Supreme Court Update: Douglas v. Independent Living Center of Southern California, Inc. (09-958), Howes v. Fields (10-680) and PPL Montana, LLC v. Montana (10-218)

March 2, 2012 Supreme Court Update

Greetings, Court fans!

We're back to bring you a few decisions you probably have not been waiting for: Douglas v. Independent Living Center of Southern California, Inc. (09-958), where the Court ducked the question of whether the Supremacy Clause provides a mechanism for health care providers to challenge Medicaid rates set by the States; Howes v. Fields (10-680), a Miranda case addressing whether removing an inmate from the general prison population to question him about crimes outside the prison constitutes a custodial interrogation; and PPL Montana, LLC v. Montana (10-218), a case that will excite only the true riparian rights enthusiasts, about the ownership of certain riverbeds in Montana.

Splitting 5-4 in Douglas v. Independent Living Center of Southern California, Inc. (09-958), the majority, led by Justice Breyer, voted not to decide whether the Supremacy Clause provides a basis for health care providers to challenge Medicaid rates. Medicaid is a jointly funded federal/state program. States set Medicaid rates, but their Medicaid plans must receive federal approval by the federal Centers for Medicare & Medicaid Services (CMS) before they can be effectuated. Under federal law, Medicaid rates must be adequate to "assure that payments are consistent with efficiency, economy, and quality of care and are sufficient to enlist enough providers so that care and services are available [to Medicaid patients] at least to the extent that such care and services are available to the general population. . . ." 42 U.S.C. § 1396a(a)(30)(A). Section 1396a(a)(30)(A) does not provide a private right of action. Nevertheless, after California enacted several laws cutting Medicaid rates, providers sued to enjoin implementation of the new rates. (Meanwhile, CMS was still reviewing California's new state plan, including the rate reductions.) Providers argued that the rate reductions violated the Supremacy Clause because they were inconsistent with the mandate set out in § 1396a(a)(30)(A). The Ninth Circuit agreed and enjoined the cuts. Subsequently, CMS, which had initially rejected the new state plan, accepted significant portions of the plan and the state agreed to drop others. The majority felt that CMS's actions on California's plan altered the landscape too significantly to decide the case. It remanded the case to the Ninth Circuit to determine, in the first instance, if a Supremacy Clause action should still be permitted in light of CMS's approval of the plan. At a minimum, the Court admonished the Ninth Circuit to consider whether an administrative action against CMS might not be the better course at this point.

The Chief led the dissenters. In their view, the issue was simple. The Supremacy Clause doesn't create rights, but merely requires that the rights Congress creates be enforced in the face of conflicting state laws. Here, Congress did not intend for private parties to enforce § 1396a(a)(30)(A) but instead left enforcement up to CMS. Allowing private parties to circumvent the lack of a statutory right of action by suing under the Supremacy Clause makes no sense at all.

Next, in Howes v. Fields (10-680), the Court held that questioning an inmate in private about an alleged crime outside of prison does not necessarily give rise to a custodial interrogation requiring a Miranda warning.

While serving a jail sentence for disorderly conduct, Fields was escorted by a corrections officer to a conference room in another part of the facility. There, two sheriff's deputies questioned him about an unrelated crime – engaging in a sex act with a minor – that occurred outside of prison. The questioning began between 7 and 9 at night, and lasted five to seven hours. Fields was told that he was free to leave and return to his cell whenever he wanted, but was not otherwise given any Miranda warnings. During the interview, Fields said several times that he no longer wanted to talk, but he didn't specifically ask to go back to his cell. Fields eventually confessed that evening. After being charged with criminal sexual conduct, Fields moved to suppress the confession, without success. He was convicted, and the Michigan Court of Appeals affirmed. The Michigan Court of Appeals held that Fields had not been in custody for Miranda purposes, noting that he had been told he was free to leave. Fields had more success on federal habeas review, at least initially. The District Court granted him habeas relief, and the Sixth Circuit affirmed, holding that isolation from the general prison population, combined with questioning about conduct occurring outside the prison, made a prison interrogation custodial per se.

The Court reversed, 6-3. Taking the pen, Justice Alito wrote that the Court had "repeatedly declined" to adopt any categorical rule with respect to whether the questioning of an inmate is custodial. Most recently, the Court held in Maryland v. Shatzer (2010) that a prisoner's return to the general prison population can constitute a break in Miranda custody; logically, then, imprisonment alone is not enough to create a custodial situation. Nor is taking a prisoner aside for questioning. When non-prisoners are detained, a custodial situation generally arises because they are taken away from a supportive environment. By contrast, questioning a prisoner away from his fellow inmates does not remove him from friends and family; in fact, it will often be in his best interests. The Court also saw no reason why questioning a prisoner about criminal activity outside the prison should be treated any differently than questioning him about criminal activity inside the prison. Rather than the Sixth Circuit's per se approach, the determination of custody should focus on all the features of the interrogation. Here, the Court found that the circumstances of Fields' questioning did not rise to the level of a custodial interrogation. Although Fields did not invite or consent to the interview in advance, he was told that he could return to his cell at any time. The sheriff's deputies were armed, but he was not restrained, and the door to the room was sometimes left open. And although he had to wait 20 minutes to be escorted back to his cell at the end of the interview, that was not out of place given the prison setting.

Justice Ginsburg, joined by Justices Breyer and Sotomayor, concurred in part and dissented in part. They agreed that, given the Court's precedents, the law was not so "clearly established" as to merit habeas relief. If the case had been before them on direct review, however, they would have found that Fields was in custody for purposes of Miranda. The dissenters noted that Fields was removed from his cell and questioned long into the night and early morning. He was not given his evening medications (an antidepressant and two antirejection medications for a recent kidney transplant). Fields understandably felt "trapped" and believed that the deputies would not have allowed him to leave the room -- he said more than once that he no longer wanted to speak, but the questioning continued until he confessed. In the dissenters' view, inmates like Fields who are interrogated incommunicado in a police-dominated atmosphere are entitled to a Miranda warning to safeguard their Fifth Amendment rights.

Finally, Justice Kennedy wrote for a unanimous Court in PPL Montana, LLC v. Montana (10-218). Petitioner PPL Montana is a power company that owns and operates hydroelectric facilities on riverbeds underlying segments of the Missouri, Madison, and Clark Fork Rivers in Montana. PPL's power facilities, which are licensed by the Federal Energy Regulatory Commission, have been in their locations for decades and in at least one instance over a century. For years, PPL and its predecessor paid rents to the United States, but not to the State of Montana. In 2003, a group of parents filed a federal suit claiming that PPL was operating on state-owned riverbeds that were part of Montana's school trust lands. Agreeing with the parents, the state demanded rents for the first time. When the federal suit was dismissed for lack of jurisdiction, PPL and other power companies filed an action in state court alleging that Montana could not charge rent for PPL's use of the riverbed lands. Montana counter-claimed that, under the equal-footing doctrine, it owns the riverbeds and can seek compensation for their use.

In 1842, the Supreme Court declared that the original 13 states, as sovereigns, held title to "all their navigable waters and the soils under them." Later cases extended the principle to the remaining states under the equal-footing doctrine, which accords states at the time they are admitted to the United States the same legal rights as existing states. Thus, upon statehood, a state gains title to the beds of all navigable waters within its borders and may govern those lands subject only to "the paramount power of the United States to control such waters for purposes of navigation in interstate and foreign commerce." Navigability is determined at the time of statehood and is based on the "natural and ordinary condition" of the water. The Supreme Court has held that river navigability must be assessed on a segment-by-segment basis.

Here, the Montana trial court determined that Montana owned the riverbeds under PPL's facilities and granted summary judgment in the state's favor, ordering PPL to pay over $40 million in rent for use of the riverbeds between 2000 and 2007. The Montana Supreme Court affirmed, dismissing as having "limited applicability" the U.S. Supreme Court's segment-by-segment approach of assessing the navigability. The Montana Supreme Court acknowledged that certain stretches of the rivers were not navigable, but determined that these stretches were "merely short interruptions" that did not render the rivers nonnavigable at the time Montana attained statehood.

The Supreme Court reversed, saying that the "segment-by-segment approach to navigability for title is well settled, and it should not be disregarded." The Court stressed that a "key justification" of sovereign ownership of navigable waters is to prohibit private riverbed owners from interfering with the public's right to use the waters for commerce. There is no reason that segments that were not navigable at the time of statehood should be deemed state-owned since commerce could not occur over them. The segment-by-segment approach also is well suited to long rivers like the Missouri that pass over widely varying terrain. Citing Brewer-Elliott Oil & Gas Co. v. United States (1922), the Court cautioned that "[i]t is not for a State by courts or legislature, in dealing with the general subject of beds or streams, to adopt a retroactive rule for determining navigability which . . . would enlarge what actually passed to the State, at the time of her admission, under the constitutional rule of equality here invoked." Considering the evidence, Court determined that at least some of the segments on which PPL operated likely were non-navigable when Montana joined the Union. It remanded the case to the state courts to determine navigability of all the lands at issue under the segment-by-segment method.

That's all for now. Have a terrific weekend!

Kim & Jenny

From the Appellate and Complex Legal Issues Practice Group at Wiggin and Dana. For more information, contact Kim Rinehart or any other member of the Practice Group at 203-498-4400