency Medical Treatment and Active Labor Act ("EMTALA"), which does not establish the legal compulsion necessary to constitute a taking. Id.

In rejecting the hospital's takings clause argument, the court cited a long line of cases which held that no taking exists where an entity voluntarily participates in a regulated program or activity. Id. at *2. The hospital also contended that because neither Medicare nor EMTALA references the reimbursement statute, the hospital's voluntary participation in those programs should not compel acceptance of reimbursement less than the actual costs for treating federal detainees. Id.  In response, the court held that the reimbursement statute governs hospitals undertaking the responsibility to treat federal detainees by opting into Medicare and EMTALA. Id. at *3.

The court was also not persuaded by the hospital's contention that its participation in Medicare and EMTALA is not truly voluntary, as Florida law compels the hospital to treat everyone who enters its emergency room. Id. at *5.  The Court noted that the hospital failed to name the State of Florida as a defendant and did not challenge the constitutionality of Florida's statutes pertaining to emergency medical services. Id.  Consequently, the hospital could not use "indirect" compulsion by the state to challenge the federal government. Id.

Finally, the court recognized the potential hardship to Medicare patients in Baker County if the hospital withdrew from Medicare. Id. at *6. Yet, the court  declared that "the fact that practicalities may in some cases dictate participation [in Medicare] does not make participation involuntary." Id.

To read the entire Baker County decision please click here.