Idaho Supreme Court dismisses lawsuit over Medicaid mental health contract

BOISE (Idaho Capital Sun) — The Idaho Supreme Court has dismissed a lawsuit from a bidder for an Idaho Medicaid contract to run mental health services.

The Dec. 18 decision upheld a lower state court’s decision to dismiss the lawsuit by Beacon, resolving a years-long legal dispute over a managed care contract that is likely Idaho state government’s largest contract, valued at $1.2 billion over four years. 

Before Idaho awarded the company Magellan the contract to run Medicaid mental health services in 2023, Beacon initially had the highest score for its bid — but the state disqualified the company due to past work that officials said was related to the contract. 

Later in 2023, two separate Idaho district court judges dismissed lawsuits by Beacon and Optum, another bidding company that didn’t win the contract. The judges agreed that they lacked jurisdiction to review the state’s contract award decision, citing limits on judicial review in the State Procurement Act, Idaho’s government contracting law, the Idaho Capital Sun previously reported. 

Optum’s lawsuit was dismissed in the Idaho Supreme Court in 2024. Last week, the Idaho Supreme Court ruled on Beacon’s appeal.

“… We hold the State Procurement Act does not violate the Idaho Constitution’s separation of power’s doctrine,” the Supreme Court ruled on Dec. 18. 

Beacon’s national affiliate, Carelon Behavioral Health, could not be immediately reached for comment. 

In a statement Monday, Idaho Attorney General Raúl Labrador said the state Supreme Court “reinforced the authority of the Idaho Legislature to define when district courts may review agency actions of the executive branch.”

“As my office argued and the Court concluded, such authority is vested in the legislative branch by the Idaho Constitution,” Labrador said. “If Carelon had prevailed, losing bidders in government contracts could drag the state into court over every major contract and ask judges to second-guess agency decisions and invalidate billion-dollar agreements that Idahoans depend on for health care, roads, and critical services.”

As Idaho faces a projected budget shortfall, the contractor Magellan has cut critical mental health services. The contract to run Idaho Medicaid mental health services is called the Idaho Behavioral Health Plan.

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