Health Reform WK-EDGE Court rebuffs effort to move Kentucky work requirements lawsuit
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Monday, April 23, 2018

Court rebuffs effort to move Kentucky work requirements lawsuit

By Robert B. Barnett Jr., J.D.

HHS’ and CMS’ efforts to transfer a case—filed by Kentucky Medicaid recipients challenging the federal government’s new proposed work requirements for continuing Medicaid eligibility—from the District of Columbia to Kentucky failed where both the private-interest factors and the public-interest factors weighed in favor in keeping the case in D.C., a federal district court has ruled. Importantly, this case is not challenging Kentucky’s decision to seek a waiver to adopt the work requirements; rather, it attacks the federal government’s decision to offer the plan to all states and to approve the plan for Kentucky. As a result, the issues in the case have national, rather than merely local, implications. Because the suit attacks the federal government’s decisions, the actions relevant to this case took place in D.C., and HHS and CMS failed to establish that their home court was an inconvenient forum (Stewart v. Azar, April 10, 2018, Boasberg, J.).

Background. Under the Trump administration, HHS developed a new policy to allow state Medicaid programs to adopt a work-incentive program for certain Medicaid recipients. On January 11, 2018, the CMS Director, sent a letter to all state Medicaid directors announcing the new policy (see Trump’s CMS endorses Medicaid work requirements, January 11, 2018). On January 12, Kentucky received notification that its application to modify its Medicaid program to include the work incentives had been approved (the application had been filed well before the January 11 letter, in anticipation of the changes). The Kentucky waiver predicates Medicaid eligibility for most of the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148) expansion population on workforce participation or community service.

Two weeks later, 16 Kentucky Medicaid recipients filed a complaint in D.C. district court, seeking declaratory and injunctive relief by alleging that HHS and CMS had violated the U.S. Constitution and the Administrative Procedures Act by (1) sending the January 11 letter and (2) approving Kentucky’s application. HHS and CMS filed a motion to transfer the case to the Kentucky federal district court in Frankfort.

Change of venue. The threshold test for any change of venue motion—whether the case could have been brought originally in Kentucky—was easily satisfied, given that several of the Medicaid recipients lived in the district where HHS and CMS tried to move the case. The decision on the motion, therefore, revolved around an evaluation of both private-interest factors and public-interest factors.

Private-interest factors. Ultimately, the court ruled, the private-interest factors weighed in favor of keeping the case in D.C. A plaintiff’s choice is typically given more deference than a defendant’s choice. The potential for this case to become a class action, which often reduces the deference given plaintiffs, did not affect the deference in this case because it is largely an administrative case (therefore, convenience of the witnesses and ease of access to sources of proof are less significant). Furthermore, convenience cannot be said to weigh in the government’s favor given that it is trying to move the case from its home court to a Kentucky court. Also, the claims have a stronger connection to D.C., given that the administrative decisions that are being challenged were made in D.C., not in Kentucky. This case is not, as the government contended, a "fundamentally local controversy" because, while the recipients challenge the decision to allow the program in Kentucky, they are also challenging the decision to offer the plan nationwide. Thus, personal involvement by D.C.-based government officials provides a link between the controversy and D.C., even if other residents of Kentucky and other states will be affected. Admittedly, some discovery into standing or class eligibility would take place in Kentucky, but that is only "a feather on the scale in favor of transfer." On balance, as a result, the private-interest factors weighed in favor of keeping the case in D.C.

Public-interest factors. Two public-interest factors—the transferee court’s familiarity with the governing law and the relative court congestion on their calendars—were deemed to be neutral. The deciding factor, therefore, was the general rule involving local interest in having local controversies decided at home. Because this case has national rather than local significance, the public-interest factors weigh against a transfer. While this suit might affect the people of Kentucky, it might also affect the lives of people across the country, given that the Medicaid recipients are asking the court to enjoin the changes nationwide. As a result, the public-interest factors also weighed in favor of leaving the case in D.C.

Why the motion? Left unexplained was why HHS and HMS sought to change the venue at all. The Medicaid recipients suggested forum shopping, given that the motion to change venue was not just to Kentucky but to a particular federal district in Kentucky, which has only one judge. HHS and CMS refuted that contention, stating that they only preferred to move the case to Frankfurt because it is Kentucky’s capitol and seat of government. The court, for its part, refused to conclude that HHS and CMS had what it called "nefarious motives." The question of why the motion was filed, therefore, was left unanswered.

The case is No. 18-152 (JEB).

Attorneys: Catherine A. McKee (National Health Law Program) for Ronnie Maurice Stewart. Deepthy Kishore, U.S. Department of Justice, for Alex M. Azar II.

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