Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caDC-19-05096/USCOURTS-caDC-19-05096-0/pdf.json

Nature of Suit Code: 890
Nature of Suit: Other Statutory Actions
Cause of Action: 

---

United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued October 11, 2019 Decided February 14, 2020

No. 19-5094

CHARLES GRESHAM, ET AL.,

APPELLEES

v.

ALEX MICHAEL AZAR, II, SECRETARY, UNITED STATES 

DEPARTMENT OF HEALTH AND HUMAN SERVICES IN HIS 

OFFICIAL CAPACITY, ET AL.,

APPELLANTS

STATE OF ARKANSAS,

APPELLEE

Consolidated with 19-5096

Appeals from the United States District Court

for the District of Columbia

(No. 1:18-cv-01900)

Alisa B. Klein, Attorney, U.S. Department of Justice, 

argued the cause for federal appellants. With her on the briefs 

USCA Case #19-5096 Document #1828589 Filed: 02/14/2020 Page 1 of 19
2

were Mark B. Stern, Attorney, Robert P. Charrow, General 

Counsel, U.S. Department of Health and Human Services, and 

Brenna E. Jenny, Deputy General Counsel.

Leslie Rutledge, Attorney General, Office of the Attorney 

General for the State of Arkansas, Nicholas J. Bronni, Solicitor 

General, Vincent M. Wagner, Deputy Solicitor General, and 

Dylan L. Jacobs, Assistant Solicitor General, were on the brief 

for appellant State of Arkansas. 

Ian Heath Gershengorn argued the cause for plaintiffappellees. With him on the brief were Jane Perkins, Thomas 

J. Perrelli, Devi M. Rao, Natacha Y. Lam, Zachary S. Blau, and 

Samuel Brooke. 

Kyle Druding was on the brief for amici curiae American 

College of Physicians, et al. in support of plaintiffs-appellees.

Edward T. Waters, Phillip A. Escoriaza, and Christopher

J. Frisina were on the brief for amici curiae Deans, Chairs, and 

Scholars in support of plaintiffs-appellees.

Judith R. Nemsick, Jon M. Greenbaum, and Sunu Chandy

were on the brief for amici curiae Lawyers Committee for Civil 

Rights Under Law, et al. in support of appellees and 

affirmance.

Before: PILLARD, Circuit Judge, and EDWARDS and 

SENTELLE, Senior Circuit Judges.

Opinion for the Court filed by Senior Circuit Judge

SENTELLE.

SENTELLE, Senior Circuit Judge: Residents of Kentucky 

and Arkansas brought this action against the Secretary of 

USCA Case #19-5096 Document #1828589 Filed: 02/14/2020 Page 2 of 19
3

Health and Human Services. They contend that the Secretary

acted in an arbitrary and capricious manner when he approved

Medicaid demonstration requests for Kentucky and Arkansas. 

The District Court for the District of Columbia held that the 

Secretary did act in an arbitrary and capricious manner because 

he failed to analyze whether the demonstrations would promote 

the primary objective of Medicaid—to furnish medical 

assistance. After oral argument, Kentucky terminated the 

challenged demonstration project and moved for voluntary 

dismissal. We granted the unopposed motion. The only 

question remaining before us is whether the Secretary’s 

authorization of Arkansas’s demonstration is lawful. Because 

the Secretary’s approval of the plan was arbitrary and 

capricious, we affirm the judgment of the district court.

I. Background

Originally, Medicaid provided health care coverage for 

four categories of people: the disabled, the blind, the elderly, 

and needy families with dependent children. 42 U.S.C. 

§ 1396-1. Congress amended the statute in 2010 to expand

medical coverage to low-income adults who did not previously 

qualify. Id. at § 1396a(a)(10)(A)(i)(VIII); NFIB v. Sebelius, 

567 U.S. 519, 583 (2012). States have a choice whether to 

expand Medicaid to cover this new population of individuals. 

NFIB, 567 U.S. at 587. Arkansas expanded Medicaid coverage 

to the new population effective January 1, 2014, through their 

participation in private health plans, known as qualified health 

plans, with the state paying premiums on behalf of enrollees. 

Appellees’ Br. 14; Gresham v. Azar, 363 F. Supp. 3d 165, 171 

(D.D.C. 2019).

Medicaid establishes certain minimum coverage 

requirements that states must include in their plans. 42 U.S.C. 

§ 1396a. States can deviate from those requirements if the 

USCA Case #19-5096 Document #1828589 Filed: 02/14/2020 Page 3 of 19
4

Secretary waives them so that the state can engage in 

“experimental, pilot, or demonstration project[s].” 42 U.S.C. 

§ 1315(a). The section authorizes the Secretary to approve 

“any experimental, pilot, or demonstration project which, in the 

judgment of the Secretary, is likely to assist in promoting the 

objectives” of Medicaid. Id. 

Arkansas applied to amend its existing waiver under 

§ 1315 on June 30, 2017. Arkansas Administrative Record

2057 (“Ark. AR”). Arkansas gained approval for its initial 

Medicaid demonstration waiver in September 2013. In 2016, 

the state introduced its first version of the Arkansas Works 

program, encouraging enrollees to seek employment by 

offering voluntary referrals to the Arkansas Department of 

Workforce Services. Dissatisfied with the level of

participation in that program, Arkansas’s new version of

Arkansas Works introduced several new requirements and 

limitations. The one that received the most attention required

beneficiaries aged 19 to 49 to “work or engage in specified 

educational, job training, or job search activities for at least 80 

hours per month” and to document such activities. Id. at 2063. 

Certain categories of beneficiaries were exempted from 

completing the hours, including beneficiaries who show they

are medically frail or pregnant, caring for a dependent child 

under age six, participating in a substance treatment program, 

or are full-time students. Id. at 2080–81. Nonexempt 

“beneficiaries who fail to meet the work requirements for any 

three months during a plan year will be disenrolled . . . and will 

not be permitted to re-enroll until the following plan year.” Id.

at 2063.

Arkansas Works included some other new requirements in 

addition to the much-discussed work requirements. Typically, 

when someone enrolls in Medicaid, the “medical assistance 

under the plan . . . will be made available to him for care and 

USCA Case #19-5096 Document #1828589 Filed: 02/14/2020 Page 4 of 19
5

services included under the plan and furnished in or after the 

third month before the month in which he made application.” 

42 U.S.C. § 1396a(a)(34). Arkansas Works proposed to 

eliminate retroactive coverage entirely. Ark. AR 2057, 2061. 

It also proposed to lower the income eligibility threshold from 

133% to 100% of the federal poverty line, meaning that 

beneficiaries with incomes from 101% to 133% of the federal 

poverty line would lose health coverage. Id. at 2057, 2060–61, 

2063. Finally, Arkansas Works eliminated a program in which

it used Medicaid funds to assist beneficiaries in paying the 

premiums for employer-provided health care coverage. Id. at

2057, 2063, 2073. Arkansas instead used Medicaid premium 

assistance funds only to help beneficiaries purchase a qualified 

health plan available on the state Health Insurance 

Marketplace, requiring all previous recipients of employersponsored coverage premiums to transition to coverage offered 

through the state’s Marketplace. Id. at 2057, 2063, 2073.

On March 5, 2018, the Secretary approved most of the new

Arkansas Works program via a waiver effective until 

December 31, 2021, but with a few changes. He approved the 

work requirements but under the label of “community 

engagement.” Id. at 2. The Secretary authorized Arkansas to 

limit retroactive coverage to thirty days before enrollment 

rather than a complete elimination of retroactive coverage. Id.

at 3, 12. He also approved Arkansas’s decision to terminate the 

employer-sponsored coverage premium assistance program. 

Id. at 3. The Secretary did not, however, permit Arkansas to 

limit eligibility to persons making less than or equal to 100% 

of the federal poverty line. Id. at 3 n.1, 11. Instead, the 

Secretary kept the income eligibility threshold at 133% of the 

federal poverty line. Id. at 3 n.1, 11.

In the approval letter, the Secretary analyzed whether 

Arkansas Works would “assist in promoting the objectives of 

USCA Case #19-5096 Document #1828589 Filed: 02/14/2020 Page 5 of 19
6

Medicaid.” Id. at 3. The Secretary identified three objectives 

that he asserted Arkansas Works would promote: “improving 

health outcomes; . . . address[ing] behavioral and social factors 

that influence health outcomes; and . . . incentiviz[ing] 

beneficiaries to engage in their own health care and achieve 

better health outcomes.” Id. at 4. In particular, the Secretary 

stated that Arkansas Works’s community engagement 

requirements would “encourage beneficiaries to obtain and 

maintain employment or undertake other community 

engagement activities that research has shown to be correlated 

with improved health and wellness.” Id. Further, the Secretary 

thought the shorter timeframe for retroactive eligibility would 

“encourage beneficiaries to obtain and maintain health 

coverage, even when they are healthy,” which, in turn, 

promotes “the ultimate objective of improving beneficiary 

health.” Id. at 5. The letter also summarized concerns raised 

by commenters that the community engagement requirement 

would “caus[e] disruptions in care” or “create barriers to 

coverage” for beneficiaries who are not exempt. Id. at 6–7. 

In response, the Secretary noted that Arkansas had several 

exemptions and would “implement an outreach strategy to 

inform beneficiaries about how to report compliance.” Id.

The new work requirements took effect for those aged 30 

to 49 on June 1, 2018, and for those aged 20 to 29 on January 

1, 2019. Gresham, 363 F. Supp. 3d at 172. Charles Gresham 

along with nine other Arkansans filed an action for declaratory

and injunctive relief against the Secretary on August 14, 2018. 

The district court on March 27, 2019, entered judgment 

vacating the Secretary’s approval, effectively halting the 

program. Gresham, 363 F. Supp. 3d at 176–85. In its opinion 

supporting the judgment, the district court relied on Stewart v. 

Azar, 313 F. Supp. 3d 237 (D.D.C. 2018) (Stewart I), which is 

the district court’s first opinion considering Kentucky’s similar 

demonstration, Gresham, 363 F. Supp. 3d at 176. In Stewart I, 

USCA Case #19-5096 Document #1828589 Filed: 02/14/2020 Page 6 of 19
7

the district court turned to the provision authorizing the 

appropriations of funds for Medicaid, 42 U.S.C. § 1396-1, and 

held that, based on the text of that appropriations provision, the 

objective of Medicaid was to “furnish . . . medical assistance” 

to people who cannot afford it. Stewart I, 313 F. Supp. 3d at 

260–61. 

With its previously articulated objective of Medicaid in 

mind, the district court then turned to the Secretary’s approval 

of Arkansas Works. First, the district court noted that the 

Secretary identified three objectives that Arkansas Works 

would promote: “(1) ‘whether the demonstration as amended 

was likely to assist in improving health outcomes’; 

(2) ‘whether it would address behavioral and social factors that 

influence health outcomes’; and (3) ‘whether it would 

incentivize beneficiaries to engage in their own health care and 

achieve better health outcomes.’” Gresham, 363 F. Supp. 3d 

at 176 (quoting Ark. AR 4). But “[t]he Secretary’s approval 

letter did not consider whether [Arkansas Works] would reduce 

Medicaid coverage. Despite acknowledging at several points 

that commenters had predicted coverage loss, the agency did 

not engage with that possibility.” Id. at 177. The district court 

also explained that the Secretary failed to consider whether 

Arkansas Works would promote coverage. Id. at 179. Instead, 

the Secretary considered his alternative objectives, primarily

healthy outcomes, but the district court observed that “‘focus 

on health is no substitute for considering Medicaid’s central 

concern: covering health costs’ through the provision of free or 

low-cost health coverage.” Id. (quoting Stewart I, 313 F. Supp. 

3d at 266). “In sum,” the district court held:

the Secretary’s approval of the Arkansas Works 

Amendments is arbitrary and capricious because it 

did not address—despite receiving substantial 

comments on the matter—whether and how the 

USCA Case #19-5096 Document #1828589 Filed: 02/14/2020 Page 7 of 19
8

project would implicate the “core” objective of 

Medicaid: the provision of medical coverage to the 

needy. 

Id. at 181. The district court entered final judgment on April 

4, 2019, and the Secretary filed a notice of appeal on April 10, 

2019. 

This case was originally a consolidated appeal from the 

district court’s judgment in both the Arkansas and Kentucky

cases. The district court twice vacated the Secretary’s approval 

of Kentucky’s demonstration for the same failure to address 

whether Kentucky’s program would promote the key objective 

of Medicaid. Stewart v. Azar, 366 F. Supp. 3d 125, 156 

(D.D.C. 2019) (Stewart II); Stewart I, 313 F. Supp. 3d at 274. 

On December 16, 2019, Kentucky moved to dismiss its appeal 

as moot because it “terminated the section [1315]

demonstration project.” Intervenor-Def.-Appellant’s Mot. to 

Voluntarily Dismiss Appeal 1–2 (Dec. 16, 2019), ECF No. 

1820334. Neither the government nor the appellees opposed

the motion. Gov’t’s Resp. (Dec. 18, 2019), ECF No. 1820655; 

Appellees’ Resp. (Dec. 20, 2019), ECF No. 1821219. 

Although the Secretary has considerable discretion to 

grant a waiver, we reject the government’s contention that such 

discretion renders his waiver decisions unreviewable. The 

Administrative Procedure Act’s (APA) exception from judicial 

review for an action committed to agency discretion is “very 

narrow,” Citizens to Preserve Overton Park, Inc. v. Volpe, 401 

U.S. 402, 410 (1971); see also Dep’t of Commerce v. New York, 

139 S. Ct. 2551, 2568 (2019), barring judicial review only in 

those “rare instances” where “there is no law to apply,” 

Overton Park, 401 U.S. at 410 (internal quotation marks and 

citation omitted). The Medicaid statute provides the legal 

standard we apply here: The Secretary may only approve 

USCA Case #19-5096 Document #1828589 Filed: 02/14/2020 Page 8 of 19
9

“experimental, pilot, or demonstration project[s],” and only 

insofar as they are “likely to assist in promoting the objectives” 

of Medicaid, 42 U.S.C. § 1315(a). Section 1315 approvals are 

not among the rare “categories of administrative decisions that 

courts traditionally have regarded as committed to agency 

discretion.” Dep’t of Commerce, 139 S. Ct. at 2568.

Additionally, the government asked that we address “the 

reasoning of the district court’s opinion in Stewart and the 

underlying November 2018 HHS approval of the Kentucky 

demonstration,” and second that we vacate the district court’s 

judgment against the federal defendants in the Kentucky case 

Stewart II, 66 F. Supp. 3d 125. Gov’t’s Resp. 1–2. The 

appellees opposed both of those additional requests. 

Appellees’ Resp. 1–4. We granted the motion to voluntarily 

dismiss but declined to vacate the district court’s judgment

against the federal defendants in Stewart II. As to the 

government’s first request, we do not rely on the Secretary’s 

reasoning in the November 2018 approval of Kentucky’s 

demonstration when considering the Secretary’s approval of 

Arkansas’s demonstration.

“We review de novo the District Court’s grant of summary 

judgment, which means that we review the agency’s decision 

on our own.” Castlewood Prods., L.L.C. v. Norton, 365 F.3d 

1076, 1082 (D.C. Cir. 2004). Therefore, we will review the 

Secretary’s approval of Arkansas Worksin accordance with the 

Administrative Procedure Act and will set it aside if it is 

“arbitrary, capricious, an abuse of discretion, or otherwise not 

in accordance with law.” 5 U.S.C. § 706(2)(A); see also C.K. 

v. New Jersey Dep’t of Health & Human Servs., 92 F.3d 171, 

181–82 (3d Cir. 1996) (applying the arbitrary and capricious 

standard of review to a waiver under § 1315); Beno v. Shalala, 

30 F.3d 1057, 1066–67 (9th Cir. 1994) (same); Aguayo v. 

Richardson, 473 F.2d 1090, 1103–08 (2d Cir. 1973) (same). 

USCA Case #19-5096 Document #1828589 Filed: 02/14/2020 Page 9 of 19
10

An agency action that “entirely failed to consider an important 

aspect of the problem, offered an explanation for its decision 

that runs counter to the evidence before the agency, or is so 

implausible that it could not be ascribed to a difference in view 

or the product of agency expertise” is arbitrary and capricious. 

Motor Vehicle Mfrs. Ass’n of U.S., Inc. v. State Farm Mut. 

Auto. Ins. Co., 463 U.S. 29, 43 (1983). 

II. DISCUSSION

A. Objective of Medicaid

The district court is indisputably correct that the principal 

objective of Medicaid is providing health care coverage. The 

Secretary’s discretion in approving or denying demonstrations 

is guided by the statutory directive that the demonstration must 

be “likely to assist in promoting the objectives” of Medicaid. 

42 U.S.C. § 1315. While the Medicaid statute does not have a 

standalone purpose section like some social welfare statutes, 

see, e.g., 42 U.S.C. § 601(a) (articulating the purposes of the 

Temporary Assistance for Needy Families program); 42 U.S.C. 

§ 629 (announcing the “objectives” of the Promoting Safe and 

Stable Families program), it does have a provision that 

articulates the reasons underlying the appropriations of funds,

42 U.S.C. § 1396-1. The provision describes the purpose of 

Medicaid as

to furnish (1) medical assistance on behalf of 

families with dependent children and of aged, blind, 

or disabled individuals, whose income and 

resources are insufficient to meet the costs of 

necessary medical services, and (2) rehabilitation 

and other services to help such families and 

individuals attain or retain capability for 

independence or self-care.

USCA Case #19-5096 Document #1828589 Filed: 02/14/2020 Page 10 of 19
11

Id. In addition to the appropriations provision, the statute 

defines “medical assistance” as “payment of part or all of the 

cost of the following care and services or the care and services 

themselves.” 42 U.S.C. § 1396d(a). Further, as the district 

court explained, the Affordable Care Act’s expansion of health 

care coverage to a larger group of Americans is consistent with

Medicaid’s general purpose of furnishing health care

coverage. See Stewart I, 313 F. Supp. 3d at 260 (citing Pub. 

L. No. 111-148, 124 Stat. 119, 130, 271 (2010)). The text 

consistently focuses on providing access to health care

coverage.

Both the First and Sixth Circuits relied on Medicaid’s 

appropriations provision quoted above in concluding that 

“[t]he primary purpose of Medicaid is to enable states to 

provide medical services to those whose ‘income and 

resources are insufficient to meet the costs of necessary 

medical services.’” Pharm. Research & Mfrs. of Am. v. 

Concannon, 249 F.3d 66, 75 (1st Cir. 2001) (quoting 42 U.S.C. 

§ 1396 (2000)), aff’d, 538 U.S. 644 (2003); Price v. Medicaid 

Dir., 838 F.3d 739, 742 (6th Cir. 2016). Similarly, the Ninth 

Circuit relied on both the appropriations provision and the 

definition of “medical assistance” when describing Medicaid 

as “a federal grant program that encourages states to provide 

certain medical services” and identifying a key element of 

“medical assistance” as the spending of federally provided 

funds for medical coverage. Univ. of Wash. Med. Ctr. v. 

Sebelius, 634 F.3d 1029, 1031, 1034–35 (9th Cir. 2011). 

Beyond relying on the text of the statute, other courts have 

consistently described Medicaid’s objective as primarily 

providing health care coverage. For example, the Third 

Circuit succinctly stated, “We recognize, of course, that the 

primary purpose of medicaid is to achieve the praiseworthy 

USCA Case #19-5096 Document #1828589 Filed: 02/14/2020 Page 11 of 19
12

social objective of granting health care coverage to those who 

cannot afford it.” W. Va. Univ. Hosps., Inc. v. Casey, 885 F.2d 

11, 20 (3d Cir. 1989), aff’d, 499 U.S. 83 (1991). Likewise, the 

Supreme Court characterized Medicaid as a “program . . . 

[that] provides joint federal and state funding of medical care 

for individuals who cannot afford to pay their own medical 

costs.” Ark. Dep’t of Health & Human Servs. v. Ahlborn, 547 

U.S. 268, 275 (2006); see also Virginia ex rel. Hunter Labs., 

L.L.C. v. Virginia, 828 F.3d 281, 283 (4th Cir. 2016) (quoting 

Ahlborn in the section of the decision explaining the important 

aspects of Medicaid). 

The statute and the case law demonstrate that the primary 

objective of Medicaid is to provide access to medical care. 

There might be secondary benefits that the government was 

hoping to incentivize, such as healthier outcomes for 

beneficiaries or more engagement in their health care, but the 

“means [Congress] has deemed appropriate” is providing 

health care coverage. MCI Telecomms. Corp. v. Am. Tel. & 

Tel. Co., 512 U.S. 218, 231 n.4 (1994). In sum, “the intent of 

Congress is clear” that Medicaid’s objective is to provide 

health care coverage, and, as a result, the Secretary “must give 

effect to [that] unambiguously expressed intent of Congress.” 

Chevron, U.S.A., Inc. v. Nat. Res. Def. Council, Inc., 467 U.S. 

837, 842–43 (1984). 

Instead of analyzing whether the demonstration would 

promote the objective of providing coverage, the Secretary

identified three alternative objectives: “whether the 

demonstration as amended was likely to assist in improving 

health outcomes; whether it would address behavioral and 

social factors that influence health outcomes; and whether it 

would incentivize beneficiaries to engage in their own health 

care and achieve better health outcomes.” Ark. AR 4. These 

three alternative objectives all point to better health outcomes 

USCA Case #19-5096 Document #1828589 Filed: 02/14/2020 Page 12 of 19
13

as the objective of Medicaid, but that alternative objective 

lacks textual support. Indeed, the statute makes no mention of 

that objective. 

While furnishing health care coverage and better health

outcomes may be connected goals, the text specifically 

addresses only coverage. 42 U.S.C. § 1396-1. The Supreme 

Court and this court have consistently reminded agencies that 

they are “bound, not only by the ultimate purposes Congress 

has selected, but by the means it has deemed appropriate, and 

prescribed, for the pursuit of those purposes.” MCI 

Telecomms., 512 U.S. at 231 n. 4; see also Waterkeeper All. v. 

EPA, 853 F.3d 527, 535 (D.C. Cir. 2017); Colo. River Indian 

Tribes v. Nat’l Indian Gaming Comm’n, 466 F.3d 134, 139–

40 (D.C. Cir. 2006). The means that Congress selected to 

achieve the objectives of Medicaid was to provide health care 

coverage to populations that otherwise could not afford it.

To an extent, Arkansas and the government characterize 

the Secretary’s approval letter as also identifying transitioning 

beneficiaries away from governmental benefits through 

financial independence or commercial coverage as an 

objective promoted by Arkansas Works. Ark. Br. 14, 37–42; 

Gov’t Br. 24–25, 32. This argument misrepresents the 

Secretary’s letter. The approval letter has a specific section 

for the Secretary’s determination that the project will assist in 

promoting the objectives of Medicaid. Ark. AR 3–5. The 

objectives articulated in that section are the health-outcome 

goals quoted above. That section does not mention 

transitioning beneficiaries away from benefits. The district 

court’s discussion of the Secretary’s objectives confirms our 

interpretation of this letter. It identifies the Secretary’s 

alternative objective as “improv[ing] health outcomes.” 

Gresham, 363 F. Supp. 3d at 179. There is no reference to 

commercial coverage in the Secretary’s approval letter, and 

USCA Case #19-5096 Document #1828589 Filed: 02/14/2020 Page 13 of 19
14

the only reference to beneficiary financial independence is in 

the section summarizing public comments. In response to 

concerns about the community engagement requirements 

creating barriers to coverage, the Secretary stated, “Given that 

employment is positively correlated with health outcomes, it 

furthers the purposes of the Medicaid statute to test and 

evaluate these requirements as a means to improve 

beneficiaries’ health and to promote beneficiary 

independence.” Ark. AR 6. But “[n]owhere in the Secretary’s 

approval letter does he justify his decision based . . . on a belief 

that the project will help Medicaid-eligible persons to gain 

sufficient financial resources to be able to purchase private 

insurance.” Gresham, 363 F. Supp. 3d at 180–81. We will not 

accept post hoc rationalizations for the Secretary’s decision. 

See State Farm, 463 U.S. at 50.

Nor could the Secretary have rested his decision on the 

objective of transitioning beneficiaries away from government 

benefits through either financial independence or commercial 

coverage. When Congress wants to pursue additional 

objectives within a social welfare program, it says so in the 

text. For example, the purpose section of TANF explicitly 

includes “end[ing] the dependence of needy parents on 

government benefits by promoting job preparation, work, and 

marriage” among the objectives of the statute. 42 U.S.C. 

§ 601(a)(2). Also, both TANF and the Supplemental Nutrition 

Assistance Program (SNAP) condition eligibility for benefits 

upon completing a certain number of hours of work per week

to support the objective of “end[ing] dependence of needy 

parents on government benefits.” 42 U.S.C. §§ 601(a)(2), 

607(c) (TANF); 7 U.S.C. § 2015(d)(1) (SNAP). In contrast, 

Congress has not conditioned the receipt of Medicaid benefits 

on fulfilling work requirements or taking steps to end receipt 

of governmental benefits.

USCA Case #19-5096 Document #1828589 Filed: 02/14/2020 Page 14 of 19
15

The reference to independence in the appropriations 

provision and the cross reference to TANF cannot support the 

Secretary’s alternative objective either. The reference to 

“independence” in the appropriations provision is in the 

context of assisting beneficiaries in achieving functional 

independence through rehabilitative and other services, not 

financial independence from government welfare programs. 

42 U.S.C. § 1396-1. Medicaid also grants states the “[o]ption” 

to terminate Medicaid benefits when a beneficiary who 

receives both Medicaid and TANF fails to comply with 

TANF’s work requirements. See 42 U.S.C. 

§ 1396u-1(b)(3)(A). The provision gives states, therefore, the 

ability to coordinate benefits for recipients receiving both 

TANF and Medicaid. It does not go so far as to incorporate 

TANF work requirements and additional objectives into 

Medicaid.

Further, the history of Congress’s amendments to social 

welfare programs supports the conclusion that Congress did 

not intend 42 U.S.C. § 1396u-1(b)(3)(A) to incorporate 

TANF’s objectives and work requirements into Medicaid. In 

1996, SNAP already included work requirements to maintain 

eligibility. 7 U.S.C. § 2015(d)(1) (1994). Also in 1996, 

Congress passed the Personal Responsibility and Work 

Opportunity Reconciliation Act, which replaced Aid to 

Families with Dependent Children with TANF and added 

work requirements. Personal Responsibility and Work 

Opportunity Reconciliation Act of 1996, Pub. L. No. 104-193, 

sec. 103, § 407, 110 Stat. 2105, 2129–34. At the same time, it 

added 42 U.S.C. § 1396u-1(b)(3)(A) to Medicaid. Id. at sec. 

114, § 1931, 110 Stat. at 2177–80. The fact that Congress did 

not similarly amend Medicaid to add a work requirement for 

all recipients—at a time when the other two major welfare 

programs had those requirements and Congress was in the 

process of amending welfare statutes—demonstrates that 

USCA Case #19-5096 Document #1828589 Filed: 02/14/2020 Page 15 of 19
16

Congress did not intend to incorporate work requirements into 

Medicaid through § 1396u-1(b)(3)(A). 

In short, we agree with the district court that the 

alternative objectives of better health outcomes and 

beneficiary independence are not consistent with Medicaid. 

The text of the statute includes one primary purpose, which is 

providing health care coverage without any restriction geared

to healthy outcomes, financial independence or transition to 

commercial coverage.

B. The Approvals Were Arbitrary and Capricious

With the objective of Medicaid defined, we turn to the 

Secretary’s analysis and approval of Arkansas’s 

demonstration, and we find it wanting. In order to survive 

arbitrary and capricious review, agencies need to address 

“important aspect[s] of the problem.” State Farm, 463 U.S. at 

43. In this situation, the loss of coverage for beneficiaries is an 

important aspect of the demonstration approval because 

coverage is a principal objective of Medicaid and because 

commenters raised concerns about the loss of coverage. See, 

e.g., Ark. AR 1269–70, 1277–78, 1285, 1294–95. 

A critical issue in this case is the Secretary’s failure to 

account for loss of coverage, which is a matter of importance 

under the statute. The record shows that the Arkansas Works 

amendments resulted in significant coverage loss. In Arkansas, 

more than 18,000 people (about 25% of those subject to the 

work requirement) lost coverage as a result of the project in just 

five months. Ark. Dep’t of Human Servs., Arkansas Works 

Program 8 (Dec. 2018), 

https://humanservices.arkansas.gov/images/uploads/011519_

AWReport.pdf. Additionally, commenters on the Arkansas 

Works amendments detailed the potential for substantial 

USCA Case #19-5096 Document #1828589 Filed: 02/14/2020 Page 16 of 19
17

coverage loss supported by research evidence. Ark. AR 1269–

70, 1277–78, 1285, 1294–95, 1297, 1307–08, 1320, 1326, 

1337–38, 1341, 1364–65, 1402, 1421. The Secretary’s 

analysis considered only whether the demonstrations would 

increase healthy outcomes and promote engagement with the 

beneficiary’s health care. Id. at 3–5. The Secretary noted that 

some commenters were concerned that “these requirements 

would be burdensome on families or create barriers to 

coverage.” Id. at 6. But he explained that Arkansas would have 

“outreach and education on how to comply with the new 

community engagement requirements” and that Centers for 

Medicare and Medicaid Services could discontinue the 

program if data showed that it was no longer in the public 

interest. Id. The Secretary also concluded that the “overall 

health benefits to the [a]ffected population . . . outweigh the 

health-risks with respect to those who fail to” comply with the 

new requirements. Id. at 7. While Arkansas did not have its 

own estimate of potential coverage loss, the estimates and 

concerns raised in the comments were enough to alert the 

Secretary that coverage loss was an important aspect of the 

problem. Failure to consider whether the project will result in 

coverage loss is arbitrary and capricious.

In total, the Secretary’s analysis of the substantial and 

important problem is to note the concerns of others and dismiss 

those concerns in a handful of conclusory sentences. Nodding 

to concerns raised by commenters only to dismiss them in a 

conclusory manner is not a hallmark of reasoned 

decisionmaking. See, e.g., Am. Wild Horse Pres. Campaign v. 

Perdue, 873 F.3d 914, 932 (D.C. Cir. 2017) (critiquing an 

agency for “brush[ing] aside critical facts” and not “adequately 

analyz[ing]” the consequences of a decision); Getty v. Fed. 

Savs. & Loan Ins. Corp., 805 F.2d 1050, 1055 (D.C. Cir. 1986) 

(analyzing whether an agency actually considered a concern 

rather than merely stating that it considered the concern).

USCA Case #19-5096 Document #1828589 Filed: 02/14/2020 Page 17 of 19
18

True, the Secretary’s approval letter is not devoid of 

analysis. It does contain the Secretary’s articulation of how he 

thought the demonstrations would assist in promoting an 

entirely different set of objectives than the one we hold is the 

principal objective of Medicaid. In some circumstances it may 

be enough for the agency to assess at least one of several 

possible objectives. See Fresno Mobile Radio, Inc. v. FCC, 

165 F.3d 965, 971 (D.C. Cir. 1999). But in such cases, the 

statute lists several objectives, some of which might lead to 

conflicting decisions. Id.; see also Melcher v. FCC, 134 F.3d 

1143, 1154 (D.C. Cir. 1998). For example, in both Fresno 

Mobile Radio and Melcher, the statute at issue included five 

separate objectives for FCC to consider when creating auctions 

for licenses, including “the development and rapid deployment 

of new technologies,” “promoting economic opportunity and 

competition,” and the “efficient and intensive use of the 

electromagnetic spectrum.” 47 U.S.C. § 309(j)(3). In Fresno 

Mobile Radio, we recognized that these objectives could point 

to conflicting courses of action, so the agency could give 

precedence to one or several objectives over others without 

acting in an arbitrary or capricious manner. Fresno Mobile 

Radio, 165 F.3d at 971; see also Melcher, 134 F.3d at 1154; 

Rural Cellular Ass’n v. FCC, 588 F.3d 1095, 1101–03 (D.C. 

Cir. 2009) (explaining that an agency may not “depart from” 

statutory principles “altogether to achieve some other goal”). 

The crucial difference in this case is that the Medicaid statute 

identifies its primary purpose rather than a laundry list. The 

primary purpose is

to furnish (1) medical assistance on behalf of 

families with dependent children and of aged, blind, 

or disabled individuals, whose income and 

resources are insufficient to meet the costs of 

necessary medical services, and (2) rehabilitation 

USCA Case #19-5096 Document #1828589 Filed: 02/14/2020 Page 18 of 19
19

and other services to help such families and 

individuals attain or retain capability for 

independence or self-care.

42 U.S.C. § 1396-1. Importantly, the Secretary disregarded 

this statutory purpose in his analysis. While we have held that 

it is not arbitrary or capricious to prioritize one statutorily 

identified objective over another, it is an entirely different 

matter to prioritize non-statutory objectives to the exclusion of 

the statutory purpose. 

III. CONCLUSION

Because the Secretary’s approval of Arkansas Works was 

arbitrary and capricious, we affirm the district court’s judgment 

vacating the Secretary’s approval.

USCA Case #19-5096 Document #1828589 Filed: 02/14/2020 Page 19 of 19