HealthLawProf Blog

Editor: Katharine Van Tassel
Concordia University School of Law

Thursday, November 1, 2012

Seventh Circuit on Medicaid and More

In what may be the first case to apply both of the Medicaid decisions from last Term, the Seventh Circuit issued a preliminary injunction last week against Indiana's new law preventing Planned Parenthood from receiving either federal or state funding. 

House Bill 1210 prohibits Indiana state agencies from contracting with or making grants to any entity that performs abortions or maintains or operates a facility in which abortions are performed and that receives state or federal funds, even if abortion services are provided with non-government funds.  Hospitals and ambulatory surgery centers are not subject to the law, but all other healthcare providers are limited by this restriction, which prevents even indirect funding of entities that may perform abortions.  Planned Parenthood and Medicaid enrollees made three claims to support their motion for a preliminary injunction to prevent implementation of this law: (1) the funding restriction violates Medicaid's "free choice of provider" provision, 42 U.S.C. 1396a(a)(23), which protects Medicaid enrollees' ability to choose who will provide their services; (2) the restriction is preempted by a federal law providing block grants to states for preventing STDs; and (3) the law operates as an unconstitutional condition on the funds granted by Indiana.  The United States supported Planned Parenthood's position on the Medicaid claim (CMS has denied Indiana's request for a State Plan Amendment to exclude abortion providers from any Medicaid funding administered by the state; the determination is being appealed).

This set of claims allowed the 7th Circuit to evaluate the big question of remedies under the Medicaid Act, which the Supreme Court narrowly dodged in Douglas v. Independent Living Center last term.  As to the question of private rights of action to enforce the 'free choice of provider' provision, the court determined that even under Gonzaga University v. Doe's restrictive analysis, Medicaid enrollees and Planned Parenthood may proceed under section 1983.  Though many provisions in the Medicaid Act have been deemed outside the reach of 1983 rights of action, this particular provision contains individual rights-style language that other circuits have deemed to fit within the Gonzaga requirement for "individually focused terminology."  Based on the likely success of this first claim, Judge Sykes granted the request for a preliminary injunction.  Interestingly, Indiana appears to have pushed an NFIB-style coercion argument (we could lose all of our funding if we don't comply with 1396a(a)(23), so a private right of action is inappropriate); but, the court rejected that defense because the theory that spending legislation can never create private rights of action seems to be too extreme - even for the circuit that  misinterpreted the nature of the states' obligations in Medicaid in Bruggeman v. Blagojevich.

Even though it permitted the 1983 claim to proceed, the court considered the remaining two claims.  Evaluating open-ended federal grant for preventing STDs, the court noted that the majority in Douglas did not decide whether private parties may enforce federal spending programs through Supremacy Clause claims.  But, relying on the strongly-worded dissent authored by Chief Justice Roberts, Judge Sykes concluded that no private right of action is available to enforce possible preemption of the state's use of the block grant at issue.  Although the block grant does not contain the kinds of specific requirements that Medicaid does, the application and adoption of the dissent from Douglas is still notable.  The court quickly dismissed the unconstitutional condition claim as being answered by Maher v. Roe and Harris v. McRae, both of which found that funding restrictions are not an undue burden on access to abortion.  Though this is the correct interpretation of these cases, I maintain that the cases are wrongly decided.

I suspect we will see additional fighting in Indiana, but for now, the 7th Circuit has given us a small window into what will undoubtedly be a new line of cases attempting to limit Medicaid enforcement mechanisms.  This set of considerations will only become more prominent as we approach the Medicaid expansion in 2014.


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