State of California and Beverlee Myers in Her Capacity as Director of the State Department of Health Services v. Norval D. Settle

The Secretary of the United States Department of Health & Human Services recovered payments made to California under the Medicaid program. The payments were the federal share of costs erroneously incurred in the administration of the program. California appealed the recoupment to the Departmental Grant Appeals Board, contending that the Secretary could only recover the federal share of erroneous payments above a tolerance level for unavoidable errors. The Grant Appeals Board upheld the recoupment because the Secretary had not promulgated any regulations establishing such a tolerance level, and the Board refused to establish a tolerance level on a case-by-case basis through adjudication. California sought judicial review, but the district court dismissed the suit because (1) the Board decision was committed to agency discretion and thus was not reviewable, and (2) a court cannot use mandamus to compel an administrative agency to perform a discretionary function, such as adjudication. California now appeals that dismissal. We affirm.

FACTS

Medicaid is a federal-state program providing health care services. Generally, Medicaid pays the doctor or hospital for individual services…