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Arkansas' solicitor general told a panel of federal judges Wednesday that Arkansas was within its rights to cut off Medicaid funding for Planned Parenthood patients a little over a year ago, while an attorney for the provider said the state's action violated the federal Medicaid Act.

Lee Rudofsky for the state and attorney Jennifer Sandman each spent 20 minutes arguing before the three-judge panel in St. Louis over whether an Oct. 2 preliminary injunction requiring the state to keep paying for the services for three women who filed suit should stand or be vacated.

The panel, consisting of 8th U.S. Circuit Court of Appeals Judges Steven Colloton of Des Moines, Iowa; Michael Melloy of Cedar Rapids, Iowa; and Bobby Shepherd of El Dorado, peppered the attorneys with questions about whether the women should have exhausted state remedies before turning to the federal courts, and whether the reasoning in a recent opinion stemming from a similar case in Louisiana should apply to the Arkansas case.

A three-judge panel of the 5th U.S. Circuit Court of Appeals, based in Atlanta, on Sept. 14 affirmed a federal judge's preliminary injunction preventing Louisiana from terminating a Planned Parenthood affiliate's access to the Medicaid program.

That termination, like the one in Arkansas, followed the release of videos, by anti-abortion activists calling themselves the Center for Medical Progress, purporting to show that Planned Parenthood clinics in other states had profited from allowing patients to donate fetal tissue to medical research after abortions.

In Arkansas, Medicaid already didn't pay for most abortions. At the national level, Planned Parenthood said the covertly filmed videos were deceptively edited and that none of its affiliates sought any payments beyond legally permitted reimbursement of costs. In January, a Houston grand jury investigating the undercover footage found no wrongdoing by Planned Parenthood and instead indicted the activists on tampering charges.

Rudofsky told the panel that U.S. District Judge Kristine Baker overstepped her authority when she imposed the injunction that prevents the state from cutting off Medicaid funding of Planned Parenthood services for the three individual plaintiffs, known only as Jane Does 1, 2, and 3. Baker said the injunction will apply "until further notice," or until the merits of a lawsuit the women filed Sept. 11, 2015, are decided.

Although Planned Parenthood is also a plaintiff in the case, Baker said she couldn't apply the injunction to anyone but the three women because the case wasn't filed as a class action. Her order prompted attorneys to amend the complaint to seek class-action status, which she granted Jan. 25, allowing the three women to represent a class of hundreds of Medicaid recipients in Arkansas who use Planned Parenthood services.

Baker hasn't yet ruled on whether to expand the preliminary injunction to apply to the entire class, as the plaintiffs also have requested. The 8th Circuit denied the state permission to appeal the class-certification ruling.

Medicaid, the state-administered health care program for the poor and disabled, is funded mostly by federal dollars. According to court documents, it spent about $51,000 in fiscal 2015 to cover costs incurred at the state's two Planned Parenthood clinics -- one in Little Rock and one in Fayetteville.

The lawsuit was prompted by Gov. Asa Hutchinson's Aug. 14, 2015, announcement that the state Department of Human Services would terminate Medicaid funding of Planned Parenthood services within 30 days, in response to the reports of "unethical" actions at other Planned Parenthood offices.

"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," Sandman of New York told the 8th Circuit judges.

She said the 5th Circuit, in accordance with earlier decisions by the 6th, 7th and 9th Courts of Appeal, has unanimously found that Medicaid beneficiaries are entitled to a file a private right of action to enforce their claims under the Medicaid Act's free choice of providers provision.

She also pointed out that there was no administrative decision for the plaintiffs to appeal to the state, as Rudofsky said the law required them to do before turning to a federal court.

"It's important to remember here that what actually happened is a termination where there is no claim of any wrongdoing," Sandman said.

She said the state's reason for terminating Planned Parenthood as a Medicaid provider wasn't even about Planned Parenthood of the Heartland, which owns the Arkansas clinics, but "about Planned Parenthood affiliates in other states."

Arkansas authorities first said the provider's Medicaid contract was being terminated because of "an at-will determination by the governor," and then later claimed the termination was based on a "for-cause" determination, with the "ethics" of other affiliates cited as the cause, Sandman noted.

Rudofsky argued that the federal Medicaid Act allows a state to exclude a provider for ethical reasons. He told the 8th Circuit judges, "In a series of interlocking statutes governing the Medicaid program, Congress has set forth more than 50 types of misconduct from which a state Department of Human Services may decide if a Medicaid provider is no longer qualified to participate in the Medicaid program."

He added, "The ultimate issue in this appeal is what is the proper forum and who is the proper party to challenge such a decision."

Rudofsky argued that Congress allows a provider that has been terminated for being unqualified to administratively appeal a termination and, if that result is unsatisfactory, to appeal to a state court. He said Congress also gave the U.S. Department of Health and Human Services the ability to withhold Medicaid funding from a state if it believes that the state has erroneously disqualified a Medicaid provider and is out of compliance with its Medicaid plan.

"The District Court decision," he said, referring to Baker's injunction, "has erroneously created a third way to challenge the decision. It allows a Medicaid patient to challenge a decision ... [but] unlike a provider itself or the federal DHS ... patients lack the knowledge of facts to decide" whether a provider is unqualified, he argued.

Rudofsky said Planned Parenthood "intentionally chose to forgo an administrative appeal" of the discontinuation of Medicaid funding and then recruited patients so it could file a federal lawsuit. He said Baker then "misinterpreted a section of the Medicaid Act and the right it confers to patients."

He argued that the U.S. Supreme Court has said patients have a right to choose among qualified providers but not to challenge a particular state's qualification decision.

In response to a question from Judge Shepherd, Rudofsky said he recalled that there are at least 200 providers, in addition to county health clinics, that are available in Arkansas for Medicaid patients to go to for birth control, annual wellness exams and testing for sexually transmitted diseases, the services that the Planned Parenthood clinics in Arkansas provided under their Medicaid contract. He conceded, however, that "not all provide all the same services."

One of the judges asked Rudofsky, "Can you see any daylight between this case and the 5th Circuit decision that came out last week?"

Rudofsky responded, "I think the 5th Circuit was very, very careful not only to limit their decision to the specific facts of their case but also to limit their decision to the concessions that Louisiana gave, and the bases for the disqualification that Louisiana gave."

The 5th Circuit joined the other appellate courts in holding that federal law created a private right of action enabling patients to sue and that states may exclude willing providers from Medicaid only for reasons "bearing on that provider's qualification" -- meaning its ability to provide medical services "in a competent, safe, legal and ethical manner."

The 4th Circuit noted in the Louisiana case that "the fact that the provider did not administratively challenge its termination did not change this analysis."

The opinion also said that "the free-choice-of-provider provision unambiguously requires that states participating in the Medicaid program allow covered patients to choose among the family planning medical practitioners they could use if they were paying out of their own pockets."

Metro on 09/22/2016

Print Headline: 8th Circuit hears 2 clinics, state argue Medicaid halt

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