Grijalva

Medicare beneficiaries enrolled in health maintenance organizations (“HMOs”) in Arizona sued the Secretary of Health and Human Services (“Secretary”). Their suit alleged a failure to enforce due process requirements and a failure to monitor HMO denials of medical services to enrolled Medicare beneficiaries. The district court granted Plaintiffs summary judgment, holding that HMO denials of medical services to Medicare beneficiaries constitute state action and that the regulations issued by the Secretary fail to provide due process. The district court issued an injunction mandating certain procedural protections for Medicare beneficiaries enrolled in HMOs. The Secretary appeals. We affirm.

I. Background

Congress passed the Medicare Act, Title XVIII of the Social Security Act, 42 U.S.C. §§ 1395 et seq., in 1965 to provide a federal health insurance program for the elderly and the disabled. Today, a Medicare beneficiary can receive Medicare services in two different ways. The first is to receive Medicare on a fee-for-service basis. Under this option, the beneficiary goes to a health care provider for the necessary covered services; either the provider or the beneficiary will be…