Federal appeals court hears oral arguments in Ark. Planned Parenthood Medicaid funding case

September 29, 2016 — A three-judge panel of the 8th U.S. Circuit Court of Appeals on Wednesday heard oral arguments regarding a lower court order that bars Arkansas from cutting Medicaid coverage of Planned Parenthood services for three beneficiaries, AP/ABC 7 reports (AP/ABC 7, 9/21).

Defunding decision

In September 2015, Arkansas Gov. Asa Hutchinson (R) ordered the state Department of Human Services to end its Medicaid provider contract with Planned Parenthood within 30 days. In the last fiscal year, Planned Parenthood clinics in the state received more than $51,000 in Medicaid reimbursements for gynecological services and family planning (Women's Health Policy Report, 11/10/15).

Hutchinson's decision followed an antiabortion group's release of misleading videos targeting Planned Parenthood (AP/ABC 7, 9/21).

Case background

Shortly after Hutchinson announced the move, Planned Parenthood of the Heartland (PPH) and the American Civil Liberties Union filed a lawsuit over his decision. In response, U.S. District Judge Kristine Baker issued a preliminary injunction ordering that Arkansas must continue Medicaid payments for three women who challenged Hutchinson's decision to block the funds. Hutchinson later that day said the state would end Medicaid funding for Planned Parenthood beyond the three women protected by Baker's order.

In October 2015, Planned Parenthood asked Baker to grant class-action status to the lawsuit. According to the organization, the lawsuit also should include Medicaid beneficiaries who currently use and who will use Planned Parenthood services (Women's Health Policy Report, 11/10/15).

Baker granted the lawsuit class-action status in January. However, she has not issued a ruling on whether to expand the ruling to apply to the entire class. The 8th Circuit rejected the state's request to appeal the certification of the class (Satter, Arkansas Democrat-Gazette, 9/22).

Several other states that also have tried to end funding for abortion providers are facing similar legal challenges. Separately, the Obama administration earlier this year issued a nationwide notice cautioning that state efforts to cut abortion providers out of Medicaid could violate federal law (Women's Health Policy Report, 9/16).

PPH's oral arguments

During oral arguments on Wednesday, Jennifer Sandman, an attorney for PPH, urged the 8th Circuit to keep the preliminary injunction in place. "The state doesn't want to go into detail about the bases for the termination here because they are not only thin; they are impermissible as a matter of federal law," she said.

In her arguments, Sandman cited rulings by other federal circuits that have determined that Medicaid beneficiaries may sue to enforce their right to access a provider of choice under the federal Medicaid Act (Arkansas Democrat-Gazette, 9/22). For instance, the 5th Circuit last week upheld a lower court ruling that blocks Louisiana from cutting Medicaid funding for Planned Parenthood Gulf Coast. Citing the federal Medicaid statute, the judges in that case explained that recipients have the right to select from a "range of qualified providers, without government interference" and rejected the state's argument that PPGC should not be considered a qualified provider (Women's Health Policy Report, 9/16).

Sandman also noted that because there was no administrative decision that the plaintiffs could appeal to the state, the beneficiaries' first course of remedy had to be through the federal courts. Sandman said, "It's important to remember here that what actually happened is a termination where there is no claim of any wrongdoing."

In addition, Sandman disputed the validity of the state's cited reasoning for cutting its Medicaid contract. She said the state initially claimed the decision was "an at-will determination by the governor." Later, the state cited "for-cause" determination but gave the "ethics" of other Planned Parenthood affiliates as its reason. Further, Sandman noted that the state's claims were not based on PPH, but "about Planned Parenthood affiliates in other states."

Arkansas' oral arguments

Lee Rudofsky, an attorney representing the state, claimed that Baker had misinterpreted the federal Medicaid statute when she issued the preliminary injunction and asked the appeals court to vacate the lower court's preliminary injunction. Rudofsky said beneficiaries have the right to choose among qualified providers but lack a right to challenge a state's decision to determine which providers are considered "qualified."

In addition, Rudofsky noted that the federal Medicaid Act permits states to cite ethical reasons for removing a provider from the program. He also alleged that PPH "intentionally chose to forgo an administrative appeal."

According to the Arkansas Democrat-Gazette, the judges questioned Rudofsky about the other appeals court decisions. Pointing to the ruling in the Louisiana case, one of the judges asked Rudofsky, "Can you see any daylight between this case and the 5th Circuit decision that came out last week?"

The judges also asked Rudofsky about alternative providers. Rudofsky claimed there were at least 200 other providers, as well as county health clinics, that could offer the same services as the Planned Parenthood clinics. However, he acknowledged that "not all provide all the same services" (Arkansas Democrat-Gazette, 9/22).