Judge rules Illinois not in compliance on Medicaid payments

CHICAGO (AP) - A federal judge ruled on Wednesday that Illinois isn't in compliance with court orders to pay health care bills for low-income and other vulnerable groups as the state heads into a third year without a budget, though she did not order the state to pay $2 billion in unpaid Medicaid bills immediately and in full.

U.S. District Judge Joan Lefkow instead instructed attorneys for the state and for Medicaid recipients to negotiate an agreement on a level of payment that would ensure critical medical care isn't jeopardized. David Chizewer, one of the lawyers for the recipients, said he hopes a payments deal could be hammered out within days.

Lefkow's three-page ruling in Chicago says state officials "have not lived up to their agreements" in the civil case that dates back to the 1990s, when Illinois first entered into a court-enforced consent decree requiring that it keep up Medicaid payments even through the kinds of financial crises the state is currently in.

Republican Gov. Bruce Rauner and the Democrat-controlled Legislature have remained deadlocked over a budget since Rauner took office in 2015. The burden of finding money from various state funds month-to-month and prioritizing payments has fallen to Illinois State Comptroller Susana Mendoza, a Democrat.

Lefkow notes in her ruling that the comptroller has fallen behind on payments for Medicaid while paying 100 percent of the state payroll and service on the debt.

"Although the court means no disrespect to the Comptroller, who faces an unenviable situation, it finds that minimally funding the obligations of the decrees while fully funding other obligations fails to comply not only with the consent decrees, but also with this court's previous orders," Lefkow wrote.

The comptroller's office has said it scrambles each month to pay off an overall backlog of bills of more than $14 billion. Illinois law and various other court orders in other consent-degree cases mean the comptroller already has little discretion about how 90 percent of available state money is spent.

In a Wednesday evening statement, Mendoza said her lawyers would, as ordered, continue talks with plaintiffs' lawyers. But she added: "The real solution to this crisis is a comprehensive budget plan passed by the General Assembly and signed by the Governor."

Lawyers for the Medicaid recipients welcomed the order, saying it helps establish that payments to health-care providers should be at least as high a priority as other payments, including for state salaries. Chizewer said he understands "it's not realistic for the state to pay all the outstanding amounts ... given the state's revenue situation." But he said the payments have to be at a higher level than they are now.