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From Health Law Daily, August 23, 2013

Ninth Circuit upholds permanent injunction preventing Arizona from excluding providers who perform abortions

By Danielle H. Capilla, JD

The Ninth Circuit Court of Appeals upheld a district court’s permanent injunction barring Arizona Medicaid officials from enforcing an Arizona statute that prohibited 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 (Planned Parenthood Arizona Inc., v Betlach, August 22, 2013, Berzon, M). The Ninth Circuit also held that the Medicaid Act’s free-choice-of-provider requirements confer a private right to action under 42 U.S.C. §1983. Furthermore, the court held that the Arizona statue 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 prevents Arizona or any political subdivision of Arizona from entering into a contract or making a grant to any person that performs nonfederally qualified abortions, or maintains or operates a facility where nonfederally qualified abortions are performed for the provision of family planning services. The bill defines “nonfederally qualified abortion” as one that does not meet the requirements of federal reimbursement. The federal Hyde Amendment (a rider attached to appropriation legislation) prohibits federal funds from being used for abortions except in the case of danger to the life of the mother, rape, or incest. The Hyde Amendment applies to Medicaid funds.

After House Bill 2800 was passed, the Arizona Health Care Cost Containment System (AHCCCS) then sent letters to all Arizona Medicaid providers. The letter to Planned Parenthood Arizona, Inc. (Planned Parenthood) asked it 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.

Earlier 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.

Right of action. The Ninth Circuit held, along with sister circuits, that the free-choice-of-provider provision may be enforced through individual lawsuits under 42 U.S.C. §1983. The section creates a federal remedy against anyone who deprives a citizen of rights, privileges or immunities secured by the Constitution and laws. Under a three prong test for determining if a claim can prevail under sec. 1983, the court found that there was clear Congressional intent to create an individual right through the free-choice-of provider requirement. Furthermore, the statute is in mandatory rather than precatory terms. Finally, the court found that the statute is not vague. Although Arizona argued that the term “qualified” health provider was vague, the court disagreed, finding that a court can readily determine if a health care provider is qualified to perform a particular medical service through a variety of means.

Free-choice-of-provider. 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.

Arizona argued that sec. 1396a empowers states to restrict patient choice to a limited list of providers for any reason supplied by state law. Arizona based this argument on defining “qualified” outside of its ordinary meaning, and instead as a Medicaid-specific “term of art” and allowing the state to determine for any reason that a provider is not qualified for Medicaid purposes. The court noted that it must avoid an interpretation that would produce absurd results, and to follow Arizona’s reasoning would do just that. The court held that allowing states to set any qualifications they want, no matter how unrelated to the provider’s ability to treat patients, would undermine the requirement.

The court also held that the free-choice-of-provider was a mandatory requirement that applies to all state Medicaid plans, and that it unambiguously requires states participating in Medicaid to allow patients to choose among the family planning medical practitioners they could use if they were paying themselves.

Waiver. The court noted that Congress has enumerated specific circumstances in which a waiver may be given to a state regarding the free-choice-of-provider requirement. Specifically the Secretary of HHS may waive the requirement to allow implementation of a managed care system, or to allow the state to limit Medicaid providers to those who meet, accept, and comply with state reimbursement, quality and utilization standards. The requirement can also be waived for approved demonstration projects. Based on this, the court held that Arizona’s interpretation of the statute is further contradicted; the specific circumstances would not need to be enumerated if states could define classes of providers as unqualified for any reason supplied by state law. The court also held that no exceptions to the free-choice-of-provider rule apply to this case.

Arizona’s other arguments. Arizona argued that Planned Parenthood could meet the requirements of House Bill 2800 and receive Medicaid funding by creating a separate entity to provide nonfederally qualified abortion services. The court ruled that this was irrelevant because the free-choice-of-provider requirement does not include an exception allowing states to violate it so long as providers can create an affiliate entity. Arizona also argued that House Bill 2800 would only result in the incidental loss of family planning services because Arizona has approximately 2,000 Medicaid providers outside of Planned Parenthood. Again, the court found this immaterial, as House Bill 2800 violates the free-choice-of-provider requirement.

Arizona also attempted to invoke the Tenth Amendment, urging the court to respect its sovereign power authority to regulate the health and welfare of its citizens. The court held that House Bill 2800 is a public funding statute, conditioning money on the range of services provided by a health care provider, and did not take away Arizona’s authority to regulate the practice of medicine.

The case numbers are 12-17558 and 13-15506.

Attorneys: Logan Johnston (Johnston Law Offices) for Tom Betlach, Director, Arizona Health Care Cost Containment System. Steven H. Aden (Alliance Defending Freedom) for Tom Horne, Arizona Attorney General. Andrew D. Beck (American Civil Liberties Union Foundation) for Planned Parenthood Arizona, Inc.

Companies: Arizona Health Care Cost Containment System; Arizona Attorney General; Planned Parenthood Arizona, Inc.

MainStory: TopStory MedicaidPaymentNews MedicaidNews CoPNews ProviderNews AlaskaNews ArizonaNews CaliforniaNews HawaiiNews IdahoNews MontanaNews NevadaNews OregonNews WashingtonNews

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