52
Opinion of the Court
In cases involving extensive state regulation of private activity, we have consistently held that "[t]he mere fact that a business is subject to state regulation does not by itself convert its action into that of the State for purposes of the Fourteenth Amendment." Jackson v. Metropolitan Edison Co., 419 U. S. 345, 350 (1974); see Blum, 457 U. S., at 1004. Faithful application of the state-action requirement in these cases ensures that the prerogative of regulating private business remains with the States and the representative branches, not the courts. Thus, the private insurers in this case will not be held to constitutional standards unless "there is a sufficiently close nexus between the State and the challenged action of the regulated entity so that the action of the latter may be fairly treated as that of the State itself." Ibid. (internal quotation marks omitted). Whether such a "close nexus" exists, our cases state, depends on whether the State "has exercised coercive power or has provided such significant encouragement, either overt or covert, that the choice must in law be deemed to be that of the State." Ibid.; see Flagg Bros., supra, at 166; Jackson, supra, at 357; Moose Lodge No. 107 v. Irvis, 407 U. S. 163, 173 (1972); Adickes v. S. H. Kress & Co., supra, at 170. Action taken by private entities with the mere approval or acquiescence of the State is not state action. Blum, supra, at 1004-1005; Flagg Bros., supra, at 154-165; Jackson, supra, at 357.
Here, respondents do not assert that the decision to invoke utilization review should be attributed to the State because the State compels or is directly involved in that decision. Obviously the State is not so involved. It authorizes, but does not require, insurers to withhold payments for disputed medical treatment. The decision to withhold payment, like the decision to transfer Medicaid patients to a lower level of care in Blum, is made by concededly private parties, and "turns on . . . judgments made by private parties" without "standards . . . established by the State." Blum, supra, at 1008.
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