Title XIX of the Social Security Act has provided medical care assistance to certain vulnerable populations under a cooperative federal-state arrangement, approved by the Secretary of the Health and Human Services (HHS). In 2010, Congress passed the Affordable Care Act (ACA) (“Obamacare”) that expanded Medicare coverage to include an additional group of low-income adults under the age of 65. While all states were obliged to comply with the Medicaid Act, states had a choice on whether to expand Medicaid. States that chose to participate in the program and comply with minimum federal requirements, such as expanding coverage, received funding from the federal government to provide the care.

In certain narrow cases, states were permitted to waive certain Medicaid Act requirements under the § 1115 Social Security Act (SSA), however, only when the waiver promoted the objectives of the Medicaid Act. Otherwise, states were forbidden from picking and choosing individuals within a covered group. Arkansas was one of the first states to expand Medicare after the ACA was passed, starting in January 2014 to include adults under the age of 65 through private care. The expansion was renamed “Arkansas Works” (AW) when it was renewed in in 2016 and extended through 2021. At this time, Arkansas requested to institute a work requirement in Medicaid as a requirement for health coverage, which was denied by the Centre for Medicare and Medicaid Services (CMS) because it was inconsistent with the purposes of the Medicaid program.

However, the 2017 Trump administration called on federal agencies to undo the ACA and introduced another purpose to Medicare, which was to promote enrollees to work. This resulted in CMS inviting states to implement exceptions to the SSA. In March 2017, Arkansas Governor Asa Hutchinson proposed amendments to the AW to institute a work requirement and shrink retroactive health coverage. Changing its original position from 2016, the Secretary of the HSS approved the AWA, including the work condition, on March 5, 2018.

On August 14, 2018, three individuals filed a lawsuit against the Department of Health and Human Services (HHS) and the Centers for Medicare & Medicaid Services (CMS) in the US District Court for the District of Columbia. The plaintiffs alleged violations of the Administrative Procedure Act and the Social Security Act by the federal government in approving the Arkansas Works Amendments (AWA) in March 2018. The AWA, according to the plaintiffs, sought to undermine the ACA and the expansion of Medicaid through a fundamental alteration of those statues. The plaintiffs claimed that the AWA was in violation of the Take Care Clause of the Constitution, which limits presidential power from rewriting congressional statutes, and ensures execution of laws passed by the Congress. All three plaintiffs were beneficiaries of Medicaid who lost or risked losing medical coverage due to changes in the AW program, which required 80 hours of employment per month for able-bodied adults from 19-49, reported online, as a requirement for health coverage. One of the plaintiffs lost his Medicaid coverage and subsequently his job after he failed to meet the AWA work requirement by not reporting his compliance in June 2018. The two other plaintiffs, employed at the time of the lawsuit, anticipated losing their Medicare coverage due to the new work requirements.

The plaintiffs alleged that the HHS violated the US Constitution and federal laws in approving the Medicaid work requirement and that the SSA did not permit the Secretary of HHS to waive federal Medicaid requirements. Represented by Legal Aid of Arkansas, Southern Poverty Law Center, and the National Health Law Program, the plaintiffs sought declaratory and injunctive relief from the Arkansas Works Amendment and attorney fees. The case was assigned to Judge James E. Bosaberg.

On November 5, 2018, the plaintiffs filed an amended complaint with additional plaintiffs who also faced loss of coverage. The plaintiffs moved for summary judgment on the same day, asking the court to strike down the Medicaid work requirement, alleging that the federal government approved the requirements without due process. The state of Arkansas also intervened as a defendant on November 30, 2018.

Judge Bosaberg held that government action was arbitrary and capricious if the government failed to adequately consider an important aspect of a problem under the Administrative Procedure Act (APA), which requires courts to set aside government actions that are “arbitrary, capricious” or unlawful. The court stated that the Secretary had a duty to determine whether the proposed AWA would promote the objectives of Medicaid, including whether it advances or hinders health coverage to the needy. In considering the merits of the plaintiff’s claims, Judge Bosaberg considered whether the Secretary, in concluding that the AWA program promoted the objectives of the Medicaid Act, acted arbitrarily or capriciously.

This challenge was previously considered in a separate suit in Steward v. Azar, where the court determined if an agency had adequately considered whether a waiver proposal from Kentucky would advance medical assistance to its citizens. The court in Steward v. Azar vacated the waiver in question, which also included a work requirement because the agency failed to sufficiently consider the impact of the proposed project on Medicaid coverage.

On March 27, 2019, the court found that the Secretary of the HHS failed to adequately consider how the AWA would lead to loss of coverage for a substantial number of Arkansas residents, including the needy. Because coverage to the needy was a core objective of Medicaid, the court held that the AWA did not advance the purpose of Medicaid. Therefore, its approval was aribtrary and capricious.

Correspondingly, the court granted the plaintiffs’ motion for summary judgment and denied the defendants’ cross-motions on April 10, 2019. Like the holding in Steward v. Azar, the approval for Arkansas’s program was also vacated. 2019 WL 1375241. A status hearing is scheduled for April 10, 2019.

As of April 10, 2019, the case is ongoing as the parties continue to resolve further issues.

Averyn Lee - 04/03/2019


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