Plnd Prnthd of Gulf Coast, Inc v. Rebekah G , 862 F.3d 445 ( 2017 )

Case: 15-30987 Document: 00514055295 Page: 1 Date Filed: 06/29/2017
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT United States Court of Appeals
Fifth Circuit
FILED
June 29, 2017
No. 15-30987
Lyle W. Cayce
Clerk
PLANNED PARENTHOOD OF GULF COAST, INCORPORATED; JANE
DOE #1; JANE DOE #2; JANE DOE #3,
Plaintiffs - Appellees
v.
REBEKAH GEE, Secretary, Louisiana Department of Health and Hospitals,
Defendant - Appellant
Appeal from the United States District Court
for the Middle District of Louisiana
Before WIENER, PRADO, and OWEN, Circuit Judges.
WIENER, Circuit Judge:
After this panel filed a unanimous opinion affirming the district court
and a judge on this court then held the mandate, a panel member changed her
position from agreeing to affirm the district court to advocating reversal. We
therefore withdraw our original, unanimous opinion and replace it with two
opinions: this one from the panel majority and another from our now-
dissenting panel member.
NARROW FRAMEWORK
First, the one and only act of the district court that is at issue in this
appeal is its temporary injunction, granted at the outset of this litigation to
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preserve the status quo among all the parties pending resolution of the
substantive issues of this case. The parties to whom we refer are the defendant,
the State of Louisiana, and the plaintiffs, Planned Parenthood of Gulf Coast,
Incorporated (“PPGC”) and three of its patients, each of whom is so financially
disadvantaged as to qualify for Medicaid. The district court granted its
injunction in recognition of the fact that, if the State’s revocation of PPGC’s
Medicaid qualification was to become effective immediately, only to be reversed
after months or years of litigation, the clinics’ poorest patients would
nevertheless have suffered permanent harm.
Second, the State is not attempting to completely shut down the two
PPGC clinics in question; it seeks only to deny Medicaid coverage for the
clinics’ treatment of their most needy patients, i.e., those who qualify for
Medicaid. It is only that threatened act of the State that the district court has
temporarily enjoined pending the orderly disposition of the Medicaid issue in
this litigation. The merits of this case are not now before us; this litigation has
not even reached the summary judgment stage, much less the merits, but only
the initial, Rule 12(b) stage.
Third, neither of PPGC’s two Louisiana clinics threatened here with
Medicaid decertification by the State performs abortions or has ever
participated in a program involving donation of fetal tissue. We emphasize this
facet of the litigation’s framework for the benefit of those of our colleagues and
our readership whose overarching anathema to Planned Parenthood is
grounded in their opposition to abortions or donations of fetal tissue, or both.
It is within this narrow framework that we now address the sole issue of
this appeal, the district court’s pre-merits, status quo, injunction.
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BACKGROUND
Medicaid’s free-choice-of-provider provision, 42 U.S.C. § 1396a(a)(23),
guarantees that Medicaid beneficiaries will be able to obtain medical care from
the qualified and willing medical provider of their choice. In response to
secretly recorded videos released by the anti-abortion Center for Medical
Progress depicting conversations with employees of an unrelated Planned
Parenthood in a different state, Defendant-Appellant Louisiana Department
of Health and Hospitals (“LDHH”) terminated only the Medicaid provider
agreement of Plaintiff-Appellee PPGC, leaving it licensed to provide its
services to any and all non-Medicaid patients. PPGC and the individual
Plaintiffs-Appellees Jane Doe #1, Jane Doe #2, and Jane Doe #3 (the
“Individual Plaintiffs”)—women who are Medicaid beneficiaries and receive
medical care provided at one of PPGC’s Louisiana facilities—(collectively “the
Plaintiffs”) filed this suit against LDHH under 42 U.S.C. § 1983, alleging
violations of 42 U.S.C. § 1396a(a)(23) and the First and Fourteenth
Amendments of the U.S. Constitution. Each Individual Plaintiff seeks to
continue receiving care from PPGC’s facilities, and each specifically contends
that LDHH’s termination action will deprive her of access to the qualified and
willing provider of her choice, in violation of Medicaid’s free-choice-of-provider
provision.
The district court entered a preliminary injunction against LDHH’s
termination of PPGC’s Medicaid provider agreements pending the eventual
outcome of this litigation on the merits. LDHH appeals.
FACTS
A. Plaintiffs-Appellees
1. PPGC is a non-profit corporation domiciled in Texas and licensed to
do business in Louisiana. It operates two clinics in Louisiana: the Baton Rouge
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Health Center and the New Orleans Health Center. Both centers participate
in Louisiana’s Medicaid program. PPGC’s two clinics provide care to over 5200
Medicaid beneficiaries, who comprise more than half of the patients they serve
in Louisiana. Both clinics offer physical exams, contraception and
contraceptive counseling, screening for breast cancer, screening and treatment
for cervical cancer, testing and treating specified sexually transmitted
diseases, pregnancy testing and counseling, and other listed procedures,
including colposcopy. Again, neither clinic performs abortions nor has either
ever participated in a fetal tissue donation program.
2. Doe #1 relies on PPGC’s health center in Baton Rouge for her annual
examinations. According to Doe #1, PPGC also helped her obtain treatment for
cancer in December 2013. Her cancer is now in remission, but it has rendered
her unable to take birth control pills. She does not wish to have any more
children and continues to rely on PPGC to advise her on future contraception
options. Doe #1 wishes to continue receiving health care at PPGC because she
does not know of any other providers that will take her insurance. She prefers
to receive care at PPGC because she is comfortable with the staff, trusts the
providers, and is easily able to make appointments.
3. Doe #2 is enrolled in Louisiana’s Take Charge Plus program 1 and has
received care at PPGC’s health center in New Orleans since 2012. Until health
issues left her unable to work full time, at which point she lost her private
health insurance, Doe #2 had used a private obstetrician-gynecologist. That
physician stopped treating Doe #2 once she lost her private insurance. Doe #2
now visits PPGC every year for her annual gynecological examination. She
1The Take Charge Plus program provides family planning services to eligible women
and men with incomes at or below 138 percent of the federal poverty level.
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prefers to continue receiving it from PPGC and does not know where else she
could obtain this care under Medicaid.
4. Doe #3 is a patient of PPGC’s health center in Baton Rouge. There,
she receives pap smears, testing for sexually transmitted diseases, and cancer
screenings. Doe #3 prefers receiving care at PPGC and finds it is easy to make
appointments there. She states that it “is very difficult to find doctors in Baton
Rouge who will accept Medicaid.” Doe #3 needed to visit another Baton Rouge
clinic for a necessary gynecological procedure, but was given an appointment
for a day seven months later.
B. History
In July 2015, the anti-abortion Center for Medical Progress, released a
series of undercover videos and allegations purporting to show that Planned
Parenthood and its affiliates were contracting to sell aborted human fetal
tissue and body parts. At a later hearing, the district court found that “none of
the conduct in question [depicted in the videos] occurred at PPGC’s two
Louisiana facilities.” Nevertheless, then-Louisiana Governor Bobby Jindal
directed LDHH and the State Inspector General to investigate PPGC.
On July 15, 2015, then-secretary of LDHH, Kathy Kliebert, wrote to
PPGC requesting responses to a range of questions about its activities. PPGC
promptly responded on July 24, 2015, relevantly stating that (1) it “does not
offer abortion services,” and (2) it does not sell or donate any unborn baby
organs or body parts. PPGC acknowledged that Planned Parenthood Center
for Choice, Inc. (“PPCFC”), a separate corporation, 2 provides abortions in
Texas, but that PPCFC does not operate a fetal tissue donation program.
2 As PPGC’s letter indicates, PPCFC was operated as a division of PPGC until 2005,
at which point it was separately incorporated in Texas. PPCFC also has a Certificate of
Authority to Transact Business in Louisiana.
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Secretary Kliebert wrote to PPGC on August 4, 2015, claiming that
several of PPGC’s responses “directly contradict” the recently released videos.
According to her, one video taken in Houston, Texas, depicted Melissa Farrell,
Director of Research at PPGC, “discuss[ing] existing contracts for fetal tissue
donation for the purpose of research.” Secretary Kliebert emphasized that
LDHH “is extremely concerned that [PPGC or PPCFC], or both have not only
participated in the sale or donation of fetal tissue, but also deliberately
misinformed [LDHH] about this practice in its July 24 response letter.” In that
same letter, Secretary Kliebert requested more information about the practices
of PPGC and PPCFC.
PPGC responded on August 14, 2015, repeating that neither PPGC nor
PPCFC sells or donates fetal tissue. PPGC explained that the secretly recorded
conversation “does not discuss existing contracts for fetal tissue donation,” but
rather, “concerns a list of tissue specimens a major Texas research institution
had expressed interest in obtaining, in discussions about a possible future fetal
tissue donation program.”
In the midst of these communications, LDHH notified PPGC on August
3, 2015, that it would terminate PPGC’s Medicaid provider agreements.
Secretary Kliebert stated no basis for the termination. She noted only that
under La. R.S. § 46:437.11 the provider agreements are voluntary contracts
subject to termination “by either party 30 days after receipt of written notice.”
That same day, then-Governor Jindal published the following press release:
“Governor Jindal and DHH decided to give the required 30-day notice to
terminate the Planned Parenthood Medicaid provider contract because
Planned Parenthood does not represent the values of the State of Louisiana in
regards to respecting human life.” Secretary Kliebert’s letter notified PPGC of
its right to a hearing and stated that PPGC may request an administrative
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appeal within 30 days. At a subsequent hearing before the district court,
LDHH’s counsel clarified that this termination action by the state did not
relate to PPGC’s ability to continue providing adequate care to its non-
Medicaid patients. 3
C. The Instant Proceedings
On August 25, 2015, the Plaintiffs filed suit under 42 U.S.C. § 1983,
contending that LDHH’s termination of PPGC’s Medicaid provider agreements
violated Medicaid’s free-choice-of-provider requirement, 42 U.S.C. §
1396a(a)(23), and the U.S. Constitution. On that date, the Plaintiffs also moved
for entry of a temporary restraining order and preliminary injunction, which
the district court eventually granted. The validity of that preliminary
injunction is the one and only issue of this appeal.
LDHH voluntarily rescinded the August 4, 2015 “at will” termination
letters on September 14, 2015. On that same day, LDHH advised the district
court by letter that it believed that the Plaintiffs’ claims and pending motions
were now moot. But the very next day, September 15, 2015, LDHH notified
PPGC that it was “terminating/revoking” PPGC’s Medicaid provider
agreements for “cause” under La. R.S. §§ 46:437.11(D)(2) and 437.14, and Title
50 of the Louisiana Administrative Code. LDHH also informed PPGC that it
3 The district court asked LDHH’s counsel several questions pertaining to this issue:
THE COURT: All right. So the reason [for LDHH’s termination action]
is unrelated to the ability of these two facilities to provide adequate care
to their patients; is that true?
MR. RUSSO: That I would agree with, yes, sir.
THE COURT: So Ms. Kliebert’s position is that these are terminated
without a relationship of any kind to the adequacy of care; correct?
MR. RUSSO: Correct, at this time, your honor, exactly.
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could request an informal hearing or suspensive administrative appeal within
30 days (PPGC has not requested either a hearing or an administrative
appeal). LDHH further notified PPGC that the effected terminations would be
suspended during this 30-day period.
LDHH has advanced three grounds for termination. First, LDHH
identified PPGC’s settlement of a qui tam False Claims Act (“FCA”) claim in
Reynolds v. Planned Parenthood Gulf Coast, Inc., 4—in which PPGC disclaimed
all liability—and its failure to notify LDHH of that settlement and any
corresponding violations. LDHH categorized these acts as “fraud.” LDHH
identified a second qui tam FCA claim against PPGC in Carroll v. Planned
Parenthood Gulf Coast. 5 At the time of the proceedings before the district court
in the instant case, the court in Carroll had denied PPGC’s motion to dismiss.
LDHH identified the Carroll suit as another example of PPGC’s failure to
comply with applicable laws and to notify LDHH of such violations. PPGC
subsequently settled that suit, again disclaiming all liability.
Second, LDHH stated that PPGC’s responses in its July and August
letters contained misrepresentations. LDHH did not identify any particular
misrepresentations either in its August 3 termination letter or before the
district court. At most, LDHH urged that PPGC’s responses differed from the
content of the videos released by the Center for Medical Progress.
Finally, LDHH claimed that PPGC was subject to termination because
it was being investigated by LDHH and the Louisiana Office of Inspector
General.
On October 7, 2015, the Plaintiffs filed a motion to amend their
complaint, seeking to continue asserting their claims under Medicaid’s free-
4 No. 9:09-cv-124-RC (E.D. Tex.).
5 No. 4:12-cv-03505 (S.D. Tex.).
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choice-of-provider provision and to add claims under the First and Fourteenth
Amendments of the U.S. Constitution. Two days later, the Plaintiffs also
renewed their request for a temporary restraining order and preliminary
injunction.
LDHH moved to dismiss the Plaintiffs’ amended complaint under
Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6). After a hearing on the
parties’ motions, the district court granted in part the Plaintiffs’ motion for
temporary restraining order and preliminary injunction and denied LDHH’s
motion to dismiss. The district court held a subsequent telephone conference
with the parties, at which point both sides consented to converting the
temporary restraining order to a preliminary injunction to allow for an
immediate appeal. The parties agreed that no evidentiary matters required
further discovery.
The district court issued an amended ruling and order in October 2015,
granting the Plaintiffs’ renewed motion for temporary restraining order and
for preliminary injunction and denying LDHH’s motion to dismiss. The district
court thus preliminarily enjoined LDHH from terminating PPGC’s Medicaid
provider agreements during the pendency of this litigation. In a lengthy and
detailed opinion, the district court rejected LDHH’s standing, ripeness, and
abstention challenges to the Plaintiffs’ claims. The court also found sufficient
grounds to issue a preliminary injunction on the basis of the Individual
Plaintiffs’ claim under Medicaid’s free-choice-of-provider provision. The
district court specifically held that 42 U.S.C. § 1396a(a)(23) affords the
Individual Plaintiffs a private right of action enforceable under 42 U.S.C. §
1983. The court expressly declined to determine whether PPGC possesses such
a right. The court then held that the Individual Plaintiffs’ claims are
substantially likely to succeed and that the remaining factors— irreparable
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injury to the Plaintiffs, balancing of the injury to the Plaintiffs versus the harm
to the defendant, and the public interest—weigh in favor of issuing a
preliminary injunction.
LDHH appealed, contending that the district court erred in concluding
that the Individual Plaintiffs have standing and that their claims are ripe for
review. It further asserts that the district court erred in entering a preliminary
injunction.
JUSTICIABILITY
Article III of the U.S. Constitution extends the federal judicial power to
“Cases” and “Controversies.” 6 The justiciability requirements of standing and
ripeness animate Article III’s cases-and-controversies requirement in this
appeal. LDHH maintains that the Plaintiffs lack standing to bring their claims
and that their claims are not ripe for review. The district court issued the
preliminary injunction as to the Individual Plaintiffs’ claims alone, so we
confine our analysis to the justiciability of those plaintiffs’ claims. 7
A. Standing
LDHH first avers that the Individual Plaintiffs lack standing to assert
their claims. We review challenges to standing de novo. 8 To establish standing,
a plaintiff must prove that (1) he has sustained an “injury in fact” that is both
(a) “concrete and particularized” and (b) “actual or imminent, not conjectural
or hypothetical,” (2) there is “a causal connection between the injury and the
conduct complained of,” and (3) a favorable decision is likely to redress the
6 U.S. CONST. art. III, § 2, cl. 1.
7 Therefore, we decline to address LDHH’s arguments related to the justiciability of
PPGC’s claims.
8 League of United Latin Am. Citizens, Dist. 19 v. City of Boerne, 659 F.3d 421, 428
(5th Cir. 2011).
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injury. 9 “An allegation of future injury may suffice if the threatened injury is
certainly impending or there is a substantial risk that the harm will occur.” 10
LDHH posits that the Individual Plaintiffs have failed to demonstrate
an injury because PPGC’s Medicaid provider agreements have not yet been
terminated and the Individual Plaintiffs have not yet been denied access to
PPGC’s services. LDHH further maintains that any injury will result not from
its actions, but from PPGC’s failure to avail itself of its administrative appeal
rights.
The Individual Plaintiffs counter that they have standing because
LDHH has acted to terminate PPGC’s Medicaid provider agreements, which
will (1) deny them access to the healthcare services they seek and (2) deny
them a legal right, viz., access to the qualified and willing provider of their
choice under 42 U.S.C. § 1396a(a)(23). Stated differently, the Individual
Plaintiffs will sustain a concrete and particular injury (denial of services from
PPGC and a legal right to the qualified provider of their choice) caused by
LDHH (termination of PPGC’s Medicaid provider agreements) that will be
redressed by a favorable decision (an injunction barring LDHH from
terminating PPGC’s Medicaid provider agreements).
At the heart of LDHH’s challenge to the Individual Plaintiffs’ standing
is its insistence that, because PPGC’s Medicaid provider agreements have not
yet been terminated, the Individual Plaintiffs have not sustained injury. This
argument ignores the well-established principle that a threatened injury may
9 Lujan v. Defs. of Wildlife, 504 U.S. 555, 560–61 (1992) (internal quotation marks and
citations omitted).
10 Susan B. Anthony List v. Driehaus, 134 S. Ct. 2334, 2341 (2014) (internal quotation
marks omitted) (quoting Clapper v. Amnesty Int’l USA, 133 S. Ct. 1138, 1147, 1150, n.5
(2013)).
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be sufficient to establish standing. 11 As LDHH itself says, “[t]hreatened injury
must be certainly impending to constitute injury in fact.” 12 LDHH has notified
PPGC that it has terminated PPGC’s Medicaid provider agreements, but has
suspended the effect of those terminations pending PPGC’s decision whether
to pursue an administrative appeal. PPGC has stated that it will not avail itself
of administrative appeal. In other words, LDHH has already acted to terminate
PPGC’s Medicaid provider agreements; only the effect of that termination has
yet to be implemented. And, importantly, the Individual Plaintiffs have no
administrative appeal rights, and they are not subject to (nor could they be)
any administrative exhaustion requirement under 42 U.S.C. § 1983. 13 The
Individual Plaintiffs thus need not wait to file suit until PPGC is forced to close
its doors to them and all other Medicaid beneficiaries.
LDHH also argues that the Individual Plaintiffs have not and will not
sustain any legal injury—presumably even when the termination of PPGC’s
provider agreements takes effect—because the Individual Plaintiffs have a
right to choose only a “qualified” provider, and PPGC is no longer a qualified
provider. This contention turns on the sole substantive question before us on
appeal, and we decline to allow LDHH to bootstrap this issue into our standing
inquiry. We also note that a violation of a statutory right, even standing alone,
may be sufficient to satisfy the injury requirement: “Congress may create a
statutory right of entitlement the alleged deprivation of which can confer
11 See Comsat Corp. v. FCC, 250 F.3d 931, 936 (5th Cir. 2001) (“A threatened injury
satisfies the injury in fact requirement so long as that threat is real rather than
speculative.”); Loa-Herrera v. Trominski, 231 F.3d 984, 988 (5th Cir. 2000) (“Mere threatened
injury is sufficient, and the threat in this case is real.”).
12 Clapper, 133 S. Ct. at 1147–48 (2013) (internal quotation marks omitted) (quoting
Whitmore v. Ark., 495 U.S. 149, 158 (1990)).
13 LDHH concedes separately that “exhaustion is often not a barrier to a claim based
on 42 U.S.C. § 1983.”
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standing to sue even where the plaintiff would have suffered no judicially
cognizable injury in the absence of statute.” 14
LDHH finally contends that even if an injury exists, it is not fairly
traceable to LDHH. Instead, asserts LDHH, PPGC’s decision not to avail itself
of an administrative appeal will alone be the cause of the Individual Plaintiffs’
injury. The Supreme Court has warned against “wrongly equat[ing] injury
‘fairly traceable’ to the defendant with injury as to which the defendant’s
actions are the very last step in the chain of causation.” 15 Although injury
resulting from “the independent action of some third party not before the court”
will not suffice, “that does not exclude injury produced by determinative or
coercive effect upon the action of someone else.” 16 LDHH is essentially asking
us to conduct a proximate cause analysis to determine the immediate cause of
the Individual Plaintiffs’ injuries, but this is not what the Supreme Court
requires. 17 We therefore affirm the district court’s determination that the
Individual Plaintiffs have standing to pursue their claims.
B. Ripeness
LDHH next asserts that the Individual Plaintiffs’ claims are not ripe. It
argues that those claims are not fit for review because no injury has occurred
and that the administrative process and the factual development it entails are
still pending. LDHH goes so far as to claim that, for an issue to be ripe for
review, this court requires a full administrative record.
14 Warth v. Seldin, 422 U.S. 490, 514 (1975); see also Spokeo v. Robins, 136 S. Ct. 1540,
1549 (2016) (“Congress’ role in identifying and elevating intangible harms does not mean that
a plaintiff automatically satisfies the injury-in-fact requirement whenever a statute grants a
person a statutory right and purports to authorize that person to sue to vindicate that right.”).
15 Bennett v. Spear, 520 U.S. 154, 168–69 (1997).
16 Id. at 169 (internal citations omitted) (emphasis in original).
17 See City of Boerne, 659 F.3d at 431 (“The causation element does not require a party
to establish proximate causation, but only requires that the injury be ‘fairly traceable’ to the
defendant.” (citing Bennett, 520 U.S. at 168–69)).
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We review de novo the issue of ripeness. 18 In evaluating whether a case
is ripe for adjudication, we balance “(1) the fitness of the issues for judicial
decision, and (2) the hardship to the parties of withholding court
consideration.” 19 “A case is generally ripe if any remaining questions are purely
legal ones.” 20
We conclude that the Individual Plaintiffs’ claims are ripe for review
because the issues before us present purely legal questions. LDHH has already
terminated PPGC’s Medicaid provider agreements, and it has proffered three
specific grounds for doing so. The operative question on appeal is whether, as
a matter of law, any of those grounds permit LDHH to terminate PPGC’s
Medicaid provider agreement without violating Medicaid’s free-choice-of-
provider requirement. Further, although PPGC had the option to engage in the
administrative appeal process, it has elected not to do so. And, as noted by the
district court, LDHH had already terminated PPGC’s provider agreements
with “its ‘effect’ alone delayed.” LDHH’s own briefing implies the same: “The
initial decision maker, the State of Louisiana, through LDHH, has not taken
final action on the issue of whether PPGC’s provider contracts were properly
terminated.” 21
The Individual Plaintiffs’ injuries are “sufficiently likely to happen to
justify judicial intervention.” 22 The Individual Plaintiffs, as already discussed,
are also likely to suffer hardship by being denied access to the provider of their
18 Venator Grp. Specialty, Inc. v. Matthew/Muniot Family, LLC, 322 F.3d 835, 838
(5th Cir. 2003).
19 Texas v. United States, 497 F.3d 491, 498 (5th Cir. 2007) (citing Abbott Labs. v.
Gardner, 387 U.S. 136, 149 (1967)).
20 New Orleans Pub. Serv., Inc. v. Council of the City of New Orleans, 833 F.2d 583,
587 (5th Cir. 1987).
21 (emphasis added).
22 Pearson v. Holder, 624 F.3d 682, 684 (5th Cir. 2010) (quoting Chevron U.S.A., Inc.
v. Traillour Oil Co., 987 F.2d 1138, 1153 (5th Cir. 1993)).
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choice under 42 U.S.C. § 1396a(a)(23) and to medical services at PPGC’s
facilities. The Individual Plaintiffs’ claims are ripe.
PRELIMINARY INJUNCTION
Concluding that the Individual Plaintiffs have standing to bring their
claims and that such claims are ripe for review, we turn to LDHH’s challenge
to the district court’s entry of a preliminary injunction.
A plaintiff seeking a preliminary injunction must clearly show
(1) a substantial likelihood that he will prevail on the merits, (2) a
substantial threat that he will suffer irreparable injury if the
injunction is not granted, (3) his threatened injury outweighs the
threatened harm to the party whom he seeks to enjoin, and (4)
granting the preliminary injunction will not disserve the public
interest. 23
We “review the district court’s determination on each of these elements for
clear error, its conclusions of law de novo, and the ultimate decision whether
to grant relief for abuse of discretion.” 24
The district court entered a preliminary injunction on the basis of the
Individual Plaintiffs’ claims that LDHH’s termination of PPGC’s Medicaid
provider agreements violates their free-choice-of-provider rights under 42
U.S.C. § 1396a(a)(23). LDHH raises multiple challenges to the grant of the
preliminary injunction. First, it insists that the district court erred in holding
that the Individual Plaintiffs claims are substantially likely to succeed because
(1) 42 U.S.C. § 1396a(a)(23) does not afford the Individual Plaintiffs a private
right of action, and, in the alternative, (2) its termination action does not
violate the Individual Plaintiffs’ free-choice-of-provider rights. Second, LDHH
23 Google, Inc. v. Hood, 822 F.3d 212, 220 (5th Cir. 2016) (quoting Lake Charles Diesel,
Inc. v. Gen. Motors Corp., 328 F.3d 192, 195–96 (5th Cir. 2003)).
24 Id. (citing Bluefield Water Ass’n v. City of Starkville, 577 F.3d 250, 253 (5th Cir.
2009)).
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contends that the district court committed clear error in holding that the
remaining factors—irreparable injury to the plaintiffs, balancing of the injury
to the plaintiffs versus the harm to the defendant, and the public interest—
weigh in favor of issuing the preliminary injunction.
A. Substantial Likelihood of Success
We first address whether 42 U.S.C. § 1396a(a)(23) affords the Individual
Plaintiffs a private right of action and, if so, whether the Individual Plaintiffs
are substantially likely to succeed in their claim that LDHH’s termination of
PPGC’s provider agreements runs afoul of that right.
1. Private Right of Action
Joining every other circuit that has addressed this issue, we conclude
that § 1396a(a)(23) affords the Individual Plaintiffs a private right of action
under § 1983. Medicaid is a cooperative program between the federal
government and the states under which the federal government gives financial
assistance to states to provide medical services to Medicaid-eligible
individuals. The federal government and participating states share the costs
of Medicaid. 25 “In return, participating States are to comply with requirements
imposed by the Act and by the Secretary of Health and Human Services.” 26
This means that states “must comply with federal criteria governing matters
such as who receives care and what services are provided at what cost.” 27 In
other words, “Medicaid offers the States a bargain: Congress provided federal
25 Atkins v. Rivera, 477 U.S. 154, 156–57 (1986) (“The Federal Government shares the
costs of Medicaid with States that elect to participate in the program.”).
26 Id. at 157 (citing 42 U.S.C. § 1396a; Schweiker v. Gray Panthers, 453 U.S. 34, 36–
37 (1981)).
27 Nat’l Fed’n of Indep. Bus. v. Sebelius, 132 S. Ct. 2566, 2581 (2012).
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funds in exchange for the States’ agreement to spend them in accordance with
congressionally imposed conditions.” 28
This appeal concerns the contours of the federal Medicaid statute’s free-
choice-of-provider requirement, 42 U.S.C. § 1396a(a)(23). That provision
mandates that “any individual eligible for medical assistance . . . may obtain
such assistance from any institution, agency, community pharmacy, or person,
qualified to perform the service or services required . . . who undertakes to
provide him such services.” 29 Discussing this provision in O’Bannon v. Town
Court Nursing Center, the Supreme Court explained that it “gives recipients
the right to choose among a range of qualified providers, without government
interference.” 30 Most recently, the Ninth Circuit explained that “[t]he provision
specifies that any individual Medicaid recipient is free to choose any provider
so long as two criteria are met: (1) the provider is ‘qualified to perform the
service or services required,’ and (2) the provider ‘undertakes to provide [the
recipient] such services.’” 31
Because the Individual Plaintiffs assert their claims under 42 U.S.C. §
1983, we analyze whether § 1396a(a)(23) creates a right of action under that
statute. Title 42 U.S.C. § 1983 “provides redress only for a plaintiff who asserts
a ‘violation of a federal right, not merely a violation of federal law.’” 32 To
determine whether a federal statute provides a right of action enforceable
under § 1983, we must determine “(1) whether Congress intended for the
28 Armstrong v. Exceptional Child Ctr., Inc., 135 S. Ct. 1378, 1382 (2015) (Scalia, J.)
(plurality opinion).
29 42 U.S.C. § 1396a(a)(23)(A).
30 447 U.S. 773, 785 (1980) (emphasis in original).
31 Planned Parenthood of Ariz. Inc. v. Betlach, 727 F.3d 960, 967 (9th Cir. 2013)
(second alteration in original) (quoting 42 U.S.C. § 1396a(a)(23)(A)).
32 S.D. ex rel. Dickson v. Hood, 391 F.3d 581, 602 (5th Cir. 2004) (quoting Blessing v.
Freestone, 520 U.S. 329, 340 (1997) (emphasis in original)).
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provision to benefit the plaintiff; (2) whether the plaintiff can show that the
right in question is not so ‘vague and amorphous’ that its enforcement would
‘strain judicial competence’; and (3) whether the statute unambiguously
imposes a binding obligation on the states.” 33
Every circuit court to have addressed this issue, as well as multiple
district courts, has concluded that § 1396a(a)(23) creates a private right
enforceable under § 1983. 34 The Ninth Circuit in Planned Parenthood Arizona
Inc. v. Betlach addressed this question most recently. As to the first element,
that court held:
The statutory language unambiguously confers [an individual]
right upon Medicaid-eligible patients, mandating that all state
Medicaid plans provide that ‘any individual eligible for medical
assistance . . . may obtain such assistance from any institution,
agency, community pharmacy, or person, qualified to perform the
service or services required.’ 35
As to the second element, the court held that “[t]he free-choice-of-provider
requirement does ‘supply concrete and objective standards for enforcement,’” 36
which are “well within judicial competence to apply.” 37 It recognized that under
the statute, Medicaid recipients have the right to choose any provider so long
as “(1) the provider is ‘qualified to perform service or services required,’ and (2)
the provider ‘undertakes to provide [the recipient] such services.’” 38 According
33 Id.
34 See Planned Parenthood of Ariz., 727 F.3d 960; Planned Parenthood of Ind., Inc. v.
Comm’r of Ind. State Dep’t of Health, 699 F.3d 962 (7th Cir. 2012); Harris v. Olszewski, 442
F.3d 456 (6th Cir. 2006); Planned Parenthood of Kan. & Mid-Mo. v. Mosier, No. 16-2284-JAR-
GLR, 2016 WL 3597457 (D. Kan. July 5, 2016); Planned Parenthood Se., Inc. v. Bentley, 141
F. Supp. 3d 1207 (M.D. Ala. 2015); Planned Parenthood Ark. & E. Okla. v. Selig, No. 4:15-cv-
566, slip op. (E.D. Ark. Oct. 2, 2015); Women’s Hosp. Found. v. Townsend, No. 07-711, 2008
WL 2743284 (M.D. La. July 10, 2008).
35 727 F.3d at 966 (quoting 42 U.S.C. § 1396a(a)(23)(A)).
36 Id. at 967 (quoting Watson v. Weeks, 436 F.3d 1152, 1161 (9th Cir. 2006)).
37 Id.
38 Id. (alteration in original) (quoting 42 U.S.C. § 1396a(a)(23)(A)).
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to the Ninth Circuit, courts addressing this provision confront “a simple factual
question no different from those courts decide every day,” and free from “any
balancing of competing concerns or subjective policy judgments.” 39
In so holding, the Ninth Circuit rejected Arizona’s contention that
“qualified,” as used in 42 U.S.C. § 1396a(a)(23)(A), is too vague to enforce.
Because the term “is tethered to an objective benchmark”—“qualified to
perform the service or services required”—“[a] court can readily determine
whether a particular health care provider is qualified to perform a particular
medical service, drawing on evidence such as descriptions of the service
required; state licensing requirements; the provider’s credentials, licenses, and
experience; and the expert testimony regarding the appropriate credentials for
providing the service.” 40
The Seventh Circuit reached the same conclusion in Planned Parenthood
of Indiana, Inc. v. Commissioner of the Indiana State Department of Health. 41
As to the third element—which the Ninth Circuit did not discuss at length
because Arizona had not challenged that point—the Seventh Circuit held that
the free-choice-of-provider requirement is couched in mandatory terms: “[T]he
free-choice-of-provider statute explicitly refers to a specific class of people—
Medicaid-eligible patients—and confers on them an individual entitlement—
the right to receive reimbursable medical services from any qualified
provider.” 42 Likewise, the Sixth Circuit in Harris v. Olszewski 43 held that the
free-choice-of-provider requirement provides a private right of action
enforceable under § 1983.
39 Id.
40 Id. at 967–68.
41 699 F.3d 962 (2012).
42 Id. at 974.
43 442 F.3d 456 (2006).
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We agree with the Sixth, Seventh, and Ninth Circuits and hold that 42
U.S.C. § 1396a(a)(23) creates a private right of action that these Individual
Plaintiffs can enforce through 42 U.S.C. § 1983. LDHH’s remaining arguments
fail to convince us otherwise.
LDHH and our dissenter rely on the Supreme Court’s decision in
O’Bannon v. Town Court Nursing Center 44 for the proposition that the
Individual Plaintiffs have no right to challenge LDHH’s provider-qualifications
determination. That case is inapposite. There, the patient-plaintiffs’ injuries
were alleged to stem from a deprivation of due process rights, specifically, the
right to a hearing to contest the state’s decertification of a health care provider,
not just its Medicaid qualification. 45 Specifically, the nursing home in question
was found to not comply with statutes governing: (1) body and management,
(2) medical direction, (3) physical services, (4) nursing services, (5)
pharmaceutical services, (6) medical records, and (7) physical environment. 46
In contrast, the Individual Plaintiffs here assert the violation of a substantive
right. 47 The Supreme Court’s holding in O’Bannon that “while a patient has a
right to continued benefits to pay for care in the qualified institution of his
choice, he has no enforceable expectation of continued benefits to pay for care
in an institution that has been determined to be unqualified,” 48 is thus not
applicable here.
44 447 U.S. 773 (1980).
45 Id. at 776 n.3.
46 Id.
47 See Planned Parenthood of Ind., 699 F.3d at 977 (distinguishing O’Bannon on the
same basis). LDHH also relies on Kelly Kare, Ltd. v. O’Rourke, 930 F.2d 170 (2d Cir. 1991),
but that case is distinguishable for the same reason as O’Bannon. See Planned Parenthood
of Ind., 699 F.3d at 977 (distinguishing Kelly Kare on the same basis).
48 447 U.S. at 786.
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The statute speaks only in terms of recipients’ rights rather than
providers’ rights, so the right guaranteed by § 1396a(a)(23) is vested in
Medicaid recipients rather than providers. Providers like PPGC cannot bring
a challenge pursuant to § 1396a(a)(23). 49 Reading O’Bannon to foreclose every
recipient’s right to challenge a disqualification decision would render the right
guaranteed by § 1396a(a)(23) nugatory.
Notably, the Court decided O’Bannon in the context of a state’s
enforcement action. In that case, Pennsylvania had decertified Town Court
Nursing Center (“Town Court”) because “it no longer met the statutory and
regulatory standards for skilled nursing facilities.” 50 Three days later,
Pennsylvania terminated the Medicaid provider agreement with Town
Court. 51 The Supreme Court held:
When enforcement of [minimum standards of care] requires
decertification of a facility, there may be an immediate, adverse
impact on some residents. But surely that impact, which is an
indirect and incidental result of the Government’s enforcement
action, does not amount to a deprivation of any interest in life,
liberty, or property. 52
In other words, the plaintiffs had no right to reside in an unqualified facility
when the disqualification decision was connected to the state’s enforcement of
49 See § 1396a(a)(23) (requiring state plans provide that “any individual eligible for
medical assistance . . . may obtain such assistance from any institution, agency, community
pharmacy, or person, qualified to perform the service or services required . . . who undertakes
to provide him such services”); cf. Wilder v. Va. Hosp. Ass’n, 496 U.S. 498 (1990) (finding that
provision requiring states to reimburse providers at reasonable and adequate rates gave
providers an enforceable right under the Medicaid law). Providers might have an
administrative remedy in state court—as PPGC did in this case—but “[t]he availability of
state administrative procedures ordinarily does not foreclose resort to § 1983.” Id. at 523.
50 O’Bannon, 447 U.S. at 775–76.
51 Id. at 776.
52 Id. at 787 (emphasis added); see also id. at 790 (concluding that “the enforcement
by [Pennsylvania] of [its] valid regulations did not directly affect the patients’ legal rights or
deprive them of any constitutionally protected interest in life, liberty, or property”).
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its health and safety regulations. 53 This makes sense: If it were otherwise,
patients could freely intervene in state enforcement actions against facilities
that violate health and safety standards.
This case is different. Louisiana has never complained that PPGC is not
competent to render the relevant medical services, and it has taken no
independent action to limit or terminate PPGC’s entitlement to render medical
services to the general population, for example, by revoking its license. Instead,
Louisiana terminated only PPGC’s Medicaid provider agreement. The
Individual Plaintiffs in this case are not challenging “the merits of the
decertification decision,” as did the plaintiffs in O’Bannon, because here there
was no decertification decision. When, as here, a state terminates only a
Medicaid provider agreement, independent of any action to enforce statutory
and regulatory standards, O’Bannon is inapposite. The Individual Plaintiffs in
this case are trying to sustain their “right to choose among a range of qualified
providers, without government interference”—a right explicitly recognized in
O’Bannon. 54
LDHH’s reliance on the recent Supreme Court opinion, Armstrong v.
Exceptional Child Center, Inc., 55 is equally misplaced. There, the relevant issue
was whether 42 U.S.C. § 1396a(a)(30)(A)—not § 1396a(a)(23) —creates a
private right of action. 56 Writing for a plurality, Justice Scalia noted that this
53 See Kelly Kare, 930 F.2d at 178 (“In O’Bannon, the Supreme Court held that
Medicaid-eligible nursing home patients did not have a vested right to choose a nursing home
that was being decertified as a health-care provider.” (emphasis added)).
54 447 U.S. at 785 (emphasis in original).
55 135 S. Ct. 1378 (2015).
56 That provision of the Medicaid statute requires state plans to “provide such methods
and procedures relating to the utilization of, and the payment for, care and services available
under the plan . . . as may be necessary to safeguard against unnecessary utilization of such
care and services and to assure that payments are consistent with efficiency, economy, and
quality of care and are sufficient to enlist enough providers so that care and services are
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provision “lacks the sort of rights-creating language needed to imply a private
right of action,” because it “is phrased as a directive to the federal agency . . . ,
not as a conferral of the right to sue upon the beneficiaries of the State’s
decision to participate in Medicaid.” 57 Justice Scalia also observed that §
1396a(a)(30)(A) was “judicially unadministrable”: “It is difficult to imagine a
requirement broader and less specific than § 30(A)’s mandate that state plans
provide for payments that are ‘consistent with efficiency, economy, and quality
of care,’ all the while ‘safeguard[ing] against unnecessary utilization of . . . care
and services.’” 58 In contrast, § 1396a(a)(23)—the provision at issue here—is
phrased in individual terms that are specific and judicially administrable, as
recognized by the Sixth, Seventh, and Ninth Circuits.
LDHH finally insists that § 1396a(a)(23) provides Medicaid recipients
with only the right to choose a qualified provider, not the right to choose a
provider that LDHH has deemed unqualified. Understandably, LDHH does not
take the next inferential step, but it follows that the free-choice-of-provider
requirement gives individuals the right to demand care from a qualified
provider when access to that provider is foreclosed by reasons unrelated to that
provider’s qualifications. Otherwise, any right to which the Individual
Plaintiffs are entitled to under § 1396a(a)(23) would be hollow. 59 Importantly,
the Individual Plaintiffs insist that LDHH has deprived them of their choice to
receive care from PPGC—a provider that LDHH has conceded is competent to
available under the plan at least to the extent that such care and services are available to
the general population in the geographic area[.]” 42 U.S.C. § 1396a(a)(30)(A).
57 Armstrong, 135 S. Ct. at 1387.
58 Id. at 1385 (alteration and omission in original).
59 See Planned Parenthood Se., 141 F. Supp. 3d at 1218 (“If [it] were correct that
allegedly unlawful terminations of provider agreements could not be challenged by recipients
pursuant to the free-choice-of-provider provision, that provision’s ‘individual entitlement,’
the ‘personal right’ it gives recipients, would be an empty one.” (quoting Planned Parenthood
of Ind., 699 F.3d at 974)).
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render the relevant medical services—for reasons unrelated to its competence.
The operative issue, therefore, is resolved by determining whether LDHH
terminated PPGC’s Medicaid provider agreements based on its qualifications
or based on some unrelated reason.
2. Likelihood of Success
Having concluded that § 1396a(a)(23) affords the Individual Plaintiffs a
right of action, we next ask whether they are likely to substantially succeed on
their claim that LDHH’s termination of PPGC’s Medicaid provider agreements
violates their rights under § 1396a(a)(23).
a. Statutory Background
The free-choice-of-provider requirement mandates that a state’s
Medicaid plan must allow beneficiaries to obtain medical care from any entity
or person who is “qualified to perform the service or services required” and
“who undertakes to provide him such services.” 60 Medicaid regulations allow
states to set “reasonable standards relating to the qualifications of
providers.” 61 The Medicaid statute does not define the term “qualified,” but
LDHH concedes that, as held by the Seventh and Ninth Circuits, “[t]o be
‘qualified’ in the relevant sense is to be capable of performing the needed
medical services in a professionally competent, safe, legal, and ethical
manner.” 62 Separately, Medicaid’s exclusion provision, 42 U.S.C. § 1396a(p)(1),
provides, “[i]n addition to any other authority,” mandatory and permissive
60 42 U.S.C. § 1396a(a)(23)(A).
61 42 C.F.R. § 431.51(c)(2).
62 Planned Parenthood of Ind., 699 F.3d at 978; see also Planned Parenthood of Ariz.,
727 F.3d at 969 (“We agree with the Seventh Circuit that ‘[r]ead in context, the term
‘qualified’ as used in § 1396a(a)(23) unambiguously relates to a provider’s . . . capab[ility] of
performing the needed medical services in a professionally competent, safe, legal, and ethical
manner.’” (alterations and omissions in original) (quoting Planned Parenthood of Ind., 699
F.3d at 978)).
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grounds—including fraud, drug crimes, and failure to disclose necessary
information to regulators—under which a state may terminate a provider’s
Medicaid agreements. That provision’s implementing regulation states that
“[n]othing contained in this part should be construed to limit a State’s own
authority to exclude an individual or entity from Medicaid for any reason or
period authorized by State law.” 63
Against this backdrop, the Seventh Circuit, in Planned Parenthood of
Indiana, Inc. v. Commissioner of Indiana State Department of Health, upheld
a district court’s entry of a preliminary injunction that prevented Indiana from
enforcing a law that “excludes a class of providers from Medicaid for reasons
unrelated to provider qualifications” because Planned Parenthood was likely
to succeed on its claim that the law violated 42 U.S.C. § 1396a(a)(23). 64 The
law at issue prohibited state agencies from providing state or federal funds to
“any entity that performs abortions or maintains or operates a facility where
abortions are performed.” 65 The Seventh Circuit recognized that “[a]lthough
Indiana has broad authority to exclude unqualified providers from its Medicaid
program, the State does not have plenary authority to exclude a class of
providers for any reason—more importantly, for a reason unrelated to provider
qualifications.” 66 Because the law “exclude[d] Planned Parenthood from
Medicaid for a reason unrelated to its fitness to provide medical services, [it]
violat[ed] its patients’ statutory right to obtain medical care from the qualified
provider of their choice.” 67
63 42 C.F.R. § 1002.2.
64 Planned Parenthood of Ind., 699 F.3d at 980.
65 Id. at 967 (quoting Ind. Code § 5-22-17-5.5(b)).
66 Id. at 968.
67 Id.
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The Ninth Circuit addressed a similar law in Planned Parenthood
Arizona Inc. v. Betlach. 68 That court held that the “law violates [the free-choice-
of-provider] requirement by precluding Medicaid patients from using medical
providers concededly qualified to perform family planning services to patients
in Arizona generally, solely on the basis that those providers separately
perform privately funded, legal abortions.” 69 In doing so, the Ninth Circuit
rejected Arizona’s contention that it “can determine for any reason that a
provider is not qualified for Medicaid purposes, even if the provider is
otherwise legally qualified, through training and licensure, to provide the
requisite medical services within the state.” 70 That court gave four reasons,
each of which we view as applicable here.
First, “[n]owhere in the Medicaid Act has Congress given a special
definition to ‘qualified,’ much less indicated that each state is free to define this
term for purposes of its own Medicaid program however it sees fit.” 71 Second,
that reading would “detach[] the word ‘qualified’ from the phrase in which it is
embedded; ‘qualified to perform the service or services rendered’ (and from the
overall context of the Medicaid statute, which governs medical services).” 72
Third, that reading would render the free-choice-of-provider requirement “self-
eviscerating” because “[i]f states are free to set any qualifications they want—
no matter how unrelated to the provider’s fitness to treat Medicaid patients—
then the free-choice-of-provider requirement could be easily undermined by
68 The law at issue provided: “[Arizona] or any political subdivision of [Arizona] may
not enter into a contract with or make 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.” 2012 Ariz. Leg. Serv. Ch. 288
(H.B. 2800) (West) (codified at Ariz. Rev. Stat. § 35-196.05(B)).
69 Planned Parenthood Ariz., 727 F.3d at 963.
70 Id. at 970 (emphasis in original).
71 Id.
72 Id. (emphasis in original).
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simply labeling any exclusionary rule as a ‘qualification.’” 73 “Giving the word
‘qualified’ such an expansive meaning would deprive the provision within
which it appears of any legal force,” and “would permit states freely to erect
barriers to Medicaid patients’ access to family planning medical providers
others in the state are free to use.” 74 This “would eliminate ‘the broad access to
medical care that § 1396a(a)(23) is meant to preserve.’” 75 Finally, “permit[ting]
states self-referentially to impose for Medicaid purposes whatever standards
for provider participation it wishes” would contravene the “mandatory
requirements [in the free-choice-of-provider provision] that apply to all state
Medicaid plans.” 76
The Seventh and Ninth Circuits have also addressed the impact of
Medicaid’s exclusion provision, 42 U.S.C. § 1396a(p). LDHH seems to rely on
42 U.S.C. § 1396a(p)(1) for only its introductory phrase: “In addition to any
other authority.” Like Arizona and Indiana, LDHH contends that this phrase
allows a state to exclude a provider for “any” reason supplied by state law. The
Seventh and Ninth Circuits flatly rejected that same contention. 77
In doing so, the Seventh Circuit explained that this argument “reads the
phrase for more than it’s worth.” 78 The phrase—“[i]n addition to any other
authority”—“signals only that what follows is a non-exclusive list of specific
73 Id. (quoting Planned Parenthood of Ind., 699 F.3d at 978).
74 Id.
75 Id. (quoting Planned Parenthood of Ind., 699 F.3d at 978).
76 Id. at 971 (emphasis in original).
77 The First Circuit in First Medical Health Plan, Inc. v. Vega-Ramos, 479 F.3d 46 (1st
Cir. 2007), however, read 42 U.S.C. § 1396a(p)(1)’s “[i]n addition to any other authority”
language much more broadly. That court held that the “‘any other authority’ language was
intended to permit a state to exclude an entity from its Medicaid program for any reason
established by state law.” Id. at 53. That case is distinguishable because it did not involve §
1396a(a)(23)’s free-choice-of-provider requirement, most notably because § 1396a(a)(23) does
not apply in Puerto Rico, the forum from which the dispute arose in Vega-Ramos.
78 Planned Parenthood of Ind., 699 F.3d at 979.
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grounds upon which states may bar providers from participating in
Medicaid.” 79 “It does not imply that the states have an unlimited authority to
exclude providers for any reason whatsoever.” 80
The Ninth Circuit adopted the Seventh Circuit’s reasoning and further
explained why this assertion “undermines, rather than aids, [the state’s]
argument”:
The language refers to “any other authority” . . . , followed by a
provision providing states with authority to exclude providers on
specified grounds. This sequence indicates that the Medicaid Act
itself must provide that “other” authority, just as it supplies the
“authority” covered by the rest of the subsection. Were it
otherwise—were states free to exclude providers as they see fit—
then the bulk of § 1396a(p)(1) itself would be unnecessary, as the
“authority” it supplies would be superfluous. 81
According to the Ninth Circuit, this “clause empowers states to exclude
individual providers on such grounds directly, without waiting for the
Secretary to act, while also reaffirming state authority to exclude individual
providers pursuant to analogous state law provisions relating to fraud or
misconduct.” 82 As to § 1396a(p)’s implementing regulation, 42 C.F.R. § 1002.2,
which provides that “[n]othing contained in this part should be construed to
limit a State’s own authority to exclude an individual or entity from Medicaid
for any reason or period authorized by State law,” the Ninth Circuit noted that
“[t]hat provision is only a limitation on interpretation of the referenced ‘part’
of the regulations . . . which does not encompass the free-choice-of-provider
requirement.” 83
79 Id.
80 Id.
81 Planned Parenthood of Ariz., 727 F.3d at 972.
82 Id.
83 Id. at 972 n.8; accord Planned Parenthood of Se., 141 F. Supp. 3d at 1221.
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While as a general rule a state may terminate a provider’s Medicaid
agreements for reasons bearing on that provider’s general qualification to
provide medical services, we are not aware of any case that holds a state may
do so while continuing to license a provider’s authorization to offer those same
services to non-Medicaid patients. “Qualified” means “to be capable of
performing the needed medical services in a professionally competent, safe,
legal, and ethical manner.” 84 States may also exclude providers on the grounds
provided by 42 U.S.C. § 1396a(p)(1) and on analogous state law grounds
relating to a provider’s qualification. Although states retain broad authority to
define provider qualifications and to exclude providers on that basis, their
authority is circumscribed by the meaning of “qualified” in this context.
b. Analysis
LDHH insists that its termination of PPGC’s Medicaid qualifications do
not violate the Individual Plaintiffs’ free-choice-of-provider rights because
LDHH has determined that PPGC is not “qualified” to render medical services
to Medicaid patients. As noted, LDHH offers three grounds for its
terminations: (1) two qui tam FCA claims, one that PPGC settled, disclaiming
all liability, and another that was pending at the time of LDHH’s termination
action, but that has recently settled with PPGC disclaiming all liability; (2)
unspecified misrepresentations in PPGC’s letters responding to LDHH’s
inquiry into whether PPGC or PPCFC operate a fetal tissue donation program;
and (3) LDHH’s and the Louisiana Office of Inspector General’s pending
investigations into PPGC. But, none of these three grounds is directed at
PPGC’s qualification to render medical services to Medicaid patients.
84 Planned Parenthood of Ind., 699 F.3d at 978.
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We agree with the district court that the Individual Plaintiffs are
substantially likely to succeed in proving that LDHH’s termination of PPGC’s
Medicaid provider agreements violates their free-choice-of-provider rights.
This is because LDHH’s grounds for termination (1) do not relate to PPGC’s
“qualifications,” (2) are not authorized by § 1396a(p), and (3), with one
exception, are not even authorized by state law.
We observe initially that LDHH does not even attempt to articulate how
its grounds for termination relate to PPGC’s qualifications. That failure is
exacerbated by the fact that LDHH has separately conceded that PPGC is
competent to provide the relevant medical services. LDHH adopts the Seventh
and Ninth Circuits definition of “qualified” and contends that its grounds for
termination fall within the statute’s broad meaning of “qualified.” But LDHH
makes no attempt to reconcile its grounds for termination with its borrowed
definition of “qualified.” Its briefing is devoid of argument on this point, and
LDHH’s grounds for termination do not speak for themselves. LDHH cannot
show that PPGC’s settlement of qui tam FCA claims, in which it disclaimed all
liability, constitutes actual fraud or renders PPGC unqualified in some other
way. Neither does LDHH explain how unspecified misrepresentations related
to a program, the existence of which PPGC unequivocally denies, render PPGC
unqualified. Likewise, that PPGC is the subject of an investigation does not
alone render PPGC unqualified. Importantly, LDHH raises no separate
concerns regarding PPGC’s provision of medical services in Louisiana. Indeed,
it bears repeating that LDHH has conceded that PPGC is competent to provide
the relevant medical services to any and all non-Medicaid patients.
Instead of attempting to show that PPGC is not “qualified” under §
1396a(a)(23), LDHH seems to rely on its bald assertion that it may terminate
a provider for any reason supplied by state law. In other words, LDHH argues
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that PPGC is unqualified simply because state law says so. The fallacy of this
circular tactic is underscored by LDHH’s failure to articulate or apply any
limiting principle to its authority to exclude any Medicaid provider. We reject
that argument because, as explained by the Ninth Circuit, a state cannot
“determine for any reason that a provider is not qualified for Medicaid
purposes, even if the provider is otherwise legally qualified, through training
and licensure, to provide the requisite medical services within the state.” 85
Neither does LDHH even assert that its grounds for termination are
consistent or analogous with 42 U.S.C. § 1396a(p)(1)’s enumerated grounds for
exclusion. LDHH might have attempted to make some argument as to this
point, but it has not invoked any of the grounds for termination provided by §
1396a(p)(1). This is likely because, as the United States’s amicus curiae brief
explains, LDHH’s grounds for termination are not authorized by any of the
grounds enumerated in § 1396a(p)(1). And, to the extent LDHH relies on that
provision’s “[i]n addition to any other authority” language, we join the Seventh
and Ninth Circuits in rejecting such an overbroad interpretation.
Finally, two of LDHH’s grounds for termination—fraud and
misrepresentations by PPGC—are not even supported by the state laws it
invokes. LDHH labels its first ground for termination as “fraud,” citing two
FCA suits filed against PPGC by qui tam plaintiffs. As to the first suit, LDHH
asserts that it may exclude PPGC for (1) settling a qui tam FCA suit, and (2)
failing to notify LDHH of the settlement. We have noted that, in Reynolds v.
Planned Parenthood of Gulf Coast, Inc., PPGC settled a qui tam FCA suit while
denying all liability. Louisiana Administrative Code Title 50 § 4147(A)(12)
states that a Medicaid provider may be terminated for “entering into a
85 Planned Parenthood of Ariz., 727 F.3d at 970 (emphasis in original).
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settlement agreement under . . . the Federal False Claims Act,” and further
places an “affirmative duty” on a provider to inform LDHH in writing of any
violations. But, that same statute states that “[i]f a False Claims Act action or
other similar civil action is brought by a Qui-Tam plaintiff, no violation of this
provision has occurred until the defendant has been found liable in the
action.” 86 Because PPGC settled the Reynolds qui tam FCA claim without
admitting liability, that settlement cannot provide the basis for applying the
subject statute.
LDHH next cites another qui tam FCA case against PPGC, Carroll
v. Planned Parenthood Gulf Coast. At the time of the district court’s
opinion and the parties’ briefing, that case was still pending and the trial
court had denied PPGC’s motion to dismiss. LDHH argued that this
lawsuit creates a violation of Title 50 of the Louisiana Administrative
Code because providers
“are required to ensure that all their agents and affiliates are in
compliance with all federal and state laws as well as rules, policies
and procedures of the Medicaid program. PPGC and its parent
organization PPFA has failed to do so and has failed to notify DHH
of violations and misconduct by affiliates and providers-in-fact.”
In so arguing, LDHH failed to demonstrate how the district court’s denial of a
motion to dismiss in a pending lawsuit indicates that PPGC had violated any
laws or Medicaid program requirements. More significantly, on May 25, 2016,
PPGC filed a Rule 28(j) letter with this court, informing us that PPGC had
settled that suit as of February 29, 2016, without admitting liability.
Accordingly, the Carroll case provides no basis for termination.
LDHH’s asserted termination on the basis of “misrepresentations”
suffers from similar flaws. Louisiana Revised Statute § 46:437.14(A)(1) states
86 LA. ADMIN CODE tit. 50 § 4147(A)(12)(c).
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that a provider’s enrollment may be revoked for a “[m]isrepresentation.” 87 That
statute separately defines “misrepresentation” to mean “the knowing failure to
truthfully or fully disclose any and all information required, or the concealment
of any and all information required on a claim or a provider agreement or the
making of a false or misleading statement to the department relative to the
medical assistance programs.” 88
LDHH posits that PPGC made misrepresentations in responding to
questions about whether it operates a fetal tissue donation program, as
evidenced by one of the discussed videos, which serves as LDHH’s sole basis
for application of La. R.S. § 46:437.14(A)(1) and PPGC’s termination. Neither
in the letters nor at any time during this litigation has LDHH identified a
single misrepresentation. Moreover, the undisputed evidence establishes that
PPGC does not perform any abortions or operate any fetal tissue donation
programs. 89 The district court found that the undisputed evidence revealed no
indication that PPGC had made any misrepresentations, and LDHH does not
even challenge that factual finding on appeal. LDHH’s only response is that its
87 This provision is part of Louisiana’s Medical Assistance Programs Integrity Law,
La. R.S. § 437.1 et seq., which was “enacted to combat and prevent fraud and abuse committed
by some health care providers participating in the medical assistance programs and by other
persons and to negate the adverse effects such activities have on fiscal and programmatic
integrity.” La. R.S. § 437.2(A). More specifically, the Louisiana legislature sought to provide
a remedy against “health care providers and other persons who engage in fraud,
misrepresentation, abuse, or other ill practices . . . to obtain payments to which these health
care providers or persons are not entitled.” La. R.S. § 437.2(B) (emphasis added).
88 La. R.S. § 46:437.3(15) (emphasis added); see also Caldwell v. Janssen Pharm., Inc.,
144 So. 3d 898, 911 (La. 2014) (“[W]e determine that a ‘misrepresentation’ under La. Rev.
Stat. 46:437.3(15) is (1) the knowing failure to truthfully or full disclose any information
required on a claim or provider agreement; (2) the concealment of any and all information
required on a claim or provider agreement; or (3) the making of a false or misleading
statement to the department relative to the medical assistance programs.”).
89 PPGC’s August 14, 2015 letter states: “To be very clear, there is no contradiction
here. As already stated, neither PPCFC nor PPGC currently has a fetal tissue donation
program in Texas, and neither sells nor donates any fetal tissue.”
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lack of specificity regarding the misrepresentations “should be addressed at an
administrative hearing.” LDHH’s strategy to terminate PPGC’s provider
agreements for misrepresentations before it can even identify a single
misrepresentation does not pass muster.
Additionally, the statute cited by LDHH requires the misrepresentation
to be made “relative to the medical assistance programs.” 90 Because the
undisputed evidence establishes that PPGC does not provide abortions or
operate a fetal tissue donation program in Louisiana (or elsewhere), any
statements contained in PPGC’s response to the state’s inquiry are likely not
“relative to” Louisiana’s Medicaid program. This conclusion is bolstered by
LDHH’s August 4, 2015 letter that cites two statements made in relation to
PPCFC, a separate Texas corporation, not to PPGC, as contradicting
statements made in one of the videos. 91 LDHH provides no explanation of how
the unspecified misrepresentations are “relative to” Louisiana’s Medicaid
program. 92 For this reason alone, the statute is inapplicable.
As to LDHH’s final ground for termination—pending investigations—
Louisiana Revised Statute § 46:437.11(D)(2) states that the “secretary may
terminate a provider agreement immediately and without written notice if a
health care provider is the subject of a sanction or of a criminal, civil, or
departmental proceeding.” That provision appears to be facially applicable to
PPGC as it is the subject of ongoing investigations. Regardless, we cannot
reconcile the free-choice-of-provider requirement’s mandate with a state law
that would enable LDHH to terminate a Medicaid provider agreement by
90 La. R.S. § 46:437.3(15).
91 In the August 4, 2015, letter, LDHH recites two responses PPGC made in relation
to only PPCFC’s operations. It then states that those responses were contradicted by one of
the Center for Medical Progress’s videos made on April 9, 2015.
92 Had LDHH come forward with evidence of PPGC’s misrepresentations, it is possible
LDHH would have had a valid reason for terminating PPGC as a Medicaid provider.
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simply instigating an investigation, much less on the basis of just any pending
investigation. If states were able to exclude Medicaid providers on the basis of
any investigation, § 1396a(a)(23)’s guarantee would be meaningless. And here,
the investigations pertain to conduct that, as described, does not independently
provide grounds for termination.
c. Limits of Our Opinion
In concluding that the Individual Plaintiffs are likely to succeed in
proving that LDHH’s termination of PPGC’s provider agreements violates
their § 1396a(a)(23) rights, we reiterate for emphasis the unique circumstances
of the instant case. LDHH initially purported to terminate PPGC’s agreements
“at will,” i.e., for no reason at all. That termination would plainly have run
afoul of § 1396a(a)(23)’s guarantee. Despite LDHH’s categorization of its
termination as “at will,” then-Governor Jindal released a contemporaneous
statement indicating that the state was terminating PPGC’s agreements
“because Planned Parenthood does not represent the values of the State of
Louisiana in regards to respecting human life.” Again, that termination would
violate the Individual Plaintiffs’ § 1396a(a)(23) rights because, as the Seventh
and Ninth Circuits have held, a state may not exclude a provider simply based
on the scope of the services it provides.
Only after the Plaintiffs filed suit to challenge that termination did
LDHH rescind its “at will” terminations and represent to the district court that
it believed the Plaintiffs’ claims were moot. But, as noted above, LDHH’s
gamesmanship was not over: The very next day, it issued new termination
letters to PPGC, which provided new grounds for termination. LDHH has
effectively run circles around PPGC and the district court. This course of
conduct further convinces us that LDHH’s termination of PPGC’s Medicaid
provider agreements has nothing to do with PPGC’s qualifications.
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To be sure, the general grounds for termination invoked by LDHH—
fraud, misrepresentations, and investigations—might well relate to a
provider’s qualifications. States undoubtedly must be able to terminate
provider agreements in cases of criminal activity, fraud and abuse, and other
instances of malfeasance. Medicaid’s 42 U.S.C. § 1396a(p)(1)’s exclusionary
provision makes that clear. And, there is no dispute that Louisiana retains
authority to establish licensing standards and other qualifications for
providers. 93 Title 42 U.S.C. § 1320a-7(b)(4) expressly contemplates that a state
licensing authority may revoke a provider’s license “for reasons bearing on the
individual’s or entity’s professional competence, professional performance, or
financial integrity,” and that the Secretary may exclude such a provider from
any federal health care program under that provision. Hence, 42 U.S.C. §
1396a(p)(1), which cross references § 1320a-7(b)(4), necessarily authorizes
states to terminate a Medicaid provider’s agreements when that state revokes
that provider’s license “for reasons bearing on the [provider’s] professional
competence, professional performance, or financial integrity.” It bears
repeating, however, that LDHH has taken no action to revoke PPGC’s license
and has not called into question any qualification that enables PPGC to offer
medical care generally.
At the most, LDHH has simply pasted the labels of “fraud” and
“misrepresentations” on PPGC’s conduct, and then insisted that alone these
content-less labels somehow insulate its termination actions from any §
1396a(a)(23) challenges. LDHH is seeking to do exactly what the Seventh and
Ninth Circuits warned against: “simply labeling any exclusionary rule as a
93 See Planned Parenthood of Ind., 699 F.3d at 980 (“No one disputes that the states
retain considerable authority to establish licensing standards and other related practice
qualifications for providers—this residual power is inherent in the cooperative-federalism
model of the Medicaid program and expressly recognized in the Medicaid regulations.”).
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‘qualification’” to evade the mandate of the free-choice-of-provider
requirement. 94 PPGC’s settlement of qui tam FCA claims without admitting
liability does not constitute fraud under any definition of that term. And
LDHH’s accusation that PPGC made misrepresentations related to inquiries
into whether it operates a fetal tissue donation program is devoid of any factual
support or linkage. Neither can LDHH’s labeling of its grounds for termination
as fraud and misrepresentations insulate its actions from a § 1396a(a)(23)
challenge. If it were otherwise, states could terminate Medicaid providers with
impunity and avoid § 1396a(a)(23)’s mandate altogether.
We repeat yet again for emphasis that LDHH has never once complained
that PPGC is not competent to render the relevant medical services, and it has
taken no independent action to limit or terminate PPGC’s entitlement to
render medical services to the general population, for example, by revoking its
license. As a result, LDHH’s termination of PPGC’s Medicaid provider
agreements would produce precisely the anomalous result that the free-choice-
of-provider provision is meant to avoid, viz., LDHH would deny PPGC’s
services only to Medicaid recipients while leaving all other individuals free to
obtain the very same services from PPGC. But, “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 were they paying out of their own pockets.” 95
In sum, we conclude that the Individual Plaintiffs are substantially
likely to succeed in showing that LDHH’s termination of PPGC’s provider
agreements violates their rights under § 1396a(a)(23). This is because LDHH
94 Id. at 978; Planned Parenthood of Ariz., 727 F.3d at 970.
95 Planned Parenthood of Ariz., 727 F.3d at 971.
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seeks to terminate PPGC’s Medicaid provider agreements for reasons
unrelated to its qualifications.
B. Remaining Factors
Finally, we turn to the other issues weighed by the district court:
irreparable injury; harm to the enjoined party; public interest.
As to whether the Individual Plaintiffs will suffer irreparable injury in
the absence of a preliminary injunction, LDHH first contends that because §
1396a(a)(23) guarantees the Individual Plaintiffs the right to choose only a
qualified provider, they will suffer no harm because PPGC is not qualified. We
have already rejected that obviously flawed circular argument.
LDHH next asserts that irreparable injury may not be presumed from a
statutory violation, and the Individual Plaintiffs’ legal injury is not sufficiently
concrete, great, and imminent to constitute irreparable harm. LDHH further
contends that any inconvenience the Individual Plaintiffs sustain by being
forced to seek medical care elsewhere is not significant enough to support a
finding of irreparable harm.
The district court determined that the Individual Plaintiffs would suffer
irreparable injury because they will not be able to obtain medical care from the
Medicaid provider of their choice. The court relied on “uncontroverted”
declarations, in which the Individual Plaintiffs state that they wish to continue
receiving care at PPGC and that they do not know where else they could get
the same kind and quality of care. The court further emphasized that even if
the Individual Plaintiffs could find medical care elsewhere, this is beside the
point: The Individual Plaintiffs would still be denied the provider of their
choice, a right guaranteed under 42 U.S.C § 1396a(a)(23).
The Seventh Circuit squarely addressed this issue, rejecting an identical
argument from the state:
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Indiana maintains that any harm to [the] patients is superficial
because they have many other qualified Medicaid providers to
choose from in every part of the state. This argument misses the
mark. That a range of qualified providers remains available is
beside the point. Section 1396a(a)(23) gives Medicaid patients the
right to receive medical assistance from the provider of their choice
without state interference, save on matters of qualifications. 96
The Ninth Circuit has also stated that “[t]here is no exception to the free-
choice-of-provider requirement for ‘incidental’ burdens on patient choice.” 97
Separately, that circuit has “several times held that beneficiaries of public
assistance may demonstrate a risk of irreparable injury by showing that
enforcement of a proposed rule may deny them needed medical care.” 98
We are satisfied that the district court did not clearly err in holding that
the Individual Plaintiffs will suffer irreparable harm, absent entry of a
preliminary injunction, while this case plays out. Because the Individual
Plaintiffs would otherwise be denied both access to a much needed medical
provider and the legal right to the qualified provider of their choice, we agree
that they would almost certainly suffer irreparable harm in the absence of a
preliminary injunction.
LDHH next urges that its substantial interest in administering its
Medicaid program—overseeing the expenditures of the state’s Medicaid funds
and ensuring that Medicaid providers are complying with applicable laws and
regulations—outweighs any injury to the Individual Plaintiffs, which it
construes as “the mere inconvenience . . . of having longer wait times or longer
lead times for appointments for family planning services.” The district court
96 Planned Parenthood of Ind., 699 F.3d at 981.
97 Planned Parenthood of Ariz., 727 F.3d at 975.
98 M.R. v. Dreyfus, 697 F.3d 706, 732 (9th Cir. 2011) (internal quotation marks
omitted).
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rejected this rationale, holding that LDHH will not be deprived of its ability to
administer Louisiana’s Medicaid program. Rather, the injunction relates only
to LDHH’s attempt to terminate a single provider. The district court also held
that any interest of the state is outweighed by the harm the Individual
Plaintiffs will suffer.
The district court did not commit clear error in concluding that the harm
to the Individual Plaintiffs will outweigh any harm inflicted on LDHH. As to
its interest in administering the state’s Medicaid program, LDHH can never
have a legitimate interest in administering that program in a manner that
violates federal law.
As to LDHH’s fiscal interests, the Ninth Circuit addressed a balancing
of similar interests in Independent Living Center of Southern California, Inc.
v. Maxwell-Jolly. 99 It explained that because a “budget crisis does not excuse
ongoing violations of federal law, particularly when there are no adequate
remedies available other than an injunction,” “[s]tate budgetary considerations
do not therefore, in social welfare cases, constitute a critical public interest
that would be injured by the grant of preliminary relief.” 100 “In contrast, there
is a robust public interest in safeguarding access to health care for those
eligible for Medicaid, whom Congress has recognized as ‘the most needy in the
country.’” 101 The Fourth Circuit has reached a similar conclusion: “Although
we understand that the North Carolina legislature must make difficult
decisions in an imperfect fiscal climate, the public interest in this case lies with
99 572 F.3d 644 (9th Cir. 2009), vacated and remanded on other grounds, 132 S. Ct.
1204 (2012).
100 Id. at 659.
101 Id. (quoting Schweiker v. Hogan, 457 U.S. 569, 590 (1982) (quoting H.R. Rep. No.
89-213, at 66 (1965))).
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safeguarding public health rather than with assuaging North Carolina’s
budgetary woes.” 102
For these reasons, we hold that the district court did not commit clear
error in ruling that the harm to the Individual Plaintiffs outweighs any harm
that the state might experience.
Finally, LDHH challenges the district court’s determination that an
injunction serves the public interest. It contends that the general public has
an interest in the proper expenditure of the state’s Medicaid funds, including
the oversight of providers who are receiving those funds. The district court
determined that the injunction serves the public interest by ensuring that
Medicaid recipients have continuing access to medical care at PPGC.
Because LDHH’s termination of PPGC’s Medicaid provider agreements
likely violates federal law, there is no legitimate public interest in allowing
LDHH to complete its planned terminations of those agreements under these
immediate facts. Instead, the public interest weighs in favor of preliminarily
enforcing the Individual Plaintiffs’ rights and thereby allowing some of the
state’s neediest citizens to continue receiving medical care from a medically
qualified provider. We emphasize that “there is a legitimate public interest in
safeguarding access to health care for those eligible for Medicaid.” 103 The
district court did not err in ruling that preliminarily enjoining LDHH’s
terminations will serve the public interest.
C. The Dissent
We close where we began. Despite the obvious scholarship of its able
author, the dissent cannot avoid the determinative distinction between this
case and O’Bannon. There, because the state decertified the medical provider
102 Pashby v. Delia, 709 F.3d 307, 331 (4th Cir. 2013).
103 Maxwell-Jolly, 572 F.3d at 659.
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totally for failure to meet statutory and regulatory requirements for
certification as a skilled nursing facility, the Supreme Court held that none of
its former clientele – implicitly, whether covered by Medicaid or commercial
insurance – had standing to advance constitutional claims because they were
only affected incidentally. Here, Louisiana did not decertify PPGC or reference
failure to meet any statutory or regulatory requirements. It only prevented it
from providing Medicaid funded treatment to the impoverished women of the
State: The financially independent women of the State (or at least those
covered by commercial health plans or their own bank accounts) can continue
to be fully served by PPGC. Although, the opinion in O’Bannon does not
expressly state whether the state’s decertification of the facility caused it to go
out of business entirely, we are satisfied that decertification had a crippling
effect on the institution even if it did not cause it to shut down totally. Not so
in this case. In sum, the institution in O’Bannon was decertified for reasons
having to do with the quality of care provided to patients. Here, the state has
not impugned the quality of PPGC’s care, and it will continue in business: Only
its Medicaid patients will be prevented from receiving treatment there.
Although this fact alone does not automatically confer a private right of action,
the dissent cannot avoid this distinction, which makes O’Bannon fully
inapplicable.
CONCLUSION
We hold that the Individual Plaintiffs met their burden of proving their
entitlement to a preliminary injunction. We also hold that the district court did
not abuse its discretion in preliminarily enjoining LDHH’s termination of
PPGC’s Medicaid provider agreements. In so doing, we have addressed only
the facts and issues necessary to address the district court’s preliminary
injunction. Our determinations do not bind any future summary judgment or
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merits panels. 104 The district court’s preliminary injunction is AFFIRMED and
this case is REMANDED for further proceedings consistent herewith.
104 See Planned Parenthood of Greater Tex. Surgical Health Servs. v. Abbott, 734 F.3d
406, 419 (5th Cir. 2013).
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PRISCILLA R. OWEN, Circuit Judge, dissenting:
I respectfully dissent because the majority opinion conflicts with the
Supreme Court’s decision in O’Bannon v. Town Court Nursing Center, which
held that a Medicaid beneficiary does not have a right based on 42 U.S.C.
§ 1396a(a)(23) to challenge the merits of a State’s assertion that a provider of
Medicaid services is no longer qualified to provide Medicaid services or to
challenge the State’s termination of a provider’s Medicaid agreements on the
basis of the provider’s noncompliance with state and federal regulatory
requirements. 1 In O’Bannon, the Court held that § 1396a(a)(23) did not give
Medicaid patients a right to litigate whether a provider was “qualified” within
the meaning of that statute. 2 The majority opinion in the present case holds
just the opposite, and none of the bases on which it attempts to distinguish
O’Bannon withstands scrutiny.
In the case before our court, the Secretary of the Louisiana Department
of Health and Hospitals (LDHH) gave notice that it intended to terminate the
Medicaid provider agreements of Planned Parenthood Gulf Coast, Inc. (PPGC),
asserting as its reasons for termination, in part, PPGC’s settlement of a federal
False Claims Act suit; provider audits regarding false claims; another pending
federal False Claims Act suit in which the federal district court had stated that
the Complaint’s allegations in that case “allow[] the court to draw the
reasonable inference that Planned Parenthood knowingly filed false claims”;
misrepresentations; and a pending investigation into PPGC’s conduct. PPGC
did not avail itself of state administrative or judicial proceedings to contest any
of these grounds, though avenues for such a contest existed. Instead, PPGC
and three of its patients sued in federal district court to set aside the proposed
1 447 U.S. 773, 775-77, 785 (1980).
2 Id. at 786.
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terminations. PPGC’s claims, asserting Equal Protection and other
constitutional violations, were not the basis for the preliminary injunction the
district court granted staying the terminations and are not the subject of this
interlocutory appeal. The only question before this panel is whether PPGC’s
patients have a right to challenge LDHH’s determination that PPGC is not a
“qualified” provider. The majority opinion concludes that the so-called “free-
choice-of-provider” provision in § 1396a(a)(23) confers such a right upon
Medicaid beneficiaries, contrary to the holding in O’Bannon.
If and when PPGC successfully challenges LDHH’s determination that
PPGC is no longer a qualified provider, then PPGC’s patients may sue to
vindicate rights granted by § 1396a(a)(23). But PPGC has not yet made such
a showing.
I
Three of PPGC’s patients, Doe #1, Doe #2, and Doe #3 (the “Individual
Plaintiffs”), who are recipients of Medicaid benefits, contend that LDHH lacked
any legitimate basis for terminating PPGC’s Medicaid provider agreements
and that PPGC is a “qualified” provider of Medicaid services within the
meaning of 42 U.S.C. § 1396a(a)(23). The Individual Plaintiffs have brought
an action under 42 U.S.C. § 1983. The federal district court considered only
the Individual Plaintiffs’ claims in granting the preliminary injunction that is
at issue in the interlocutory appeal before our court. The Individual Plaintiffs
do not have a § 1983 cause of action unless there has been a violation of a
federal constitutional or statutory right.
I agree that § 1396a(a)(23), which is set forth in the margin, 3 provides a
right upon which a Medicaid patient may base a suit under § 1983 when she
3 42 U.S.C. § 1396a(a)(23) provides:
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has been denied access to a provider that a State has determined meets all
state and federal Medicaid requirements and qualifications. However,
§ 1396a(a)(23) does not give a patient the right to contest a State’s
determination that a provider is not “qualified” to provide Medicaid services or
a determination that the provider has not otherwise met state or federal
statutory requirements. The Supreme Court’s decision in O’Bannon makes
this clear.
The question in O’Bannon was whether residents of a nursing home had
a “constitutional right to participate in . . . revocation proceedings,” in which a
federal entity and a state entity sought to revoke the nursing home’s authority
to provide care to Medicaid recipients. 4 The Court held that the recipients did
(a) Contents
A State plan for medical assistance must— . . .
(23) provide that (A) any individual eligible for medical assistance
(including drugs) may obtain such assistance from any institution,
agency, community pharmacy, or person, qualified to perform the
service or services required (including an organization which provides
such services, or arranges for their availability, on a prepayment basis),
who undertakes to provide him such services, and (B) an enrollment of
an individual eligible for medical assistance in a primary care case-
management system (described in section 1396n(b)(1) of this title), a
medicaid managed care organization, or a similar entity shall not
restrict the choice of the qualified person from whom the individual may
receive services under section 1396d(a)(4)(C) of this title, except as
provided in subsection (g) of this section, in section 1396n of this title,
and in section 1396u-2(a) of this title, except that this paragraph shall
not apply in the case of Puerto Rico, the Virgin Islands, and Guam, and
except that nothing in this paragraph shall be construed as requiring a
State to provide medical assistance for such services furnished by a
person or entity convicted of a felony under Federal or State law for an
offense which the State agency determines is inconsistent with the best
interests of beneficiaries under the State plan or by a provider or
supplier to which a moratorium under subsection (kk)(4) is applied
during the period of such moratorium[.]
4 447 U.S. at 775-76.
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not have such a right. 5 The Court’s due process analysis required it to decide
what substantive rights 42 U.S.C. § 1396a(a)(23) bestows upon Medicaid
beneficiaries. The Court concluded that this provision “gives [Medicaid]
recipients the right to choose among a range of qualified providers, without
government interference. By implication, it also confers an absolute right to
be free from government interference with the choice to remain in a home that
continues to be qualified.” 6 However, the Court then said, “[b]ut it clearly does
not confer a right on a recipient to enter an unqualified home and demand a
hearing to certify it, nor does it confer a right on a recipient to continue to
receive benefits for care in a home that has been decertified.” 7 The nursing
home residents had contended that they “were entitled to an evidentiary
hearing on the merits of the decertification decision before the Medicaid
payments were discontinued.” 8 In denying this relief, the Court explained
“decertification does not reduce or terminate a patient’s financial assistance,
but merely requires him to use it for care at a different facility.” 9 Because the
patients had no substantive right to demand care from a provider that had been
decertified, they had no due process rights to participate in a hearing regarding
certification or decertification of the provider. 10
The decision in O’Bannon controls here. Medicaid patients do not have
rights under 42 U.S.C. § 1396a(a)(23) that permit them to sue, under § 1983,
to contest the merits of LDHH’s allegations supporting the proposed
termination of PPGC’s Medicaid provider agreements.
5 Id. at 775.
6 Id. at 785.
7 Id.
8 Id. at 777.
9 Id. at 785-86.
10 Id. at 775, 785.
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II
The majority opinion attempts to distinguish O’Bannon on various
grounds. But none of those grounds are valid.
A
The majority opinion states that O’Bannon “is inapposite” because
“[t]here, the patient-plaintiffs’ injuries were alleged to stem from a deprivation
of due process rights” and that “[i]n contrast, the Individual Plaintiffs here
assert the violation of a substantive right.” 11 These statements reflect a failure
to appreciate that there is no right to due process unless there is a substantive
right that may be vindicated if adequate process is accorded. The Supreme
Court concluded in O’Bannon that when a State declares that a particular
provider is not qualified to provide Medicaid services, a Medicaid recipient has
no “life, liberty, or property” interest arising from 42 U.S.C. § 1396a(a)(23) that
is affected. 12 The Due Process Clause does not confer a “right to a hearing” in
the abstract; rather, it does so only as a prerequisite to a deprivation of “life,
liberty, or property.” 13 Before a plaintiff can prevail on a due process claim,
she must show that a liberty or property interest exists and that the State has
interfered with that interest. 14
Though the Medicaid recipients in O’Bannon claimed that they were
“entitled to an evidentiary hearing on the merits of the decertification
11 Ante at 20.
12 O’Bannon, 447 U.S. at 787.
13 U.S. CONST. amend. XIV, § 1.
14 Ky. Dep’t of Corr. v. Thompson, 490 U.S. 454, 460 (1989) (“We examine procedural
due process questions in two steps: the first asks whether there exists a liberty or property
interest which has been interfered with by the State; the second examines whether the
procedures attendant upon that deprivation were constitutionally sufficient.” (citations
omitted) (citing Hewitt v. Helms, 459 U.S. 460, 472 (1983) and Bd. of Regents of State Colls.
v. Roth, 408 U.S. 564, 571 (1972))).
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decision,” 15 they were first required to show that the State had deprived them
of a “liberty or property interest” 16 by terminating reimbursement agreements
with their preferred Medicaid provider. 17 The recipients identified 42 U.S.C.
§ 1396a(a)(23) as a source of a substantive liberty or property interest. 18 The
Supreme Court therefore examined whether § 1396a(a)(23) gives recipients a
right to demand care from a particular provider when that provider had been
decertified as a Medicaid provider. The Court concluded that recipients do not
have such a right. 19 The Court characterized the recipients’ argument as
claiming that § 1396a(a)(23) “give[s] them a property right to remain in the
home of their choice.” 20 In rejecting that claim, the Court explained that
although Medicaid recipients have a “right to continued benefits to pay for care
in the qualified institution of [their] choice,” they have “no enforceable
expectation of continued benefits to pay for care in an institution that has been
determined to be unqualified.” 21 In the present case, the majority opinion is
plainly mistaken in characterizing the O’Bannon decision as dealing only with
“due process,” but not substantive, rights under 42 U.S.C. § 1396a(a)(23). 22
15 O’Bannon, 447 U.S. at 777.
16 See Thompson, 490 U.S. at 460.
17 O’Bannon, 447 U.S. at 784.
18 Id. (“The patients have identified two possible sources of such a right.”); id. at 784-
85 (discussing 42 U.S.C. § 1396a(a)(23) as one of the identified sources).
19 Id. at 785.
20 Id. at 784.
21 Id. at 786.
22 But see Planned Parenthood of Ind., Inc. v. Comm’r of Ind. State Dep’t of Health, 699
F.3d 962, 977 (7th Cir. 2012) (distinguishing O’Bannon on the basis that “the free-choice-of-
provider statute was raised in the context of a due-process claim” and that “[t]his is not a
due-process case”).
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B
1
The majority opinion says “[t]his case is different” from O’Bannon
because “Louisiana has never complained that PPGC is not competent to
render the relevant medical services, and it has taken no independent action
to limit or terminate PPGC’s entitlement to render medical services to the
general population, for example, by revoking its license.” 23 The majority
opinion concludes that “this distinction . . . makes O’Bannon fully
inapplicable.” 24 As discussed below, 25 O’Bannon’s analysis of Medicaid
beneficiaries’ rights under 42 U.S.C. § 1396a(a)(23) did not turn on whether
the State revoked the nursing home’s authorization to continue functioning as
a nursing home. But before O’Bannon is examined on that score, it is
important to understand that the majority opinion’s interpretation of
§ 1396a(a)(23) finds no support in its text and conflicts with the Government’s
understanding of when, based on § 1396a(a)(23), Medicaid patients can and
cannot sue to challenge termination of a Medicaid provider’s agreement.
The majority opinion concludes that whenever a State terminates a
provider’s Medicaid agreement, regardless of the grounds for termination, a
patient may sue to contest the termination, unless the State also precludes the
provider from providing services or care to all patients, not just Medicaid
recipients. 26 This construction of § 1396a(a)(23) is plainly mistaken. Under
23 Ante at 22.
24 Ante at 42.
25 See infra Part II(C)(1).
26 Ante at 36 (“To be sure, the general grounds for termination invoked by LDHH—
fraud, misrepresentations, and investigations—might well relate to a provider’s
qualifications. States undoubtedly must be able to terminate provider agreements in cases
of criminal activity, fraud and abuse, and other instances of malfeasance. Medicaid’s 42
U.S.C. § 1396a(p)(1)’s exclusionary provision makes that clear. . . . It bears repeating,
however, that LDHH has taken no action to revoke PPGC’s license and has not called into
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federal statutory and regulatory provisions, a State may terminate a provider’s
Medicaid agreement on many grounds, and it is not a prerequisite for such
terminations that the State preclude a provider from providing services to any
and all patients.
Subsection 1396a(p)(1) provides that “[i]n addition to any other
authority, a State may exclude any individual or entity for purposes of
participating under the State plan . . . for any reason for which the Secretary
could exclude the individual or entity from participation in a program under
subchapter XVIII of this chapter under section 1320a-7, 1320a-7a, or
1395cc(b)(2) of this title.” 27 A State may terminate a provider’s agreement for
many reasons even though the State does not seek to prohibit a provider from
providing health care to the “general population” or to “revoke[e] its license.” 28
The United States Government does not agree with the majority
opinion’s assertion that O’Bannon is limited to situations in which a State
seeks to prevent a provider from treating or providing services to all patients,
not just Medicaid patients. The Government has filed an amicus brief in this
question any qualification that enables PPGC to offer medical care generally.”); see also ante
at 37 (“We repeat yet again for emphasis that LDHH has never once complained that PPGC
is not competent to render the relevant medical services, and it has taken no independent
action to limit or terminate PPGC’s entitlement to render medical services to the general
population, for example, by revoking its license.”); ante at 37 (“LDHH would deny PPGC’s
services only to Medicaid recipients while leaving all other individuals free to obtain the very
same services from PPGC.”).
27 See 42 U.S.C. § 1396a(p)(1) (“In addition to any other authority, a State may exclude
any individual or entity for purposes of participating under the State plan under this
subchapter for any reason for which the Secretary could exclude the individual or entity from
participation in a program under subchapter XVIII of this chapter under section 1320a-7,
1320a-7a, or 1395cc(b)(2) of this title.”); § 1320a-7(b)(6) (permitting exclusion for excessive
charges or unnecessary services); § 1320a-7(b)(7) (permitting exclusion for “an act which is
described in section 1320a-7a, 1320a-7b, or 1320a-8 of this title”); id. § 1320a-7a(a)(1)(A)
(presenting a claim “for a medical or other item or service that the person knows or should
know was not provided as claimed”).
28 Ante at 22.
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case that sets forth a number of grounds on which a State may terminate a
provider’s agreement. 29 Termination can occur because of, among other acts
or omissions, 30 a provider’s excessive charges; 31 fraud, kickbacks, or other
prohibited activities; 32 failure to provide information; 33 failure to grant
immediate access under specified circumstances; 34 default on loan or
scholarship obligations; 35 or false statements or material misrepresentations
of fact in certain circumstances. 36 The Government acknowledges that a
patient has no right under § 1396a(a)(23) on which to base a § 1983 suit
challenging a provider’s termination on any of these grounds. But the majority
opinion appears to limit O’Bannon’s application more narrowly than the
Government advocates.
The majority opinion says that it “makes sense” that patients cannot
“freely intervene in state enforcement actions against facilities that violate
health and safety standards.” 37 Why, then, does it “make[] sense” to allow
patients to “intervene” “freely” when a State asserts, as LDHH asserted, that
its basis for termination is that a Medicaid provider has engaged in submitting
false claims for services that were never provided and for medically
unnecessary services or items, in violation of federal regulations? 38
29 See 42 U.S.C. §§ 1396a(p)(1)-(3), 1320a-7, 1395cc(b)(2).
30 Id. § 1320a-7(b).
31 § 1320a-7(b)(6).
32 § 1320a-7(b)(7).
33 § 1320a-7(b)(9)-(11).
34 § 1320a-7(b)(12).
35 § 1320a-7(b)(14).
36 § 1320a-7(b)(16).
37 Ante at 21-22.
38 See 42 U.S.C. §§ 1396a(p), 1320a-7(b)(6).
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2
In the present case, the majority opinion says that PPGC’s Medicaid
patients who have sued LDHH are not “challenging ‘the merits of’” its decision
to terminate PPGC’s Medicaid provider agreements. 39 Yet, some of the
grounds LDHH gave for termination at least facially pertain to PPGC’s
qualifications to continue as a Medicaid provider, and the Individual Plaintiffs
do in fact contend that, when examined on their merits, none of those grounds
is an adequate basis for termination. The majority opinion agrees, concluding
that since the Individual Plaintiffs will likely prevail on their contention that
PPGC is a qualified provider, the Individual Plaintiffs have the right to sue to
obtain Medicaid services from that qualified provider. This reasoning is
circular, and it permits Medicaid recipients to do precisely what O’Bannon said
they have no statutory right to do. The Supreme Court held in O’Bannon that
Medicaid patients cannot challenge the merits of whether a provider is a
qualified Medicaid provider.
The majority opinion relatedly says, “[w]hen, as here, a state terminates
only a Medicaid provider agreement, independent of any action to enforce
statutory and regulatory standards, O’Bannon is inapposite.” 40 But LDHH’s
notice of intent to terminate PPGC’s provider agreements did assert acts or
omissions that would come within prohibitions in the federal statutory and
regulatory scheme.
The majority opinion recognizes that “States may . . . exclude providers
on the grounds provided by 42 U.S.C. § 1396a(p)(1) and on analogous state law
grounds relating to a provider’s qualification,” 41 though apparently the opinion
39 Ante at 22.
40 Ante at 22.
41 Ante at 29.
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adds the additional qualification that a State may not terminate a provider’s
Medicaid agreement unless the State also precludes the provider from
providing services to patients, generally, 42 as already discussed above. 43
Putting that gloss on § 1396a(p)(1) aside for the moment, the opinion also says,
“[t]o be sure, the general grounds for termination invoked by LDHH—fraud,
misrepresentations, and investigations—might well relate to a provider’s
qualifications. States undoubtedly must be able to terminate provider
agreements in cases of criminal activity, fraud and abuse, and other instances
of malfeasance.” 44 The opinion notes that “Medicaid’s 42 U.S.C. § 1396a(p)(1)’s
exclusionary provision makes that clear.” 45 The opinion then proceeds to
determine, on the merits, that none of the grounds given by LDHH for
terminating PPGC’s provider agreement are “authorized by § 1396a(p).” 46 The
majority opinion errs not only in permitting Medicaid recipients to litigate
whether a provider is qualified, but also in incorrectly analyzing the grounds
LDHH identified for its proposed termination of PPGC’s provider agreements.
42 See ante at 29:
While as a general rule a state may terminate a provider’s Medicaid
agreements for reasons bearing on that provider’s general qualification to
provide medical services, we are not aware of any case that holds a state may
do so while continuing to license a provider’s authorization to offer those same
services to non-Medicaid patients. “Qualified” means “to be capable of
performing the needed medical services in a professionally competent, safe,
legal, and ethical manner.” States may also exclude providers on the grounds
provided by 42 U.S.C. § 1396a(p)(1) and on analogous state law grounds
relating to a provider’s qualification. Although states retain broad authority
to define provider qualifications and to exclude providers on that basis, their
authority is circumscribed by the meaning of “qualified” in this context.
(footnote omitted) (quoting Planned Parenthood of Ind., Inc. v. Comm’r of Ind.
State Dep’t of Health, 699 F.3d 962, 978 (7th Cir. 2012)).
43 See supra Part II(B)(1).
44 Ante at 36.
45 Ante at 36.
46 Ante at 30.
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The letter informing PPGC of LDHH’s intent to terminate its Medicaid
provider agreements included several independent grounds for termination.
One was that PPGC had filed false Medicaid or Medicare claims. LDHH’s
stated bases for believing that PPGC had done so were provider audits,
settlement of a federal False Claims Act suit, and an opinion and order in a
federal False Claims Act case pending at the time, in which the court said that
it could draw a reasonable inference from the Complaint in that case that
PPGC had knowingly filed false claims. LDHH’s letters to PPGC stated:
Also under consideration in our departmental proceedings are
provider audits and federal false claims cases against Planned
Parenthood of America (PPFA) affiliates. Included among these
are pending federal false claims cases against PPGC, one in which
the presiding judge found that the information already provided
“allows the court to draw the reasonable inference that Planned
Parenthood knowingly filed false claims.” Memorandum Opinion
and Order at 17, Carroll v. Planned Parenthood Gulf Coast, 4:12-
cv-03505 (S.D. TX, Houston Div.) (May 14, 2014). Providers and
providers-in-fact are required to ensure that all their agents and
affiliates are in compliance with all federal and state laws as well
as rules, policies and procedures of the Medicaid program.
The panel’s majority opinion gives short shrift to this ground for
termination. The opinion states that “[a]t the most, LDHH has simply pasted
the labels of ‘fraud’ and ‘misrepresentations’ on PPGC’s conduct.” 47 However,
LDHH contemplated that there would be administrative proceedings following
the letters that expressed its intent to terminate PPGC’s provider agreements.
The notice letters each advised in their opening paragraph that termination
would take effect only after “final determination, judgment, completion,
withdrawal from, or termination of all administrative and/or legal proceedings
in this matter. Such proceedings include, but are not limited to, informal
47 Ante at 36.
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hearings, administrative appeals, appeals for judicial review, appellate
judgments, and/or denials of writ applications.” But, as the majority opinion
repeatedly recognizes, 48 there was never even an informal hearing at which
evidence would be presented because PPGC declined to participate in any
administrative proceedings at all.
In any event, at least some of LDHH’s grounds for termination were
within the scope of the federal statutes and regulations that permit a State to
terminate a provider’s Medicaid agreement for fraud or improprieties in billing
practices. Details of alleged fraud and improper billing practices were
contained in the settlement agreement described in LDHH’s notices of
termination, which was PPGC’s settlement of a federal False Claims Act suit
initiated by Karen Reynolds, a former PPGC former employee. 49 The
allegations in that suit were serious and included assertions that over a five-
and-a-half-year period, PPGC had submitted false claims for medically
unnecessary or unneeded items and services, and items and services that were
never provided by PPGC. PPGC paid $4,300,000 to settle that suit. The
settlement agreement reflects that both the United States and the State of
Texas asserted claims against PPGC for fraud in addition to those alleged by
the Qui-Tam plaintiff. 50 Though the settlement agreement reflects that PPGC
48 See, e.g., ante at 8 (“PPGC has not requested either a hearing or an administrative
appeal.”).
49 ROA 498, 727.
50 The settlement agreement recites:
D. The United States contends that PPGC submitted false claims
and made false statements to the United States in connection with claims that
PPGC submitted to the United States under the Social Security Block Grant,
Tide XX of the Social Security Act, 42 U.S.C. §§ 1397 et seq. (SSBG), the
Medicaid Program, Title XIX of the Social Security Act, 42 U.S.C. §§ 1396 et
seq. (Medicaid Program), and the Women's Health Program (WHP), a Medicaid
research and demonstration waiver created under Section 1115(a) of the Social
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did not admit liability, the agreement memorializes that (1) PPGC agreed to
wire transfer to the United States $4,300,000, (2) the United States agreed to
pay $1,247,000 of the $4,300,000 to the Qui-Tam plaintiff, (3) the United States
paid $500,831 to the State of Texas “which is the Medicaid portion of the
Settlement Amount, less Texas’ portion of the [Qui-Tam plaintiff’s] Share,” (4)
the balance was retained by the United States Government, and (5) PPGC
agreed to pay the Qui-Tam plaintiff’s attorney’s fees and attorney’s costs in a
separate written settlement agreement with the Qui-Tam plaintiff. The
settlement expressly reserved the rights of the United States and the State of
Texas to maintain administrative actions to exclude PPGC from federal health
care programs, including Medicare.
The fact that PPGG settled these claims with a disclaimer that it was
not admitting liability does not make the factual allegations contained in the
settlement agreement disappear. If true, any one of the allegations set forth
Security Act, 42 U.S.C. § 1315(a), and implemented by Texas under former
Tex. Hum. Res. Code § 32.0248.
E. Texas contends that PPGC submitted false claims and made
false statements to Texas in connection with claims that PPGC submitted to
Texas under the Medicaid Program and WHP in violation of the TMFPA, Tex.
Hum. Res. Code. Ann. § 36.001 et seq.
F. The Government contends that it has certain civil and
administrative claims, as specified in Sections III.B, III.C, and III.E below,
against PPGC for engaging in the following conduct:
submission of claims for payment to the United States and the State of
Texas during the time period between July 30, 2003, through February
28, 2009, through the Medicaid Program, SSBG, and WHP when such
items and services were (i) medically unnecessary or not medically
indicated; (ii) not actually provided by PPGC; or (iii) improperly
documented in patient charts as being provided even though they had
not been performed. Covered Conduct is further limited to claims based
on the following Current Procedural Terminology (“CPT”) and local
codes . . . [detailed listing of codes and terminology omitted in this
opinion in the interest of brevity].
57
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in the settlement agreement would have been grounds for LDHH’s termination
of PPGC’s Medicaid provider agreements.
The district court proceeded to rule, on the merits, that LDHH had
previously analyzed the claims in the Reynold’s suit and did not think they had
much credence. 51 Even if, ultimately, that is shown to be true, the point is that
the district court examined grounds that at least facially were adequate for
termination under § 1396a(p)(1), but concluded that, on the merits, those
grounds were not likely to prevail.
Both the district court, and the panel’s majority opinion, permit the
Individual Plaintiffs to challenge LDHH’s determination that PPGC is not a
“qualified” provider under the Medicaid statutes and regulations. In so doing,
both courts have failed to adhere to O’Bannon, which held that when a State
concludes that a provider is not qualified, even if that determination is
erroneous, a Medicaid recipient does not have a right by virtue of 42 U.S.C.
§ 1396a(a)(23) that can be vindicated by a § 1983 suit.
C
The majority opinion concludes that there is a “determinative distinction
between this case and O’Bannon” and that “this distinction . . . makes
O’Bannon fully inapplicable.” 52 The distinction, the majority opinion asserts,
is that in O’Bannon, “the Supreme Court held that none of [the nursing home’s]
former clientele—implicitly, whether covered by Medicaid or commercial
insurance—had standing to advance constitutional claims because they were
only affected incidentally,” and in O’Bannon, “the state decertified the medical
provider totally for failure to meet statutory and regulatory requirements for
51 The district court wrote that “Plaintiffs have credibly shown that DHH was aware
of the Reynolds Settlement long before October 14, 2015, with Defendant’s own emails
suggesting that it did not find it sufficient to provide “credible evidence” of Medicaid fraud.”
52 Ante at 41-42.
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certification as a skilled nursing facility.” 53 Two premises in this assertion are
incorrect.
1
The opinion in O’Bannon does not say that the nursing home facility was
“totally” prohibited from providing care to any nursing home resident. The
facility was decertified as a Medicaid provider, not prohibited from operating
as a nursing home. 54
Specifically, as to the factual underpinnings of O’Bannon, there is no
indication in the Supreme Court’s opinion that “decertification” of the nursing
home under the Medicaid statutes required it to cease providing nursing home
care to patients who were not Medicaid beneficiaries. The Supreme Court’s
opinion reflects that the nursing home had first been certified in 1967 by the
Department of Health, Education, and Welfare (HEW) as a “skilled nursing
facility,” which made it eligible to enter into one-year Medicare and Medicaid
provider agreements with HEW and the Pennsylvania Department of Public
Welfare (DPW). 55 The home “was decertified in 1974 as a result of substantial
noncompliance with both state and federal requirements,” 56 but in 1976, it was
recertified by HEW. 57 In 1977, HEW once again decertified the nursing home
under the Medicaid statutes, and HEW and DPW once again decided not to
renew the nursing home’s one-year Medicaid provider agreements due to
failure to meet statutory and regulatory standards for skilled nursing homes. 58
There is no indication in O’Bannon, the Court of Appeals’ decision that it
53 Ante at 41-42 (emphasis added).
54 See O’Bannon v. Town Court Nursing Ctr., 447 U.S. 773, 775-76 & nn.2-3 (1980).
55 Id. at 775 & n.1.
56 Id. at 775 n.1.
57 Id. at 775.
58 Id. at 775-76.
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reversed, 59 or the briefing in the Supreme Court, 60 that the nursing home was
prohibited from providing services to residents who were not Medicaid or
Medicare beneficiaries as the majority opinion in the present case posits, and
therefore that the home was required to cease operations “totally,” 61 during the
interim between 1974 and 1976, or when the home was again decertified in
1977.
The O’Bannon opinion reflects that in response to the 1977
decertification, six Medicaid recipients sued to challenge that determination
and the termination of the nursing home’s Medicaid provider agreements. 62
Their “complaint alleged that termination of the [Medicaid] payments would
require [the nursing home] to close,” 63 not that the nursing home had lost its
license or had been closed by the State. The home was in jeopardy of closing
due to economic factors, since so many of its residents (approximately 180 of
198) were Medicaid recipients, 64 not because the home had been “decertified
. . . totally” 65 by State or federal agencies, as the majority opinion in the present
59Town Court Nursing Ctr., Inc. v. Beal, 586 F.2d 280 (3d Cir. 1978), rev’d sub nom.
O’Bannon v. Town Court Nursing Ctr., 447 U.S. 773 (1980).
60 Brief for Petitioner, O’Bannon v. Town Court Nursing Ctr., 447 U.S. 773 (1980) (No.
78-1318), 1979 WL 213543; Brief for Respondents, O’Bannon v. Town Court Nursing Ctr.,
447 U.S. 773 (1980) (No. 78-1318), 1979 WL 199370; Brief for the Secretary of Health,
Education, and Welfare, O’Bannon v. Town Court Nursing Ctr., 447 U.S. 773 (1980) (No. 78-
1318), 1979 WL 199369.
61 See ante at 41-42.
62 O’Bannon, 447 U.S. at 777.
63 Id. (emphasis added).
64 See id. at 775-77, 777 n.5 (recounting that Town Court operated a 198-bed facility
and six Medicaid recipients residing in the facility “filed their action on behalf of a class of
all Medicaid recipients in the home, [though] the District Court never certified the class,”
while framing the question for decision as “whether approximately 180 elderly residents of a
nursing home operated by Town Court Nursing Center, Inc., have a constitutional right to a
hearing before a state or federal agency may revoke the home's authority to provide them
with nursing care at government expense”).
65 Ante at 41-42.
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case asserts repeatedly. 66 Whether the nursing home facility in O’Bannon was
required to cease operations had no bearing on the Supreme Court’s holding
that 42 U.S.C. § 1396a(a)(23) is not a font of substantive rights flowing to
Medicaid patients that permits them to sue to set aside the termination of a
provider’s Medicaid or Medicare agreements on the basis that the provider
failed to comply with certain statutory or regulatory requirements.
The majority opinion in the present case admits that it is on shaky
ground in asserting that “decertification” in O’Bannon meant complete closure
of the home by order of the State. The panel’s opinion hedges, saying,
“[a]lthough, the opinion in O’Bannon does not expressly state whether the
state’s decertification of the facility caused it to go out of business entirely, we
are satisfied that decertification had a crippling effect on the institution even
if it did not cause it to shut down totally.” 67 To what statutory language in 42
U.S.C. § 1396a(a)(23) is “a crippling effect on the institution” pertinent? What
language in § 1396a(a)(23) differentiates between instances in which
termination of a provider’s Medicaid agreement results in a “total[]” 68 closure
66 See, e.g., ante at 20 (“[O’Bannon] is inapposite. There, the patient-plaintiffs’ injuries
were alleged to stem from a deprivation of due process rights, specifically, the right to a
hearing to contest the state’s decertification of a health care provider, not just its Medicaid
qualification.”); ante at 22 (“This case is different [from O’Bannon]. Louisiana has never
complained that PPGC is not competent to render the relevant medical services, and it has
taken no independent action to limit or terminate PPGC’s entitlement to render medical
services to the general population, for example, by revoking its license.”); ante at 36 (“It bears
repeating, however, that LDHH has taken no action to revoke PPGC’s license and has not
called into question any qualification that enables PPGC to offer medical care generally.”);
ante at 42 (“[T]he institution in O’Bannon was decertified for reasons having to do with the
quality of care provided to patients. Here, the state has not impugned the quality of PPGC’s
care, and it will continue in business: Only its Medicaid patients will be prevented from
receiving treatment there. The dissent cannot avoid this distinction, which makes O’Bannon
fully inapplicable.”).
67 Ante at 42.
68 Ante at 42.
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of a facility (or a “crippling effect”) 69 and termination of a Medicaid agreement
having little impact on the facility’s operations? Nothing in the Supreme
Court’s decision in O’Bannon even alludes to such a distinction. The Court’s
reasoning and its holding in O’Bannon would have been the same had the
termination of the Medicaid provider agreements in that case affected only a
few residents. The residents who sued in O’Bannon, all Medicaid beneficiaries,
would have had the same arguments that they made in the Supreme Court.
They would have been required to move as a result of the decertification, even
if scores of other residents (who did not receive Medicaid benefits) remained in
the nursing home.
2
Nor was O’Bannon decided on standing principles applicable to nursing
home residents generally. The question before the Court was whether 42
U.S.C. § 1396a(a)(23) gave Medicaid beneficiaries “a right to continued
residence in the home of one’s choice.” 70 The issue actually decided was not
whether a resident of a nursing home whose care is paid for by private funds
has standing to contest a State’s closure of the home. As just noted, the State
did not require the home to be closed, and the legal question before the Court
was whether Medicaid beneficiaries could contest the termination of the
nursing home’s Medicaid provider agreements by state and federal agencies.
The focus of the Supreme Court’s decision in O’Bannon was the extent of rights
granted by the Medicaid and Medicare statutory provisions. 71 The Supreme
Court’s construction of 42 U.S.C. § 1396a(a)(23) applies in the present case.
69 Ante at 42.
70 O’Bannon v. Town Court Nursing Ctr., 447 U.S. 773, 785 (1980).
71 See id. (“Whether viewed singly or in combination, the Medicaid provisions relied
upon by the Court of Appeals do not confer a right to continued residence in the home of one's
choice. Title 42 U.S.C. § 1396a(a)(23) (1976 ed., Supp.II) gives recipients the right to choose
among a range of qualified providers, without government interference.”); id. at 785-90.
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D
The panel’s majority opinion says that it will not follow O’Bannon
because “[r]eading O’Bannon to foreclose every recipient’s right to challenge a
disqualification decision would render the right guaranteed by § 1396a(a)(23)
nugatory.” 72 First and foremost, this court is not free to disregard the Supreme
Court’s holding in O’Bannon, which was that § 1396a(a)(23) does not give a
Medicaid recipient the right to challenge a determination that a provider is
unqualified. 73 Second, O’Bannon’s holding does not render rights under
§ 1396a(a)(23) “nugatory.” The Supreme Court held that § 1396a(a)(23)
“confers an absolute right to be free from government interference with the
choice” to receive services from a qualified provider. 74 Under § 1396a(a)(23)(A),
“any individual eligible for medical assistance (including drugs) may obtain
such assistance from any institution, agency, community pharmacy, or person,
qualified to perform the service or services required, . . . who undertakes to
provide him such services,” and under § 1396a(a)(23)(B), the systems and
entities specified “shall not restrict the choice of the qualified person from
whom the individual may receive services,” with certain limitations.
That Medicaid recipients do not have a right to challenge a State’s
decision that a particular provider is unqualified does not mean that the
State’s decision is unreviewable. In the present case, for example, the provider,
PPGC, had the right to challenge the termination of its provider agreements
in state administrative proceedings. 75 It did not do so. However, in the federal
district court proceedings, PPGC has asserted constitutional violations and
may also have a § 1983 claim based on rights under provisions of the Medicaid
72 Ante at 21.
73 O’Bannon, 447 U.S. at 785.
74 Id.
75 See LA. STAT. ANN. § 46:437.4; LA. ADMIN. CODE tit. 50, §§ 4161, 4211, 4213.
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statutes and regulations (other than § 1396a(a)(23) and regulations
promulgated under it) to challenge the State’s termination of its provider
agreement. Even if PPGC is limited to state administrative proceedings and
state-court review, which is doubtful, that is not a basis for construing
§ 1396a(a)(23) to allow PPGC’s patients to challenge the State’s termination of
PPGC’s provider contracts when the Supreme Court has held that
§ 1396a(a)(23) does not permit them to do so.
The argument that § 1396a(a)(23) should be construed to give patients a
right to contest a State’s termination of a provider’s Medicaid agreement for
cause is also undermined by the fact that § 1396a(a)(23) assumes a willing
provider who “undertakes to provide . . . such services” to the Medicaid
recipient. In instances in which a provider does not challenge the termination
of its Medicaid agreement, it cannot be said to be undertaking to provide
Medicaid services to its patients. The Medicaid statutory scheme contemplates
that only the provider can contest a determination that it is not qualified.
There is no need to give Medicaid patients that right. If the provider is
successful in its challenge (as PPGC may ultimately be in the present case
when its claims are addressed) and a State were to then seek to prevent
patients from seeking treatment or services from that qualified provider,
patients could sue based on § 1396a(a)(23).
I submit that the majority opinion has created a right to remedy what it
perceives to be a violation of law by the State of Louisiana. But ends do not
justify means, and any violation of law by the State can be remedied.
III
The majority opinion relies upon decisions from the Seventh and Ninth
Circuits that permitted patients to challenge state laws that excluded Planned
Parenthood from providing health-care services to recipients of state-
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administered funds unless Planned Parenthood ceased performing privately
funded, legal abortions. 76 The purpose of the state laws at issue in those two
cases was to prevent indirect subsidization of abortion. 77 In neither case did
the State assert that the provider had settled False Claims Act suits, made
misrepresentations, or was under investigation. In any event, the reasoning
of those decisions is contrary to O’Bannon and is undermined by the
recognition in those opinions that there are many circumstances in which a
State may terminate a provider’s Medicaid provider agreement and yet the
provider’s patients would be unable to sue to challenge those terminations. 78
The majority opinion in the case before us today cites the Sixth Circuit’s
decision in Harris v. Olszewski. 79 But that decision does not support the
majority opinion’s conclusion that in some circumstances, a patient may
challenge a determination that a provider is not “qualified” to provide services.
In Harris, as a cost-savings measure, the State contracted with a sole provider
of incontinence products after a competitive-bidding process. 80 A Medicaid
benefits recipient filed suit seeking to certify a class and to enjoin enforcement
of the single-source-provider contract. 81 There was no contention that other
providers were unqualified; the Medicaid recipients sought to obtain supplies
from other qualified providers. 82 The Sixth Circuit concluded that the patients
had a right arising from § 1396a(a)(23) to bring a § 1983 claim. 83 That
76 Ante at 18-20 (citing Planned Parenthood Ariz., Inc. v. Betlach, 727 F.3d 960 (9th
Cir. 2013) and Planned Parenthood of Ind., Inc. v. Comm’r of Ind. State Dep’t of Health, 699
F.3d 962 (7th Cir. 2012)).
77 See, e.g., Planned Parenthood of Ind., 699 F.3d at 967 (“The point is to eliminate the
indirect subsidization of abortion.”).
78 See Betlach, 727 F.3d at 973; Planned Parenthood of Ind., 699 F.3d at 979.
79 Ante at 18, 19 (citing Harris v. Olszewski, 442 F.3d 456 (6th Cir. 2006)).
80 Harris, 442 F.3d at 460, 463.
81 Id. at 460.
82 Id.
83 Id. at 459.
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conclusion is entirely consistent with O’Bannon, which held that under
§ 1396a(a)(23), “a patient has a right to continued benefits to pay for care in
the qualified institution of his choice.” 84 Nevertheless, the Sixth Circuit denied
the requested relief, ultimately holding that the “single-source contract for
incontinence products complied with statutory and regulatory requirements
for an exemption to the freedom-of-choice provision.” 85
IV
The majority opinion observes that because § 1396a(a)(23) “speaks only
in terms of recipients’ rights rather than providers’ rights,” “the right
guaranteed by § 1396a(a)(23) is vested in Medicaid recipients rather than
providers.” 86 I agree with that observation and the majority opinion’s
conclusion that providers “cannot bring a challenge pursuant to
§ 1396a(a)(23).” 87 However, as discussed above, a provider has other avenues
to seek redress when a State terminates its status as a qualified provider for
purposes of Medicaid.
* * *
The State of Louisiana may have improperly terminated PPGC’s
Medicaid provider agreements, and if so, PPGC may pursue remedies.
However, the Supreme Court has held that when a State determines that a
particular provider is not qualified to provide Medicaid services, a patient has
84 O’Bannon v. Town Court Nursing Ctr., 447 U.S. 773, 786 (1980).
85 Harris, 442 F.3d at 467, 468-69 (concluding that the State had not violated the
freedom-of-choice provision contained in 42 U.S.C. § 1396a(a)(23) because of the statutory
exception found in 42 U.S.C. § 1396n(a)(1)(B)).
86 Ante at 20.
87 Ante at 20-21. But see Planned Parenthood Ariz., Inc. v. Betlach, 727 F.3d 960, 965-
67 (9th Cir. 2013) (concluding that Planned Parenthood had stated a cause of action under
§ 1983 based on rights conferred by § 1396a(a)(23)); Planned Parenthood of Ind., Inc. v.
Comm’r of Ind. State Dep’t of Health, 699 F.3d 962, 972-77 (7th Cir. 2012) (drawing no
distinction between Planned Parenthood and its patients in concluding that there is an
individual right to sue arising from § 1396a(a)(23)).
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no life, liberty, or property interest under 42 U.S.C. § 1396a(a)(23) that is
implicated or affected. 88 Because the majority opinion has created patients’
rights that are not found in § 1396a(a)(23)’s text and because the majority
opinion fails to follow the Supreme Court’s decision in O’Bannon, I must
dissent.
88 O’Bannon, 447 U.S. at 785-87.
67