State needn’t pay clinics, court rules
Planned Parenthood loses in appeal
A federal appellate panel on Wednesday vacated a federal judge’s orders in 2015 and 2016 directing Arkansas to continue paying for Planned Parenthood services for Medicaid recipients.
The divided decision of a three-judge panel of the 8th Circuit U.S. Court of Appeals is likely to affect thousands of Medicaid patients in Arkansas, primarily women, and expands a growing divide among federal appellate courts across the country that may end up having to be settled by the U.S. Supreme Court.
The panel disagreed with U.S. District Judge Kristine Baker that the federal Medicaid Act allows individual recipients a right to sue over their choice of any qualified provider.
On Oct. 2, 2015, Baker ordered the state to continue funding Planned Par-
enthood services for three women who sued over Gov. Asa Hutchinson’s decision to discontinue paying Medicaid dollars for any services obtained through Planned Parenthood. In September, after the lawsuit was turned into a class-action case, Baker expanded the order to cover all Medicaid recipients in the state who seek Planned Parenthood services.
Attorney General Leslie Rutledge appealed both of Baker’s preliminary injunctions to the 8th Circuit, arguing that the federal Medicaid Act doesn’t create a federal right through which individual patients can sue over Medicaid benefits. The panel heard oral arguments Sept. 21.
Planned Parenthood provides birth control, cancer screenings, testing and treatment for sexually transmitted infections, as well as other preventive care, to nearly 4,500 patients in Arkansas each year. A “significant number” of those patients are on Medicaid, according to Planned Parenthood Great Plains, which oversees the provider’s two clinics in Arkansas — one in Little Rock and one in Fayetteville.
In the fiscal year that ended in 2015, Medicaid paid about $51,000 for services at the two clinics, according to court documents.
Before Hutchinson’s directive discontinuing Medicaid funding for Planned Parenthood services, state law had already prevented Medicaid funds from being used for most abortions. Medicaid is a state-administered health care program for the poor and disabled and is funded mostly by federal dollars.
The governor’s Aug. 14, 2015, announcement that the state Department of Human Services would terminate the funding within 30 days came in response to reports of “unethical” actions at Planned Parenthood affiliates in other states.
The allegations were made by anti-abortion activists who released heavily edited videos purporting to show that some clinics in other states had profited from allowing patients to donate fetal tissue to medical research after abortions. However, a Texas grand jury that investigated the “undercover” footage instead indicted the activists on tampering charges, and Planned Parenthood said none of its affiliates sought any payments beyond legally permitted reimbursements of costs.
Still, in a statement issued Wednesday, Hutchinson again said, “In 2015, the state terminated its Medicaid provider agreement with Planned Parenthood because there was evidence that Planned Parenthood and its affiliates were acting in an unethical manner and engaging in what appeared to be wrongful conduct.”
Hutchinson added, “This is a substantial legal victory for the right of the state to determine whether Medicaid providers are acting in accordance with the best practices and affirms the prerogative of the state to make reasoned judgments on the Medicaid program.”
Rutledge issued a statement saying, “The 8th Circuit rightfully agreed with me in my defense of Gov. Asa Hutchinson’s decision. … The Court found that Planned Parenthood and the three patients it recruited could not contest in federal court Arkansas’s determination that a medical provider has engaged in misconduct that merits disqualification from the Medicaid program.”
It isn’t clear when the funds will be discontinued, as the appellate court directed the district court to vacate the injunctions once the case is returned to that court’s jurisdiction, and any appeal could trigger a request for a stay.
But in a news release condemning the split ruling, Planned Parenthood said, “Today’s decision does not go into effect yet and therefore will not have any immediate impacts to Medicaid patients in Arkansas.” The provider said it is “evaluating all options to ensure our patients receive uninterrupted care.”
Aaron Samulcek, interim president and chief executive officer of Planned Parenthood Great Plains, said, “Medicaid patients deserve the right to choose their doctors and nurses, just like any other insured patient in our health care system. PPGP health centers in Fayetteville and Little Rock will continue serving Medicaid patients while we find a path to affirm our patients’ rights to access health care when and where they need it. PPGP will leave no stone unturned.”
Rita Sklar, executive director of the American Civil Liberties Union of Arkansas, which filed the lawsuit on behalf of the three anonymous Medicaid recipients, said: “Politicians have no business telling women where they can and can’t get their birth control and cancer screenings. We disagree with today’s ruling and are evaluating all options for protecting Arkansans’ access to Planned Parenthood and the essential health services it provides.”
The panel of 8th Circuit judges issuing the opinion included U.S. Circuit Judge Steven Colloton of Des Moines, Iowa, who wrote the opinion; U.S. Circuit Judge Bobby Shepherd of El Dorado; and U.S. Circuit Judge Michael Melloy of Cedar Rapids, Iowa, who issued a 10-page dissent.
At oral arguments in St. Louis in September, the judges peppered attorneys for the state and Planned Parenthood with questions about whether the three women — who at the time were the only ones to which the injunction applied — should have exhausted state remedies before turning to the federal courts. They also wondered how a Sept. 14 opinion issued in a similar case by a three-judge panel of the 5th U.S. Circuit Court of Appeals, based in Atlanta, might apply to the Arkansas case.
The 5th Circuit panel affirmed a preliminary injunction preventing Louisiana from terminating a Planned Parenthood affiliate’s access to the Medicaid program.
Jennifer Sandman, representing Planned Parenthood, argued in St. Louis that the 5th Circuit agreed with earlier decisions by the 6th, 7th and 9th circuit courts of appeal that Medicaid beneficiaries are entitled to file a private right of action — a lawsuit — to enforce their claims under the federal Medicaid Act’s free choice of providers provision.
She said that because the state’s reason for terminating Planned Parenthood as a Medicaid provider wasn’t even about the Arkansas clinics, there was nothing for the provider to appeal to the state.
But Lee Rudofsky, solicitor general under Rutledge, argued that the Medicaid Act allows a state to exclude a provider for ethical reasons. He told the panel, “In a series of interlocking statutes governing the Medicaid program, Congress has set forth more than 50 types of misconduct from which a state … may decide if a Medicaid provider is no longer qualified to participate in the Medicaid program.”
He said the “ultimate issue” before the panel was “what is the proper forum, and who is the proper party, to challenge such a decision.”
Rudofsky said Judge Baker “misinterpreted a section of the Medicaid Act and the right it confers to patients.”
The majority opinion of the 8th Circuit panel noted that under federal regulations, each state must establish appeal procedures for Medicaid providers.
In Arkansas, a terminated provider can file an administrative appeal within 30 days of the termination and then, if that fails, seek judicial review through the Arkansas courts. A provider also can ask the federal Department of Health and Human Services to withhold federal funds from a state government that doesn’t comply with the Medicaid law.
Planned Parenthood didn’t seek an administrative appeal, instead letting the three anonymous patients, identified only as Jane Does 1, 2 and 3, sue the state Department of Human Services in federal court.
The plaintiffs argued that by excluding the provider for a reason unrelated to its fitness to provide medical services, the department had violated Section 23 (A) of the Medicaid Act, which is known as the “free-choice-of-provider” provision.
The three-judge panel focused on how likely the plaintiffs were to succeed on their claim that they have a judicially enforceable right under Section 23 (A). Colloton wrote, “We see significant difficulties with the contention that Section 23 (A) unambiguously creates an enforceable federal right.”
But in his dissent, Melloy said he sided with “the four other circuit courts and numerous district courts that all have found a private right of enforcement” in the controversial section of the Medicaid Act.
“This provision unambiguously confers an individual right to Medicaid-eligible patients,” Melloy wrote, noting that Section 23 (A) states that “any individual eligible for medical assistance” can obtain that assistance from a provider of their choice.
“Moreover, the freedomof-choice provision is a mandatory provision,” Melloy wrote. “Under the provision, states ‘must provide’ the free choice of providers to Medicaid-eligible individuals.”
Noting that Planned Parenthood is still licensed to serve other patients, Melloy wrote, “The plaintiffs in this case do not claim that the freedom-of-choice provision entitles them to choose a provider rightfully disqualified from the pool of Medicaid providers. … Instead, they argue that Arkansas’ termination of the Medicaid Provider Agreement constitutes government interference with their freedom of choice.”
In a concurring opinion, Shepherd noted that the plaintiffs argue that they have an absolute right to use the qualified provider of their choice without governmental interference, but that he sees the right as much narrower — that is, as a right to choose among a “range of qualified providers.”