Health Law Daily Texas OIG had sufficient expertise to determine qualifications of abortion provider
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Thursday, January 24, 2019

Texas OIG had sufficient expertise to determine qualifications of abortion provider

By Elizabeth M. Dries, J.D.

The Fifth Circuit ruled that a de novo review of evidence could not sustain the basis of a preliminary injunction against the Texas Office of Inspector General’s (OIG) decision to terminate Medicaid agreements with abortion providers.

A district court erred when it applied a de novo review, instead of the more deferential arbitrary and capricious standard review of evidence, to issue a preliminary injunction against the Texas Office of Inspector General’s (OIG) decision to terminate the Medicaid provider agreements of Texas Planned Parenthood and its affiliates. While 42 U.S.C. §1396a(a)(23) affords Medicaid beneficiaries a private right of action to challenge a state’s erroneous termination of Medicaid provider agreements, the basis for the preliminary injunction depends on the application of the arbitrary and capricious standard to the administrative record alone and not outside evidence. The OIG possesses sufficient expertise to determine the qualifications of abortion providers. The court vacated the preliminary injunction and remand the district court to limit review to the agency record under the arbitrary and capricious standard. (Planned Parenthood of Greater Texas Family Planning and Preventative Health Services, Inc. v. Charles Smith, January 17, 2019, Jones, E).

The OIG sought to terminate the Medicaid provider agreements of Planned Parenthood affiliates throughout the state of Texas based largely on undercover video footage of graphic discussions with Planned Parenthood personnel concerning the sale of liver, thymus, and neural tissue from fetuses aborted during the second trimester of pregnancy. The OIG indicated that the videos justified terminating the affiliates’ provider agreements because they indicated noncompliance with accepted medical and ethical standards. Three Planned Parenthood affiliates and several Medicaid beneficiaries sought a preliminary injunction against the termination decision. The district court held that the Medicaid beneficiaries possessed a private right of action under the "qualified-provider" provision of the Medicaid Act, 42 U.S.C. §1396a(a)(23), and issued the preliminary injunction after a three day evidentiary hearing during which it reviewed the videos and heard testimony from medical and ethics experts on both sides. Evidence focused on whether Planned Parenthood had violated federal regulations relating to fetal tissue research by altering abortion procedures for research purposes or allowing the researchers themselves to be involved in abortions to harvest samples. The preliminary injunction prevented Texas from terminating Medicaid funding to the Planned Parenthood facilities statewide. The OIG appealed arguing that: (1) the Medicaid beneficiaries lack a private right of action; and (2) district court erred in evaluating the OIG termination decision de novo, rather than limiting its review to the agency record under the deferential arbitrary and capricious standard.

On appeal, the court rejected OIG’s first argument that 42 U.S.C. §1396a(a)(23) did not apply in this case and that the Medicaid beneficiaries lacked a private right of action, as it felt constrained to affirm the controlling standard. 42 U.S.C. §1396a(a)(23) affords Medicaid beneficiaries a private right of action to challenge a state’s erroneous termination of Medicaid provider agreements. This "free choice of provider" provision mandates that any individual eligible for medical assistance may obtain such assistance from any institution or person, qualified to perform the service or services required. The appeals court, however, agreed that the district court erred in evaluating the OIG termination decision de novo, as it allowed Planned Parenthood to offer evidence outside the administrative record, and did not defer to the OIG’s findings. The review of state Medicaid decisions is governed by the arbitrary and capricious standard. The district court failed to apply the proper arbitrary and capricious standard; therefore the basis for the preliminary injunction could not be sustained. A private right of action under 42 U.S.C. §1396a(a)(23) does not preclude the use of an arbitrary and capricious standard. The arbitrary and capricious standard incentivizes providers to use the state administrative appeal process required by the Medicaid Act. The OIG had sufficient expertise to determine the qualifications of the abortion providers. The appeals court vacated the preliminary injunction and remanded the district court to limit review to the agency record under the arbitrary and capricious standard.

The case is No. 17-50282.

Attorneys: Jennifer Sandman, Planned Parenthood Federation of America, for Planned Parenthood of Greater Texas Family Planning and Preventative Health Services, Inc., Planned Parenthood San Antonio and Planned Parenthood Cameron County. Heather Gebelin Hacker, Office of the Attorney General, for Charles Smith and Sylvia Hernandez Kauffman.

Companies: Planned Parenthood of Greater Texas Family Planning and Preventative Health Services, Inc.; Planned Parenthood San Antonio

MainStory: TopStory CaseDecisions MedicaidNews ProviderNews LouisianaNews MississippiNews TexasNews

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