Planned Parenthood o v. Commissione

In the

United States Court of Appeals

For the Seventh Circuit

No. 11-2464

P LANNED P ARENTHOOD OF INDIANA, INC., et al.,

Plaintiffs-Appellees,

v.

C OMMISSIONER OF THE INDIANA S TATE

D EPARTMENT OF H EALTH, et al.,

Defendants-Appellants.

Appeal from the United States District Court

for the Southern District of Indiana, Indianapolis Division.

No. 1:11-cv-00630-TWP-TAB—Tanya Walton Pratt, Judge.

A RGUED O CTOBER 20, 2011—D ECIDED O CTOBER 23, 2012

Before C UDAHY, K ANNE, and SYKES, Circuit Judges.

S YKES, Circuit Judge. In 2011 Indiana adopted a law

prohibiting state agencies from providing state or

federal funds to “any entity that performs abortions or

maintains or operates a facility where abortions are

performed.” IND. C ODE § 5-22-17-5.5(b). The Hyde Amend-

ment already forbids states from using federal funds to

pay for most nontherapeutic abortions; Indiana has a

2 No. 11-2464

similar ban on the use of state funds. The new law goes a

step further by prohibiting abortion providers from

receiving any state-administered funds, even if the

money is earmarked for other services. The point is to

eliminate the indirect subsidization of abortion.

Immediately after the defunding law was enacted,

Planned Parenthood of Indiana and several individual

plaintiffs filed this lawsuit seeking to block its imple-

mentation. 1 As an enrolled Medicaid provider,

Planned Parenthood provides reimbursable medical

services to low-income patients, two of whom are

named as plaintiffs. Planned Parenthood claims that the

defunding law violates the Medicaid Act’s “free choice

of provider” provision, which requires state Medicaid

plans to allow patients to choose their own medical

provider. See 42 U.S.C. § 1396a(a)(23). The United States,

as amicus curiae, supports this claim. Planned Parent-

hood also contends that the defunding law is preempted

by a federal block-grant statute that authorizes the Secre-

tary of Health and Human Services (“HHS”) to make

1

The plaintiffs are Planned Parenthood of Indiana, one of its

doctors, and two Indiana residents who receive Medicaid

services from Planned Parenthood clinics. We refer to the

plaintiffs collectively as “Planned Parenthood” unless the

context requires otherwise. The defendants are the Commis-

sioner of the Indiana State Department of Health and several

other state department heads, the Indiana General Assembly,

and the state prosecutors of Marion, Monroe, and Tippecanoe

Counties. We refer to the defendants collectively as “Indi-

ana” unless the context requires otherwise.

No. 11-2464 3

grants to the states for programs related to sexually

transmitted diseases. See 42 U.S.C. § 247c(c). Finally,

Planned Parenthood claims that the defunding law

places an unconstitutional condition on its receipt of state-

administered funds because it must choose between

providing abortion services and receiving public money.

The district court held that the first two claims were

likely to succeed and enjoined Indiana from enforcing

the defunding law with respect to Planned Parenthood’s

Medicaid and § 247c(c) grant funding. The court did not

address the unconstitutional-conditions claim. Indiana

appealed.

We affirm in part and reverse in part. A threshold

question on the two statutory claims is whether the

plaintiffs have a right of action. To create private rights

actionable under 42 U.S.C. § 1983, the statutes in question

must meet the requirements of Gonzaga University v.

Doe, 536 U.S. 273 (2002). The free-choice-of-provider

statute does. Under § 1396a(a)(23) state Medicaid plans

“must” allow beneficiaries to obtain medical care from

“any institution, agency, . . . or person, qualified to

perform the service.” This is individual-rights language,

stated in mandatory terms, and interpreting the right

does not strain judicial competence. See Gonzaga Univ.,

536 U.S. at 284.

Planned Parenthood is likely to succeed on this

claim. Although 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 particularly, for a

4 No. 11-2464

reason unrelated to provider qualifications. In this

context, “qualified” means fit to provide the necessary

medical services—that is, capable of performing the

needed medical services in a professionally competent,

safe, legal, and ethical manner. The defunding law ex-

cludes Planned Parenthood from Medicaid for a reason

unrelated to its fitness to provide medical services, vio-

lating its patients’ statutory right to obtain medical care

from the qualified provider of their choice.

The remaining claims are not likely to succeed, how-

ever, so the scope of the injunction must be modified.

First, the block-grant statute does not create private

rights actionable under § 1983, and the district court’s

conclusion that the Supremacy Clause supplies a pre-

emption claim of its own force is probably wrong. In

any event, the defunding law does not conflict with

§ 247c(c), which attaches no strings to the federal money

other than a general requirement that the recipient

state spend it on programs for the surveillance of sexually

transmitted diseases. Finally, the unconstitutional-condi-

tions claim does not supply an alternative basis for

relief. This doctrine, sometimes murky, requires close

attention to the potentially implicated right. Here,

Planned Parenthood’s claim is entirely derivative of a

woman’s right to obtain an abortion. It is settled law

that the government’s refusal to subsidize abortion does

not impermissibly burden a woman’s right to obtain an

abortion. If a ban on public funding for abortion does

not directly violate the abortion right, then Indiana’s ban

on other forms of public subsidy for abortion providers

cannot be an unconstitutional condition that indirectly

violates the right.

No. 11-2464 5

I. Background

Medicaid “is a cooperative federal-state program

through which the Federal Government provides financial

assistance to States so that they may furnish medical care

to needy individuals.” Wilder v. Va. Hosp. Ass’n, 496

U.S. 498, 502 (1990). Indiana participates in Medicaid, and

as a condition of receiving federal funds, its Medicaid

program must comply with federal requirements. See

42 U.S.C. § 1396a(a); see also Collins v. Hamilton, 349 F.3d

371, 374 (7th Cir. 2003) (“[O]nce a state elects to

participate [in Medicaid], it must abide by all federal

requirements and standards as set forth in the Act.”).

Assuming the federal requirements are met, states

have “substantial discretion to choose the proper mix

of amount, scope, and duration limitations on coverage,

as long as care and services are provided in ‘the best

interests of the recipients.’ ” Alexander v. Choate, 469

U.S. 287, 303 (1985) (quoting 42 U.S.C. § 1396a(a)(19)).

To ensure compliance with federal rules, participating

states must submit proposed Medicaid plans and any

subsequent amendments to the Centers for Medicare

and Medicaid Services (“CMS”) for approval. 2 Douglas v.

Indep. Living Ctr. of S. Cal., Inc., 132 S. Ct. 1204, 1208 (2012).

The HHS Secretary may withhold Medicaid fund-

ing—either in whole or in part—from any state whose

plan does not comply with federal requirements. See 42

U.S.C. § 1396c; 42 C.F.R. § 430.12(c); cf. Nat’l Fed’n of

Indep. Bus. v. Sebelius, 132 S. Ct. 2566, 2607-08 (2012).

2

CMS is a division of HHS.

6 No. 11-2464

At issue here is the Medicaid Act’s requirement that

state Medicaid plans “must . . . 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.” 42 U.S.C. § 1396a(a)(23); see also

42 C.F.R. § 431.51(b)(1) (requiring that a state plan

provide that “a recipient may obtain Medicaid services

from any institution . . . that is [q]ualified to furnish

the services[] . . . and [w]illing to furnish them to that

particular recipient”). This is known as the free-choice-of-

provider requirement.

A. Indiana House Enrolled Act 1210, the Abortion-

Provider Defunding Law

In the spring of 2011, the Indiana General Assembly

adopted a law prohibiting abortion providers from re-

ceiving any state contracts and grants, including those

involving state-administered federal funds. More specifi-

cally, the defunding law provides that state agencies

“may not[] enter into a contract with[] or make a grant

to[] any entity that performs abortions or maintains or

operates a facility where abortions are performed.” IND.

C ODE § 5-22-17-5.5(b). The new law, known as House

Enrolled Act 1210, also cancelled existing contracts with

abortion providers. See id. § 5-22-17-5.5(c), (d). The

defunding law does not apply to hospitals and am-

bulatory surgical centers. See id. § 5-22-17-5.5(a).

Act 1210 fills a gap in Indiana law regarding public

funding of abortion. The Hyde Amendment prohibits the

No. 11-2464 7

use of federal funds to pay for nontherapeutic abortions

except in the case of pregnancies resulting from rape

or incest.3 Indiana law contains similar restrictions on

the use of state funds. See id. §§ 12-15-5-1(17), 16-34-1-2; 405

IND. A DMIN. C ODE 5-28-7; Humphreys v. Clinic for Women,

Inc., 796 N.E.2d 247, 250-51 (Ind. 2003). Act 1210 aims

to prevent the indirect subsidization of abortion by stop-

ping the flow of all state-administered funds to abor-

tion providers.

Governor Mitch Daniels signed Act 1210 into law on

May 10, 2011. On May 13 Indiana notified CMS of the

change in its law and sought approval for an amend-

ment to its Medicaid plan to exclude any provider (not

including hospitals and ambulatory surgical centers) that

offers abortion services. After consulting with the HHS

Secretary, see 42 C.F.R. § 430.15(c), the CMS Admini-

strator rejected the proposed plan amendment citing

§ 1396a(a)(23), the free-choice-of-provider rule. In a

letter to Indiana’s Director of Medicaid Policy &

Planning, the Administrator noted that “federal

Medicaid funding of abortion services is not permitted

under federal law except in extraordinary circum-

stances (such as in cases of rape or incest).” “At the

same time,” the Administrator continued, “Medicaid

programs may not exclude qualified health care

3

The Hyde Amendment is actually a rider Congress attaches

to appropriations legislation each year. See Consolidated

Appropriations Act, 2012, Pub. L. No. 112-74, §§ 506-507,

125 Stat. 786, 1111-12 (2011).

8 No. 11-2464

providers from providing services that are funded under

the program because of a provider’s scope of practice.”

Because Indiana’s proposed amendment excluded

abortion providers from participation in Medicaid for a

reason unrelated to provider qualifications, the Admin-

istrator refused to approve it.

Indiana petitioned for reconsideration of the Admin-

istrator’s decision. See 42 U.S.C. § 1316(a)(2); 42 C.F.R.

§ 430.18. This initiated an administrative appeal process

that included a hearing, see 42 C.F.R. §§ 430.76(a), 430.83,

and the right to seek judicial review of the final decision,

see 42 U.S.C. § 1316(a)(3); 42 C.F.R. § 430.38. The

hearing was held on December 15, 2011, and on June 20,

2012, the hearing officer sent the Administrator his rec-

ommended findings and a proposed decision upholding

the initial determination. See 42 C.F.R. § 430.102. Under

42 C.F.R. § 430.102(b)(2), the parties have an opportunity

to file objections before final action on the recommenda-

tion is taken. To our knowledge, a final agency decision

has not yet been issued.

B. Planned Parenthood’s Legal Challenge to Act 1210

Planned Parenthood is a nonprofit healthcare provider

offering reproductive healthcare and family-planning

services in Indiana, including preventive primary-care

services such as medical examinations, cancer screenings,

testing for sexually transmitted diseases, and various birth-

control services. The organization operates 28 health

clinics in Indiana and has more than 75,000 patients.

Planned Parenthood is an enrolled provider in Indiana’s

No. 11-2464 9

Medicaid program. In 2010 the organization offered

Medicaid services to more than 9,300 patients and

received $1,360,437 in Medicaid reimbursement. Planned

Parenthood also receives grants from Indiana state agen-

cies, including some funded with federal money. Among

those in effect when Act 1210 was adopted were two

grants totaling $150,000 from Indiana’s federal Disease

Intervention Services block-grant money received under

§ 247c(c), which authorizes grants for programs that

diagnose and monitor sexually transmitted diseases.

Planned Parenthood also performs abortions. The

organization uses private funding to support its

abortion services and takes steps to ensure that public and

private funds are not commingled. As an abortion pro-

vider, Planned Parenthood is barred by Act 1210 from

receiving any state-administered funds, including

Medicaid reimbursement and funding from state and

federal grants for services unrelated to abortion. The

organization estimates that full implementation of the

defunding law would require it to close a quarter of its

health clinics, lay off approximately 37 employees, and

cease serving an unknown number of patients.

Because of the effect of the defunding law on its state-

wide operations, Planned Parenthood did not wait for

the outcome of the CMS administrative process. On

May 10, 2011—the same day that Governor Daniels

signed Act 1210 into law—Planned Parenthood went to

court in the Southern District of Indiana seeking to block

the new law. Its lawsuit challenges Act 1210 on several

grounds. First, Planned Parenthood alleges that the law

10 No. 11-2464

violates § 1396a(a)(23), the Medicaid free-choice-of-pro-

vider requirement. The complaint also asserts a preemp-

tion claim based on several federal block-grant programs.

Finally, Planned Parenthood alleges that the defunding

law imposes an unconstitutional condition on its

receipt of public funds by forcing it to choose between

performing abortions and receiving nonabortion-related

public funding. The complaint seeks declaratory and

injunctive relief under § 1983. Planned Parenthood im-

mediately moved for a temporary restraining order

(“TRO”) and a preliminary injunction.4

The district court denied the motion for a TRO, but

after full briefing granted Planned Parenthood’s motion

for a preliminary injunction. Planned Parenthood of Ind., Inc.

v. Comm’r of the Ind. State Dep’t of Health, 794 F. Supp. 2d

892 (S.D. Ind. 2011). As relevant here, the court held that

§ 1396a(a)(23) creates individual rights enforceable

under § 1983 and that Planned Parenthood was likely

to succeed on its claim that the defunding law violates

§ 1396a(a)(23). On the preemption claim, the court

focused solely on the Disease Intervention Services block-

grant program under § 247c(c). The court held that al-

though § 247c(c) does not confer an individual right,

4

Planned Parenthood also challenges two provisions in Act

1210 that amended Indiana’s informed-consent statute to

require abortion practitioners to inform patients that “human

physical life begins when a human ovum is fertilized by a

human sperm” and that “objective scientific information

shows that a fetus can feel pain at or before twenty (20) weeks

of postfertilization age.” I ND . C ODE § 16-34-2-1.1(a)(1)(E), (G).

These aspects of the case are not at issue in this appeal.

No. 11-2464 11

Planned Parenthood could bring its preemption claim

directly under the Supremacy Clause. Having found a

right of action, the court concluded that Planned Parent-

hood was likely to succeed on its claim that § 247c(c)

preempts Act 1210. The court then assessed the balance

of harms and the public interest, ultimately concluding

that preliminary injunctive relief was warranted. The

court enjoined “[a]ll attempts to stop current or future

funding contracted for or due” Planned Parenthood

and ordered Indiana to “take all steps to insure that

all monies are paid.” Id. at 921. Having awarded all the

preliminary relief Planned Parenthood had requested,

the court did not address the unconstitutional-condi-

tions claim.

II. Discussion

This case comes to us on Indiana’s appeal from the

district court’s order granting a preliminary injunction.

See 28 U.S.C. § 1292(a)(1). To obtain a preliminary injunc-

tion, the moving party must demonstrate a reasonable

likelihood of success on the merits, no adequate remedy

at law, and irreparable harm absent the injunction. See

Am. Civil Liberties Union of Ill. v. Alvarez, 679 F.3d 583, 589-

90 (7th Cir. 2012); Christian Legal Soc’y v. Walker, 453

F.3d 853, 859 (7th Cir. 2006); Joelner v. Village of Washing-

ton Park, Ill., 378 F.3d 613, 619 (7th Cir. 2004). If it makes

this threshold showing, the district court weighs the

balance of harm to the parties if the injunction is granted

or denied and also evaluates the effect of an injunction

on the public interest. See Alvarez, 679 F.3d at 589-90;

Christian Legal Soc’y, 453 F.3d at 859. The strength of

12 No. 11-2464

the moving party’s likelihood of success on the merits

affects the balance of harms. “The more likely it is that [the

moving party] will win its case on the merits, the less

the balance of harms need weigh in its favor.” Girl Scouts

of Manitou Council, Inc. v. Girl Scouts of U.S., Inc., 549

F.3d 1079, 1100 (7th Cir. 2008). We review the district

court’s factual findings for clear error, its legal conclu-

sions de novo, and its balancing of the injunction

factors for an abuse of discretion. Christian Legal Soc’y,

453 F.3d at 859; Joelner, 378 F.3d at 620.

Here, the relevant facts are not in dispute. Planned

Parenthood’s motion raised legal questions about the

existence of private statutory rights enforceable under

§ 1983 and whether Act 1210 conflicts with federal law

or violates the unconstitutional-conditions doctrine.

The motion also called for a discretionary judgment

about the balance of harms and the effect of an injunc-

tion on the public interest.

A. The Medicaid Act Claim

1. Is There a Private Right of Action Enforceable Under

§ 1983?

Section 1983 creates a federal remedy against anyone

who, under color of state law, deprives “any citizen of

the United States . . . of any rights, privileges, or immuni-

ties secured by the Constitution and laws.” 42 U.S.C.

§ 1983. In Maine v. Thiboutot, 448 U.S. 1 (1980), the

Supreme Court held that § 1983 “means what it says,” id.

at 4, and “authorizes suits to enforce individual rights

under federal statutes as well as the Constitution,” City

No. 11-2464 13

of Rancho Palos Verdes, Cal. v. Abrams, 544 U.S. 113,

119 (2005). But “it is rights, not the broader or vaguer

‘benefits’ or ‘interests,’ that may be enforced under

the authority of that section.” Gonzaga Univ., 536 U.S.

at 283.

Three factors help determine whether a federal

statute creates private rights enforceable under § 1983:

(1) “Congress must have intended that the provision

in question benefit the plaintiff”; (2) the asserted right

must not be “so vague and amorphous that its

enforcement would strain judicial competence”; and

(3) “the provision giving rise to the asserted right must

be couched in mandatory, rather than precatory, terms.”

Blessing v. Freestone, 520 U.S. 329, 340-41(1997) (internal

quotation marks omitted). These factors are meant to

set the bar high; nothing “short of an unambiguously

conferred right [will] support a cause of action

brought under § 1983.” Gonzaga Univ., 536 U.S. at 283.

“[W]here the text and structure of a statute provide

no indication that Congress intends to create new individ-

ual rights, there is no basis for a private suit, whether

under § 1983 or under an implied right of action.” Id.

at 286.

In the context of legislation adopted under the

spending power,5 this rigorous approach reflects

concerns about federalism and reinforces the principle

that Congress must clearly express its “intent to

5

See U.S. C ONST . art. I, § 8, cl. 1 (“The Congress shall have

Power To lay and collect Taxes . . . to pay the Debts and provide

for the . . . general Welfare of the United States . . . .”).

14 No. 11-2464

impose conditions on the grant of federal funds so that

the States can knowingly decide whether or not to accept

those funds.” Pennhurst State Sch. & Hosp. v. Halderman,

451 U.S. 1, 24 (1981); see also Arlington Cent. Sch. Dist. Bd.

of Educ. v. Murphy, 548 U.S. 291, 296 (2006) (requiring

that spending statutes provide “clear notice” of state

obligations). Pennhurst analogized cooperative Spending

Clause legislation to a contract between the federal gov-

ernment and willing states: “[L]egislation enacted

pursuant to the spending power is much in the nature of

a contract: in return for federal funds, the States agree

to comply with federally imposed conditions.” 451 U.S.

at 17. As such, the legitimacy of spending-power legisla-

tion “rests on whether the State voluntarily and

knowingly accepts the terms of the ‘contract.’ ” Id. There

cannot be knowing acceptance “if a State is unaware of

the conditions or is unable to ascertain what is expected

of it.” Id.; see also Arlington Cent. Sch. Dist., 548 U.S. at

296. The Supreme Court has repeatedly reaffirmed this

understanding, most recently in National Federation

of Independent Business v. Sebelius, 132 S. Ct. at 2601-02.

Accordingly, “where a statute by its terms grants no

private rights to any identifiable class,” Gonzaga Univ.,

536 U.S. at 284 (internal quotation marks omitted), it

cannot be construed to confer an individual right en-

forceable under § 1983, id. at 284-85. Instead, to

create judicially enforceable private rights, the statute

“ ‘must be phrased in terms of the persons benefited,’ ”

with “ ‘an unmistakable focus on the benefited class.’ ” Id.

(quoting Cannon v. Univ. of Chi., 441 U.S. 677, 691, 692 n.13

(1979)). It must “confer[] entitlements ‘sufficiently specific

No. 11-2464 15

and definite to qualify as enforceable rights.’ ” Id. at 280

(quoting Wright v. Roanoke Redev. & Hous. Auth., 479 U.S.

418, 432 (1987)). In other words, the statute must contain

“rights-creating language” that unambiguously creates

an “ ‘individual entitlement.’ ” Id. at 287 (quoting Blessing,

520 U.S. at 343).

“Once a plaintiff demonstrates that a statute confers

an individual right, the right is presumptively enforceable

by § 1983.” Id. at 284. The defendant may defeat this

presumption by demonstrating “that Congress shut

the door to private enforcement either expressly, through

specific evidence from the statute itself, or impliedly,

by creating a comprehensive enforcement scheme that

is incompatible with individual enforcement under

§ 1983.” Id. at 284 n.4 (internal quotation marks and

citations omitted); see also Wilder, 496 U.S. at 520-21;

Middlesex Cnty. Sewerage Auth. v. Nat’l Sea Clammers

Ass’n, 453 U.S. 1, 20 (1981) (holding that there is no en-

forceable private right where the statute itself creates

a remedial scheme that is “sufficiently comprehensive . . .

to demonstrate congressional intent to preclude the

remedy of suits under § 1983”).

Applying these principles here, we agree with the

district court that the free-choice-of-provider statute

unambiguously gives Medicaid-eligible patients an indi-

vidual right. Section 1396a(a)(23) mandates that all

state Medicaid plans provide that “any individual

eligible for medical assistance . . . may obtain such assis-

tance from any institution, agency, community

pharmacy, or person, qualified to perform the service

or services required.” Medicaid patients are the obvious

16 No. 11-2464

intended beneficiaries of the statute; it states that any

Medicaid-eligible person may obtain medical assistance

from any institution, agency, or person qualified to

perform that service. In other words, Medicaid patients

have the right to receive care from the qualified

provider of their choice. This language does not simply

set an aggregate plan requirement, but instead

establishes a personal right to which all Medicaid

patients are entitled. Gonzaga Univ., 536 U.S. at 288 (con-

trasting a statute with an “aggregate” focus with one

that is focused on the needs of an identified class of

persons). Section 1396a(a)(23) uses “individually focused

terminology,” id. at 287, unmistakably “ ‘phrased in terms

of the persons benefitted,’ ” id. at 284 (quoting Cannon,

441 U.S. at 692 n.13).

Second, the right is administrable and falls comfortably

within the judiciary’s core interpretive competence.

Planned Parenthood argues that a state infringes the free-

choice-of-provider right when it excludes a provider

from its Medicaid program for a reason other than the

provider’s fitness to render the medical services re-

quired. Whether this is the proper interpretation of

§ 1396a(a)(23) is a legal question fully capable of judicial

resolution.

Finally, § 1396a(a)(23) is plainly couched in mandatory

terms. It says that all states “must provide” in their

Medicaid plans that beneficiaries may obtain medical

care from any provider qualified to perform the service.

In sum, the free-choice-of-provider statute explicitly

refers to a specific class of people—Medicaid-eligible

No. 11-2464 17

patients—and confers on them an individual entitle-

ment—the right to receive reimbursable medical services

from any qualified provider. We agree with the district

court that § 1396a(a)(23) unambiguously creates private

rights “presumptively enforceable by § 1983.” Gonzaga

Univ., 536 U.S. at 284.

Nothing in the Medicaid Act suggests, explicitly or

implicitly, that “Congress specifically foreclosed a

remedy under § 1983.” Id. at 284 n.4 (internal quotation

marks omitted). Indiana points to the Medicaid Act’s

general administrative scheme—more specifically, to the

HHS Secretary’s authority to review state plans for com-

pliance and withhold or curtail Medicaid funds as a

means of bringing noncompliant states into line. See 42

U.S.C. §§ 1316(a), 1396c; 42 C.F.R. § 430.12(c). The State

suggests that this feature of the administrative scheme

implies that Congress foreclosed private enforcement of

§ 1396a(a)(23). But the Secretary’s power to shut off all

or part of a state’s funding is not a “comprehensive

enforcement scheme,” see Gonzaga Univ., 536 U.S. at 284

n.4, nor does the administrative-approval process for

plan amendments provide an avenue for beneficiaries

to vindicate their free-choice-of-provider rights, cf.

Middlesex Cnty. Sewerage Auth., 453 U.S. at 20 (ex-

plaining that where a federal statute provides “its own

comprehensive enforcement scheme, the requirements

of that enforcement procedure may not be bypassed

by bringing suit directly under § 1983”).

It would be a different matter if Congress had provided

an administrative remedy for individual patients. “The

18 No. 11-2464

provision of an express, private means of redress in

the statute itself is ordinarily an indication that Congress

did not intend to leave open a more expansive remedy

under § 1983.” Rancho Palos Verdes, 544 U.S. at 121. But

Congress did not provide a means of private redress

here. And private enforcement of § 1396a(a)(23) in suits

under § 1983 in no way interferes with the Secretary’s

prerogative to enforce compliance using her administra-

tive authority. Indeed, addressing a different subsection

of § 1396a(a), the Supreme Court has held that the

Medicaid Act’s “administrative scheme cannot be con-

sidered sufficiently comprehensive to demonstrate a

congressional intent to withdraw the private remedy

of § 1983.” Wilder, 496 U.S. at 522. Wilder held that the

Boren Amendment, which established a standard for

Medicaid reimbursement of hospitals, nursing homes,

and intermediate-care facilities, is enforceable under

§ 1983. Id. (holding that 42 U.S.C. § 1396a(a)(13)(A) is

enforceable in a suit under § 1983).

Our conclusion finds support in decisions from other

circuits. In Harris v. Olszewski, 442 F.3d 456, 459 (6th Cir.

2006), the Sixth Circuit squarely addressed this

issue and held that § 1396a(a)(23) uses the kind of rights-

creating, mandatory language required to create

individual rights enforceable under § 1983. The court

went on to note that although

there may be legitimate debates about the medical

care covered by or exempted from the freedom-of-

choice provision, the mandate itself does not

contain the kind of vagueness that would push the

limits of judicial enforcement. Whether a state

No. 11-2464 19

plan provides an individual with the choice specified

in the provision is likely to be readily apparent . . . .

Id. at 462. Finally, the court observed that the Medicaid

Act does not “explicitly or implicitly foreclose the private

enforcement of this statute through § 1983 actions.”

Id. More particularly, the Act “does not provide other

methods for private enforcement.” Id. In short, applying

the Gonzaga University test, the Sixth Circuit concluded

that § 1396a(a)(23) “creates enforceable rights that a

Medicaid beneficiary may vindicate through § 1983.“ 6

Id. at 461.

Other circuits have reached the same conclusion in

cases involving individual suits for violation of

§ 1396a(a)(8), which requires that state Medicaid plans

“provide that all individuals wishing to make applica-

tion for medical assistance under the plan shall have

opportunity to do so, and that such assistance shall

be furnished with reasonable promptness to all eligible

individuals.” 42 U.S.C. § 1396a(a)(8); see Doe v. Kidd, 501

F.3d 348, 355-57 (4th Cir. 2007); Sabree ex rel. Sabree v.

Richman, 367 F.3d 180, 189-93 (3d Cir. 2004); Bryson v.

Shumway, 308 F.3d 79, 88-89 (1st Cir. 2002); Doe ex rel.

6

The Eleventh Circuit agrees, albeit in a case decided prior to

Gonzaga University. See Silver v. Baggiano, 804 F.2d 1211, 1218

(11th Cir. 1986), abrogated on other grounds by Lapides v. Bd. of

Regents of Univ. Sys. of Ga., 523 U.S. 613 (2002) (holding that

“Medicaid recipients do have enforceable rights under

§ 1396a(a)(23)”).

20 No. 11-2464

Doe v. Chiles, 136 F.3d 709, 715-19 (11th Cir. 1998).7 And we

have recently followed the lead of our sister circuits in

finding an enforceable individual right in yet another

provision of § 1396a(a)—subsection (10), which requires

that state Medicaid plans “must . . . provide . . . for making

medical assistance available . . . to all [eligible] individu-

als.” See Bontrager v. Ind. Family & Soc. Servs. Admin.,

No. 11-3710, 2012 WL 4372524, *6 (7th Cir. Sept. 26, 2012)

(citing Watson v. Weeks, 436 F.3d 1152, 1159-61 (9th Cir.

2006); Sabree, 367 F.3d at 189-92; South Dakota ex rel.

Dickson v. Hood, 391 F.3d 581 604-06 (5th Cir. 2004)). The

free-choice-of-provider provision uses language far

more concrete and individually focused than either

subsection (8) or (10) of § 1396a(a). Indiana’s position

is hard to reconcile with Wilder and a fair amount of

precedent from this and other circuits.8

Against this authority, Indiana insists that legislation

adopted under Congress’s spending power cannot create

individual rights enforceable under § 1983 because its

legal force stems from a state’s acceptance of federal

7

We have assumed without deciding that § 1396a(a)(8) creates

an enforceable individual right. See Bertrand ex rel. Bertrand

v. Maram, 495 F.3d 452, 457 (7th Cir. 2007) (“This circuit has

itself assumed after Gonzaga University that § 1396a(a)(8) may

be enforced via § 1983.”).

8

One district-court decision supports Indiana’s argument.

See M.A.C. v. Betit, 284 F. Supp. 2d 1298, 1307 (D. Utah 2003). As

the Sixth Circuit has observed, however, that opinion offers

virtually no analysis of the issue. See Harris v. Olszewski, 442

F.3d 456, 463 (6th Cir. 2006).

No. 11-2464 21

funding rather than from the law itself. This categorical

argument cannot be correct; if it were, then the elaborate

doctrine worked out in Gonzaga University and its prede-

cessors was completely unnecessary. Not too long ago

we made this very point, observing that the Supreme

Court’s recent statutory-right-of-action cases “do not

stand for a broad rule that spending power statutes

can never be enforced by private actions” under § 1983.

Ind. Prot. & Advocacy Servs. v. Ind. Family & Soc. Servs.

Admin., 603 F.3d 365, 378 (7th Cir. 2010) (en banc).

Taking a slightly different tack, Indiana argues that

the free-choice-of-provider statute does not create

privately enforceable rights because the conditions

listed in § 1396a(a) are simply criteria for federal reim-

bursement, not requirements that must be met by partic-

ipating states. In other words, noncompliance with the

conditions listed in § 1396a(a) puts the State at risk of

losing its federal Medicaid funding but does not

constitute a violation of federal law.9 To be sure, non-

9

In a related argument, Indiana maintains that federal statutes

specifying the requirements of state Medicaid plans cannot

impose legal obligations on state officials. Congress specifically

foreclosed this argument when it enacted 42 U.S.C. § 1320a-2,

which states that a provision of the Medicaid Act “is not to

be deemed unenforceable because of its inclusion in a section

of this chapter requiring a State plan or specifying the

required contents of a State plan.” See Harris v. James, 127

F.3d 993, 1003 (11th Cir. 1997) (explaining that § 1320a-2

establishes that “the mere fact that an obligation is couched in

(continued...)

22 No. 11-2464

compliance with the requirements of § 1396a(a) may

serve as a basis for the Secretary’s disapproval of a

state’s Medicaid plan and withholding of Medicaid

funds, but that does not mean that § 1396a(a) functions

only as a condition precedent to the federal government’s

obligation to keep its end of the Medicaid bargain.

Federal statutes enacted pursuant to the spending power

do not create federal rights or obligations of their

own force, but “once a state elects to participate [in

Medicaid], it must abide by all federal requirements and

standards as set forth in the Act.” Collins, 349 F.3d at

374 (citing Wilder, 496 U.S. at 502); see also Alexander,

469 U.S. at 289 n.1. As we have explained, the contract

model for interpreting Spending Clause legislation

has important implications for the relationship between

the federal government and the states, see Nat’l Fed’n

of Indep. Bus., 132 S. Ct. at 2601-03; Pennhurst, 451 U.S. at

17, but it does not follow that Spending Clause legisla-

tion can never create judicially enforceable individual

rights.

Finally, Indiana argues that allowing private enforce-

ment of the free-choice-of-provider requirement would

conflict with O’Bannon v. Town Court Nursing Center, 447

U.S. 773 (1980), and Kelly Kare, Ltd. v. O’Rourke, 930

9

(...continued)

a requirement that the State file a plan is not itself

sufficient grounds for finding the obligation unenforceable

under § 1983 ”).

No. 11-2464 23

F.2d 170 (2d Cir. 1991). We disagree. In O’Bannon the

Supreme Court held that a state need not provide a pre-

termination hearing to Medicaid beneficiaries when

state officials terminate a medical provider (in that case,

a nursing home) as unfit to participate in Medicaid.

447 U.S. at 785. The Court explained its holding as follows:

[T]he Medicaid provisions relied upon by the Court

of Appeals do not confer a right to continued

residence in a home of one’s choice. Title 42 U.S.C.

§ 1396a(a)(23) . . . 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 gov-

ernment interference with the choice to remain in

a home that continues to be qualified. But 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.

Id.

Similarly, in Kelly Kare the free-choice-of-provider

statute was raised in the context of a due-process claim.

A home-healthcare provider and its patients alleged

that they were deprived of due process when the State

cancelled the provider’s contract based on allegations

of unfitness without providing a pre-termination hear-

ing. Relying on O’Bannon, the Second Circuit rejected the

claim:

24 No. 11-2464

We read O’Bannon as holding that a Medicaid recipi-

ent’s freedom of choice rights are necessarily depend-

ent on a provider’s ability to render services. No

cognizable property interest can arise in the

Medicaid recipient unless the provider is both quali-

fied and participating in the Medicaid program.

Kelly Kare, 930 F.2d at 178.

Neither O’Bannon nor Kelly Kare supports Indiana’s

argument. This is not a due-process case. Planned Parent-

hood and its patients are not suing for violation of their

procedural rights; they are making a substantive claim

that Indiana’s defunding law violates § 1396a(a)(23). As

the Supreme Court explained in O’Bannon, § 1396a(a)(23)

“gives [Medicaid] recipients the right to choose among

a range of qualified providers.” 447 U.S. at 785. This lan-

guage reinforces rather than undermines our conclu-

sion that § 1396a(a)(23) confers individual rights enforce-

able under § 1983.

2. Does the Defunding Law Violate § 1396a(a)(1)?

Indiana argues that even if § 1396a(a)(23) confers

an individual right, the states may establish provider

qualifications that effectively limit that right. It is true

that Medicaid regulations permit the states to establish

“reasonable standards relating to the qualifications

of providers.” 42 C.F.R. § 431.51(c)(2). But Indiana

claims plenary authority to exclude Medicaid providers

for any reason, as long as it furthers a legitimate state

interest—here, the State’s interest in avoiding indirect

No. 11-2464 25

subsidization of abortion. This sweeping claim conflicts

with the unambiguous language of § 1396a(a)(23) and

finds no support in related Medicaid statutes and regula-

tions.

To repeat, § 1396a(a)(23) requires that state Medicaid

plans must 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.” 42 U.S.C.

§ 1396a(a)(23) (emphases added). The Act does not

define what it means for a provider to be “qualified,” and

the term is not self-defining. See B LACK’S L AW D ICTIONARY

1360 (9th ed. 2009) (defining “qualified” as “[p]ossessing

the necessary qualifications; capable or competent”).

Medicaid regulations provide that the states may

establish “reasonable standards relating to the qualifica-

tions of providers.” 42 C.F.R. § 431.51(c)(2). This authority,

however, does not suggest that states are free to ascribe

any meaning to the statutory term “qualified”—including

a meaning “ ‘entirely strange to those familiar with its

ordinary usage.’ ” United States v. Little Lake Misere Land Co.,

412 U.S. 580, 596 (1973) (quoting De Sylva v. Ballentine,

351 U.S. 570, 581 (1956)). As the limiting term “reasonable”

in the regulation suggests, a state’s authority to

determine provider qualifications must be keyed to

the “permissible variations in the ordinary concept”

of what it means to be “qualified” in this particular

context. De Sylva, 351 U.S. at 581.

Read in context, the term “qualified” as used in

§ 1396a(a)(23) unambiguously relates to a provider’s

26 No. 11-2464

fitness to perform the medical services the patient re-

quires. The statute provides that Medicaid beneficiaries

“may obtain [medical] assistance from any institution,

agency . . . or person[] qualified to perform the service or

services required.” To 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. Planned Parenthood’s clinics are “qualified” in

the sense meant by § 1396a(a)(23).

Indiana argues that the term is more elastic and

includes the authority to establish provider-eligibility

criteria based on any legitimate state interest. That inter-

pretation of § 1396a(a)(23) would lead to strange results.

If the 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-pro-

vider requirement could be easily undermined by

simply labeling any exclusionary rule as a “qualification.”

This would open a significant loophole for restricting

patient choice, contradicting the broad access to medical

care that § 1396a(a)(23) is meant to preserve.

Indiana attempts to articulate a limiting principle, but

its effort is unpersuasive. It suggests that “a [s]tate may

not use a qualification to target patient choice as

such—for example by eliminating all choice in the

market—but it may reduce patient choice incident to a

qualification targeting some legitimate government

objective, such as the desire not to subsidize abortion

even indirectly.” This argument inverts what the statute

says. Section 1396a(a)(23) does not simply bar the states

No. 11-2464 27

from ending all choice of providers, it guarantees to

every Medicaid beneficiary the right to choose any quali-

fied provider.

Looking for support elsewhere in the Medicaid

Act, Indiana focuses on § 1396a(p)(1), which elaborates

on the states’ authority to exclude Medicaid providers:

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 partic-

ipation in a program under subchapter XVIII of

this chapter under section 1320a-7, 1320a-7a, or

1395cc(b)(2) of this title.

42 U.S.C. § 1396a(p)(1). The cross-referenced sections of

the Medicaid Act—§§ 1320a-7, 1320a-7a, and 1395cc(b)(2)—

pertain to mandatory or permissive exclusions of pro-

viders for various forms of malfeasance such as fraud,

drug crimes, and failure to disclose necessary informa-

tion to regulators. Indiana emphasizes the phrase “[i]n

addition to any other authority” and suggests that this

language implies a plenary power reserved to the states

to exclude Medicaid providers as they see fit. This

reads the phrase for more than it’s worth. “[I]n addition

to any other authority” signals only that what follows

is a nonexclusive list of specific grounds upon

which states may bar providers from participating

in Medicaid. It does not imply that the states have an

unlimited authority to exclude providers for any

reason whatsoever.

28 No. 11-2464

To bolster its implied-authority argument, Indiana

relies on a Senate Finance Committee Report explaining

that § 1396a(p)(1) “is not intended to preclude a State

from establishing, under State law, any other bases for

excluding individuals or entities from its Medicaid program.”

S. R EP. N O . 100-109, at 20 (1987) (emphasis added), reprinted

in 1987 U.S.C.C.A.N. 682, 700. The Senate Report is not

useful here; it suggests only that § 1396a(p)(1) does not

have preemptive effect. The Senate Report does

not—indeed, it cannot—alter the plain meaning of “quali-

fied” as that term is used in § 1396a(a)(23).

Indiana also points to 42 U.S.C. § 1320a-7(b)(14), which

allows states to exclude providers who are in default

on their student-loan payments, and from this provision

makes another argument by implication: If the states

may refuse to subsidize student-loan delinquents with

Medicaid dollars, then they must have the authority to

“avoid indirect financing” of any “non-Medicaid” conduct.

But like § 1396a(p)(1), this statute merely stipulates a

particular ground for excluding a Medicaid provider; it

does not imply that the states may establish any rule of

exclusion and declare it a provider “qualification” for

purposes of § 1396a(a)(23). That would make the free-

choice-of-provider requirement a nullity.

Finally, the cases Indiana cites do not support its posi-

tion. In First Medical Health Plan, Inc. v. Vega-Ramos, 479

F.3d 46 (1st Cir. 2007), for instance, the First Circuit

simply recognized the point we have just made—that

states may exclude providers from participating in

Medicaid for reasons not listed in § 1396a(p)(1). Vega-

No. 11-2464 29

Ramos, moreover, involved a conflict-of-interest rule

applicable only in Puerto Rico; the First Circuit had no

reason to consider the effect of the free-choice-of-

provider requirement, which does not apply to Puerto

Rico’s Medicaid program. See 42 U.S.C. § 1396a(a)(23)(B).

The court’s opinion thus cannot be understood to

suggest that states may override the free-choice-of-pro-

vider requirement by creating “qualifications” wholly

unrelated to the competent delivery of medical services.

Nor does Guzman v. Shewry, 552 F.3d 941 (9th Cir.

2009), help Indiana’s case. There, a provider was sus-

pended from California’s Medicaid program based on a

pending criminal investigation. He claimed that federal

law occupies the entire field of regulation pertaining

to Medicaid and therefore preempted the state’s disciplin-

ary measure. The Ninth Circuit rejected this argu-

ment, relying in part on 42 U.S.C. § 1320a-7(b)(5), which

provides that the states may suspend or exclude

providers from participating in Medicaid “for reasons

bearing on the individual’s or entity’s professional compe-

tence, professional performance, or financial integrity.”

The court remarked that this provision presupposes

state regulatory authority over provider qualifications.

Guzman, 552 F.3d at 949.

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. See 42 C.F.R. § 431.51(c)(2)

30 No. 11-2464

(providing that states may establish “reasonable

standards relating to the qualifications of providers”).

This case raises a question about the limits of that author-

ity. Guzman, which involved state action falling within

the core of the state’s residual authority, does not

support Indiana’s argument.

Before concluding our discussion of the Medicaid Act

claim, a few words about agency deference, which the

district court applied and the parties briefed on appeal.

As an additional reason to affirm the district court’s

decision, Planned Parenthood argues, and the United

States agrees, that we should defer to the CMS Admin-

istrator’s interpretation of § 1396a(a)(23) under Chevron.

See Chevron, U. S. A., Inc. v. Natural Res. Def. Council, Inc.,

467 U.S. 837 (1984). But Chevron deference is triggered

only when a statute is ambiguous. Id. at 842-43 (“If the

intent of Congress is clear, that is the end of the matter;

for the court, as well as the agency, must give effect to

the unambiguously expressed intent of Congress.”). As

we have explained, the term “qualified” as used in

§ 1396a(a)(23) unambiguously refers to the provider’s

fitness to render the medical services required. See

generally Carcieri v. Salazar, 555 U.S. 379, 391 (2009) (noting

that statutory text susceptible to alternative meanings

is not ambiguous when its meaning is clear in light of the

statutory context). In the absence of ambiguity, Chevron

deference does not come into play.

Because Indiana’s defunding law excludes a class of

providers from Medicaid for reasons unrelated to

provider qualifications, we agree with the district court

that Planned Parenthood is likely to succeed on its

No. 11-2464 31

claim that Indiana’s defunding law violates § 1396a(a)(23).

This brings us to the district court’s evaluation of the

balance of harms and the effect of preliminary injunctive

relief on the public interest.

3. Balance of Harms and the Public Interest

The court below held that the loss of Medicaid funding

would cause Planned Parenthood immediate irreparable

harm. Indiana does not seriously challenge this con-

clusion. Planned Parenthood would have to lay off

dozens of workers, close multiple clinics, and stop

serving a significant number of its patients. Planned

Parenthood of Ind., 794 F. Supp. 2d at 912. Absent a pre-

liminary injunction, its Medicaid patients would lose

their provider of choice for the duration of the litigation.

Id. at 912-13. These harms are entitled to significant

weight given Planned Parenthood’s strong likelihood

of success on the merits of its Medicaid Act claim. In

addition, the district court noted that “[t]he federal gov-

ernment has threatened partial or total withholding

of federal Medicaid dollars to the State of Indiana,

which could total well over $5 billion dollars annually

and affect nearly 1 million Hoosiers.” Id. at 913. The

judge saw “a high-stakes political impasse” looming,

with the well-being of Indiana’s Medicaid patients

hanging in the balance: “[I]f dogma trumps pragmatism

and neither side budges, Indiana’s most vulnerable

citizens could end up paying the price as the collateral

damage of a partisan battle.” Id. This helped tip the

scales in favor of a preliminary injunction.

32 No. 11-2464

Without endorsing the political commentary, we see

no reason to disturb the district court’s assessment of

the balance of harms and the public interest. Indiana

maintains that any harm to Planned Parenthood’s

Medicaid 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 provider qualifica-

tions.

Indiana also argues that the district court’s

preliminary injunction “completely undermines” the pub-

lic’s interest in the established administrative pro-

cess. We cannot see how. Indiana’s appeal of the CMS

Administrator’s decision has proceeded in the ordinary

course. It is true that the federal government’s position

as an amicus curiae in this litigation makes it unlikely

that the HHS Secretary will overrule the CMS Admin-

istrator’s decision and approve Indiana’s request to

amend its Medicaid plan. But that has no real effect on

the balance of harms. And if the Secretary approves

the plan amendment, Indiana may ask for relief from

the preliminary injunction.

In the end, our review of this aspect of the district

court’s decision is deferential. The judge appropriately

weighed the relative harm to the parties and the public

interest and reasonably concluded that it warranted

No. 11-2464 33

preliminary injunctive relief on the Medicaid Act claim.

That decision was not an abuse of discretion.

B. Block-Grant Preemption Claim

The district court also enjoined Indiana from enforcing

Act 1210 to halt the payment of money Planned Parent-

hood receives from the State under a federal block-grant

program for the diagnosis and monitoring of sexually

transmitted diseases. The statutory authority for the

program is as follows:

§ 247c. Sexually transmitted diseases; prevention and

control projects and programs

....

(c) Project grants to States

The Secretary is also authorized to make project grants

to States and, in consultation with the State health

authority, to political subdivisions of States, for—

(1) sexually transmitted diseases surveillance ac-

tivities, including the reporting, screening, and

followup of diagnostic tests for, and diagnosed cases

of, sexually transmitted diseases . . . .

42 U.S.C. § 247c.

The Disease Intervention Services agency (“DIS”) ad-

ministers the grants at the federal level. In 2011

Indiana awarded Planned Parenthood two grants

totaling $150,000 from federal funds the State received

from DIS under § 247c(c). Planned Parenthood has re-

34 No. 11-2464

ceived grants from this program continuously since 1996

and alleges that but for Act 1210, it would receive

renewals on an ongoing basis. The defunding law can-

celed Planned Parenthood’s 2011 contracts and makes the

organization ineligible for future grants or renewals.1 0

The district court accepted Planned Parenthood’s

argument that § 247c(c) preempts the defunding law

and on this basis enjoined Indiana from cutting off the

organization’s funding under this program. There are

several problems with the court’s analysis. First, § 247c(c)

does not create private rights actionable under § 1983.

No one argued to the contrary, but the judge held that

Planned Parenthood’s preemption claim may proceed

anyway, as a direct claim under the Supremacy Clause.

That was very likely an error. Even if it was not, Planned

Parenthood cannot succeed on the merits of this claim.

Section 247c(c) places no conditions on recipient states

other than the basic requirement that the block-granted

money be used for the stated purposes. Finally, the

unconstitutional-conditions doctrine does not supply

an alternative basis to affirm the injunction on the block-

grant claim.

10

The complaint also mentions other federal block-grant

programs under which Planned Parenthood receives state-

administered federal funds, but the injunction proceeding

was limited to § 247c(c).

No. 11-2464 35

1. Does the Supremacy Clause Supply a Preemption

Right of Action?

By its terms, § 247c(c) merely authorizes the HHS

Secretary to make grants to the states for surveillance

activities relating to sexually transmitted diseases. The

statute confers no individual rights and therefore the

remedy of § 1983 is unavailable. Planned Parenthood

acknowledges as much, but persuaded the district court

that the Supremacy Clause supplies a preemption right

of action of its own force. We have our doubts.

It is well-established that the Supremacy Clause is “not

a source of any federal rights.” Chapman v. Hous. Welfare

Rights Org., 441 U.S. 600, 613 (1979); see also Ill. Ass’n of

Mortg. Brokers v. Office of Banks & Real Estate, 308 F.3d 762,

765 (7th Cir. 2002) (recognizing that the Supremacy

Clause “does not of its own force create rights”). The

Supremacy Clause “ ‘secure[s] federal rights by according

them priority whenever they come in conflict with state

law.’ ” Golden State Transit Corp. v. City of Los Angeles, 493

U.S. 103, 107 (1989) (alteration in original) (quoting Chap-

man, 441 U.S. at 613) (internal quotation marks omitted).

Just this past Term, the Supreme Court was set to

decide a case raising the question whether Medicaid

providers and recipients could bring a claim that the

Medicaid Act preempts state statutes reducing Medicaid

payments to providers. See Douglas, 132 S. Ct. at 1207. In

Douglas, as here, the providers and recipients had no

statutory right of action under the Medicaid Act, but

the Ninth Circuit said they could bring the suit directly

under the Supremacy Clause. Id. at 1209. The Supreme

36 No. 11-2464

Court granted certiorari to decide whether the court of

appeals was correct. Id. While the case was pending,

however, CMS approved California’s statutory scheme.

Id. The Court held that this development did not moot

the case, id. at 1209-10, but remanded to the Ninth Circuit

to permit that court to address the impact of this

new development “in the first instance,” id. at 1211.

Chief Justice Roberts dissented, joined by Justices Scalia,

Thomas, and Alito. In their view, the Court should have

kept the case and decided the legal question presented:

whether the Supremacy Clause provides a cause of

action to enforce the requirements of a Spending Clause

statute when Congress has not provided a right of action

in the statute itself. Id. at 1212 (Roberts, C.J., dissenting).

That is the precise question here, and although the

Court ultimately left it for another day, we can take

some cues from the Chief Justice’s analysis.

The Chief Justice began by reiterating the principle

that the Supremacy Clause does not create federal rights,

but instead “simply ensures that the rule established

by Congress controls.” Id. at 1213. In other words, the role

of the Supremacy Clause is simply to “ensure that, in a

conflict with state law, whatever Congress says goes.” Id.

at 1212. So “if Congress does not intend for a statute to

supply a cause of action for its enforcement, it makes no

sense to claim that the Supremacy Clause itself must

provide one.” Id. In this situation, implying a direct right

of action under the Supremacy Clause “would effect a

complete end-run around [the Court’s] implied right of

action and 42 U.S.C. § 1983 jurisprudence.” Id. at 1213. In

No. 11-2464 37

the view of the dissenting justices in Douglas, a proper

understanding of the Supremacy Clause compelled

the conclusion that “[w]hen Congress did not intend to

provide a private right of action to enforce a statute

enacted under the Spending Clause, the Supremacy

Clause does not supply one of its own force.” Id. at 1215.

Other than the Ninth Circuit’s decision in Douglas, few

appellate opinions have recognized a freestanding right

to bring a preemption action under the Supremacy

Clause, though we acknowledge that there are some. See,

e.g., Wilderness Soc’y v. Kane County, Utah, 581 F.3d 1198,

1216 (10th Cir. 2009), vacated on other grounds, 632 F.3d 1162

(10th Cir. 2011) (en banc); Planned Parenthood of Hous. & Se.

Tex. v. Sanchez, 403 F.3d 324, 331-35 (5th Cir. 2005). This

approach is controversial (as the grant of certiorari

in Douglas implies), and we think highly doubtful, for

the reasons articulated by the Douglas dissenters.

This is not, moreover, a circumstance covered by the

doctrine of Ex parte Young, 209 U.S. 123 (1908). The pre-

emption claim here, as in Douglas, does not involve

the “pre-emptive assertion in equity of a defense that

would otherwise have been available in the State’s en-

forcement proceedings at law.” Va. Office for Prot. &

Advocacy v. Stewart, 131 S. Ct. 1632, 1642 (2011) (Kennedy,

J., concurring); see also Douglas, 132 S. Ct. at 1213 (Roberts,

C. J., dissenting). In other words, Indiana is not

threatening Planned Parenthood with an enforcement

action or otherwise trying to regulate its behavior

through an action at law; the State has simply turned off

the funding spigot.

38 No. 11-2464

If Planned Parenthood’s preemption claim is to

proceed, we would have to agree with its position that

the Supremacy Clause supplies a right of action of its

own force. We are not inclined to agree, but we do not

need to commit ourselves here. Planned Parenthood’s

preemption claim cannot succeed on the merits. Because

our jurisdiction is not at issue, we can assume without

deciding the right-of-action question and proceed

directly to the merits. See Nw. Airlines, Inc. v. County of

Kent, Mich., 510 U.S. 355, 365 (1994) (“The question

whether a federal statute creates a claim for relief is not

jurisdictional.”); see also Bertrand ex rel. Bertrand v. Maram,

495 F.3d 452, 457-58 (7th Cir. 2007) (assuming a right of

action exists and deciding the case on the merits because

“[a] private right of action is not a component of subject-

matter jurisdiction”); Bruggeman ex rel. Bruggeman v.

Blagojevich, 324 F.3d 906, 911 (7th Cir. 2003) (same).

2. Likelihood of Success on the § 247c(c) Preemption

Claim

By its terms, § 247c(c) does no more than authorize

the HHS Secretary to make federal block grants to the

states to help pay for programs that diagnose and monitor

sexually transmitted diseases. The only restriction on

the states is that the federal money be used for the stated

purposes. Beyond that, § 247c(c) attaches no strings to

the block-granted money at all. Nor has Planned Parent-

hood identified any related federal statute or regulation

that expressly limits how a recipient state may disburse

No. 11-2464 39

these funds. 11 Indiana’s defunding law cannot possibly

conflict with a block-grant statute as unrestricted as

this one.

Nonetheless, the district court concluded that Indiana

is not free to decide how to distribute its § 247c(c) funds.

Without discussing the statutory text at all, the court

held that § 247c(c) “does not suggest that states are per-

mitted to determine eligibility criteria for the DIS

grants.” Planned Parenthood of Ind., 794 F. Supp. 2d at 912.

This inverts established preemption analysis, which

begins with a presumption against preemption and focuses

first on the text of the statute. Wyeth v. Levine, 555 U.S. 555,

565 & n.3 (2009). Unless Congress has “indicate[d]

pre-emptive intent through a statute’s express language

or through its structure and purpose,” the state law is

11

Planned Parenthood makes passing reference to 42 C.F.R.

§ 51b.106(e), but that regulation simply provides that the

Secretary of HHS may impose conditions on the state’s use of

§ 247c(c) block-granted funds at the time the grant is made,

“including conditions governing the use of information or

consent forms, when, in the [federal government’s] judgment,

they are necessary to advance the approved program, the

interest of the public health, or the conservation of grant funds.”

Without explanation, the district court also relied on

§ 51b.106(e). See Planned Parenthood of Ind., Inc. v. Comm’r of

the Ind. State Dep’t of Health, 794 F. Supp. 2d 892, 912 (S.D. Ind.

2011). The regulation has no relevance here. It simply makes

explicit what is already implicit in the Secretary’s authority

to make block grants: that she may attach specific conditions

to a state’s § 247c(c) block-grant funding at the time the grant

is made.

40 No. 11-2464

presumed to be valid. Altria Grp., Inc. v. Good, 555 U.S. 70,

76 (2008).

Because § 247c(c) contains no express preemption

language, only implied preemption is even conceivably

at issue. Implied preemption comes in two types: (1) field

preemption, which arises when the federal regulatory

scheme is so pervasive or the federal interest so

dominant that it may be inferred that Congress intended

to occupy the entire legislative field; and (2) conflict

preemption, which arises when state law conflicts with

federal law to the extent that “compliance with both

federal and state regulations is a physical impossibility,” or

the state law “stands as an obstacle to the accomplish-

ment and execution of the full purposes and objectives

of Congress.” Arizona v. United States, 132 S. Ct. 2492,

2501 (2012) (internal quotation marks and citations omit-

ted). Field preemption and the “impossibility” form of

conflict preemption are not implicated here. That leaves

only obstacle preemption.

We note for starters that the district court’s view that

Indiana may not impose eligibility conditions on DIS

subgrants conflicts with the basic structure and purpose

of block-grant funding. As a general matter, federal

block grants devolve control to the states over the dis-

bursement of federal funds. Of course, Congress may

restrict a recipient state’s disbursement of block-granted

money in a variety of ways, see King v. Smith, 392 U.S.

309, 333 n.34 (1968), as when the federal statute or im-

plementing regulations expressly provide eligibility

criteria for subgrants from states, see N.Y. State Dep’t of

No. 11-2464 41

Soc. Servs. v. Dublino, 413 U.S. 405, 421-22 (1973). But if the

federal law allows room for state-imposed eligibility

conditions, then the recipient state is free to establish its

own eligibility criteria unless the party asserting preemp-

tion meets its burden of showing that the state rules

frustrate the federal objective. Id. (distinguishing

between grants where federal law “expressly provided

[who] would be eligible” and those where federal law

allowed for “complementary” state conditions).

The district court stood this principle on its head. The

question is not whether § 247c(c) expressly allows a recipi-

ent state to impose its own subgrant conditions, as the

district court seemed to think. Instead, the pertinent

question is whether § 247c(c) prohibits state-imposed

eligibility conditions, either expressly or by necessary

implication. As we have noted, congressional and regula-

tory silence usually defeats a claim of preemption, not the

other way around. See Wyeth, 555 U.S. at 602-03 (Thomas,

J., concurring in the judgment).

Nothing in § 247c(c) or its implementing regulations

restricts Indiana’s authority over subgrants. Absent a

conflict between state and federal law in the first place,

state law cannot possibly stand as an obstacle to the

accomplishment of congressional objectives. “[S]tate law

is displaced only ‘to the extent that it actually conflicts

with federal law.’ ” Dalton v. Little Rock Family Planning

Servs., 516 U.S. 474, 476 (1996) (per curiam) (quoting Pac.

Gas & Elec. Co. v. State Energy Res. Conservation & Dev.

Comm’n, 461 U.S. 190, 204 (1983)). Because Indiana’s

§ 247c(c) funding is unrestricted, there is no conflict

between state and federal law.

42 No. 11-2464

The district court relied on a series of cases regarding

block-grant family-planning funding under Title X. See,

e.g., Sanchez, 403 F.3d at 336-37; Planned Parenthood

Fed’n of Am., Inc. v. Heckler, 712 F.2d 650, 663-64 (D.C. Cir.

1983); Valley Family Planning v. North Dakota, 661 F.2d 99,

100-02 (8th Cir. 1981). Indiana pointed out that Title X’s

implementing regulations contain an explicit open-eligibil-

ity requirement—“[a]ny public or nonprofit private

entity in a State may apply for a grant,” 42 C.F.R.

§ 59.3—while § 247c(c) and its regulatory scheme do not,

see 42 C.F.R. § 51b.106. The district court ignored this

critical distinction. The Title X cases have no bearing here.

Simply put, Indiana’s defunding law does not conflict

with § 247c(c) or its implementing regulations. Having

“identified no significant conflict with an identifiable

federal policy or interest,” O’Melveny & Myers v. FDIC,

512 U.S. 79, 88 (1994), Planned Parenthood cannot

succeed on the merits of its preemption claim. The

district court should not have enjoined the enforcement

of Act 1210 with respect to Indiana’s DIS block-grant

funding.

3. Unconstitutional-Conditions Doctrine

Having decided to order preliminary injunctive relief

on the statutory claims, the district court had no need

to address Planned Parenthood’s unconstitutional-condi-

tions claim. Our decision on the merits of the preemp-

tion claim brings this alternative theory into play. If viable

and likely to succeed, Planned Parenthood’s unconstitu-

No. 11-2464 43

tional-conditions claim may serve as an independent

basis to affirm the judge’s order prohibiting the termina-

tion of its DIS funding. The issue was preserved in the

district court, the parties have briefed it on appeal, and

because it raises a purely legal question, it makes sense

for us to address it here. See Bennett v. Spear, 520 U.S.

154, 166-67 (1997) (“The asserted grounds were raised

below, and have been fully briefed and argued here;

we deem it an appropriate exercise of our discretion

to consider them now rather than leave them for disposi-

tion on remand.”); see also Alvarez, 679 F.3d at 590.

“The ‘unconstitutional conditions’ doctrine is premised

on the notion that what a government cannot compel, it

should not be able to coerce.” Libertarian Party of Ind. v.

Packard, 741 F.2d 981, 988 (7th Cir. 1984). Understood at

its most basic level, the doctrine aims to prevent the

government from achieving indirectly what the Con-

stitution prevents it from achieving directly. Thus, “[t]he

denial of a public benefit may not be used by the gov-

ernment for the purpose of creating an incentive

enabling it to achieve what it may not command directly.”

Elrod v. Burns, 427 U.S. 347, 361 (1976) (plurality opinion).

This does not mean that the myriad public benefits dis-

pensed at all levels of government have the status of

constitutional rights; rather, the doctrine prevents the

government from awarding or withholding a public

benefit for the purpose of coercing the beneficiary to

give up a constitutional right or to penalize his exercise

of a constitutional right. As the Supreme Court explained

the doctrine in Perry v. Sindermann,

44 No. 11-2464

even though a person has no “right” to a valuable

governmental benefit and even though the govern-

ment may deny him the benefit for any number of

reasons, there are some reasons upon which the

government may not rely. It may not deny a benefit

to a person on a basis that infringes his con-

stitutionally protected interests . . . .

408 U.S. 593, 597 (1972).

The first step in any unconstitutional-conditions claim

is to identify the nature and scope of the constitutional

right arguably imperiled by the denial of a public benefit.

See Michael W. McConnell, The Selective Funding Problem:

Abortions and Religious Schools, 104 H ARV . L. R EV. 989, 992

(1991) (observing that a claim that a selective-funding

decision is an unconstitutional condition requires

“careful consideration of the nature of the constitutional

right implicated by the funding decision, including the

nature of the countervailing interests of the govern-

ment”); Cass R. Sunstein, Is There an Unconstitutional

Conditions Doctrine?, 26 SAN D IEGO L. R EV. 337, 338 (1989)

(“Whether a condition is permissible is a function of the

particular constitutional provision at issue . . . .”). Here,

Planned Parenthood’s unconstitutional-conditions claim

necessarily derives from a woman’s constitutional right

to obtain an abortion. See Planned Parenthood of Se. Pa. v.

Casey, 505 U.S. 833, 846 (1992) (“Constitutional protection

of the woman’s decision to terminate her pregnancy

derives from the Due Process Clause of the Fourteenth

Amendment.” (emphasis added)). Under existing prece-

dent any protection for Planned Parenthood as an

No. 11-2464 45

abortion provider is “derivative of the woman’s posi-

tion.” Id. at 884 (plurality opinion).

Two aspects of the Supreme Court’s abortion juris-

prudence are important here. First, the Court has

explained that the constitutional right to obtain an

abortion is a right against coercive governmental burdens;

the government may not “prohibit any woman from

making the ultimate decision to terminate her pregnancy”

before fetal viability or impose an “undue burden on a

woman’s ability to make this decision.” Id. at 874, 879;

see also Gonzales v. Carhart, 550 U.S. 124, 146 (2007). An

“undue burden” exists if the challenged law has the

“purpose or effect” of placing “a substantial obstacle in

the path of a woman seeking an abortion before the

fetus attains viability.” Casey, 505 U.S. at 878 (plurality

opinion); see also Gonzales, 550 U.S. at 146.

Accordingly, the Court has conceptualized the right as “a

constitutionally protected interest ‘in making certain

kinds of important decisions’ free from govern-

mental compulsion.” Maher v. Roe, 432 U.S. 464, 473 (1977)

(quoting Whalen v. Roe, 429 U.S. 589, 599-600 & nn.24 &

26 (1977)).

This brings up the second important point. The Court

has explicitly rejected a neutrality-based view of abor-

tion rights. Thus, the Court has held that although

the abortion right recognized in Roe v. Wade1 2 “protects

the woman from unduly burdensome interference with

her freedom to decide whether to terminate her preg-

12

410 U.S. 113 (1973).

46 No. 11-2464

nancy[,] [i]t implies no limitation on the authority of a

State to make a value judgment favoring childbirth

over abortion, and to implement that judgment by the

allocation of public funds.” Id. at 473-74. In Maher the

Court upheld Connecticut’s ban on public funding for

nontherapeutic abortions because it “places no obsta-

cles—absolute or otherwise—in the pregnant woman’s

path to an abortion.” Id. at 474. The Court reaffirmed

Maher in Harris v. McRae, 448 U.S. 297, 314-17 (1980),

upholding the Hyde Amendment. And in Webster v.

Reproductive Health Services, 492 U.S. 490, 508-11 (1989),

the Court upheld Missouri’s statutory ban on the use of

public employees and facilities to perform or assist in

the performance of an abortion.

Finally, in Rust v. Sullivan, 500 U.S. 173 (1991), the

Court rejected a challenge to federal regulations prohi-

biting recipients of Title X family-planning grants from

advocating abortion as a method of family planning

or referring patients for abortion. Under the regulations,

grant recipients with abortion-related practices could

continue to receive Title X money only if they segregated

their abortion-related activities in a separate affiliate. Id.

at 179-81. Rust held that the regulations did not place

an unconstitutional condition on Title X grant recipients.

Id. at 203. This was so whether the claim was premised

on the speech rights of the providers, id. at 196-99, or

the abortion rights of their patients, id. at 201-03. As

relevant here, the Court reaffirmed the holdings of

Webster, Harris, and Maher that “[t]he Government has no

constitutional duty to subsidize an activity merely

because the activity is constitutionally protected and

No. 11-2464 47

may validly choose to fund childbirth over abortion.” Id.

at 201. Because the Title X regulations did not place

an undue burden on a woman’s right to obtain an

abortion or otherwise impose an unconstitutional condi-

tion on grant recipients, the Court upheld the regulatory

scheme. Id. at 203.

As these cases make clear, the government need not be

neutral between abortion providers and other medical

providers, and this principle is particularly well-estab-

lished in the context of governmental decisions regarding

the use of public funds. As long as the difference

in treatment does not unduly burden a woman’s right

to obtain an abortion, the government is free to treat

abortion providers differently.

Applying these principles here, the unconstitutional-

conditions claim is not likely to succeed. Planned Parent-

hood does not argue that the loss of its block-grant

funding imposes an undue burden—directly or indi-

rectly—on a woman’s right to obtain an abortion. If, as

the foregoing cases hold, the government’s refusal to

subsidize abortion does not unduly burden a woman’s

right to obtain an abortion, then Indiana’s ban on public

funding of abortion providers—even for unrelated

services—cannot indirectly burden a woman’s right to

obtain an abortion.1 3 See Rumsfeld v. Forum for Academic &

13

The unconstitutional-conditions doctrine would be

implicated if a state adopted a policy of withholding unrelated

public benefits from a woman who had an abortion. See

Harris v. McRae, 448 U.S. 297, 317 n.19 (1980) (“A substantial

(continued...)

48 No. 11-2464

Institutional Rights, Inc., 547 U.S. 47, 59-60 (2006) (“It is

clear that a funding condition cannot be unconstitutional

if it could be constitutionally imposed directly.”).

Planned Parenthood offers nothing else in support of

its unconstitutional-conditions claim.1 4 Accordingly, this

theory does not provide an alternative basis to affirm

the district court’s order prohibiting Indiana from ter-

minating Planned Parenthood’s DIS funding.

III. Conclusion

For the foregoing reasons, we A FFIRM the district court’s

order granting preliminary injunctive relief on Planned

Parenthood’s Medicaid Act claim. We R EVERSE the order

as it relates to the State’s § 247c(c) block-grant funding

and R EMAND the case with instructions to modify the

injunction accordingly.

13

(...continued)

constitutional question would arise if Congress had

attempted to withhold all Medicaid benefits from an other-

wise eligible candidate simply because that candidate had

exercised her constitutionally protected freedom to terminate

her pregnancy by abortion.”).

14

The parties debate the feasibility of segregating Planned

Parenthood’s abortion-related services in a separate affiliate

organization, as in the Title X regulatory scheme at issue in

Rust. See Rust v. Sullivan, 500 U.S. 173, 179-81 (1991). That issue

is not directly relevant here. The defunding law does not, on

its face, provide for this option, and Planned Parenthood

does not now organize its affairs in this way.

No. 11-2464 49

C UDAHY, concurring in part and dissenting in part.

I join Part IIA of the majority opinion in full. I also join

Part IIB1 and IIB2 but do not join Part IIB3 or the reversal

of the judgment requiring modification of the prelim-

inary injunction insofar as it prohibits state restrictions

on § 247c(c) block-grant funding. I believe the issue of

unconstitutional conditions should be remanded to the

district court for development of the record with respect

to any possible imposition of a burden on access to abor-

tions. In arguing the matter below, Planned Parenthood

was required to defend both its Medicaid and block-

grant funding. Unsurprisingly, Planned Parenthood

focused on Medicaid and aimed its brief primarily at the

appropriate interpretation of § 1396a(a)(23). The § 247c(c)

block-grant funding received comparatively little atten-

tion from both parties as well as numerous amici in

this case. I believe it is premature for this court to

address this issue on the present record. Plaintiffs

may not have fully addressed this issue below, but the

fundamental constitutional nature of this issue should

preclude its disposition on less than an adequate record.

10-23-12