MS 2023-05-D-Snyder-May-1-2023-Section-43-13-117K May 1, 2023

Can Mississippi's Medicaid agency negotiate liability caps with actuarial firms, or does the state constitution prohibit limiting their liability?

Short answer: The AG declined to opine on whether § 43-13-117(K) violates Mississippi Constitution § 100. Statutes are presumed constitutional until a court of competent jurisdiction rules otherwise. Section 43-13-117(K) (which lets the Division of Medicaid negotiate liability limits with actuarial firms) remains valid until either repealed by the legislature or struck down by a court.

Disclaimer: This is an official Mississippi Attorney General opinion. AG opinions are persuasive authority but not binding precedent. This summary is for informational purposes only and is not legal advice. Consult a licensed Mississippi attorney for advice on your specific situation.

Plain-English summary

Section 100 of the Mississippi Constitution prohibits the legislature from "remitting, releasing, postponing, or in any way diminishing" obligations or liabilities owed to the state. The traditional concern: the legislature giving favored parties a discount on debts owed to the state.

Section 43-13-117(K) of the Mississippi Code authorizes the Executive Director of the Division of Medicaid to "negotiate a limitation on liability to the state of prospective contractors" when contracting with actuarial firms. That looks, on its face, like a legislative authorization to diminish liability owed to the state, which is exactly what Section 100 forbids.

Director Snyder asked whether § 43-13-117(K) authorizes liability limits without violating Section 100.

The AG's answer: I won't tell you whether the statute is constitutional. That is a matter for the courts. Statutes passed by the legislature are presumed constitutional until a court of competent jurisdiction rules otherwise. Mississippi Power Co. v. Goudy, 459 So. 2d 257 (Miss. 1984). As of the opinion date, no court has declared § 43-13-117(K) unconstitutional. So the statute remains valid and operative.

This is a classic deflection by the AG, but a doctrinally clean one. AG opinions cannot resolve constitutional questions definitively; only courts can. The AG points to the presumption of constitutionality and lets the executive proceed with the statute as written.

The practical effect: the Division of Medicaid can negotiate liability caps with actuarial firms, relying on § 43-13-117(K), unless and until a court strikes the statute down.

What this means for you

If you're a Mississippi Medicaid contracting officer

You can negotiate liability limitations with prospective actuarial contractors under § 43-13-117(K). The statute is presumed constitutional. If a court eventually strikes it down, contracts entered before the ruling may have transitional issues, but until that happens, you operate under the statute.

Practical considerations:

Document the rationale for the liability cap (often: actuarial firms charge dramatically higher fees if they have unlimited liability exposure on Medicaid actuarial work; capping liability lets the state get the work done at reasonable cost).
Negotiate the cap to a defensible level. Caps should reflect the actuary's likely fee level and the kind of work involved. A cap of $1 million on a $50,000 contract might seem reasonable; a cap of $50,000 on the same contract is essentially eliminating liability.
Build in provisions that survive any future ruling. Indemnification, insurance requirements, and warranty provisions can layer on top of the liability cap.
Coordinate with the Division of Medicaid's general counsel on the specific contract terms.

If you're an actuarial firm bidding on Mississippi Medicaid work

Section 43-13-117(K) creates an authority to cap your liability. Negotiate it explicitly. The statutory cap protects you only if the contract incorporates it. Consider:

Specific dollar caps that reflect the value of the engagement.
Carve-outs (e.g., the cap might not apply to gross negligence or willful misconduct, depending on negotiation).
Insurance requirements that match the cap.
The risk that a future court ruling could invalidate the cap. Build that into your pricing if you cannot get other contract protections.

If you're a state legislator

This kind of question (negotiated liability caps in state contracts) sits at a tension point in Mississippi constitutional law. Section 100 is meant to prevent legislative cronyism, but its broad language can capture run-of-the-mill commercial liability allocation. The legislature's response in § 43-13-117(K) was to authorize specific liability caps for specific contractors (actuarial firms doing Medicaid work). This is a focused legislative judgment that the policy benefit (lower-cost actuarial work) outweighs the Section 100 concern.

If a court eventually strikes down § 43-13-117(K), the legislature would need to rewrite it. Possible paths:
- Amend Section 100 by constitutional amendment (high bar).
- Reframe the authorization to fit within Section 100 (e.g., by characterizing liability allocation as a procurement decision rather than a legislative remission).
- Move the actuarial work to private intermediaries that are not directly contracted to the state.

If you're a constitutional law litigator

Section 43-13-117(K) is potentially vulnerable. A challenge would likely argue:
- The statute "diminishes" liability owed to the state, which Section 100 forbids except for compromise of doubtful claims by general law.
- A negotiated cap on a specific contractor's liability is not a "compromise of doubtful claims" within the constitutional carve-out.
- The presumption of constitutionality can be overcome with a clear textual conflict.

Defending the statute: the actuarial work is voluntary and contractual; the legislature can permit different allocations of risk in private contracts; "diminishing" liability owed in the constitutional sense refers to legislative remission of debts, not contractual liability allocation in voluntary transactions.

The AG's deflection means this issue waits for an actual case where a party has standing and a concrete dispute.

If you're a state auditor or legislative oversight staff

The Division of Medicaid is operating under a presumed-constitutional statute. That is the appropriate posture until a court rules. Your audit function should focus on:
- Whether the Division's negotiated caps are reasonable in scope.
- Whether contracts properly invoke and document the § 43-13-117(K) authority.
- Whether the resulting work product is acceptable for the cap negotiated.

Common questions

Q: Can the AG declare a statute unconstitutional?
A: Not definitively. AG opinions are advisory and do not bind courts. Only courts can declare statutes unconstitutional. The AG can opine that a statute may be unconstitutional or raises constitutional concerns, but the actual ruling comes from the judiciary.

Q: What does "presumption of constitutionality" mean?
A: When the legislature passes a statute, courts assume it is valid until a party challenges it and a court rules otherwise. The party challenging the statute must overcome the presumption. Mississippi Power Co. v. Goudy, 459 So. 2d 257 (Miss. 1984).

Q: Why would the legislature want to limit actuarial firm liability?
A: Actuarial work involves complex projections that may be off significantly. Firms with unlimited liability exposure either decline state contracts or charge premiums that price out the state. Limiting liability is a cost-management measure that reflects how actuarial work is contracted in the private market.

Q: Can the Executive Director just decide not to use the cap?
A: Yes. Section 43-13-117(K) is permissive, not mandatory. It says the Executive Director "may negotiate a limitation on liability." If the Director chooses not to, no cap applies, and standard liability rules govern.

Q: What happens to existing contracts if a court strikes down § 43-13-117(K)?
A: Generally, contract clauses negotiated under a then-valid statute remain enforceable, though there are exceptions. Most contracts include severability provisions that try to preserve the rest of the contract if one provision is invalidated. The specific remedy would depend on the contract terms, the court's ruling, and contract-law principles.

Q: Are there other Mississippi statutes that authorize similar liability caps?
A: Yes. Mississippi has several statutes authorizing liability caps in specific contexts (engineering services, certain professional services, etc.). Each would face its own Section 100 analysis if challenged.

Background and statutory framework

Section 100 of the Mississippi Constitution reads:

No obligation or liability of any person, association, or corporation held or owned by this state, or levee board, or any county, city, or town thereof, shall ever be remitted, released or postponed, or in any way diminished by the Legislature, nor shall such liability or obligation be extinguished except by payment thereof into the proper treasury; nor shall such liability or obligation be exchanged or transferred except upon payment of its face value; but this shall not be construed to prevent the Legislature from providing by general law for the compromise of doubtful claims.

The provision was adopted as part of Mississippi's 1890 Constitution. Its purpose was to prevent legislative favoritism toward debtors of the state, levee board, or local governments. The "doubtful claims" carve-out at the end allows compromises of disputed obligations through general law (not special bills favoring particular debtors).

The interpretive question: does Section 100 reach prospective contractual liability allocation, or only existing debts/obligations? Reading the text strictly, "obligation or liability . . . held or owned by this state" suggests existing liabilities. Reading it broadly, future liabilities are still "obligations" of the contracting party once the contract is signed, and a statutory cap "diminishes" them.

Section 43-13-117(K) takes a middle road: the legislature authorizes the Director to negotiate caps in specific actuarial contracts. It is not a blanket exemption; it is a focused authorization for a specific kind of work where the policy benefit is clear (lower-cost actuarial expertise on a complex multi-billion-dollar program).

The AG's refusal to opine on the constitutional question reflects a doctrinal modesty. AG opinions are advisory; binding interpretation of constitutional provisions belongs to the courts. The presumption of constitutionality lets the Division of Medicaid operate while the question goes unresolved.

Citations and references

Statutes and constitutional provisions:
- Miss. Code Ann. § 43-13-117(K) (Medicaid actuarial firm liability limitation authority)
- Miss. Const. § 100 (prohibition on legislative diminishment of state obligations)

Case:
- Mississippi Power Co. v. Goudy, 459 So. 2d 257 (Miss. 1984), statutes presumed constitutional

Prior AG opinion referenced:
- MS AG Op., Capps (Sept. 6, 1996), restating the presumption-of-constitutionality doctrine

Source

Original opinion text

May 1, 2023

Drew Snyder, Executive Director
Mississippi Division of Medicaid
550 High Street, Suite 1000
Jackson, Mississippi 39201

Re: Section 43-13-117(K)

Dear Director Snyder:

The Office of the Attorney General has received your request for an official opinion.

Question Presented

Does the Division of Medicaid have the authority under Mississippi Code Annotated Section 43-13-117(K) to diminish the liability of actuarial firms without violating Article 4, Section 100 of the Mississippi Constitution?

Brief Response

To the extent that your question asks us to opine on the constitutionality of Section 43-13-117, we must decline to do so. Statutes passed by the Mississippi Legislature are presumed constitutional until a court of competent jurisdiction rules otherwise. MS AG Op., Capps at 2 (Sept. 6, 1996) (citing Mississippi Power Co. v. Goudy*, 459 So. 2d 257 (Miss. 1984)). As of the date of this opinion, we are not aware that any court has declared Section 43-13-117 unconstitutional. This statute remains valid until such time as a court of competent jurisdiction declares it to be unconstitutional or until it is repealed or amended by the Legislature.

Applicable Law and Discussion

Section 100 of the Mississippi Constitution provides:

No obligation or liability of any person, association, or corporation held or owned by this state, or levee board, or any county, city, or town thereof, shall ever be remitted, released or postponed, or in any way diminished by the Legislature, nor shall such liability or obligation be extinguished except by payment thereof into the proper treasury; nor shall such liability or obligation be exchanged or transferred except upon payment of its face value; but this shall not be construed to prevent the Legislature from providing by general law for the compromise of doubtful claims.

According to Section 43-13-117(K), "In the negotiation and execution of such contracts involving services performed by actuarial firms, the Executive Director of the Division of Medicaid may negotiate a limitation on liability to the state of prospective contractors."

Section 43-13-117(K) remains valid until such time as a court of competent jurisdiction declares it to be unconstitutional or until it is repealed or amended by the Legislature.

If this office may be of any further assistance to you, please do not hesitate to contact us.

Sincerely,

LYNN FITCH, ATTORNEY GENERAL

By: /s/ Beebe Garrard
Beebe Garrard
Special Assistant Attorney General