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High Court Cancels Argument in Fight Over Medicaid Work Rules (1)

March 11, 2021, 3:38 PM; Updated: March 11, 2021, 5:37 PM

The Supreme Court won’t hear the dispute over work requirements for Medicaid recipients in Arkansas and New Hampshire later this month.

The court on Thursday removed the cases from its March argument calendar. The federal government had asked the justices to toss out the appeals court rulings and send the matter back to the Department of Health and Human Services to be resolved.

The justices didn’t issue a ruling on the request. They only provided notice that the cases will no longer be heard on March 29. The cases could be rescheduled, but some legal scholars are doubtful.

“It’s very unlikely this case will be heard,” said Nicholas Bagley, a law professor at the University of Michigan Law School. “The Supreme Court must realize that it would be dopey to hear a case involving work requirements that will never take effect. I suppose it could, but the Biden administration has signaled that these are going to be withdrawn.”

Whether to hold oral arguments this month was the most urgent question before the court for this case. The court is expected to decide the other requests the Department of Justice made in a subsequent order.

Policies requiring beneficiaries to work, go to school, or volunteer to maintain Medicaid coverage have been hotly criticized by opponents who say they unfairly put people at risk of losing their health-care coverage. The DOJ told the court in its request Feb. 22 that the HHS was particularly concerned about testing the policies during the Covid-19 pandemic.

The U.S. Court of Appeals for the District of Columbia Circuit struck down the federal government’s prior approvals of the policies, leading Arkansas and the Trump administration to appeal the decisions to the high court.

But the HHS under the Biden administration has already taken steps to withdraw those prior approvals.

Agency Action

The agency notified Arkansas, New Hampshire, and other states with previously approved policies in a letter Feb. 12 that it had preliminarily determined that allowing work-related requirements to take effect in states would not promote the objectives of the Medicaid program and “is not likely to achieve the statutory purposes.”

Given this development, the DOJ said the cases no longer present a suitable context for the court to rule on the scope of the secretary’s authority to approve the Arkansas and New Hampshire demonstration policies.

“The cases should be remanded with instructions that the underlying matters be remanded to the Secretary, so that the agency may complete the review process it has commenced and determine the appropriate path forward in the first instance, exercising the ‘judgment’ Congress expressly vested in the agency with respect to demonstration projects,” Acting Solicitor General Elizabeth Prelogar said in her motion to the court.

However, Arkansas said the issue isn’t going away, noting there will likely be challenges if the federal government revokes its prior approvals.

The state pushed back on the federal government’s request to toss out the appeals court decisions and send the issue back to the HHS. That would leave the district court decisions striking down the agency approvals in place, “potentially making any challenge to its proposed revocations futile and the district court’s judgments unreviewable,” Arkansas Attorney General Leslie Rutledge and lawyers in her office said in their opposition brief.

Thorny Questions

Medicaid work requirements have been approved or are pending in more than a dozen states. Prelogar noted none of the requirements are in effect. Arkansas was the only state to begin disenrolling beneficiaries for failing to satisfy its work rules, but that was stopped after the district court’s ruling in March, she said.

The Biden administration’s request for the court to dismiss the appeal and vacate the D.C. Circuit decision presents some thorny legal questions for the court.

Though the D.C. Circuit decision affirms the Biden administration argument that work requirements for Medicaid are invalid, the decision was drafted in pretty strong language about what Medicaid waivers are allowed to accomplish, Bagley said.

“The D.C. Circuit decision limited HHS’s discretion to grant Medicaid waivers and typically, agencies prefer to have more discretion rather than less,” he said.

The justices now have to decide whether to toss out that decision.

“I could imagine it taking several weeks if not longer to decide how to deal with the requests that the Justice Department made,” Bagley said.

The case is Cochran v. Gresham, U.S., No. 20-37.

(Updated with commentary starting in the third paragraph.)

To contact the reporter on this story: Lydia Wheeler in Washington at lwheeler@bloomberglaw.com

To contact the editors responsible for this story: Fawn Johnson at fjohnson@bloombergindustry.com; Brent Bierman at bbierman@bloomberglaw.com

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