A few years ago, we told you about the “ongoing saga” surrounding the ability of a Medicaid beneficiary or a provider of health care services to a Medicaid beneficiary to challenge a state Medicaid agency’s putative violation of a requirement of the Medicaid program. For example, section 1902(a)(8) of the Social Security Act says that a state Medicaid agency must provide Medicaid benefits “with reasonable promptness to all eligible individuals.” Well, what if I applied for Medicaid in California November of 2018? It’s now January of 2021 and the state Medicaid agency hasn’t even acknowledged receiving my application, let alone decided it. Has California violated the law? And if so, can I sue California?
As we said in our post in 2017, that very question has plagued the federal court system for over 30 years, and there still isn’t a clear answer. What prompted our article in 2017 was a decision by the U.S. Court of Appeals for the Eighth Circuit that held that Medicaid’s “free choice of provider” requirement was not enforceable via the federal court system. In Doe v. Gillespie, Arkansas had made a policy decision to exclude Planned Parenthood as a provider of health care services to Medicaid enrollees in the state. But the Medicaid statute guarantees that a Medicaid enrollee can obtain Medicaid benefits “from any institution, agency, community pharmacy, or person qualified to perform the service or services required … who undertakes to provide” those services. By excluding Planned Parenthood as a provider, Arkansas has effectively told Medicaid beneficiaries there that they cannot receive benefits from Planned Parenthood, even if the organization is willing to provide those services.
In the Arkansas case, the court held that the Medicaid statutory requirement did not create a right, enforceable under federal law, available to Medicaid beneficiaries. The court explained that, under precedent set forth by the Supreme Court, a state agency administering a federal benefits program like Medicaid can’t be the subject of a private right of action unless the state has deprived the recipient of the benefit of a “clear” and “unambiguously granted” right. According to the Eighth Circuit, the free choice of provider requirement of Medicaid does not create such a right; as such, it is not enforceable in the federal court system.
The reason we’re writing about this again is that there have been two developments in this area in the past couple of months that we thought merited an update. The first deals with a decision by the United States Court of Appeals for the Fourth Circuit (Planned Parenthood South Atlantic v. Baker, No. 18-2133 (4th Cir. 2019)) that reached exactly the opposite conclusion of the Eighth Circuit in Doe v. Gillespie. In Baker, the state of South Carolina similarly excluded Planned Parenthood as a provider of services under South Carolina’s Medicaid program. But unlike the courts assessing the Arkansas statute, the Fourth Circuit permitted a challenge to the South Carolina policy to go forward. Unlike the Seventh Circuit, the Fourth Circuit held that the free choice of provider provision of the Medicaid statute “is unambiguous.” Additionally, because a state Medicaid plan “must” furnish a Medicaid beneficiary a right to choose from among providers who are “qualified to perform the service or services required,” and because South Carolina excluded Planned Parenthood for a reason unrelated to competency, the court held that the South Carolina policy was inconsistent with the Medicaid statute and that this particular provision of the Medicaid statute was enforceable by an individual Medicaid recipient.
Typically, when there is a conflict between two circuit courts of appeal – and there certainly appears to be a conflict between the Eighth Circuit and the Fourth Circuit on this question – the Supreme Court will step in to mediate the conflict. But as we noted in our earlier post on this topic, the Supreme Court has been very skittish to weigh in on the enforceability of the Medicaid statute. And so, we weren’t terribly surprised to see that the Supreme Court, on October 13, declined to review the Circuit split in Doe v. Gillespie and Planned Parenthood of the South Atlantic v. Baker.
But the saga continues. About a month after the Supreme Court declined to hear a challenge to the Fourth Circuit’s decision, the U.S. Court of Appeals for the Fifth Circuit weighed in on the same topic, this time reviewing a challenge to a Texas decision to exclude Planned Parenthood providers in that state from participation as Medicaid providers. The Fifth Circuit decision was an en banc decision, meaning that all judges on the court participated in the decision. And in that case, Planned Parenthood of Greater Texas v. Smith, the Fifth Circuit concluded that a plaintiff lacked the ability to challenge the Texas decision, thereby aligning themselves with the Eighth Circuit and against the Fourth Circuit.
The Texas decision followed an investigation of Planned Parenthood providers in Texas by the Office of Inspector General (OIG) of the Texas Health and Human Services Commission. Based on that investigation, the OIG concluded that the providers were “no longer capable of performing medical services in a professionally competent, safe, legal and ethical manner” and excluded them from participation in the Medicaid program. The providers sued, arguing that Texas had violated the free choice of provider provisions of the Medicaid statute. The Fifth Circuit – as had the Eighth Circuit, when analyzing the Arkansas decision – concluded that the providers could not enforce that provision of the Medicaid statute in the federal court system.
So now all eyes return to the Supreme Court. Will the plaintiffs in the Fifth Circuit case ask the Supreme Court to review the Texas policy and seek to overturn the decision? Will the Supreme Court agree to resolve the split in the Circuit Courts this time around? Will the death of Justice Ginsburg and her replacement by Justice Barrett affect the Supreme Court’s decision? As of the date of this post, the plaintiffs have not yet asked the Supreme Court to review the case. According to Rule 13 of the Supreme Court Rules, a petition for review must generally be filed within 90 days of the entry of judgment. The Texas case was filed on November 23, so we expect to hear by mid to late February whether the plaintiffs will seek review of the decision and, if so, whether the Supreme Court will agree to hear the case perhaps as soon as this Spring. We plan to keep you posted on these developments. If the Supreme Court does agree to hear this case, it will be one of the seminal court decisions in the 55 year history of the Medicaid program.
 Justice Ginsburg died on September 18, 2020. The Supreme Court declined to review the Fourth Circuit decision on October 13, 2020. Justice Barrett was confirmed by the Senate on October 26, 2020 and was sworn in on October 27, 2020.