In Gresham v. Azar, United States District Court for the District of Columbia Judge James E. Boasberg “[found] its guiding principle in Yogi Berra’s aphorism, ‘It’s déjà vu all over again.’” No. CV 18-1900 (JEB), 2019 WL 1375241, at *7 (D.D.C. Mar. 27, 2019). In striking down the Department of Health and Human Services (“HHS”) approval of Arkansas’s Medicaid work requirements as “arbitrary and capricious,” Judge Boasberg noted that the agency’s failures were “nearly identical” to those in Stewart v. Azar I, 313 F.Supp.3d 237, 243 (D.D.C. 2018), where he vacated the agency’s approval of Kentucky’s Medicaid Work requirements back in June 2018. The same day the Court issued Gresham, Judge Boasburg declared “[t]he bell now rings for round two” and again vacated Kentucky’s Medicaid work requirements finding the agency’s reaproval “arbitrary and capricious” in Stewart v. Azar II. No. CV 18-152 (JEB), 2019 WL 1375496, at *1 (D.D.C. Mar. 27, 2019).

Under Section 1115 of the Social Security Act, HHS may approve a state’s waiver application and allow a state to waive certain Medicaid program requirements. Such waivers include “experimental, pilot, or demonstration project[s]” that “in the judgment of the Secretary, [are] likely to assist in promoting the [Medicaid Act’s] objectives.” 42 U.S.C. § 1315(a). In March 2017, Seema Verma, the Administrator for the Centers for Medicare & Medicaid Services (“CMS”), along with HHS Secretary at the time, Thomas Price, sent a letter to state governors clarifying the agency’s “intent to use existing Section 1115 demonstration authority to review and approve” Medicaid work requirements. Heeding this call, the governor of Kentucky applied for a Section 1115 waiver to implement an experimental program which includes work requirements as a condition of Medicaid coverage. Under these work requirements, many adults must complete 80 hours of employment or other qualifying activities every month or lose their Medicaid coverage. These requirements primarily target the Medicaid expansion population (individuals who obtained coverage after states expanded eligibility under the Affordable Care Act). Arkansas’ program—which took effect last June as the first work requirements in the history of Medicaid—is substantially similar to the Kentucky program. The Kentucky work requirements had yet to take effect.

Plaintiffs in both cases sued the Secretary of HHS arguing that HHS’s approval of these new work requirements violated the Administrative Procedure Act (“APA”). More specifically, Plaintiffs argued that the Secretary’s conclusion that the Arkansas and Kentucky Medicaid work requirements were “likely to assist in promoting the [Medicaid Act’s] objectives” was arbitrary and capricious. The Court agreed. Just as it had ruled in Stewart I, in Gresham, the Court explained that “the Secretary’s approval of the Arkansas [work requirements] is arbitrary and capricious because it did not address — despite receiving substantial comments on the matter — whether and how the project would implicate the ‘core’ objective of Medicaid: the provision of medical coverage to the needy.” Gresham, 2019 WL 1375241, at *12. The Court reached the same conclusion regarding the Secretary’s reapproval of the Kentucky program. This time around, Kentucky posited a new argument: “although [Kentucky’s work requirements] may cause nearly 100,000 people to lose coverage, that number will be dwarfed by the approximately 450,000 people who would suffer that fate if Kentucky ends its coverage entirely of those who have joined the Medicaid rolls via the Affordable Care Act, as it has threatened to do if this project is not approved.” Stewart II, 2019 WL 1375496 at *1. The Court rejected this fiscal-sustainability argument because, taken to its logical extreme, “any waiver would be coverage promoting compared to a world in which the state offers no coverage at all . . . Could a state decide it did not wish to cover pregnant women? The blind? All but 100 people currently on its Medicaid rolls? The Secretary offers no reason that his position would not allow for any of those results.” Id. at *19.

HHS approved Medicaid work requirement waivers in six other states: Arizona, Wisconsin, Michigan, Indiana, Ohio, and New Hampshire. A challenge to the New Hampshire requirements was filed on March 20, 2019. Philbrick v. Azar, No. CV 18-00773 (JEB). Seven other states already submitted work requirement waiver applications. Judge Boasberg’s twin rulings last week do not directly impact any other states’ programs. But given these opinions, plaintiffs in other states may be emboldened to challenge their state’s Medicaid work requirements. Because each suit would involve an APA challenge to HHS approval of such work requirements, plaintiffs can continue filing suit in the United States District Court for the District of Columbia. In fact, as did the plaintiffs in Gresham, the plaintiffs in the recently filed New Hampshire case, Philbrick, designated their case as a “related case” to Stewart I because it “involve[es] common issues of fact.”  Sure enough, that case has been assigned to Judge Boasberg.  It thus appears it will continue to be “déjà vu all over again” for Judge Boasberg. Consequently, this issue is unlikely to be finally resolved until it reaches the United States Court of Appeals for the District of Columbia Circuit, and possibly even the Supreme Court.

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Photo of Shelley Rosenberg Shelley Rosenberg

Rochelle-Leigh (Shelley) Rosenberg is a trial and appellate litigator. As a counsel in Crowell & Moring’s Washington, D.C. office, she practices in the Litigation and Health Care groups and is also a member of the Administrative Law & Regulatory Practice, which is a…

Rochelle-Leigh (Shelley) Rosenberg is a trial and appellate litigator. As a counsel in Crowell & Moring’s Washington, D.C. office, she practices in the Litigation and Health Care groups and is also a member of the Administrative Law & Regulatory Practice, which is a cross-section of all of the firm’s regulatory groups. Shelley’s practice primarily includes representing health care providers, managed care organizations, and other health care entities in various litigation matters. Shelley maintains an active practice. She litigates education access cases on behalf of parents of children with special needs.

Shelley is also a member of the Children’s Law Center Advisory Board. She recently spoke on the Washington Council of Lawyers — Representation of Children and Families Panel at the Summer Pro Bono & Public Interest Forum about how to fit work into one’s practice. She also serves on the Emerging Leaders Committee of Tzedek DC, an independent public interest center at the University of the District of Columbia David A. Clarke School of Law. Tzedek DC’s mission is to safeguard the legal rights of low-income DC residents facing often unjust, life-altering debt collection lawsuits, and other consumer protection crises.