JULIE A. ROBINSON, District Judge.
In May 2016, after an informal administrative hearing, Defendant Susan Mosier, in her official capacity as Secretary of the Kansas Department of Health and Environment ("KDHE"), at the direction of Governor Sam Brownback, terminated as Medicaid providers Plaintiffs Planned Parenthood of Kansas and Mid-Missouri ("PPKM"), Planned Parenthood of the St. Louis Region and Southwest Missouri ("PPSLR"), and eleven current and former individual provider Plaintiffs who are, or were in the past, employees of PPKM and PPSLR. The KDHE provided three grounds for the termination decisions: (1) video evidence about practices by other Planned Parenthood Federation of America ("PPFA") affiliates that include unlawful agreements to procure fetal tissue after abortions; (2) PPKM's failure to cooperate with KDHE solid waste disposal inspections; and (3) claims submission concerns about other PPFA affiliates identified by neighboring states. Plaintiffs PPKM, PPSLR, the individual providers, and three Jane Doe patient Plaintiffs filed this action challenging the KDHE's decision under the Medicaid Act and the Equal Protection Clause of the United States Constitution, and sought preliminary injunctive relief from the termination decisions. On June 13, 2016, the KDHE reconsidered and reversed its decision to terminate the eleven individual health care provider plaintiffs from the Medicaid program. On June 29, 2016, the individual providers voluntarily dismissed their claims in this matter.
Before the Court are Plaintiffs' Motion for Temporary Restraining Order and Preliminary Injunction (Doc. 12); Motion to Certify Class (Doc. 14), and Motion to Strike Exhibits (Doc. 51). These motions are fully briefed, and the Court heard argument on the preliminary injunction motion on June 7, 2016. The Court considers the motion for preliminary injunction as it pertains to PPKM and PPSLR only.
On June 24, 2016, Defendant filed a Motion to Dismiss (Doc. 59), re-arguing some of the justiciability arguments raised in response to the motion for preliminary injunction, adding others, and challenging both of Plaintiffs' claims under Fed. R. Civ. P. 12(b)(6) for failure to state a claim. This motion is not fully briefed, but the Court at this time considers Defendant's justiciability challenges, to the extent necessary to rule on the motion for preliminary injunction.
Having fully considered the parties' arguments and evidence on these issues, the Court is prepared to rule. As described more fully below, Plaintiffs' motion for preliminary injunction is granted and the class certification motion is denied without prejudice. The motion to strike is denied. Defendant's motion to dismiss under Fed. R. Civ. P. 12(b)(1) for lack of subject matter jurisdiction is denied in part; the motion otherwise will remain pending and the Court will rule on the remaining issues raised therein after it is fully briefed.
Plaintiffs have submitted the sworn declarations of Laura McQuade, President and CEO of PPKM, and Mary Kogut, President and CEO of PPSLR in support of their motions for preliminary injunction.
For forty years, PPKM (and its predecessor organizations) has been a Medicaid provider for thousands of Kansans. PPKM provides Medicaid services to Kansas residents at two health centers in Kansas and three health centers in nearby cities in Missouri. In 2014, PPKM and affiliated providers provided family planning services at approximately 750 visits to nearly 500 Medicaid patients. In 2015, PPKM and affiliated providers provided services at over 650 visits to nearly 450 Medicaid patients. PPKM offers a range of family planning and other health services, including annual exams, contraception (including long-acting reversible contraception or "LARC") and contraceptive counseling, hormonal counseling, screening for breast cancer, screening and treatment for cervical cancer, screening and treatment for sexually transmitted infections ("STIs"), including human papilloma virus ("HPV") vaccines, pregnancy testing and counseling, and other limited general health services, such as hemoglobin testing for anemia. The Wichita, Kansas City, and Independence health centers are in areas that have primary care provider shortages.
PPSLR operates several health centers in Missouri, including a health center in Joplin, Missouri, which is located approximately seven miles from the Kansas border and provides family planning health services to a small number of Kansas Medicaid patients each year, including well-woman exams, contraception (including LARC) and contraceptive counseling, hormonal counseling, screening for breast cancer, screening and treatment for cervical cancer, screening and treatment for STIs, including HPV vaccines, and pregnancy testing and counseling. PPSLR's Joplin, Missouri health center is located in a Primary Care Health Professional Shortage Area ("HPSA"), and Cherokee County, Kansas, the county directly across the border from Joplin, Missouri is also in a Primary Care HPSA and is designated as a Medically Underserved Population Area.
In 2013, the Kansas Medicaid program implemented KanCare and moved from a fee-for-service program model to a managed care program model. PPKM enrolled as a KanCare provider at that time with three managed care organizations ("MCOs") that the State of Kansas contracted with to coordinate care for nearly all of its Medicaid beneficiaries. Defendant has submitted a 2016 contractual amendment to its contracts with the MCOs, which provides that a contract termination with a Medicaid provider "shall be effective 30 calendar days after notification from the State that the provider's state fair hearing rights have expired or the state fair hearing has been completed related to the Medicaid termination."
In order to qualify for Kansas Medicaid/KanCare, among other requirements, an adult must be low-income and either pregnant, disabled or a parent. For example, the monthly income for a family of four cannot exceed $768. Medicaid does not pay for abortions for Kansas women except under very narrow circumstances allowed for under federal law: if their lives are in danger or if they are a victim of rape or incest.
According to evidence presented by both sides of this dispute, PPKM and PPSLR are both independently incorporated affiliates of Planned Parenthood Federation of America.
With respect to financial support from PPFA, the document explains:
Another fund, the Fund for the Future ("the Fund"), is a PPFA fund designed to help "long-term development of the Organization's affiliates. The Fund receives board-designated resources as well as affiliate and general-public contributions. The Fund's investment returns are used for development grants to affiliates."
Plaintiff Jane Doe #1 is a PPKM patient who lives in Overland Park, Kansas and has received her annual well-woman gynecological exam at the Overland Park health center. She qualifies for Medicaid until the spring of 2017. Jane Doe #1 characterizes her care as excellent based on the friendliness of the staff, and the fact that she does not feel judged because she is a single mother. She states that the providers she saw at PPKM spent as much time as necessary explaining to her the care she was getting and talked with her about her concerns. PPKM was the only provider that would schedule an appointment for her annual exam, getting her in for an appointment very quickly. She wants to continue to receive her reproductive health care from PPKM and is not sure where she would get her care if it is not an option.
Plaintiff Jane Doe #2 is a long-time Planned Parenthood patient who has most recently received care at PPKM's Overland Park health center. She has received a range of health care services including annual examinations, birth control (Depo-Provera shots), screening for STIs, treatment for pre-cancerous cells, sexual health education, and breast cancer screenings. Jane Doe #2 is currently disabled and relies on Medicaid for her health insurance. She prefers going to Planned Parenthood because she believes they have an expertise in reproductive health care that is unmatched by other providers, and she feels comfortable asking Planned Parenthood about anything related to her reproductive health care. She wishes to continue to obtain her reproductive health care from Planned Parenthood and does not wish to find another provider.
Plaintiff Jane Doe #3 is a PPKM patient who lives in Wichita, Kansas. She is a KanCare recipient and has no other health insurance. At the PPKM health center in Wichita, she receives her annual examinations, follow up care after some abnormal pap smears, birth control, and STI screening and treatment. At a Planned Parenthood clinic in another state, she also received an abortion. Most recently, the PPKM health center in Wichita provided her with a pregnancy confirmation test. She is currently 33 weeks pregnant. After she has the baby, Jane Doe #3 plans to return to the Wichita health center for birth control. Given her status as an established patient at PPKM, it is important to her to be able to return there for her reproductive health care. She believes that Planned Parenthood "saved my life in many ways by providing me the health care that I needed at critical points in my life."
In July 2015, a group called the Center for Medical Progress ("CMP") released a series of YouTube videos purporting to depict representatives from PPFA and from Planned Parenthood affiliates in other states discussing the illegal sale of fetal tissue and altering abortion procedures to preserve fetal tissue. The videos themselves are not part of this record. Instead, Defendant submits unauthenticated transcripts from two videos dated July 25, 2014,
Kansas investigated PPKM about whether it failed to comply with Kansas law regarding fetal organs and tissue. "After careful review of the investigative materials," the Disciplinary Panel of the Kansas Board of Healing Arts ("KBHA") concluded on January 7, 2016, that no further action should be taken against PPKM.
A few weeks before the KBHA concluded its investigation, KDHE's Bureau of Waste Management ("BWM") inspectors appeared unannounced at the PPKM Overland Park health care center on December 16, 2015, for a solid waste inspection pursuant to K.A.R. § 28-29-16. That regulation provides that a duly authorized representative of Secretary Mosier
BWM had never previously inspected the PPKM Overland Park health care facility. The BWM inspectors were escorted to two exam rooms, but when they reached the laboratory about one hour into the inspection, PPKM staff informed them that they had spoken to PPKM's attorney and that although the inspectors could continue, they could not take further photographs out of concern for clinic and patient privacy and safety. At this point during the inspection, patients were present at the facility. The BWM inspectors also asked PPKM staff for a list of its vendors, including linen service and regular trash hauler vendors. PPKM was concerned about whether this information would become unprotected public information, exposing the vendors to anti-abortion harassment that has occurred in other states were such information was made public. PPKM staff asked the inspectors about whether the requested vendor information would remain confidential and the inspectors responded that it would be available through the Kansas Open Records Act and PPKM would have to go through the official process of claiming the information as confidential. PPKM would not provide the inspectors the names of the facility's solid waste vendors, and asked the inspectors to return with a signed warrant. They returned later that day with a signed warrant. PPKM's legal counsel told the inspectors that they could inspect, but could not take photographs due to concern for patient and staff safety. Again, counsel declined to provide the list of solid waste vendors, and the BWM inspectors left.
On January 5, 2016, BWM inspectors returned again with a warrant, and stated that they would only photograph relevant areas and take measures to protect patient privacy. PPKM eventually provided vendor information to the BWM on January 15, 2016, after agreeing to allow PPKM additional time to provide the vendor information and to document PPKM's request to keep any photographs confidential. After the inspection, the facility was provided with a report that stated no violations had been identified.
One week later, Governor Sam Brownback announced during his State of the State address on January 12, 2016:
Almost two months later, on March 10, 2016, the KDHE sent the Plaintiff providers a Notice of Intent to Terminate Provider, "[a]t the direction of Governor Sam Brownback as set forth in his letter to Secretary Susan Mosier, M.D.," attached to each notice. The notices state that KDHE intends to terminate the provider's participation in the Kansas Medical Assistance Program ("KMAP") under K.A.R. 30-5-60(a), subsections (2) noncompliance with applicable state laws, administrative regulations, or program issuances concerning medical providers; (3) noncompliance with the terms of a provider agreement; (9) unethical or unprofessional conduct; and (17) other good cause. In an attachment to the letters of intent to terminate, KDHE provided three grounds for termination: (1) video evidence about practices by Planned Parenthood Federation of America affiliates that include unlawful agreements to procure fetal tissue after abortions; (2) failure to cooperate with solid waste disposal inspections; and (3) claims submission concerns identified by neighboring states about other PPFA affiliates.
The notice of intent to terminate letters provided for an administrative review on March 23, 2016. But an informal administrative review with legal counsel for PPKM and PPSLR was held on April 29, 2016. PPKM and PPSLR counsel presented evidence to rebut the allegations in the notice of termination letters and requested that if the KDHE decided to follow through with the termination, that it be made effective thirty days from the issuance of the decision.
On May 3, 2016, the provider Plaintiffs received final notices of termination, with an effective date of May 10, 2016. The notices state that "[a]fter thorough review of all information presented, it is the decision of DHCF that your participation in KMAP will be terminated effective May 10, 2016."
The day after receiving the final termination notices, Plaintiffs filed this lawsuit and sought a temporary restraining order ("TRO") before the May 10 termination date, and a preliminary injunction pending a final decision on the merits. The Complaint alleges the following claims for relief under 42 U.S.C. § 1983: (1) violation of the Medicaid Act, 42 U.S.C. § 1396(a)(23) "free-choice-of-provider" provision; and (2) an Equal Protection violation under the Fourteenth Amendment.
The Court set a TRO hearing for May 6. But soon after setting the hearing, the parties jointly agreed to proceed on the request for preliminary injunction only and requested a continuance of the hearing until May 17. On May 10, the parties again jointly requested a continuance of the hearing until May 25. On May 17, outside counsel for the KDHE withdrew from the case and the Court conducted a status conference by telephone. Upon assurance from the KDHE that its termination decision would not become effective until July 7, 2016, the Court again reset the briefing deadlines on the motion for preliminary injunction and continued the hearing until June 7. On June 13, 2016, the KDHE reversed its termination decisions as to the individual provider Plaintiffs; these Plaintiffs have voluntarily dismissed their claims. The Court therefore considers the motion for preliminary injunction motion as it applies to the PPKM and PPSLR termination decisions only.
Under the KDHE regulations promulgated in furtherance of the Kansas Administrative Procedure Act ("KAPA"), the providers have the right to request a fair hearing administered by a hearing officer from the KDHE's administrative hearings section to review an unfavorable decision.
Article III of the Constitution gives federal courts the power to exercise jurisdiction only over "Cases" and "Controversies." As the Supreme Court has explained, "[i]n limiting the judicial power to `Cases' and `Controversies,' Article III of the Constitution restricts it to the traditional role of Anglo-American courts, which is to redress or prevent actual or imminently threatened injury to persons caused by private or official violation of law."
As described more fully below, the Court rejects Defendant's ripeness, standing, and abstention challenges to this Court's jurisdiction.
When it filed its response to the motion for preliminary injunction on May 31, Defendant argued for the first time that the preliminary injunction motion is premature because the provider terminations could not possibly take effect until September 10, 2016, at the earliest.
The Court expressed frustration at the June 7 hearing about the procedural posture of this case. Newly-retained defense counsel, who entered their appearances after the response brief was filed and four days before the hearing, took the odd position that entering into a stipulated injunction would somehow require a concession on the merits of the case. The Court understood at the conclusion of oral argument that these issues were ripe for adjudication, and made clear that it intended to rule on Plaintiffs' request for relief before the July 7 effective date. The Court was therefore surprised to learn of Defendant's lengthy motion to dismiss filed on Friday, June 24, 2016, reasserting several justiciability arguments, adding others, and seeking to dismiss the substantive claims under Fed. R. Civ. P. 12(b)(6) for failure to state a claim. Once again, many of the KDHE's arguments are tied to its contention that no enforcement action can take place before September 10, 2016.
Defendant's motion to dismiss does nothing to allay the Court's concern that Defendant wishes to have its cake and eat it too. The Court cannot fathom why Defendant objects to some form of agreed injunctive relief during the period between the KDHE's July 7 termination date, and the date upon which Defendant claims reimbursements would be declined under the MCO contracts unless it intends to enforce the terminations. Defendant repeatedly asserts in its briefs that no action may be taken before this September date, but never addresses Plaintiffs' argument that there is nothing in the law or record that would guarantee a stay of the termination decisions while the appeal time runs, and pending any appeal that may be taken. Plaintiffs further point out that the contractual extension does not apply to PPSLR, and that their contracts with the MCOs do not reflect that January amendment in the contracts between the State and the MCOs. In the Court's view, absent some sort of stipulation or other assurance, Plaintiffs reasonably do not take counsel's briefing statements at their word that the termination decisions will not become effective until September. This refusal to commit to the KDHE's intended course of action has created a procedural headache for the parties and for the Court, especially given the newly-filed motion to dismiss that deserves responsive briefing before decision. As Defendant is no doubt fully aware, it is impossible at this juncture for the Court to allow full briefing, and decide the motion to dismiss in its entirety before July 7. The fact that Defendant is unwilling to put its counsel's representations into a stipulated order that would apply to both providers is entirely inconsistent with its position that this dispute is premature.
Defendant urges this Court to deny the motion for preliminary injunction without prejudice based on "prudential considerations" associated with the timing of the motion. Although buried in the response brief and not articulated as such at oral argument, Defendant clarifies in the motion to dismiss that this is a ripeness challenge based on the fact that the effective date of the Medicaid terminations is potentially two months away.
Ripeness is a jurisdictional prerequisite to suit that has both constitutional and prudential components.
To determine the fitness for judicial resolution prong, the Court asks "whether judicial intervention would inappropriately interfere with further administrative action and whether the courts would benefit from further factual development of the issues presented."
Defendant argues that judicial intervention would interfere with an ongoing administrative proceeding, and that the KDHE's decision "is without imminent practical effect" because it cannot take effect until the time to administratively appeal passes, plus an additional thirty days provided under the State's contracts with the MCOs. Although the termination letters advise the providers of their right to a fair hearing, they do not state that the decisions will be stayed pending review, nor that these are tentative or advisory decisions. If Plaintiffs do not appeal, they can be assured that on August 10, 2016, the KDHE's decision will stand. And even if they do request a fair hearing, under K.A.R. § 30-4-66, assistance is not terminated unless it concerns "the termination of a provider from program participation." While it is true that the MCO contract submitted by Defendant states that a provider termination is effective thirty calendar days "after notification from the State that the provider's state fair hearing rights have expired or the state fair hearing has been completed related to Medicaid termination,"
When considering threatened action by the government for purposes of standing and ripeness, the Supreme Court has explained that "where threatened action by government is concerned, we do not require a plaintiff to expose himself to liability before bringing suit to challenge the basis for the threat—for example, the constitutionality of a law threatened to be enforced."
Defendant argues that the Court should allow the KDHE to exercise its agency expertise because the issues in this case are fact driven and deserve a more fully developed administrative record. To be sure, the parties dispute the degree to which PPFA and the Planned Parenthood affiliates in this case are connected. And there is some dispute about the details involving the solid waste inspection. But both parties have submitted evidence on these issues and, tellingly, neither party requested an evidentiary hearing on the motion for preliminary injunction. They treated the hearing as oral argument, resting on the evidence submitted with the briefs. Defendant provides the Court with no explanation about how these non-legal issues demand "agency expertise" in order to resolve the claims in this case. Certainly it does not take agency expertise to determine the relationship between affiliated organizations. Instead, the Court finds that this case predominately involves purely legal questions: the meaning of 42 U.S.C. § 1396a(a)(23), and the applicability of the Equal Protection clause to the facts of this case.
The Court also finds Plaintiffs have demonstrated hardship if this Court declines to review the decision—the KDHE's termination decisions result in a legal and practical harm by terminating the providers' status as Medicaid providers.
As discussed above, while September 10, 2016 may be the effective date for the MCOs to terminate the provider agreements based on the KDHE's summary decision, the KDHE's decision itself becomes final on August 10, 2016. The Court finds that the claims in this case are fit for judicial resolution, and that Plaintiffs will suffer a hardship if this Court declines to review their § 1983 challenges to the KDHE's termination decisions.
In its recently filed motion to dismiss, Defendant argues for the first time that Plaintiffs lack standing under Article III of the Constitution to assert their claims in this case because the alleged injury is neither imminent nor fairly traceable to Defendant's actions. One of several doctrines reflecting Article III's case-or-controversy limitation on the judicial power is the doctrine of standing. That doctrine requires federal courts, before considering the merits of an action, to "`satisfy themselves that the plaintiff has alleged such a personal stake in the outcome of the controversy as to warrant [the plaintiff's] invocation of federal-court jurisdiction.'"
The Supreme Court has found the "irreducible constitutional minimum of standing" to contain three elements:
"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."
For the same reasons explained under the Court's ripeness analysis,
The Court also finds that the alleged injury is fairly traceable to Defendant's action. Plaintiffs need not show that Defendant's conduct was the "proximate cause" of its injury in fact, but, "[i]f `speculative inferences are necessary to connect [a plaintiff's] injury to the challenged action,' this burden has not been met. Moreover, where `the independent action of some third party not before the court'—rather than that of the defendant—was the direct cause of the plaintiff's harm, causation may be lacking."
The Court next considers Defendant's argument that it should abstain under the Younger abstention doctrine. Under Younger, a federal court considers whether:
The issue in this case is whether the administrative appeal process available to Plaintiffs constitutes an ongoing administrative proceeding, which involves two inquiries: (1) whether there is an ongoing proceeding; and (2) "whether the proceeding is the type of state proceeding that is due the deference accorded by Younger abstention."
The Court agrees with Plaintiffs that the administrative proceeding here is not ongoing. If PPKM and PPSLR decide to appeal the KDHE's termination decisions, the fair hearing would be conducted under the KAPA.
Even if the administrative proceeding is ongoing, the Court finds that the administrative decision here is not the type that requires Younger abstention. In 2013, the Supreme Court made clear that abstention is warranted in only three types of proceedings: (1) state criminal prosecutions; (2) certain civil enforcement proceedings; and (3) "civil proceedings involving certain orders that are uniquely in furtherance of the state courts' ability to perform their judicial functions."
Tenth Circuit authority also supports the conclusion that the KDHE's termination decision is not the type of proceeding entitled to deference for purposes of Younger. In Brown ex rel. Brown v. Day, which was decided before the Sprint case, the Tenth Circuit considered whether the district court was correct to abstain in favor of an administrative proceeding for which state court judicial review was still available.
First, the "state proceeding" was initiated by the provider Plaintiffs—they opted to avail themselves of an informal administrative hearing before a final termination decision was issued by the KDHE. If any further administrative appeal is taken before August 10, 2016, it must be initiated by the provider Plaintiffs as well. Neither the informal administrative hearing nor any administrative appeal is mandatory under Kansas law and Plaintiffs declare that they will not pursue their optional administrative remedy. Importantly, any potential appeal would only be available to PPKM and PPSLR; the patient Plaintiffs would have no recourse for pursuing their claims in this case.
The Court therefore finds that there is no ongoing state administrative proceeding that requires this Court to abstain under Younger. In reaching this conclusion, the Court is mindful that the Court's "duty to exercise [its] jurisdiction is so imperative" in the § 1983 context because "Congress specifically created a federal cause of action enforceable in federal courts."
A preliminary injunction "is an extraordinary remedy," so "the right to relief must be clear and unequivocal."
Plaintiffs argue that they are likely to succeed on both of their claims—that the State violated the Medicaid Act free-choice-of-provider provision, and the Equal Protection Clause of the Fourteenth Amendment when it terminated the Plaintiff providers from the Medicaid program. Because the Court finds that Plaintiffs are likely to succeed on their Medicaid Act claim, it does not consider the likelihood of success on the merits of the Equal Protection claim at this time.
Plaintiffs argue that the KDHE's decision to terminate the provider Plaintiffs from Medicaid violates 42 U.S.C. § 1396a(a)(23), often referred to as the "free-choice-of-provider" requirement. "Medicaid is a cooperative federal-state program that provides federal funding for state medical services to the poor."
Defendant first challenges whether the free-choice-of-provider provision creates an enforceable right that may be vindicated under § 1983. All of the circuit courts to consider this issue have concluded after a thorough analysis that Medicaid patients may bring an enforcement action under § 1983 to vindicate their rights under this provision.
The Supreme Court has cautioned that "where the text and structure of a statute provide no indication that Congress intends to create new individual rights, there is no basis for a private suit, whether under § 1983 or under an implied right of action."
This Court follows the Sixth, Ninth, and Seventh Circuits in holding that the patient Plaintiffs have a private right of action to enforce the Medicaid free-choice-of-provider provision under this three factor test. The statute creates unambiguous rights-creating language sufficient to show that Congress intended to benefit Medicaid beneficiaries.
Defendant argues that a more recent Supreme Court decision dictates a different result. In Armstrong v. Exceptional Child Center, Inc.
The lower court found that the plaintiff providers had an implied right of action under the Supremacy Clause to seek injunctive relief against enforcement of state legislation that failed to set rates in a manner consistent with § 30(A).
Defendant argues for the first time in the motion to dismiss that if there is a private right of action, it runs only to Medicaid patients and therefore PPKM and PPSLR lack standing to assert a claim under § 1396a(a)(23). Because the Court finds that the Jane Doe Plaintiffs have a private right of action, the Court need not resolve at this time whether PPKM and PPSLR have standing in their own right, or on behalf of the patients, in order to grant injunctive relief. The Court will instead consider this issue in the context of the motion to dismiss, after allowing full briefing.
The free-choice-of-provider requirement is subject to two limitations: "(1) the provider is `qualified to perform the service or services required,' and (2) the provider `undertakes to provide [the recipient] such services.'"
Defendant does not contest this meaning of "qualified" in its brief, nor does it argue that the Provider Plaintiffs are not qualified under § 1396a(a)(23).
The Court finds that Plaintiffs properly brought their claim under the free-choice-of-provider requirement because they allege that the Jane Doe Plaintiffs were denied their right to receive covered Medicaid services from any qualified provider of their choice willing to provide the services. They contend that their provider was wrongfully removed from the pool of providers.
The Court therefore proceeds to consider Defendant's position that it properly terminated PPKM and PPSLR under the exclusion provision of the Medicaid Act, § 1396a(p)(1). That provision states:
This provision permits termination in two ways: (1) for any reason that the Secretary could exclude under the cross-referenced Medicaid Act provisions, and (2) pursuant to the "any other authority," savings clause. Under the savings clause, Defendant argues that it may terminate a provider agreement if it determines that the providers violated Kansas law or some other federal law.
Defendant first argues that it was justified in terminating the providers' Medicaid provider agreements under 42 U.S.C. § 1320a-7(b), which provides for permissive termination under circumstances involving certain types of fraud and malfeasance. Plaintiffs are likely to succeed in showing that this statute does not justify the termination decisions.
Under § 1320a-7(b)(5)(B), the Secretary of Health and Human Services may terminate "any individual or entity" "for reasons bearing on the individual's or entity's professional competence, professional performance, or financial integrity." Defendant contends that all three grounds it provided for the provider Plaintiffs' terminations constitute violations of this statute. Plaintiffs are likely to demonstrate that this statute is inapplicable for several reasons. First, under § 1396a-p(1), the "entity" that a "State may exclude" must be the same entity that committed the infraction defined in § 1320a-7(b).
Defendant points the Court to evidence that Governor Mary Fallin of Oklahoma has called for termination of her State's Medicaid provider contracts with the two Planned Parenthood affiliates located there. She cites two October 2015 Integrity Reviews, finding a 20.3% and 14.1% billing error rate.
Plaintiffs are likely to succeed in arguing that § 1320a-7(b) does not apply by virtue of affiliation, and therefore could not be applied to the provider Plaintiffs in this case as to two of the grounds for termination: the videos and the alleged Medicaid fraud. It also renders the grounds for termination against PPSLR entirely baseless since the KDHE inspection involved only one PPKM clinic.
The Court further finds that Plaintiffs are likely to succeed in showing that PPKM's purported failure to cooperate with the BWM's solid waste inspection in December 2015 does not bear on PPKM's "professional competence, professional performance, or financial integrity."
Next, Defendant claims that the termination decisions were justified under § 1320a-7(b)(12)(B), which allows the Secretary to terminate a provider "that fails to grant immediate access, upon reasonable request (as defined by the Secretary in regulations) . . . (B) To the Secretary or the State agency, to perform the reviews and surveys required under State plans under paragraphs (26), (31), and (33) of section 1396a(a) of this title and under section 1396b(g) of this title." Section 1396a(a)(33), requires a State health or other appropriate medical agency to establish a plan for "the review by appropriate professional health personnel of the appropriateness and quality of care and services furnished to recipients of medical assistance under the plan in order to provide guidance with respect thereto in the administration of the plan to the State agency." The Court finds that Plaintiffs are likely to succeed in demonstrating that the solid waste inspection here does not constitute a review bearing on "the appropriateness and quality of care and services furnished to recipients of medical assistance under the plan." As already discussed, the failure to cooperate in the inspection, standing alone, does not implicate PPKM's competence, performance, or financial integrity. Moreover, Plaintiffs have shown a likelihood of success in their contention that they did grant immediate access to the inspectors. And even after the inspectors insisted on taking photographs and obtaining confidential material, PPKM allowed the inspection to continue; the inspectors opted to come back in January instead.
Finally, Defendant appears to argue that its decision was justified under § 1320a-7(a)(1), (3), or (b)(1)(A)(ii) based on evidence that other PPFA affiliates submitted false Medicaid claims.
Defendant makes the same argument advanced and rejected by the many courts that have been called upon to review whether termination decisions under the Medicaid Act violate the free-choice-of-provider provision: that under the savings clause, the states have plenary power to exclude providers as they deem fit under § 1396a(p)(1) without running afoul of the free-choice-of-provider provision.
Defendant argues that PPKM violated state law by refusing to cooperate with a solid waste inspection in December 2015, which makes it unlawful for a person to interfere with a solid waste inspection. But as already discussed, the Court finds the Plaintiffs are likely to succeed in showing that they did not run afoul of state regulations by refusing to allow the BWM inspectors to take photographs in the facility while patients were present. And there is no evidence that PPKM was cited for impeding an inspection. The KDHE argues that it was justified in inferring that there was a solid waste violation by PPKM's refusal to allow inspectors to "do their job," when viewed in conjunction with the YouTube videos. But the KBHA conducted a "thorough investigation" into PPKM after the CMP videos were released, and issued its finding that no further action be taken after PPKM allegedly interfered with the first solid waste inspection. And it is undisputed that PPKM does not participate in fetal tissue donation or sale. After the KBHA finding was issued, and after the parties negotiated BWM's permission to take certain photographs and receive confidential solid waste vendor information, the BWM was able to finish its unannounced inspection and found no infractions.
Finally, Defendant argues that it was justified in terminating the providers' Medicaid contracts based on the video evidence that Planned Parenthood affiliates "have sold body parts and manipulated abortions. These violations likely run afoul of State and Federal law, contravene the terms of the provider agreement, and fall well below the professional standard of care."
First, Defendant cites several state law cases that explain when piercing the corporate veil is warranted.
Next, Defendant asserts that there is financial overlap between the affiliates, which she characterizes as "spokes of a common hub." Defendant relies on PPFA's financial statements, to show that the affiliates are required to pay dues that are redistributed in part back to the affiliates, and that the Annual Report is a joint balance statement. The Court does not read the financial statements as sweepingly as the Defendant. The joint financial statement referenced by Defendant states that, "the accompanying consolidated financial statements do not include the financial position or the changes in net assets and cash flows of these independent affiliated organizations."
Defendant next argues that PPFA and its fifty-nine affiliates have a "unity of interest" that is evidenced by certain language used by PPFA and it officers when describing the organization and its affiliates. But again, Plaintiffs are likely to succeed in showing that these stray references to the organizational structure does not overcome the declarations and other legal statements showing that PPKM and PPSLR are independent entities that are merely members of PPFA. The record shows that PPFA does not provide medical services or operate health centers. As described in Bentley, there is no evidence
Defendant cites the transcript from one of the CMP videos, suggesting that PPFA coordinates fetal tissue donation policy with its affiliates. Assuming the authenticity of this video, which has not yet been provided to the Court, any question that the KDHE had about such coordination is negated by the fact that the KBHA conducted a thorough investigation of the allegations in those videos and found no evidence to support such activity by PPKM. Likewise, the Missouri Attorney General investigated and cleared PPSLR of wrongdoing.
Finally, Defendant points to filings in another case involving affiliate Planned Parenthood of the Great Northwest, Inc. ("PPGNW"), as evidence that PPFA and its affiliates present themselves as "a single organization."
In sum, the Court determines that Plaintiffs are likely to succeed on the merits of their claim that PPKM and PPSLR may not be terminated as Kansas Medicaid providers based on the activities of other Planned Parenthood affiliates.
To constitute irreparable harm, the injury "must be both certain and great."
Defense counsel suggested at oral argument that the Jane Doe declarations filed in this case were not specific enough because they lacked information such as how far away alternative providers are located. The Court does not require such detailed information from these Plaintiffs in order to credit their declarations of injury. As already discussed, the Court gives weight to their uncontroverted declarations that they depend on Planned Parenthood clinics for their reproductive health care, and that these Planned Parenthood clinics are their providers of choice for a host of reasons. They are happy with the quality of care they receive, they do not feel judged by the provider's staff, and they have indicated scheduling and convenience benefits to being treated by these providers. Defense counsel also suggested that the fact that these patients could still be treated at PPKM, albeit without Medicaid reimbursement, negates any finding that they could not be treated by the provider of their choice. It is uncontroverted that to be eligible for Medicaid assistance, a family of four must have a net income of $768 per month or less. The Court easily finds that these patients will be unable to afford to pay out of pocket to see the health care provider of their choice without Medicaid assistance.
In 2014, PPKM and affiliated providers provided family planning services at approximately 750 visits to nearly 500 Medicaid patients. In 2015, PPKM and affiliated providers provided services at over 650 visits to nearly 450 Medicaid patients. PPSLR operates a health center in Joplin, Missouri, which is located approximately seven miles from the Kansas border and provides family planning health services to a small number of Kansas Medicaid patients each year. These clinics offer important health services, including: annual exams, contraception and contraceptive counseling, hormonal counseling, screening for breast cancer, screening and treatment for cervical cancer, screening and treatment for STIs, including HPV vaccines, pregnancy testing and counseling, and other limited general health services. Many of these clinics are located in places with health care provider shortages. Plaintiffs have demonstrated that both the named Jane Doe Plaintiffs, and hundreds of other Kansas Medicaid patients that currently depend on PPKM and PPSLR for their family planning and reproductive health services would be unable to be treated by these providers if they are terminated from the KanCare/Medicaid program. A disruption or denial of these patients' health care cannot be undone after a trial on the merits. The Court finds that Plaintiffs has shown irreparable harm to Medicaid patients who have chosen PPKM and PPSLR as their family planning and reproductive health care providers.
Defendant submits evidence that Kansas Medicaid recipients can choose from other qualified family planning providers in Kansas. But as several courts have found, this argument "misses the mark" because "[t]hat a range of qualified providers remains available is beside the point. Section 1396a(a)(23) give Medicaid patients the right to receive medical assistance from the provider of their choice without state interference save on matters of provider qualifications."
Finally, Defendant urges that the availability of administrative review negates the imminence of patient harm because it could be months before the provider terminations become effective, and because the harm is within Plaintiffs' control. First, as already discussed at length, there is no requirement that the providers pursue a fair hearing in order to obtain relief in this Court, and the providers have stated on the record that they do not intend to pursue that channel of relief. It is certain therefore that the KDHE's termination decisions will become final on August 10, 2016, at the latest. There is no evidence or legal authority in this record that the termination decisions would not be enforced on the July 7 effective date stated in the termination letter, or pending an administrative appeal if one was filed, other than defense counsel's assertions in the briefs. Second, as the Court has already discussed, PPSLR has no contracts with KanCare MCOs, so the contractual extension would not apply to it. Third, there are dueling contractual provisions in the record that make it unclear how quickly the MCOs would terminate their contracts with PPKM. Fourth, Plaintiffs have submitted authority that the termination decisions themselves may create a domino effect because termination from the Kansas program puts PPKM and PPSLR at risk of termination in neighboring states—PPKM is also a Missouri and soon-to-be Oklahoma provider and PPSLR is also Missouri and Illinois Medicaid provider. Regulations in Oklahoma and Missouri allow for those Medicaid programs to terminate a provider based on termination decisions in other states; they are not tied to the "effective date" of the other state's Medicaid provider terminations.
Defendant contends that it will suffer irreparable harm if an injunction ensues, because it would allow taxpayer money to flow to the provider Plaintiffs despite evidence that they have violated Federal and State law, the terms of their provider agreements, and applicable professional standards. Defendant further argues that an injunction would disrupt ongoing administrative proceedings. Plaintiffs urge that the irreparable harm it has cited cannot be undone, particularly the domino effect that a for cause termination could have by allowing other states to terminate based on the Kansas decision. Plaintiffs further argue that it is in the public interest to preserve patients' freedom to choose their provider without government interference and that an injunction would simply freeze the status quo of reimbursing these providers until a decision can be reached on the merits.
The Court is not persuaded that the risk of taxpayer harm if the Court issues the injunction outweighs the established irreparable injury to Kansas Medicaid patients if an injunction does not issue. As the Court has explained, neither the fetal tissue donation allegation nor the Medicaid fraud allegation have any relation to the Planned Parenthood affiliates who were terminated by the KDHE, so no taxpayer money is at risk of flowing to providers that have violated State or Federal law on those grounds. And Plaintiffs have made a strong showing that the solid waste disposal ground for termination is unrelated to the provider's qualifications as defined in § 1396a(a)(23). Given these showings, the risk of taxpayer harm is quite low as compared to the certain injury to Medicaid patients if the injunction does not issue—they will be unable to seek treatment from their providers of choice. This is a right explicitly provided in the Medicaid Act, and the Court finds that protecting this right until the case can be decided on the merits is in the public interest.
The Court further finds that the injunction will not interfere with an ongoing administrative proceeding. As the Court has explained throughout this opinion, there is no "ongoing" administrative proceeding to interfere with and Plaintiffs have made clear that they will not be exercising their optional right to a fair hearing. Moreover, Defendant cannot explain how this implicates the balance of harms. If, for example, Plaintiffs opted to avail themselves of the administrative process and the KDHE reversed its decision, Defendant could always ask this Court for relief from the preliminary injunction.
Moreover, the Supreme Court has explained that requiring administrative exhaustion of state remedies for a § 1983 claim is inconsistent with Congressional intent that the statute "interpose the federal courts between the States and the people, as guardians of the people's federal rights—to protect the people from unconstitutional action under color of state law, `whether that action be executive, legislative, or judicial.'"
The Court further finds that it is in the public's interest to ensure that the goals of Medicaid are served—"to afford medical assistance to persons whose income and resources are insufficient to meet the financial demands of necessary care and services."
In sum, Plaintiffs have satisfied the elements required to obtain a preliminary injunction on the Jane Doe Plaintiffs' Medicaid Act claim. The KDHE's termination decisions shall therefore be held in abeyance until the case can be decided on the merits.
Plaintiffs asks that the preliminary injunction be issued without a bond requirement. Fed. R. Civ. P. 65(c) provides that "[t]he Court may issue a preliminary injunction or a temporary restraining order only if the movant gives security in an amount that the court considers proper to pay the costs and damages sustained by any party found to have been wrongfully enjoined or restrained." The Court may exercise its discretion, and determine a bond is unnecessary "if there is an absence of proof showing a likelihood of harm."
Also pending is Plaintiffs' Motion for Class Certification. In their motion, Plaintiffs seek to certify a class of all Kansas Medicaid beneficiaries who obtain, or who seek to obtain, covered health care services from PPKM and PPSLR and their current affiliated providers.
The injunctive relief requested in this case does not require individualized remedies. Moreover, case law supports this Court's authority to issue classwide injunctive relief based on its general equity powers before deciding a class certification motion.
Under the circumstances of this case, class certification is unnecessary in order to award relief to all Kansas Medicaid patients who obtain or seek to obtain covered health services from PPKM and PPSLR. The Court has granted the motion for preliminary injunction, enjoining the KDHE from enforcing its termination decisions until this case can be decided on the merits. This directive will allow all Kansas Medicaid patients who seek to obtain covered services from these providers, to have those services covered. And there is no suggestion by either party that the Jane Doe Plaintiffs' claims will become moot during the pendency of the lawsuit. Under these circumstances, Plaintiffs' motion for class certification is denied without prejudice.
