Opinion ID: 8312801
Heading Depth: 3
Heading Rank: 2

Heading: Promote Coverage

Text: At the same time that he failed to consider the risk to coverage, the Secretary identified only one element of the Amendments that might promote health coverage. In a single sentence, he noted that a more limited period of retroactive eligibility will encourage beneficiaries to obtain and maintain health coverage, even when they are healthy. AR 8. Little needs to be said on this score. It is well established that conclusory or unsupported suppositions do not satisfy the agency's obligation to engage in reasoned decisionmaking. See McDonnell Douglas Corp. v. U.S. Dep't of Air Force , 375 F.3d 1182 , 1187 (D.C. Cir. 2004). That is particularly so in the face of numerous comments taking the opposite position. As the American Congress of Obstetricians and Gynecologists, among others, explained, limiting retroactive coverage may lead Medicaid-eligible persons [to] wait even longer to have their conditions treated to avoid incurring medical bills they cannot pay. AR 1279. And when they do eventually arrive for treatment, they will be covered for less time than they would have been before AWA took effect, by definition reducing their Medicaid coverage. See AR 1338 (National Health Law Program describing this risk). HHS's brief reference to the potential coverage-promoting effects of the changes to retroactive eligibility thus does not get it across the line. 2. Counterarguments Defendants offer two separate reasons for the Court to overlook the Secretary's failure to consider coverage, neither of which is persuasive. They say first that the Arkansas Works Amendments promote several other important objectives of Medicaid, including the health of Medicaid-eligible persons. Second, Defendants maintain that any deficiency in the administrative record in this case is cured by the agency's subsequent approval of Kentucky's similar project on remand from the Court's decision in Stewart I . Defendants justify the proposed demonstration project on the ground that, regardless of its effect on Medicaid coverage, it advances other objectives of the Act. HHS specifically insists, as it did in Stewart I , that the Secretary was on solid ground in finding that the project would improve health outcomes, thereby advancing the goals of Medicaid. See HHS MSJ at 17-18. Faced with this argument previously, this Court expressed skepticism that health, generally construed, was properly considered an objective of the Act. See Stewart I , 313 F.Supp.3d at 266 . It ultimately held that the agency's 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. The Court reached the same conclusion in response to assertions that Kentucky HEALTH promoted independence and self-sufficiency. Id. at 271-72 . HHS has offered no argument here that calls those conclusions into question. Arkansas presses the point in a somewhat different way, asserting that the provision of Medicaid coverage is (1) the purpose only of Medicaid appropriations , not Medicaid, (2) in irreconcilable tension with other purposes of the Act, and (3) not applicable to the Medicaid expansion population. See Ark. MSJ at 10-22. At the same time, it concedes, seemingly in conflict with its other contentions, that it is readily apparent that providing Medicaid coverage for Medicaid-eligible people is  an objective of Medicaid. Id. at 13. The Court has said this before and will say it again: if, as Arkansas and HHS admit (and  this Court has found), ensuring Medicaid coverage for the needy is a key objective of the Act, the Secretary's failure to consider the effects of the project on coverage alone renders his decision arbitrary and capricious; it does not matter that HHS deemed the project to advance other objectives of the Act. While the Court might stop there, a brief foray into Arkansas's arguments is nevertheless worthwhile. As to the first, Medicaid is an appropriations statute enacted pursuant to  Congress's power under the Spending Clause. NFIB , 567 U.S. at 542 , 132 S.Ct. 2566 . What better place could the purpose of a spending program be found than in the provision that sets up the  purpose  of its appropriations? Arkansas's second objection is even more puzzling. The Court does not understand how the objectives of a statute all agree was designed to provide free or low-cost medical care to the needy could nevertheless stand in irreconcilable tension with the goal of providing free or low-cost medical care to that population. The third sits on more comprehensible ground, though it yields Arkansas no more success. Addressing the purpose of the Medicaid expansion in Stewart I , the Court explained that the Medicaid statute - taken as a whole - confirms that Congress intended to provide medical assistance to the expansion population. 313 F.Supp.3d at 269 . HHS conceded as much in that case. Id. Neither party has offered any reason to retreat from that determination. Defendants' attempts to find refuge in other purposes of the Act and the propriety of Chevron deference as to those purposes are thus all hat, no cattle. Because they agree that the provision of low-cost medical care to Medicaid-eligible persons is a core purpose of the Act, see HHS Reply at 5, there is no legally significant dispute over the meaning of the Medicaid Act. What matters, instead, is the question addressed above: whether the Secretary adequately considered this issue. As has been made abundantly clear, he did not. Perhaps understanding as much, HHS largely attempts to justify its approval of the project in this case not on the Arkansas record but on another record entirely. This brings the Court to the argument that leads off the Secretary's Reply Brief: that his approval of AWA is amply justified by the reasoning in his November 20, 2018, approval of Kentucky's materially similar project. HHS Reply at 1. In particular, HHS argues that the project on review here will, like the one approved on remand in Kentucky, help adults transition from Medicaid to financial independence, thereby enhancing the fiscal sustainability of Arkansas's Medicaid program - an objective of the Act. Id. at 6. The Government clarified at oral argument that this is not merely a contention against vacatur - although it was principally offered as such - but also an argument in favor of sustaining the Secretary's approval entirely. See Tr. at 8-10. The Court addresses the latter position here, leaving the remedy question for the end. In short, three weighty and independent rationales require rejecting HHS's assertion that the Amendments should be approved based on the record in the Kentucky remand proceeding. First, it runs headlong into the fundamental rule of administrative law that a reviewing court must judge the propriety of such action solely by the grounds invoked by the agency. SEC v. Chenery Corp. , 332 U.S. 194 , 196, 67 S.Ct. 1760 , 91 L.Ed. 1995 (1947). Nowhere in the Secretary's approval letter does he justify his decision based on concerns about the sustainability of Arkansas's Medicaid program, or on a belief that the project will help Medicaid-eligible persons to gain sufficient  financial resources to be able to purchase private insurance. And the Court may not accept [ ] counsel's post hoc rationalizations for agency action. State Farm , 463 U.S. at 50 , 103 S.Ct. 2856 ; see also Burlington Truck Lines , 371 U.S. at 168-69 , 83 S.Ct. 239 ( Chenery requires that an agency's discretionary order be upheld, if at all, on the same basis articulated in the order by the agency itself.). The Government responded at oral argument that the Secretary did not need to provide any basis for his decision approving Arkansas's proposed project, so it does not matter on what justification his decision is judicially upheld. See Tr. at 9-10. The Court has already explained why that assertion is inconsistent with the APA, see supra at 20-21, and it will not spill more ink on the matter here. HHS's argument suffers from a second and equally significant flaw. The demonstration project under consideration in Kentucky involves different considerations from the Arkansas project, and the rationales in favor of approving one may well not apply to approving the other. The Secretary said as much in opposing this case's designation as related to the Kentucky one. See ECF No. 17 (The two cases involve two separate approvals of two distinct projects in two different States.). Consider the principal arguments the Secretary relies upon on remand in Kentucky. First, he says that the project promotes coverage because in its absence, the expansion population would have no Medicaid coverage. See Stewart v. Azar , No. 18-152, 308 F.Supp.3d at ----, ECF No. 108 (HHS MSJ) at 18-20. A necessary ingredient of this argument appears to be that the Kentucky Governor has conditioned the Commonwealth's continued expansion of Medicaid on the Secretary's approval of the proposed project. Id. at 19. There is no suggestion that Arkansas's Governor has made any similar kind of threat with regard to the Arkansas Works Amendments. Second, the Secretary justifies the Kentucky program on the ground that it advances the fiscal sustainability of the state's Medicaid program, which is at risk due to Kentucky's dire budgetary situation. Id. at 15-18. Yet there is no assertion that Arkansas is suffering from similar fiscal problems. The Government's argument that the Kentucky approval justifies the decision on review in this case is particularly unpersuasive considering these significant differences. The final reason to reject this argument is the simplest: the justification the Secretary has given for sustaining Kentucky's program on remand is insufficient and the Court today rejects it in its latest Opinion in Stewart . See Stewart v. Azar , No. 18-152, 308 F.Supp.3d 239 , 244-45, Slip Opinion at 3, 2019 WL 1375496 (Mar. 27, 2019) ( Stewart II ). If the explanation does not even justify affirmance of Kentucky's project, it cannot support upholding a different administrative decision approving a different state's project. In sum, 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 project would implicate the core objective of Medicaid: the provision of medical coverage to the needy. Neither his consideration of other Medicaid Act objectives nor his subsequent approval of Kentucky's separate demonstration project cure that deficiency. This failure infected the Secretary's approval of AWA as a whole, such that those Amendments are invalid. The Court will thus grant Plaintiffs full relief on their arbitrary-and-capricious claim, removing any need to address their separate statutory-authority, APA notice-and-comment,  and constitutional arguments.