Florida Gov. Rick Scott says he will sue Obama administration for withholding hospital funds

Florida Gov. Rick Scott said Thursday he is suing the Obama administration for withholding federal money for hospitals that serve the poor, saying they are doing so because the state won't expand Medicaid.

The announcement is another twist in what has been a gritty yearlong battle with the feds over roughly $1 billion in funds for Florida hospitals. The fight has come to a head as the state Legislature works to finalize a state budget before May 1.

"Florida is the first and only state to sue the federal government on this issue. There are only a handful of states that even have anything like" the hospital funds, said Joan Alker, executive director of the Georgetown University Center for Children and Families.

The hospital funds, known as the low-income pool, give federal money to hospitals that serve large numbers of uninsured and Medicaid patients. Florida's funds were negotiated under Gov. Jeb Bush when he was governor.

Federal health officials have warned states for more than a year the program would end in June because the president's health law was intended to provide insurance to more people, meaning the hospitals would have more paying customers. But the Supreme Court decision allowing states to decide whether or not to expand Medicaid has complicated the hospital funds.

That 2012 ruling bars the federal government from coercing states into expanding Medicaid. Yet, that's what the Republican governor says the Centers for Medicare and Medicaid Services is doing because the agency insists that the hospital funds and Medicaid expansion should be part of the same discussion.

"It is appalling that President Obama would cut off federal health care dollars to Florida in an effort to force our state further into Obamacare," said Scott, who recently reversed course, saying he no longer supports Medicaid expansion.

Florida Attorney General Pam Bondi, who said her office will handle the lawsuit, said the state has not yet decided when and where the lawsuit would be filed.

The Florida House and Senate remain gridlocked with rival budgets $4 billion apart. The House is refusing to expand Medicaid and the Senate vows not to pass a budget that includes deep cuts to hospitals.

The Senate proposed a compromise that initially expands Medicaid but then transitions to a program that uses federal funds to let consumers purchase private health insurance for themselves. Scott and the House are against it, warning the federal government can't be trusted to foot the bill.

Legal experts say the Supreme Court case Scott is using in his defense doesn't apply here. CMS has broad discretion on whether to grant pilot projects like the one in Florida. But the case Scott mentions refers to state's ability to participate in Medicaid, not optional pilot programs, said Washington D.C.-based attorney Ken Choe, who served as deputy general counsel for the U.S. Department of Health and Human Services.

Republican Senate President Andy Gardiner said the federal government has no obligation to provide the hospitals funds.

"It is difficult to understand how suing CMS on day 45 of a 60-day session regarding an issue the state has been aware of for the last 12 months will yield a timely resolution to the critical health care challenges facing our state," said Gardiner, who is also a hospital executive.

The Centers for Medicare and Medicaid Services declined comment on the pending lawsuit. But the agency did issue a statement asking the state to prove how relying on federal funds to pay hospitals caring for those without insurance is a more effective use of taxpayer money than purchasing Medicaid or other health insurance directly for those patients.