Planned Parenthood of Gulf Coast, Inc. v. Gee

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].

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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