          United States Court of Appeals
                     For the First Circuit


Nos. 11-1121, 11-1126, 11-1733

   CONSEJO DE SALUD DE LA COMUNIDAD DE LA PLAYA DE PONCE, INC.,
  CDT, d/b/a Centro de Diagnóstico y Tratamiento de la Playa de
   Ponce; DR. JOSÉ S. BELAVAL, INC.; CONCILIO DE SALUD INTEGRAL
      DE LOÍZA, INC. (CSILO); ATLANTIC MEDICAL CENTER, INC.;
       CAMUY HEALTH SERVICES, INC.; CENTRO DE SALUD FAMILIAR
    DR. JULIO PALMIERI FERRI, INC.; CIALES PRIMARY HEALTH CARE
   SERVICES, INC.; CORPORACIÓN DE SERVICIOS MÉDICOS PRIMARIOS Y
       PREVENCIÓN DE HATILLO, INC.; CORPORACIÓN DE SERVICIOS
  INTEGRALES DE SALUD INTEGRAL DE LA MONTAÑA, INC.; CORPORACIÓN
    DE SERVICIOS DE SALUD Y MEDICINA AVANZADA, INC.; EL CENTRO
    DE SALUD DE LARES, INC.; EL CENTRO DE SERVICIOS PRIMARIOS
     DE SALUD DE PATILLAS, INC.; MIGRANT HEALTH CENTER, INC.;
    HOSPITAL GENERAL CASTAÑER, INC.; MOROVIS COMMUNITY HEALTH
             CENTER, INC.; RINCÓN HEALTH CENTER, INC.;
               GURABO COMMUNITY HEALTH CENTER, INC.,

             Plaintiffs-Appellees, Cross-Appellants,

        TOA ALTA COMPREHENSIVE URBAN/RURAL ADVANCED HEALTH
    SERVICES, INC.; RÍO GRANDE COMMUNITY HEALTH CENTER, INC.,

                           Plaintiffs,

                                 v.

           LORENZO GONZÁLEZ-FELICIANO, Substituted for
   Rosa Pérez-Perdomo, former Secretary, Department of Health,
                   Commonwealth of Puerto Rico,

              Defendant-Appellant, Cross-Appellee,

       COMMONWEALTH OF PUERTO RICO; DEPARTMENT OF HEALTH,
  COMMONWEALTH OF PUERTO RICO; MICHAEL O. LEAVITT, Secretary of
        the U.S. Department of Health; U.S. DEPARTMENT OF
                     HEALTH & HUMAN SERVICES,

                           Defendants.
         APPEALS FROM THE UNITED STATES DISTRICT COURT
                FOR THE DISTRICT OF PUERTO RICO

          [Hon. Gustavo A. Gelpí, U.S. District Judge]


                             Before

                  Torruella, Selya, and Lipez,
                         Circuit Judges.


     Caroline M. Brown, with whom Matthew J. Berns, Covington &
Burling LLP, Eliezer Aldarondo-Ortiz, Eliezer Aldarondo-López,
Marla Hadad-Orta, and Aldarondo & López-Bras was on brief, for
appellant/cross-appellee.
     Robert A. Graham, with whom James L. Feldesman, Nicole M.
Bacon, and Feldesman Tucker Leifer Fidell LLP was on brief, for
appellees/cross-appellants.




                        August 20, 2012




                              -2-
          TORRUELLA, Circuit Judge.       We press on down the long and

tedious road of litigation concerning the implementation of a

federally-assisted Medicaid program by the Commonwealth of Puerto

Rico (the "Commonwealth"), represented here by its Secretary of

Health, Lorenzo González-Feliciano (the "Secretary").          In fact,

these appeals mark the sixth time we have considered issues that

are related to a dispute between the Commonwealth and several

"federally     qualified   health   centers"   ("FQHCs").1   Plaintiffs-

Appellees are FQHCs serving medically underserved populations in

Puerto Rico.      They have taken their claims for reimbursement

payments owed to them under the Medicaid program ("Medicaid" or the

"Program"), 42 U.S.C. §§ 1396 et seq., to the federal courts.

Consejo de Salud de la Comunidad de la Playa de Ponce ("Consejo"),

has,   since    February   2009,    represented   nineteen   such   FQHCs

(collectively, the "plaintiff FQHCs" or "plaintiffs"), acting in

the capacity of lead Plaintiff-Appellee.

          As the litigation now comes to us, the Secretary presents

two main issues on appeal.     The first is whether the formula that



1
   All FQHCs are health centers, but not all health centers are
FQHCs. Under 42 U.S.C. § 254b(a)(1), "the term 'health center'
means an entity that serves a population that is medically
underserved, or a specially medically underserved population
comprised of migratory and seasonal agricultural workers, the
homeless, and residents of public housing, by providing" certain
statutorily-defined services.       The FQHCs involved in this
litigation are eligible to receive Medicaid financial grants
because they "serve[] a population that is medically underserved."
Id.

                                    -3-
the district court set in place by way of a preliminary injunction

to calculate payments that the Commonwealth owes the FQHCs for

providing Medicaid services mistakenly factored costs associated

with beneficiaries whose care has been or should be paid solely

through Commonwealth funds, thus resulting in overpayment to the

plaintiff FQHCs.        The second is whether the district court's

formula also erroneously included certain third party costs for

which the plaintiffs can already expect compensation through other

means.

            The plaintiff FQHCs cross-appeal and raise two claims.

First,     they   contend   that   the      district    court's    preliminary

injunction improperly denied them indemnification from debts owed

to third party managed care organizations.             Second, the plaintiffs

challenge the district court's judgment that the Eleventh Amendment

bars a federal court from ordering the Commonwealth to reimburse

the FQHCs for costs incurred prior to the date of its preliminary

injunction.

            After careful consideration of the parties' claims and

arguments, we conclude that the formula that the district court

endorsed    in    its   preliminary   injunction       is   not   sufficiently

supported by the factual record.            Accordingly, we remand to the

district court for further consideration and reformulation.               With

regards to the claims raised by the plaintiff FQHCs on their cross-

appeal, we find that the issue of indemnification is not properly


                                      -4-
within the scope of this litigation and affirm the district court's

holding on that issue.      Finally, we also affirm the district

court's determination that the Eleventh Amendment precludes a

federal court from imposing a judgment for money damages upon the

Commonwealth to make payments for periods predating the date of the

district court's preliminary injunction.

              I.    Background and Procedural History

          We have laid out much of the background relevant to these

appeals in our past decisions in this protracted litigation.2    We

recount only the facts that are essential to the present appeals

and refer to our prior judgments wherever those prove helpful to

our exposition.    We provide additional background relevant to each

of the discrete issues before us infra.




2
    As explained further infra, these appeals are the first
involving all of four separate but factually and legally similar
cases that have now been consolidated into one.         Before the
district court consolidated these cases, this court considered
three separate appeals in which Dr. José S. Belaval, Inc.
("Belaval"), an FQHC, appeared as lead plaintiff. Belaval has been
party to all five previous appeals and again appears before this
court, now represented by Consejo. For ease of reading, we refer
to our previous judgments in this continuing litigation as Belaval
I through Belaval V. Specifically, see Concilio de Salud Integral
de Loíza, Inc. v. Pérez-Perdomo, 625 F.3d 15 (1st Cir. 2010)
("Belaval V"); Concilio de Salud Integral de Loíza, Inc. v. Pérez-
Perdomo, 551 F.3d 10 (1st Cir. 2008) ("Belaval IV"); Dr. José S.
Belaval, Inc. v. Pérez-Perdomo, 488 F.3d 11 (1st Cir. 2007)
("Belaval III"); Dr. José S. Belaval, Inc. v. Pérez-Perdomo, 465
F.3d 33 (1st Cir. 2006) ("Belaval II"); and Río Grande Cmty. Health
Ctr., Inc. v. Rullán, 397 F.3d 56 (1st Cir. 2005) ("Belaval I").

                                 -5-
A. The Medicaid Framework

              Medicaid is funded jointly through federal and state

funds. See, e.g., 42 U.S.C. § 1301(a)(8)(A)-(B); see also Rabin v.

Wilson-Coker, 362 F.3d 190, 192 (2d Cir. 2004).           States are not

obligated to participate in Medicaid, but must rigidly comply with

several federally-imposed requirements if they opt to do so.3                See

Belaval I, 397 F.3d at 61.     Importantly, participating states must

offer certain "federally-qualified health center services," 42

U.S.C.   §§    1396a(a)(10)(A),    1396d(a)(2)(C),    which    may    only   be

provided by FQHCs such as the consolidated plaintiffs in this

litigation.

              Under the Program, FQHCs are entitled to reimbursement

for   services    they   provide   to   Medicaid   patients.     42    U.S.C.

§ 1396a(bb)(1).      Reimbursement payments owed by a participating

State to FQHCs are assessed through statutorily-set calculations

established by Medicaid's Prospective Payment System ("PPS"). Most

simply stated, "[u]nder the PPS, the reimbursement for a given year

is calculated by multiplying the number of visits by Medicaid

patients to [an] FQHC in that year by the average cost per patient

visit in fiscal years 1999 and 2000, adjusting to account for an

FQHC's change in services and inflation."          Belaval V, 625 F.3d at

17 (citing 42 U.S.C. § 1396a(bb)(3)).



3
   Puerto Rico is considered a "State" under the Medicaid regime.
See 42 U.S.C. § 1301(a)(1).

                                    -6-
          As is its prerogative, the Commonwealth has opted to

operate its Medicaid system by contracting with managed care

organizations ("MCOs"),4 which then provide health services to

Program beneficiaries.       The Commonwealth pays these MCOs a fixed

monthly fee and the MCOs either profit or turn a loss depending on

whether the costs of provided services are less or greater than the

fixed fee they receive.       See Belaval I, 397 F.3d at 62.          However,

since MCOs    often    do not     own   facilities,   they   must    routinely

subcontract with FQHCs to provide medical services.               In practice,

an MCO will commonly contract with an FQHC to provide certain

services to Medicaid beneficiaries for a fixed per-patient price,

or "assigned capitation," on a pre-determined schedule.                      This

arrangement can lead to a problem that is at the heart of this

litigation: at times, an MCO's contract with an FQHC will not cover

the amount the FQHC is entitled to receive as determined by PPS

calculations.    When this happens, the Commonwealth is statutorily

required to pay the FQHC a supplemental "wraparound" payment at

least three times a year to cover the difference between what an

MCO paid the FQHC and what the FQHC is entitled to receive under

the PPS regime.       See 42 U.S.C. §         1396a(bb)(5)(A)-(B); see also

Belaval IV,     551   F.3d   at   12    (explaining   "detailed     scheme    for

calculating [] wraparound payments"). The upshot of this scheme is



4
    "MCOs are also commonly referred to as health maintenance
organizations -- or HMOs." Belaval IV, 551 F.3d at 11.

                                        -7-
that an FQHC operating in Puerto Rico often should receive two

distinct   payments   for   the   services   it   provides   Medicaid

beneficiaries -- a direct payment from the MCO and a wraparound

payment from the Commonwealth to supplement the former if it does

not meet the amount that the FQHC is entitled to receive.

B. The Road Here: Delayed Compliance and Litigation

           As events actually transpired, the Commonwealth dragged

its feet in setting up an administrative system in order to comply

with the PPS regime -- which was supposed to come into effect on

January 1, 2001 -- and made no wraparound payments to FQHCs at all

in 2001.   Despite some preliminary steps taken by the Commonwealth

to adopt the PPS methodology, three FQHCs -- Appellees Concilio de

Salud Integral de Loíza, Inc. ("Loíza"), Belaval, and Río Grande

Community Health Center, Inc. ("Río Grande") -- filed suit in 2003

in the U.S. District Court for the District of Puerto Rico claiming

that the Secretary had failed to release wraparound payments to

which they were entitled to under the Program.    On March 31, 2004,

the district court granted a motion, filed only by Loíza, which

sought a temporary restraining order for emergency payments owed

for the first quarter of 2004 on account of the "precarious

financial position" that Loíza allegedly faced at the time.      See

Belaval I, 397 F.3d at 65.        In granting Loíza's request for

emergency relief, the district court also postulated a formula for

the Secretary to use in calculating those wraparound payments. Our


                                  -8-
judgment in Belaval I, issued on February 14, 2005, affirmed the

district court's decision to enjoin the Secretary to make payments

to Loíza.    See id. at 56.

            On   November   1,   2004,    the   district   court   granted   a

preliminary injunction in favor of Loíza and its two co-plaintiff

FQHCs requiring the Secretary to set in place a system through

which to comply with the PPS framework and make owed payments. The

district court's November 1, 2004 order incorporated the formula it

had set out in its previous March 31, 2004 judgment in favor of

Loíza and endorsed it as the proper way to assess future payments

owed to Loíza, Belaval, and Río Grande.

            In the spring of 2006, Consejo and two other groups of

FQHCs involved in these appeals filed separate suits against the

Secretary alleging similar claims to those being aired in the then-

pending action brought by Loíza, Belaval, and Río Grande.5             These

cases proceeded along discrete tracks until the district court


5
   One group was comprised of twelve individual FQHCs: Atlantic
Medical Center, Inc., Camuy Health Services, Inc., Centro de Salud
Familiar Dr. Julio Palmieri Ferri, Inc., Ciales Primary Health Care
Services, Inc., Corporación de Servicios Médicos Primarios y
Prevención de Hatillo, Inc., Corporación de Servicios de Salud y
Medicina Avanzada, Inc., Corporación de Servicios Integrales de
Salud Integral de la Montaña Inc., El Centro de Salud de Lares
Inc., El Centro de Servicios Primarios de Salud de Patillas, Inc.,
Hospital General Castañer Inc., Morovis Community Health Center
Inc., and Rincón Health Center, Inc.

    The other group of plaintiffs consisted of three individual
FQHCs: Gurabo Community Health Center, Inc., Migrant Health Center,
Inc., and Toa Alta Comprehensive Urban/Rural Advanced Health
Services, Inc.

                                    -9-
consolidated them into the current action and made Consejo the lead

plaintiff.

            On March 27, 2007, the district court, acting sua sponte,

lifted the injunction it had set in place on November 1, 2004 as to

Loíza, citing mootness grounds and its understanding that the

Commonwealth had come into compliance with Medicaid's reimbursement

requirements.      The district court explained that the Commonwealth

had established an office, the task of which was to calculate

wraparound payments owed to FQHCs and which had begun to process

these payments in earnest.             Consequently, the district court

enjoined    the    Commonwealth   to    proceed    with     issuing   wraparound

payments based on the formula it had laid out in its March 31, 2004

temporary restraining order.            The court issued a similar order

relating to Belaval on July 3, 2007.

            Both the Secretary and the FQHCs appealed the district

court's March 2007 ruling to this court, claiming that it left

crucial issues relating to the calculation of wraparound payments

unresolved.       On December 15, 2008, in Belaval IV, we reversed the

district court's order vacating its preliminary injunction.                  See

551 F.3d at 17. Our decision explained that the district court had

failed     to   "rule    on   whether     the     formula     adopted   by   the

[Commonwealth's] PPS Office was in compliance with the methodology

provisions of § 1396a(bb) [and failed to] fully determine what

constitutes compliance under these provisions."              Id.   Accordingly,


                                       -10-
we held that the district court had "erred in refusing to consider

and resolve these issues before vacating the preliminary injunction

and dismissing" the litigation on mootness grounds.                  Id.       Our

judgment   reinstated     the    district      court's    November      1,    2004

preliminary     injunction,     lifted   the     injunction      ordering      the

Secretary to use the district court's formula to calculate payments

because unresolved disputed issues remained, and remanded to the

district court for proceedings consistent with our opinion.                     See

id. at 18-19.

           As proceedings below were again taking shape, Loíza and

Belaval filed a motion to the district court, now requesting

payment of reimbursements allegedly owed to them for Medicaid-

related costs accrued during what has, in the lexicon of this

drawn-out litigation, come to be known as the "gap period":                   i.e.,

the interval between the district court's decision to vacate its

preliminary injunction -- made on March 27, 2007, and July 3, 2007,

for Loíza and Belaval, respectively -- and our December 15, 2008

judgment in Belaval IV reversing those termination orders.                      The

Secretary opposed this motion and, on May 12, 2009, the district

court   denied    Loíza   and    Belaval's      request    for    gap        period

reimbursements. See Consejo de Salud Playa Ponce v. Pérez-Perdomo,

No. 3:06-cv-01260-GAG (D.P.R. May 12, 2009).                Citing concerns

rooted in the Eleventh Amendment's protective scope -- which

precludes a federal court from ordering a State to pay monetary


                                    -11-
relief for past violations of a federal statute absent consent by

the State, waiver, or congressional abrogation, see Edelman v.

Jordan, 415 U.S. 651, 677-78 (1974) -- the district court reasoned

that "the Secretary was not under any court-imposed obligation to

issue any wraparound payments" during the gap period.

          Loíza and Belaval pursued an interlocutory challenge to

the district court's ruling.   See Belaval V, 625 F.3d at 18-19.   In

Belaval V, we agreed with Loíza and Belaval's claims that the

Eleventh Amendment did not bar the district court from ordering the

Commonwealth to reimburse the health centers for Medicaid-related

costs incurred during the gap period.      Our judgment, issued on

October 27, 2010, reasoned that the Secretary remained under a

court-imposed obligation to make wraparound payments throughout the

gap period by virtue of the original November 1, 2004 injunction,

notwithstanding our mandate in Belaval IV reversing the district

court's vacatur of the same injunction.    See id. at 20 ("From the

issuance of the preliminary injunction onward, a district court

order was on the books requiring the formula payment; the district

court orders at issue in Belaval IV discontinued the preliminary

injunction requiring payment while simultaneously substituting

permanent ones requiring payment.").    Once again, we remanded the

matter to the district court with instructions to proceed in a

manner consistent with our guidance.




                                -12-
            Matters   proceeded      rapidly     following       Belaval       V.     On

November    8,   2010,   the    district      court     issued     an    order       and

preliminary      injunction    directing        the    Commonwealth       to        issue

prospective payments to the plaintiff FQHCs.                  This order excluded

Loíza and Belaval, for which the district court had already issued

injunctive relief, and -- as the district court clarified in a

subsequent order issued on November 9, 2010 -- Consejo, which had

obtained similar relief on November 13, 2009.                    Importantly, in

issuing the November 8, 2010 order requiring the Commonwealth to

issue payments as of that date, the district court rejected the

FQHC   Plaintiff-Appellees'            contention      and      its      own        prior

determination that the Secretary had waived Eleventh Amendment

protections as early as 2006 by virtue of its conduct in the

litigation.

            Challenging      certain    aspects of      the     district       court's

formula for calculating wraparound payments owed, which we explain

in further detail below, the Secretary timely appealed the district

court's preliminary injunction order on January 5, 2011.                             The

plaintiff     FQHCs   cross-appealed       as     to    the     district       court's

conclusions      regarding     the   Commonwealth's           Eleventh     Amendment

immunity and debt indemnification.




                                       -13-
                           II. Discussion

A.    Appealed Issues Regarding Formula for        Calculation   of
Reimbursements Owed under 42 U.S.C. § 1396a(bb)

          The Secretary does not challenge the district court's

decision ordering the Commonwealth to reimburse the plaintiff FQHCs

for future Medicaid-related costs.     Rather, he claims that the

district court erred when it incorporated two separate components

into the formula whereby those reimbursement payments are to be

assessed. First, the Secretary argues that the formula erroneously

factors into its calculations non-Medicaid beneficiaries whose care

is solely funded through State funds.       Second, the Secretary

challenges the district court's inclusion of certain costs into the

formula for which he claims the plaintiff FQHCs can properly expect

to receive remuneration from third parties.     We address each of

these arguments in turn.

          1. GHIP Recipients Included in Reimbursement Calculations

                 a. The Commonwealth's Health Insurance Structure

          Established in 1965, Congress structured Medicaid to be

"a cooperative federal and state cost-sharing venture for the

provision of basic medical services to eligible applicants . . . ."

Hogan v. Heckler, 769 F.2d 886, 887 (1st Cir. 1985) (internal

citations omitted). As stated, once a State chooses to participate

in Medicaid, it must agree to satisfy certain federally-imposed

conditions and requirements.   In accordance with this arrangement,

a participating State must submit a "State plan" proposal for

                                -14-
approval from the U.S. Secretary of Health and Human Services

before it is eligible to receive federal Medicaid funding.               See 42

U.S.C. §§ 1396a(b), 1396b(a)(1), (i)(17); see also Concourse Rehab.

& Nursing Ctr. Inc. v. DeBuono, 179 F.3d 38, 41 (2d Cir. 1999).

            Among other things, a State plan must set forth the

categories of beneficiaries that a State intends to cover through

Medicaid    funding.       Coverage     of   certain   "categorically    needy"

beneficiaries -- for example, individuals who benefit from federal

assistance      plans   such   as the    Aid   to   Families   with   Dependent

Children ("AFDC") program or Supplemental Security Income for the

Aged, Blind, and Disabled ("SSI") -- is compulsory, see 42 U.S.C.

§ 1396a(a)(10)(A); Hogan, 769 F.2d at 888, but a State retains

discretion to cover other categories of beneficiaries if it elects

to   do   so.     First,   a   State    may    classify   certain     groups   of

individuals as being "optionally categorically needy" under 42

U.S.C. § 1396a(a)(10)(A)(ii)(I)-(XXII). The Commonwealth has opted

to cover a number of these groups -- e.g., individuals who are

under the age of 21 and meet AFDC's income requirements.                Second,

a State may similarly opt to cover "medically needy" individuals

who satisfy categorical requirements but whose earnings or other

assets put them over the financial eligibility limit.                 42 U.S.C.

§ 1396a(a)(10)(C).         Such individuals are eligible for Medicaid

coverage if they "spend down" any excess income by incurring

medical costs, thereby coming down to Medicaid eligibility levels.


                                       -15-
See Hogan, 769 F.2d at 889.            The Commonwealth covers a small number

of these groups as well -- e.g., pregnant women and individuals

under age 18 who, but for income and resources, would otherwise

qualify as categorically needy.

          As   is     the       case    with    other    Medicaid-participating

jurisdictions, the Commonwealth also administers its own health

insurance plan.      Under Puerto Rico's "Plan de Salud del Gobierno"

(otherwise   known    in    Spanish       as    "Reforma"),    the   Commonwealth

services beneficiaries that it considers "medically indigent" but

who do not satisfy criteria for Medicaid eligibility.                     Certain

individuals who are not considered "medically indigent" -- such as

Puerto Rico Police officers and government employees -- are also

included in Reforma coverage.               The services provided to these

groups of individuals are paid solely from Commonwealth funds.

          Important        to    our     discussion,     the   Commonwealth    has

structured its health care system so that a single administrative

entity manages the provision of both federally-matched Medicaid and

Reforma services.      Specifically, the provisions codified at P.R.

Laws Ann. tit. 24, §§ 7001, 7003-7004, create the Puerto Rico

Health Insurance Administration, or "ASES" as it is known by its

Spanish-language     acronym,      and     task   it    with   administering   the

Commonwealth's Government Health Insurance Program ("GHIP"), which

provides medical services to four primary and discrete recipient

populations.   First, the GHIP covers all Medicaid beneficiaries.


                                         -16-
See P.R. Laws. Ann. tit. 24, §§ 7025, 7029(a).                Second, the GHIP

covers individuals eligible for assistance under the federally-

created    but   jointly-administered          Children's   Health   Insurance

Program ("CHIP").6       Third, the GHIP covers individuals deemed

"medically indigent" under the Commonwealth's Reforma plan.                 See

id.   Fourth, the GHIP covers individuals, such as Puerto Rico

Police    officers,   who   do   not    meet    eligibility    criteria   under

Medicaid or Reforma, but for whom the Commonwealth has nonetheless

extended Reforma coverage.       As noted above, the services provided

to these third and fourth recipient groups are paid entirely out of

funds drawn from the Commonwealth's fisc.

            Whether this arrangement constitutes the most reasonable

way to administer such a system is far beyond the province of this

court to decide.      What is certain, however, is that this scheme --

which calls upon a single administrative body to oversee the care

provided to approximately 1.5 million beneficiaries, some covered

by joint federal-state Medicaid funding and some covered only by

Commonwealth funds -- has muddled an already convoluted set of

factual and legal issues and generated continuous controversy.



6
   In 2009, Congress enacted and the President signed into law the
Children's Health Insurance Program Reauthorization Act of 2009
(CHIPRA). Pub. L. No. 111-3, 123 Stat. 8 (2009). Among other
things, CHIPRA renamed the "State Children's Health Insurance
Program" ("SCHIP") to its current form, omitting the word "State"
from the program's title. For ease of reading, this opinion will
uniformly refer to the program as "CHIP," even if that was not the
program's title during much of the relevant time period.

                                       -17-
Because   only   a   portion    of    GHIP    recipients   are    eligible     for

Medicaid-covered services, the parties have disputed whether the

formula used to calculate wraparound payments has at times been

underinclusive by leaving out costs incurred in providing care to

certain Medicaid beneficiaries (in which case the plaintiffs would

be   short-changed    of   certain     reimbursements      owed   to   them)    or

overinclusive in factoring individuals who actually receive only

Commonwealth-funded benefits (in which case the Commonwealth would

overpay the plaintiff FQHCs reimbursement for costs they are not

owed).

                     b. Inclusion of "State/Other Medicaid" Modifier
                     in Wraparound Payment Formula

           Currently, the preliminary injunction uses a formula for

calculating the wraparound payments owed to an FQHC under the PPS

by adopting much of the methodology that one of the Commonwealth's

auditors, Ramón L. Marrero Rosado ("Marrero"), first employed in

2003.     See    Belaval   I,   397    F.3d    at   63   (discussing    Marrero

methodology).     Marrero began by identifying the total number of

patients seen by an FQHC in 1999 and 2000, the PPS "base years."

See id.   He then multiplied the total number of patients by "the

percentage of patients attended [] who are 'purely Medicaid.'" Id.

Marrero then divided the costs that could be accredited to "purely

Medicaid" beneficiaries by the number of "purely Medicaid" patients

to determine the figure that the statute takes as the base for



                                      -18-
wraparound payment calculations for each FQHC. See 42 U.S.C. § 1396a(bb)(3).

            Marrero arrived at the "purely Medicaid" multiplier by

auditing    ASES-created    tables    detailing    the    percentages      of

respective FQHCs that could be classified into four different

categories of GHIP recipients: "'Pure' or 'Federal' Medicaid,"

"State/Other Medicaid," "CHIP," and "Other Reforma."             Prior to the

district court's issuing an advance order on January 7, 2009, the

formula only required the Commonwealth to reimburse FQHCs for costs

accrued    in   servicing   beneficiaries    falling     under    the   "Pure

Medicaid" label.      In contrast, the current wraparound payment

formula -- which was rendered binding by the district court's

November 2010 injunction -- incorporates costs that the FQHCs incur

in providing care to beneficiaries belonging to three of the four

categories: "Pure Medicaid," "State/Other Medicaid," and "CHIP."

            The Secretary does not challenge the inclusion of costs

accrued in relation to CHIP beneficiaries into the formula.7


7
   CHIPRA established a reimbursement scheme applicable to CHIP
that is identical to Medicaid's. See 42 U.S.C. § 1397gg(e)(1)(G)
(adopting Medicaid's reimbursement scheme for services provided by
FQHCs and rural health clinics by cross-reference to § 1396a(bb)).
Although the Secretary once argued before the district court that
CHIP was a plan separate from Medicaid and that CHIP visits should
not factor into Program reimbursement calculations, the Secretary
now abides by the guidance of the Centers for Medicaid and State
Operations ("CMS") which, in 2010, endorsed the view that CHIP
programs were instead implemented as expansions to Medicaid. See
Letter from Cindy Mann, Director, CMS Center for Medicaid and State
Operations,    at    2    (Feb.     4,    2010),    available    at
http://www.cms.gov/smdl/downloads/SHO10004.pdf. Consequently, the
Secretary now concedes that CHIP visits should be included in
wraparound payments made to the FQHCs.

                                   -19-
Neither do the parties dispute that costs accrued in connection

with recipients falling under the "Other Reforma" modifier -- such

as Puerto Rico Police officers and government employees -- should

be excluded from reimbursement calculations.        The Secretary also

accepts the proposition that the Commonwealth must reimburse FQHCs

for   relevant   services   provided    to    all    federally-matched

beneficiaries, not just those that fall under Medicaid's mandatory

"categorically needy" classification.

           This last point is an important one.          The district

court's advance ruling rested in large part on the court's apparent

understanding that the Secretary's position below was a less

nuanced postulation.   Specifically, the district court seemingly

understood that the Commonwealth considered that its responsibility

to reimburse FQHCs extended only to services provided to recipients

that must be covered as "categorically needy" under the Medicaid

statute.   See 42 U.S.C. § 1396a(a)(10)(A).   In its order modifying

its own prior preliminary injunction, the district court concluded

that certain "optional" groups, such as "foster care children,"

"individuals and families with up to 200% of the Puerto Rico

poverty level," and "dual eligibles" -- i.e., recipients who

qualify for both Medicaid and Medicare under 42 U.S.C. § 1396u-

5(c)(6)(A) -- were eligible for Medicaid federal assistance under

the Commonwealth's plan but, importantly, were not accounted for

under the "Pure Medicaid" modifier.      Thus, the district court


                               -20-
appears to have reasoned that these optional groups fell under the

"State/Other Medicaid" category and that the Commonwealth was

responsible for reimbursing FQHCs for reasonable services provided

to that entire population as well.            See Amend. to Opinion and Order

of June 4, 2008 Re: "Pure Medicaid" Modifier, Consejo de Salud v.

Sec'y of Health, (Civil Nos. 06-1260 (GAG), 06-1542 (GAG) (Jan. 7,

2009)).

           Even if that was indeed the Secretary's position at some

point, it no longer is at this juncture.                    What the Secretary

contests is the district court's inclusion of the "State/Other

Medicaid" category, which accounts for approximately 22 percent of

all GHIP recipients, into the formula the Commonwealth will follow

in   calculating    wraparound    payments      owed   to   the    FQHCs.      This

contention implicates the proper interpretation of § 1396a(bb) of

the Medicaid statute, and we consider it de novo.8                See Belaval IV,

551 F.3d at 16.      We review the district court's findings of fact

for clear error and show "considerable deference" to its judgment

calls. New Comm Wireless Servs., Inc. v. SprintCom, Inc., 287 F.3d

1, 9 (1st Cir. 2002).

           Simply    stated,     the    Secretary's     claim      is   that   the

"State/Other Medicaid" classification of GHIP recipients does not


8
  As noted, the Secretary does not challenge the district court's
decision to grant preliminary injunctive relief in the plaintiff
FQHCs' favor, a determination that we would normally review for
abuse of discretion. Charlesbank Equity Fund II v. Blinds To Go,
Inc., 370 F.3d 151, 158 (1st Cir. 2004).

                                       -21-
implicate    costs     that    FQHCs     would      incur        in     providing     care

specifically to Medicaid-eligible patients.                      Understandably, the

federal    Medicaid     statute     only    requires        the        Commonwealth    to

reimburse    the     FQHCs    for   care    provided        to        federally-matched

Medicaid-eligible beneficiaries, not those that the Commonwealth

has pledged to support with its own funds through Reforma.                       In this

regard, Congress has anchored the scheme by which wraparound

payments are to be calculated to the amount of visits made by

Medicaid patients to a given FQHC in two "base" years, 1999 and

2000.   See 42 U.S.C. § 1396a(bb)(2)-(3); see also Belaval IV, 551

F.3d at 12 (describing PPS calculations).                   The Secretary argues

that recipients falling into the "State/Other Medicaid" label are

Reforma-only beneficiaries and should not figure into this base

calculation.        To the extent that the relevant modifier refers to

these patients as being "Other Medicaid" the label is a misnomer,

or so the argument goes.

            The     issue    presented     appears    to    be        potentially   two-

pronged.     To suitably resolve the parties' controversy on this

point, it seems proper to first ascertain whether certain disputed

categories     of     recipients    were        covered     by        federal   Medicaid

assistance under the Commonwealth's State plan.                        Second, it would

then be necessary to turn to the tables used to determine the

FQHCs' base rates and assess whether those categories of persons




                                         -22-
are in fact listed under the "State/Other Medicaid" modifier or

instead belong to another category.

             The Secretary points to evidence in the record which he

claims suggests that the identified groups were not, in fact,

stand-alone eligibility categories under the Commonwealth's State

plan   or   instead    were    elements     of   larger   categories     already

collapsed    into    the    "Pure   Medicaid"    descriptor.        Foster    care

children, for example, are not expressly referenced as a separate

eligibility category in the Commonwealth's State plan.               Similarly,

the Secretary highlights evidence in the record that he claims to

be contradictory of the plaintiff FQHCs' claim below (and the

district court's reasoning) that "dual eligible" recipients fit

squarely and solely into the "State/Other Medicaid" category. Most

notably, population distribution tables that the plaintiffs entered

into evidence place several thousand Medicare enrollees under

columns      listing       "Federal    Medicaid"     or     "Pure     Medicaid"

beneficiaries.

             In briefing to this court, the plaintiff FQHCs counter

that the district court's findings as to groups such as foster care

children and dual eligibles belonging to the "State/Other Medicaid"

category are supported by evidence in the record and are consistent

with information that the Commonwealth has reported in the past to

federal     health    agencies.       The   plaintiff     FQHCs   cite   to   the

Commonwealth's profile in the 2005 National Summary of State


                                      -23-
Medicaid Managed Care Programs, a CMS-prepared document detailing

data culled from programs that employ MCOs to deliver health

services.    See Ctrs. for Medicare & Medicaid Servs., 2005 National

Summary of State Medicaid Managed Care Programs, June 30, 2005,

available at http://media.khi.org/news/documents/2011/12/05/Medic

aid_managed_care_national_rpt_2005.pdf.             Because     this   document

lists the disputed recipient groupings along with other Medicaid

beneficiaries, see id. at 461-62, the plaintiffs reason that the

Commonwealth    has   all       but   conceded   that   these    controverted

populations     are      comprised      of   federally-matched         Medicaid

beneficiaries and argues that the Secretary cannot now claim

otherwise.

            The fact that controverted population groups -- such as

foster care children and "dual eligibles" -- appear on a CMS

listing alongside undisputed federally-matched populations appears,

at first blush at least, to cut in the plaintiff FQHCs' favor.               We

are unconvinced, however, that the CMS 2005 National Summary

document does much to resolve matters.           As the Secretary correctly

notes, the listing upon which the plaintiffs rely also enumerates

Puerto Rico Police officers as a distinct population, but this

recipient     grouping     is     indisputably     covered    only     by   the

Commonwealth's Reforma funds.           Thus, insofar as the CMS summary

document includes -- without differentiation -- both federally-

assisted persons and those covered only by Commonwealth funds, it


                                      -24-
adds nothing to the question of how to distinguish between these

two groups.        At best, the summary supplies further obfuscation

where none is necessary.

           The     district    court's    advance order    is    unfortunately

consonant with this confused state of affairs. Indeed, because the

ruling lacks citation to competent record evidence or relevant law,

it is unclear to us how the court reached the conclusion that the

disputed   GHIP     recipient    groupings    were   comprised     of    optional

federally-matched Medicaid beneficiaries or, for that matter, that

those groupings could be properly subsumed into the "State/Other

Medicaid" collection of recipient populations. We are mindful that

any concerns we may have in this regard touch upon the court's

ability to reach factual determinations and balance the equities of

a case, an area in which we commonly accord considerable deference

to the district court's competence.           See Waldron v. George Weston

Bakeries, Inc., 570 F.3d 5, 8-9 (1st Cir. 2009).                But "deference

has its limits," Belaval IV, 551 F.3d at 16, and our cases are

clear   that   a    district    court's   decision   to   "grant    or    deny   a

preliminary injunction must be supported by adequate findings of

fact and conclusions of law,"            TEC Eng'g Corp. v. Budget Molders

Supply, Inc., 82 F.3d 542, 544-45 (1st Cir. 1996).

           Here, we do not believe that the district court made

sufficiently specific and clearly-stated findings of fact.                 In its

three-page written order the district court concluded, without


                                     -25-
more, that the three above-cited populations -- i.e., "foster care

children," "individuals and families with incomes up to 200% of the

Puerto   Rico   poverty   level,"     and   "so-called     'Medicare   dual

eligibles'" -- were comprised of non-CHIP optional federally-

matched beneficiaries under the State plan.       As we have noted, the

Secretary proffers evidence which he claims is suggestive that this

is not the case, but in any event, the district court's order did

not   communicate   any   specific    findings   as   to    whether    those

populations properly belonged in the much maligned "State/Other

Medicaid" classification.      In the compass of this convoluted

litigation, we do not believe that the district court's reasoning

supports its judgment modifying the wraparound payment formula to

its current form.

           Neither do we believe, however, that the record permits

us to resolve the dispute regarding the size of the Commonwealth's

federally-matched beneficiary population in favor of either side.

The plaintiffs present evidence and arguments that muddy the waters

and complicate the questions we are asked to consider, some of

which were not raised below and which, as our cases command, this

court will not consider for the first time on appeal.                    See

Kozikowski v. Toll Bros., Inc., 354 F.3d 16, 23 (1st Cir. 2003).

Unable to undertake informed review of the issues presented, we

remand to the district court for additional factfinding and legal

determinations.     See, e.g., TEC Eng'g Corp., 82 F.3d at 545


                                    -26-
(remanding to district court where court "unable to engage in

meaningful appellate review").       On remand, the district court

should engage in the two-pronged analysis we have outlined above,

first ascertaining whether disputed GHIP recipient populations are

comprised of federally-matched Medicaid beneficiaries under the

Commonwealth's State plan, then locating whether these fall in the

"State/Other Medicaid" classification or otherwise.         The district

court should also evaluate any as-yet unreviewed or unconsidered

evidence that the Secretary filed in response to its advance ruling

on the reimbursement formula.

            2.   Inclusion of Capitation Payments in Reimbursement
            Calculations

            The second claim that the Secretary presents concerns the

question of whether the Commonwealth can deduct certain funds that

an MCO has paid an FQHC's third party subcontractors from its

supplemental payment obligations.9 This issue arises because FQHCs

sometimes   subcontract   with   third   parties   to   provide   Medicaid

services and those third parties are then reimbursed directly by

the MCO on a fee-for-service basis with funds from the FQHCs'

assigned capitation.    The Secretary alleges that these payments to

third party subcontractors should count as payments to the FQHCs



9
   We note that our discussion of the MCO payment to third party
subcontractor issue does not pertain to Consejo. The Secretary and
Consejo have agreed that costs incurred by third party providers
with whom Consejo has subcontracted should not figure into PPS
calculations specific to that FQHC.

                                  -27-
because, as a special master assigned to the case explained in

proceedings below, the FQHCs commonly include these third party

costs as expenditures in their own financial statements.              Assigned

capitation amounts that an MCO pays either directly to an FQHC or

to    an   FQHC's   third   party    creditor,    the   Secretary   ultimately

contends, should be deducted from the Commonwealth's wraparound

obligations.

             In essence, this issue concerns the proper interpretation

of the Medicaid statute.            The statutory provision requiring the

Commonwealth to make the wraparound payments at issue in this

litigation is codified at 42 U.S.C. § 1396a(bb)(5).             In pertinent

part, the statute provides:

             In the case of services furnished by a[n]
             [FQHC] pursuant to a contract between the
             center or clinic and a[n] [MCO], the State
             plan shall provide for payment to the center
             or clinic by the State of a supplemental
             payment equal to the amount (if any) by which
             the amount determined . . . exceeds the amount
             of the payments provided under the contract.

42 U.S.C. § 1396a(bb)(5)(A). The Secretary now appeals whether, in

a June 4, 2008 ruling, the district court correctly concluded that

MCO    payments     to   third      party     service   providers   who   have

subcontracted with FQHCs properly constitute "payments provided

under the contract" under § 1396a(bb)(5)(A).

             The Secretary and the plaintiff FQHCs have consistently

disputed § 1396a(bb)(5)(A)'s scope.              Seizing upon the "payments

provided under the contract" language, the Secretary first argued

                                       -28-
that the Commonwealth could deduct the amount that an MCO owed an

FQHC under the terms of the contract between them from wraparound

calculations.   See Belaval IV, 551 F.3d at 13.          Conversely, as

early as 2005, the plaintiff FQHCs involved in the original action

stressed that the statute accounts for payments that an FQHC has

actually received from an MCO, not those which are owed but which

the MCO's had not yet disbursed in the center's favor.             If the

Secretary could offset his wraparound obligations by deducting

these "phantom MCO payments," the plaintiffs argued, the FQHCs

could be left holding the bag as to certain funds owed to them if

the MCOs defaulted on payment.         See id. (noting "[p]laintiffs

argued before the district court that the payments actually made by

MCOs often fall well short of the amounts budgeted by contract").

On October 6, 2005, the district court resolved this disagreement

in   the   plaintiff   FQHCs'   favor,    specifically    ruling     that

"§ 1396a(bb)(5) barred the deduction of 'phantom MCO payments,'"

id. at 14, and "interpret[ing] the phrase 'payments provided under

the contract' to allow the deduction only of amounts actually paid

by the MCO to the FQHC," id. (internal citation omitted) (quoting

42 U.S.C. § 1396a(bb)(5)(A)).

           The Secretary concedes the district court's October 6,

2005 ruling, but posits that decision bore specifically on the

narrower issue of contractual default on the part of an MCO and

does not inform the separate question, presented here, of whether


                                -29-
payments made directly from an MCO to a third party should offset

wraparound calculations.          Put another way, the Secretary reasons

that just because the sums an MCO pays a third party creditor never

flow through an FQHC's coffers it does not follow that they are not

"amounts actually paid by the MCO to the FQHC."                 Id.    If they were

not, the Secretary contends, the FQHCs would be doubly reimbursed

for these costs -- once, when an MCO paid off their third party

debt for services rendered, and a second time when the Commonwealth

remitted the FQHC a wraparound payment for the same services.

            The Secretary relies on a 2000 agency guidance letter to

support his proposition that assigned capitation is the correct

amount that the Commonwealth should be allowed to deduct from its

wraparound calculations.          See Letter from Timothy M. Westmoreland,

Director of the Center for Medicaid and State Operations, HCFA, to

State     Medicaid   Director        (Sept.     27,     2000),        available    at

https://www.cms.gov/smdl/downloads/smd092700.pdf (hereinafter, "CMS

Letter").    The CMS Letter discusses possible negative or positive

incentive    structures      in     MCO-FQHC    contractual       relationships,

specifically, the way in which "MCOs frequently use their own funds

to   include    financial     incentives        in      their    contracts        with

subcontracting providers."           Id.      In relevant part, the letter

states:    "Inclusion   of   incentive        amounts    (whether      positive    or

negative) in calculating supplemental payments would negate the

financial impact [an] incentive is designed to provide. . . .


                                      -30-
[Therefore], the State's quarterly supplemental payment obligation

should be determined using the baseline payment under the contract

for services being provided."          Id. (emphasis added).          Relying on

the accentuated language the Secretary argues that, because the

letter   calls    for   a   wraparound     payment     based   on    the    amount

contracted between an MCO and an FQHC, regardless of negative

incentives, CMS     has interpreted the Medicaid statute's reference

to "the amount of the payments provided under the contract" to mean

assigned capitation.        Further, since the CMS Letter interprets

§ 1396a(bb)(5)(A)'s predecessor statute and Congress reenacted the

wraparound provision without change when it set the PPS in place,

the Secretary posits that Congress in essence ratified the agency's

interpretation.     See, e.g., Lorillard v. Pons, 434 U.S. 575, 580

(1978) ("Congress is presumed to be aware of an administrative or

judicial     interpretation     of    a      statute     and   to   adopt     that

interpretation when it re-enacts a statute without change.").

           The plaintiff FQHCs dismiss the CMS Letter's import,

countering that the letter does not say what the Secretary says it

does.      More    importantly,      the     plaintiff    FQHCs     highlight   a

distinction between what they term "FQHC services" and "non-FQHC

services," which they claim the Secretary's entire argumentation

overlooks.        The   plaintiff     FQHCs     contend    that     the    current

preliminary injunction formula correctly ensures that FQHCs are

reimbursed for money paid by an MCO to a third party for non-FQHC


                                      -31-
(i.e., non-primary) services -- e.g., "hospitalization, specialty

care, [and] ancillary services unassociated with FQHC operations"

-- while allowing the Commonwealth to deduct costs associated with

"FQHC" or "primary" services that the FQHC provides. The plaintiff

FQHCs posit that reference to "primary care" services in these

documents clearly indicates that any payments from an MCO to a

third party for so-called non-FQHC services should not count

towards a reduction of their wraparound reimbursements.

          Insofar as the parties ask us to resolve this dispute, we

note that we are again presented with evidence and arguments which

the parties have raised for the first time in briefing to this

court.   As we have already explained, "'[i]t is well established

that this court will not consider an argument presented for the

first time on appeal,'" Hidalgo v. Overseas Condado Ins. Agencies,

Inc., 120 F.3d 328, 333 n.3 (1st Cir. 1997) (quoting Villafañe-

Neriz v. F.D.I.C., 75 F.3d 727, 734 (1st Cir. 1996)), and we see no

reason here to deviate from this well-settled rule.    Although the

district court cannot be faulted for failing to consider evidence

that the parties did not bring before it, we also again find the

court's ruling on this issue too sparse for comfort.    Indeed, to

the extent that the district court provided the reasoning behind

its decision not to allow the Commonwealth to offset MCO payments

to FQHCs' third party creditors from reimbursement obligations, the

district court only noted that the Secretary's argument had been


                               -32-
"squarely rejected" by the court in its October 6, 2005 ruling

regarding "phantom MCO payments." See Consejo de Salud Playa Ponce

v. Gurabo Cmty. Health Ctr., Inc., No. 3:06-cv-01260-GAG (D.P.R.

June   4,    2008).         Here,   we   must    agree   with    the   crux    of   the

Secretary's postulation: the two issues are dissimilar enough that

one does not naturally follow from the other.                   That is to say, the

fact that the Commonwealth must reimburse an FQHC for moneys owed

but which an MCO never disbursed in the FQHC's favor does not

answer      the   separate     question    of    which    FQHC    costs    should   be

altogether deducted from the Commonwealth's repayment obligations

because the MCOs have covered them in the first place.10

              The district court's silence on this distinction is all

the more concerning in light of two of the findings that the

special master assigned to this case made during the proceedings

below. First, the special master determined that the FQHCs receive

three different types of "payment" from MCOs, including direct fee-

for-service        reimbursement,11         third        party     fee-for-service

reimbursement,        and    capitation     payments.       Second,       he   notably


10
    The Secretary notes that the district court appears to have
recognized this distinction during an evidentiary hearing in which
the district judge noted that the court had addressed the third
party payment issue previously but added: "I don't think it was
raised in that case the same [] way it was raised here."
11
   Under a direct "fee-for-service" arrangement, the FQHC bills an
MCO for provided services on a fee-for-service sub-capitated basis.
The parties have agreed that payments made in this manner should be
properly subtracted from the wraparound amount owed by the
Commonwealth as payments already received directly from the MCO.

                                          -33-
concluded that if payments to third parties are excluded from

calculations of the wraparound amount due, those same costs must be

excluded from PPS rates used to calculate the Commonwealth's

reimbursement obligations.   In its ruling, the district court did

not present reasons as to why it did not find that the special

master's factual conclusions informed the matter before it. We are

cognizant of the considerable discretion that a district court

retains regarding a special master's findings.      See Ballard v.

Comm'r, 544 U.S. 40, 66 (2005) (Kennedy, J., concurring) ("The

court after hearing may adopt the special master's report or may

modify it or may reject it in whole or in part or may receive

further evidence or may recommit it with instructions." (quoting

Fed. R. Civ. P. 53(e)(2))).      But, as we have already noted, a

district court's judgment to grant an injunction must be properly

grounded in both fact and law.   Here, we cannot conclude that that

is the case.    Accordingly -- and because we believe that the

district court is better-situated to view the parties' arguments

through the lens of this litigation's extensive record -- we again

remand so that the district court may further consider whether MCO

payments to third parties made on an FQHC's behalf can be deducted

from the Commonwealth's PPS base rates.   See Harlow v. Fitzgerald,

457 U.S. 800, 820 (1982) (remanding where "trial court is more

familiar with the record so far developed and also [] better

situated to make any such findings as may be necessary").       As


                                 -34-
before, we instruct the district court, in resolving this issue, to

review any as-yet unconsidered evidence or argumentation that the

parties presented after its ruling.

B. Indemnification of Plaintiff FQHCs' Debts to MCOs

          We now address the issues that the plaintiff FQHCs raise

on cross-appeal.       The plaintiff FQHCs first contend that the

district court improperly refused to either clarify or modify its

preliminary    injunction     to    afford      them    protection      from    debts

accruing to MCOs.      For the reasons we now outline, we agree with

the district court that the issue of debt indemnification is not

properly within      the    scope   of   this    litigation and         affirm    the

district court's ruling on this question.

          We       briefly     frame      the        plaintiff        FQHCs'     debt

indemnification claim.         The plaintiff FQHCs' request for debt

protection is grounded in their stated concern that Puerto Rico's

managed care system improperly transfers financial risk from MCOs

to primary care providers.          As has been explained in some detail

supra, the Puerto Rico Department of Health contracts with MCOs to

provide   health     care    services.          In     turn,   MCOs     enter    into

subcontracts with primary care providers, such as the plaintiff

FQHCs, to arrange for delivery of these services.                     To the extent

that the FQHCs' costs as determined by Medicaid's formula exceed

payments provided to them under their contracts with the MCOs, the

Commonwealth must then disburse a wraparound reimbursement to


                                       -35-
ensure that FQHCs receive the amount to which they are entitled

under the statute.

            As with the previously discussed matter of MCO payments

to an FQHC's third party creditors, the plaintiff FQHCs' debt

indemnification claim arises in the context of MCO-FQHC contractual

relations.        Because    third    party    health    care    providers    are

reimbursed for FQHCs' costs by MCOs with funds out of the FQHCs'

assigned capitation, to the extent that third party costs exceed an

FQHC's assigned capitation amount, such an FQHC effectively incurs

a debt to an MCO.       The plaintiff FQHCs argue that this arrangement

impermissibly "downloads" financial risk onto the FQHCs, forcing

them to "pay to play" -- i.e., participate -- in the Commonwealth's

Medicaid scheme.        According to the plaintiff FQHCs, the resulting

debt obligation to MCOs in this scenario yields a dollar-for-dollar

reduction    in   the    wraparound    payment    they   would    otherwise    be

entitled to under the Medicaid formula prescribed by the district

court's preliminary         injunction.       Specifically,     the   plaintiffs

contend that, insofar as the preliminary injunction interprets the

statutory language "payments provided under the contract" to refer

to net capitation -- i.e., payments that the FQHCs have actually

received under their contracts with MCOs -- the injunction does not

account for situations in which FQHCs not only fail to receive any

actual payments from MCOs, but also incur a debt with the MCOs.




                                      -36-
              Despite the general allegations in the FQHCs' complaints

and   other    pleadings   denouncing     concerns      over   improper     "risk

downloading" in Puerto Rico's managed care system, the FQHCs did

not specifically (or explicitly) request the district court for

relief pertaining to this specific claim until December 2010.                  At

that date, the plaintiff FQHCs asked the district court to amend

its November 2010 preliminary injunction in order to "either (1)

clarify its wraparound formula to state that the difference between

plaintiffs' costs and payments actually received from an [MCO] must

account for debt accrued to that [MCO] dollar for dollar, or (2)

order [the Secretary] to indemnify and hold plaintiffs harmless

against any [MCO] efforts to collect such debts."

              The district court denied the motion on June 8, 2011. In

response, the plaintiffs filed a notice of appeal and a motion for

injunction pending appeal in which they restated their request to

alter the preliminary injunction to afford them protection against

debts accrued to MCOs.         On June 30, 2011, the district court again

denied the plaintiff FQHCs' request in a two-sentence order in

which it declared that the motion "involves non-parties to this

action   and    the   relief    sought   is   outside    the   scope   of   this

litigation."

              On cross-appeal, the plaintiffs charge that the district

court abused its discretion when it refused to grant their request

for debt indemnification. The plaintiff FQHCs point to allegations


                                      -37-
in their complaints and other pleadings to support their claim that

the question of how MCO debts should be properly addressed squarely

falls within the scope of this case.

            We find these arguments unavailing.   The district court

without a doubt enjoys considerable discretion in deciding whether

or not to expand the scope of a case.       See Donahue v. City of

Boston, 371 F.3d 7, 17 (1st Cir. 2004); see also Harper v. Colo.

State Bd. of Land Comm'rs, 248 F. App'x 4, 13 (10th Cir. 2007)

(holding that the management of the scope of the issues in a case

is committed to the district court's discretion).     Here, a plain

reading of the plaintiffs' varied complaints and other filings

below confirms that the district court did not abuse its discretion

when it concluded that the debt indemnification relief that the

plaintiff FQHCs sought lies outside the scope of this long-running

litigation.    Specifically, three of the four underlying complaints

in these consolidated appeals -- i.e., those filed by Atlantic

Medical Center, Gurabo, and Río Grande -- sought to "enjoin [the

Secretary] . . . from failing to pay federally-qualified health

centers."    Consistent with this request, the plaintiff FQHCs then

proceeded to dissect the Medicaid statute's provisions regarding a

State's obligations to issue wraparound payments under a managed

care system.     In a section titled "Violations of the Medicaid

Statute," the FQHCs denounced the Commonwealth's failure "to pay,

or assure payment to, FQHCs of the wraparound (or other payment) to


                                -38-
which those FQHCs have been and continue to be entitled" under the

Medicaid statute.       The fourth complaint, filed by Consejo, is

similarly structured and limited itself to "seeking an order

. . . directing defendant . . . to make future wraparound payments

as they become due."      From these pleadings, the plaintiff FQHCs'

claims for relief appear limited to requesting injunctive relief

that   would   ensure   that   the    Commonwealth   issued   prospective

wraparound payments under the Medicaid statute.        As a result, the

pleadings   do not   suggest that      the   district court   abused   its

discretion in failing to accommodate the plaintiff FQHCs' final

hour request for modification of its injunction.

            The plaintiff FQHCs attempt to buttress their request for

debt indemnification by claiming that any such request was properly

grounded on their repeated denunciation of the alleged "full risk"

feature of their contracts with MCOs -- a concern they expressed in

pleadings and filings submitted to the district court.          With one

ineffectual exception,12 however, the plaintiffs never drew an


12
   We note that plaintiffs Belaval and Loíza did raise the issue
of debt indemnification in separate filings before the district
court in 2006 and 2007, respectively.        In issuing the final
judgment order that this court reversed in Belaval IV, the district
court concluded that Belaval's and Loíza's requests for debt
indemnification were, by then, a "moot matter." 551 F.3d at 15.
The fact that we ultimately reversed the district court's order in
our Belaval IV decision does not, however, help the plaintiff FQHCs
here because their appeal of the district court's entry of final
judgment was limited to issues pertaining to wraparound payments
and the 42 U.S.C. § 1396a(bb) formula. The plaintiffs' failure to
preserve their claim for debt indemnification on appeal thus
circumscribed the remaining live issues in that litigation to those

                                     -39-
expressly-stated connection between the alleged "full risk" feature

of the contracts and the question of how properly to address MCO

debts.   Instead, the gist of plaintiffs' complaint remained the

Commonwealth's failure to comply with the wraparound provisions of

the Medicaid statute.      Thus, to the extent that plaintiff FQHCs

rely on any "risk downloading" or "full risk" concerns expressed

below to support their claim that the issue of debt indemnification

is within the scope of this litigation, their claim fails.

C.   Eleventh Amendment Sovereign Immunity

           Shortly   after    this    court     issued      its    judgment   in

Belaval V, the Secretary filed an informative motion with the

district court   arguing     that    our    decision   in   that    appeal    had

"necessarily rejected" the district court's prior finding that the

Secretary waived Eleventh Amendment immunity since 2006.                      The

Secretary's motion cited our Belaval V opinion, in which we stated

that

           a federal court cannot ordinarily order money
           payments by a state to make up for past
           violations of a federal statute . . . : only
           if the state were disobeying a forward-looking


this court addressed (and remanded to the district court) in
Belaval IV. See United States v. Connell, 6 F.3d 27, 30 (1st Cir.
1993) ("Because the [appellate court's] mandate serves as a
limitation on the power of the trial court, the issues that remain
open on remand frequently will be circumscribed by the earlier
appeal and by the appellate court's disposition of the issues
therein."); see also Negrón-Almeda v. Santiago, 579 F.3d 45, 51
(1st Cir. 2009) (noting district court's entry of final judgment
makes order "appealable[,] and the plaintiffs' failure to challenge
it fits within the law of the case doctrine").

                                     -40-
           court order to make such payments could a
           violation of that order be redressed by a
           federal court remedial directive to make
           payments to comply with the preexisting order.

625 F.3d at 19.

           On November 8, 2010, the district court enjoined the

Secretary to make wraparound payments to the plaintiff FQHCs.                  As

part of its order, the district court made an about-face on its

prior ruling that the Commonwealth had waived Eleventh Amendment

immunity   from   2006    through   2008    by   means    of   its   conduct   in

litigation before the court.        The FQHCs also appeal the district

court's ultimate finding on this issue.              Before we conclude our

discussion we are therefore called upon to determine whether the

district court correctly found that the Commonwealth did not waive

Eleventh Amendment immunity and that fourteen13 of the nineteen

original Plaintiff-Appellee FQHCs may only obtain relief as of the

date of entry of the November 8, 2010 preliminary injunction

onwards.     Within      the   standard    of    review   applicable    in     the

preliminary injunction context, this presents a pure issue of law




13
   As noted in our discussion of the reimbursement formula above,
Loíza and Belaval both obtained injunctive relief in 2004; it is
therefore undisputed that they are entitled to reimbursement
payments as of the respective dates that the district court issued
judgments as to them.    FQHCs Consejo, Río Grande, and Toa Alta
Comprehensive Urban/Rural Advanced Health Services, Inc. have
either settled their disputes regarding the Eleventh Amendment
issue with the Secretary or are otherwise uninvolved in this aspect
of the case.

                                    -41-
that we review de novo.14 See Langlois v. Abington Hous. Auth., 207

F.3d 43, 47 (1st Cir. 2000); see also Entergy, Ark., Inc. v.

Nebraska, 241 F.3d 979, 987 (8th Cir. 2001) (noting Court of

Appeals     considered     "district     court's    decision   to    grant   an

injunction [] under [] abuse of discretion standard" but "reviewed

de novo . . . legal conclusion that Nebraska had waived its

Eleventh Amendment immunity").

             We begin our analysis of the issue with the fundamental

proposition that the FQHCs' claims against the Secretary have

always been grounded on 42 U.S.C. § 1983.           See Belaval I, 397 F.3d

at 72-75. This important statute "imposes liability on anyone who,

acting under color of state law, deprives a person of any 'rights,

privileges, or immunities secured by the Constitution and laws.'"

Id. at 72 (quoting 42 U.S.C. § 1983).              Asserting a violation of

federal law, however, will not always be enough to establish a

§    1983   cause   of   action   --   "[the]   plaintiff   must    assert   the

violation of a federal right,"            Blessing v. Freestone, 520 U.S.

329, 340 (1997), and we look to the provision that a plaintiff


14
   Because our review is de novo, we do not concern ourselves with
the district court's interpretation of our opinion in Belaval V.
Nor do we find it necessary to consider whether the district
court's original judgment on this issue –- in which the court ruled
that the Secretary had waived the Commonwealth's sovereign immunity
–- has any bearing on the proper resolution of this question. See
United States v. Gen. Elec. Co., 670 F.3d 377, 384 n.6 (1st Cir.
2012) (noting, on de novo review, that the court "need not consider
whether the specific reasoning set out by the district court
contained errors" (quoting Euromotion, Inc. v. BMW of N. Am., Inc.,
136 F.3d 866, 872 (1st Cir. 1998))).

                                       -42-
seeks to enforce to determine whether it creates such a right, see

Gonzaga Univ. v. Doe, 536 U.S. 273, 283-84 (2002).         Our judgment in

Belaval I, among other things, concluded that the portions of the

Medicaid   statute   at   issue   in   this   litigation   so   did.   See

Belaval I, 397 F.3d at 74 (holding language found at 42 U.S.C.

§ 1396a(bb)(5)(A) "is rights-creating [] because it is mandatory

and has a clear focus on the benefitted FQHCs").

           The federal courts' powers to bring state officials into

compliance with federally-recognized rights are not without limits.

Relevant here, the Eleventh Amendment shields a State from being

haled into federal court if it has not consented to the same.15        See

Pennhurst St. Sch. & Hosp. v. Halderman, 465 U.S. 89, 98 (1984).

But the well-settled doctrine first laid out in Ex Parte Young, 209

U.S. 123 (1908), nonetheless recognizes the federal courts' power

to enjoin a State's officers and "vindicate federal rights" if

necessary.   Pennhurst, 465 U.S. at 105.       The doctrine's boundaries

are well-defined, rendering it inapplicable "when 'the state is the

real, substantial party in interest . . . .'"        Id. at 101 (quoting

Ford Motor Co. v. Dep't of Treas., 323 U.S. 459, 464 (1945)).           As

a result, "[i]n a 42 U.S.C. § 1983 action, the federal courts'

remedial power 'may not include a retroactive award which requires


15
    This Circuit has consistently recognized that "Puerto Rico
enjoys the same immunity from suit that a State has under the
Eleventh Amendment." Maysonet-Robles v. Cabrero, 323 F.3d 43, 53
(1st Cir. 2003); see also Arecibo Cmty. Health Care, Inc. v. Com.
of P.R., 270 F.3d 17, 21 n.3 (1st Cir. 2001).

                                   -43-
the payment of funds from the state treasury.'"                      Echevarría-

González v. González-Chapel, 849 F.2d 24, 32 (1st Cir. 1988)

(quoting Fernández v. Chardón, 681 F.2d 42, 59 (1st Cir.), cert.

denied, 459 U.S. 989 (1982)); see also Vaquería Tres Monjitas, Inc.

v. Irizarry, 587 F.3d 464, 478 (1st Cir. 2009) (noting suits

brought      under   the   Ex    Parte    Young   doctrine    "may    only     seek

prospective injunctive or declaratory relief; they may not seek

retroactive monetary damages or equitable restitution").

              Exceptions to this rigid rule are only allowed where

Congress abrogates a State's sovereign immunity through valid

legislation or when the State submits by waiving its immunity. See

Va. Office for Prot. & Advocacy v. Stewart, 131 S. Ct. 1632, 1638

(2011); cf. Vaquería Tres Monjitas, 587 F.3d at 478 (noting "'line

drawn by the Court represents a compromise between the impulse to

preserve state autonomy and the need to enforce federal law'"

(quoting Santiago v. Corporación de Renovación Urbana y Vivienda de

P.R., 554 F.2d 1210, 1212 (1st Cir. 1977))).            There are three ways

in   which    a   State    may   waive    its   immunity:    "(1)    by   a   clear

declaration that it intends to submit itself to the jurisdiction of

a federal court or administrative proceeding; (2) by consent to or

participation in a federal program for which waiver of immunity is

an express condition; or (3) by affirmative conduct in litigation."

New Hampshire v. Ramsey, 366 F.3d 1, 15 (1st Cir. 2004).                  Latching

on to the latter of these, the FQHCs argue that the Secretary so


                                         -44-
waived any immunity that may attach to the Commonwealth through his

conduct       and   good   faith   representations     in    federal   court.

Specifically, the FQHCs reason that the Secretary waived any

protection that the Eleventh Amendment could bestow upon the

Commonwealth from, at a minimum, June 2006 onwards. At that point,

the Secretary made representations to the district court stating

that the Commonwealth had set in place a system by which to process

wraparound payments to the FQHCs and said payments would start

being issued as of mid-2006.           The FQHCs reason that the district

court may therefore enjoin the Commonwealth to issue reimbursement

payments as of that date.

               The FQHCs' arguments on this issue are unavailing because

they do not account for the well-settled principle that a State's

waiver of its Eleventh Amendment immunity through conduct in

litigation must be "unambiguous" and "evince a clear choice to

submit [its] rights [to] adjudication by the federal courts."

Ramos-Piñero v. Puerto Rico, 453 F.3d 48, 52 (1st Cir. 2006)

(internal quotation marks omitted).             While the Commonwealth has

been    embroiled     in    litigation   regarding     its   failure   to   duly

establish a PPS reimbursement payment scheme for the better part of

the    past    decade,     the   Secretary    has   repeatedly   asserted    the

Commonwealth's Eleventh Amendment rights to either litigate certain

matters in its courts or otherwise protect its coffers from an

imposition of liability.            This conduct generally forecloses a


                                       -45-
finding of consent or waiver.        The Supreme Court's cases are as

clear as they are consistent in holding that a State only waives

its immunity under the Eleventh Amendment when it voluntarily

entreats a federal court to adjudicate its rights.        See Lapides v.

Bd. of Regents of Univ. Sys. of Ga., 535 U.S. 613, 620 (2002)

(holding State waived immunity where it "voluntarily agreed to

remove the case to federal court"); Gardner v. New Jersey, 329 U.S.

565,   573-74   (1947)   (holding   State   waived   immunity   where   it

"invoke[d] the aid" of bankruptcy court by filing a proof of

claim); Clark v. Barnard, 108 U.S. 436, 447 (1883) (holding State

waived Eleventh Amendment immunity where it chose to appear as

intervenor); see also Ramsey, 366 F.3d at 16 (holding State waived

Eleventh Amendment immunity where it invoked jurisdiction of a

federal agency whose decisions were subject to review in federal

court).   That a State is haled into federal court as a defendant

against its will and then defends itself once therein will not do.

See Fla. Dep't of State v. Treasure Salvors, Inc., 458 U.S. 670,

683 n.18 (1982) ("The fact that the State appeared and offered

defenses on the merits does not foreclose consideration of the

Eleventh Amendment issue . . . .").

           Here we cannot say that the Secretary voluntarily invoked

the jurisdiction of the federal courts or otherwise waived its

immunity by litigation conduct.      The Commonwealth has consistently

asserted its immunity to suit under the Eleventh Amendment, first


                                    -46-
doing so in 2003 as a defense to the first group of FQHCs' action

against it.    As to the specific representations that the FQHCs

claim amounted to consent or waiver in 2006, we note that the

Secretary    first   made   statements   that   the   Commonwealth   had

established a PPS reimbursement payment system and would begin

making payments within the context of a June 27, 2006 informative

motion to the district court that related only to the original suit

involving plaintiffs Río Grande, Loíza, and Belaval. At that point

in the litigation, the district court had already enjoined the

Secretary to set in place a PPS reimbursement payment system and

commence making payments to Loíza and Belaval.        The June 27, 2006

motion purported to inform the court that the Secretary had, by

then, established such a system and that for the system to be

"fully operational" it "require[d] the cooperation of all FQHC[s]

in providing . . . information" needed to start payments as of the

third quarter of 2006.

            In subsequent filings, however, the Secretary explained

the Commonwealth's position that the preliminary injunction in

place at the time should not be rendered permanent because, inter

alia, the preliminary injunction relied upon an inaccurate formula.

But importantly, the Secretary also then pressed his contention

that once an injunction ordering that the Commonwealth to comply

with the Medicaid statute issued, any disputes as to the proper

calculation of past payments owed had to be litigated in the


                                  -47-
Commonwealth's courts in accordance with the above-cited principle

that, even though a federal court may indirectly cause State funds

to be expended by means of ordering future compliance with federal

law, it may not "impose upon the State 'a monetary loss resulting

from past breach of a legal duty on the part of the defendant state

officials.'"     Verizon Md. Inc. v. Pub. Serv. Comm'n of Md., 535

U.S. 635, 646 (2002) (quoting Edelman, 415 U.S. at 668).               The

Secretary then raised this Eleventh Amendment-based argument in

each of the cases brought by the distinct groupings in the not-as-

of-yet consolidated actions, and, specifically, in the respective

actions relevant to the fourteen FQHCs that now cross-appeal the

district court's November 8, 2010 ruling on this issue.

             Surveying the Secretary's litigation conduct insofar as

it can be gleaned from the record before us, we simply cannot agree

with   the   FQHCs'   reasoning   that    the   Secretary   "unquestionably

consented" to make payments from the Commonwealth's coffers as

early as the third quarter of 2006.        As our own case law commands,

any such waiver would require the Commonwealth to have "engag[ed]

in affirmative conduct during litigation sufficient to evince

conduct to suit."      Bergemann v. R.I. Dep't of Envtl. Mgmt., 665

F.3d 336, 340 (1st Cir. 2011).           A finding of waiver or consent

through conduct in litigation is simply foreclosed where, instead

of voluntarily invoking federal jurisdiction, a State does nothing

more than zealously defend against the same whenever possible.


                                   -48-
                              III. Conclusion

            We make a few parting comments regarding our judgment to

remand for additional consideration on the formula that will be

used to calculate the Commonwealth's reimbursement obligations.

This decision is not lightly reached: we are mindful that our

judgment today imposes further burden on the district court and

postpones the eventual resolution of this long-enduring litigation.

But the stakes here are undeniably high -- the tangible effects of

this litigation involve multiples of millions of dollars and bear

on the health care of thousands of Medicaid beneficiaries in Puerto

Rico.    On remand, we urge the parties to assist the district court

in its efforts to bring this controversy to an efficient and just

conclusion.

            For the reasons we have explained above, we affirm the

district court's ruling on the Eleventh Amendment claims.             We also

affirm its ruling regarding the plaintiffs' request for debt

indemnification relief.       We reverse the district court's judgments

regarding    the    formula   used     to   calculate   the   Commonwealth's

reimbursement      obligations   and    remand   for    further   proceedings

consistent with this opinion.           All parties will bear their own

costs.

            It is so ordered.




                                     -49-
