Arizona Can’t Exclude Planned Parenthood From Medicaid Funding

The United States Supreme Court has let stand a Ninth Circuit decision upholding an Arizona district court’s permanent injunction barring Arizona Medicaid officials from enforcing an Arizona statute prohibiting state Medicaid beneficiaries from obtaining covered family planning services through health care providers who perform abortions in cases other than incest, rape or medical necessity. The Arizona statute would have effectively disqualified providers of elective abortions from receiving Medicaid funding. Arizona’s petition for certiorari was denied.

The Ninth Circuit also held that (1) the Medicaid Act’s free-choice-of-provider requirements at 42 U.S.C. sec. 1396a(a)(23) confer a private right to action under 42 U.S.C. sec. 1983 and (2) the Arizona statute contravenes the Medicaid Act’s requirement that states give Medicaid recipients a free choice of qualified provider by preventing patients from selecting a provider only because the provider separately provides privately funded, legal abortions.

Background

In the spring of 2012, the Arizona legislature enacted House Bill 2800. The bill would have prevented Arizona or any political subdivision of Arizona from entering into a contract or providing a grant to any person that performs non-federally qualified abortions, or maintains or operates a facility where non-federally qualified abortions are performed for the provision of family planning services. The bill defines “non-federally qualified abortion” as one that does not meet the requirements of federal reimbursement. The federal Hyde Amendment, which applies to Medicaid funds, prohibits federal funds from being used for abortions except in the case of danger to the life of the mother, rape, or incest.

After House Bill 2800 was passed, the Arizona Health Care Cost Containment System (AHCCCS) sent letters to all Arizona Medicaid providers, including Planned Parenthood Arizona, Inc. (Planned Parenthood). The letter asked Planned Parenthood to sign a form attesting that as of August 2, 2013, it would not perform any abortions or maintain or operate a facility where any abortion is performed, except in cases of rape, incest or medical need. Failure to return the form would lead to AHCCCS terminating its provider participation agreement, and Planned Parenthood would receive no reimbursement from Arizona for any medical service.

Legal Proceedings

Planned Parenthood and individual plaintiffs filed suit to block House Bill 2800 and the district court granted a preliminary injunction barring implementation of the law. Arizona filed an appeal with the Ninth Circuit, and before it was heard, the lower court granted summary judgment for Planned Parenthood, holding that House Bill 2800 violates the free-choice-of-provider requirement, and permanently enjoined Arizona from enforcing House Bill 2800. Arizona appealed to the Ninth Circuit, and the court consolidated the two appeals.

The Ninth Circuit held that the free-choice-of-provider provision may be enforced through individual lawsuits under 42 U.S.C. sec. 1983, which creates a federal remedy against anyone who deprives a citizen of rights, privileges or immunities secured by the Constitution and laws. As a cooperative federal-state health care program, under 42 U.S.C. sec. 1396a(a)(23(A) states must allow Medicaid recipients to obtain care from any provider who is “qualified to perform the service or services required” and “who undertakes to provide…such services.” Although the word “qualified” is not defined, the court read the term to convey its ordinary meaning, a health care provider having an officially recognized qualification to practice as a member.

Certiorari Petition

Arizona’s petition to the Supreme Court presented two issues: (1) whether the claimed right to choose a “qualified” health care provider, as the Ninth Circuit construed that right, is so vague that its enforcement strains judicial competence, and (2) whether the Ninth Circuit’s definition of “qualified” engenders a Spending Clause violation and strips Arizona of powers reserved under the Tenth Amendment, namely, the power to regulate health care according to state law by disqualifying from Medicaid participation any provider who performs non-federally qualified abortions.