Korab v. Fink

• Decision Date: 01 April 2014
• Docket Number: No. 11–15132.,11–15132.
• Citation: 748 F.3d 875
• Parties: Tony KORAB; Tojio Clanton; Keben Enoch, each individually and on behalf of those persons similarly situated, Plaintiff–Appellees, v. Kenneth FINK, in his official capacity as State of Hawai‘i, Department of Human Services, Med–QUEST Division Administrator and Patricia McManaman, in her official capacity as Director of the State of Hawai‘i, Department of Human Services, Defendants–Appellants.
• Court: U.S. Court of Appeals — Ninth Circuit

748 F.3d 875

Tony KORAB; Tojio Clanton; Keben Enoch, each individually and on behalf of those persons similarly situated, Plaintiff–Appellees,

v.Kenneth FINK, in his official capacity as State of Hawai‘i, Department of Human Services, Med–QUEST Division Administrator and Patricia McManaman, in her official capacity as Director of the State of Hawai‘i, Department of Human Services, Defendants–Appellants.

No. 11–15132.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted Sept. 18, 2012.

Filed April 1, 2014.

Lee Ann N.M. Brewer (argued) and John F. Molay, Deputy Attorneys General, Honolulu, Hawai‘i for Defendant–Appellant.

Paul D. Alston (argued), Zachary A. McNish, and J. Blaine Rogers, Alston, Hunt, Floyd, & Ing, Honolulu, Hawai‘i; Catherine Leilani Aubuchon and Margery S. Bronster, Bronster Hoshibata, Honolulu,Hawai‘i; M. Victor Geminiani, Lawyers for Equal Justice, Honolulu, Hawai‘i, for Plaintiffs–Appellees.

Susan K. Serrano, Honolulu, Hawai‘i for Amici Curiae Japanese American Citizens League–Honolulu Chapter, National Association for the Advancement of Colored People–Honolulu Branch, and Kokua Kalihi Valley Comprehensive Family Services.

Before: M. MARGARET McKEOWN, RICHARD R. CLIFTON, and JAY S. BYBEE, Circuit Judges.

Opinion by Judge McKEOWN; Concurrence by Judge BYBEE; Dissent by Judge CLIFTON.

OPINION

McKEOWN, Circuit Judge:

This case presents yet another challenge to the complex area of state-funded benefits for aliens. In enacting comprehensive welfare reform in 1996, Congress rendered various groups of aliens ineligible for federal benefits and also restricted states' ability to use their own funds to provide benefits to certain aliens. See8 U.S.C. § 1601 et seq. As a condition of receiving federal funds, Congress required states to limit eligibility for federal benefits, such as Medicaid, to citizens and certain aliens. For state benefits, such as the Hawai‘i health insurance program at issue here, Congress essentially created three categories of eligibility. The first category—full benefits—requires states to provide the same benefits to particular groups of aliens, including certain legal permanent residents, asylees, and refugees, as the state provides to citizens. Id. § 1622(b). Recipients in this category also benefit from federal funds. Id. § 1612(b)(2). The second category—no benefits—prohibits states from providing any benefits to certain aliens, such as those who are in the United States without authorization. Id. § 1621(a). The third category—discretionary benefits—authorizes states to determine the eligibility for any state benefits of an alien who is a qualified alien, a nonimmigrant, or a parolee. Id. § 1622(a).

Within the third category are nonimmigrant aliens residing in Hawai‘i under a Compact of Free Association with the United States, known as COFA Residents. ¹ Although this group was not eligible for federal reimbursement under the cooperative state-federal Medicaid plan, Hawai‘i initially included them in the state health insurance plans at the same level of coverage as individuals eligible for federal reimbursement under Medicaid, and Hawai‘i assumed the full cost of that coverage. Then, in the face of declining revenues, in 2010 Hawai‘i dropped COFA Residents from its general health insurance plans and created a new plan with more limited coverage—Basic Health Hawai‘i—exclusively for COFA Residents and legal permanent residents who have lived in the United States for less than five years. Haw.Code R. § 17–1722.3–1. Hawai‘i did not adopt a plan for other aliens excluded from federal coverage under the third category.

In this class action suit on behalf of adult, non-pregnant COFA Residents, Tony Korab, Tojio Clanton, and Keben Enoch (collectively “Korab”) claim that Basic Health Hawai‘i violates the Equal Protection Clause of the Fourteenth Amendment because it provides less health coverage to COFA Residents than the health coverage that Hawai‘i provides to citizens and qualified aliens who are eligible for federal reimbursements through Medicaid. Korab does not challenge the constitutionality of the federal law excluding COFA Residents from federal Medicaid reimbursements. Rather, the claim is that the prior, more comprehensive level of state coverage should be reinstated so that COFA Residents are on equal footing with those covered by Medicaid.

We are sympathetic to Korab's argument but cannot accept the rationale. The basic flaw in the proposition is that Korab is excluded from the more comprehensive Medicaid benefits, which include federal funds, as a consequence of congressional action. Congress has plenary power to regulate immigration and the conditions on which aliens remain in the United States, and Congress has authorized states to do exactly what Hawai‘i has done here—determine the eligibility for, and terms of, state benefits for aliens in the narrow third category, with regard to whom Congress expressly gave states limited discretion. Hawai‘i has no constitutional obligation to fill the gap left by Congress's withdrawal of federal funding for COFA Residents.

The district court thought otherwise. As Hawai‘i put it in its brief, “the district court ruled that the [Hawai‘i] Department [of Human Services] is constitutionally required to set up a state-only funded program that completely ‘fills the void’ created by the Federal Welfare Reform Act's discrimination against aliens.” We vacate the district court's grant of a preliminary injunction preventing Hawai‘i from reducing state-paid health benefits for COFA Residents because Hawai‘i is not obligated to backfill the loss of federal funds with state funds and its decision not to do so is subject to rational-basis review.

Background

I. The Welfare Reform Act and Aliens

As part of welfare policy reforms enacted in 1996, Congress passed the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (“the Welfare Reform Act” or “the Act”). Pub.L. 104–193, 110 Stat. 2105 (1996). Title IV of the Welfare Reform Act restricts public benefits for aliens, based on the rationale that aliens should “not depend on public resources to meet their needs, but rather rely on their own capabilities and the resources of their families, their sponsors, and private organizations.” 8 U.S.C. § 1601(2)(A). Congress declared the reforms to be “a compelling government interest” that is “in accordance with national immigration policy.” Id. § 1601(5)-(6).

With regard to federal benefits,² Congress created two categories of aliens: “qualified aliens,” who may be eligible for federal benefits, and all other aliens, who are ineligible for federal benefits. Id. §§ 1611–13, 1641. “Qualified aliens” are defined as legal permanent residents, asylees, refugees, certain parolees, and aliens who fall within other limited categories specified in the statute.³Id. § 1641(b)-(c). The Act renders aliens who are not qualified aliens ineligible for all federal public benefits, with only limited exceptions, such as the provision of emergency medical assistance. Id. § 1611(b).

With regard to state benefits,⁴ such as Basic Health Hawai‘i, Congress further subdivided aliens into three categories: one category of aliens who are eligible for any state public benefits (particular qualified aliens, such as refugees, asylees, certain legal permanent residents, veterans and members of the military on active duty), id. § 1622(b); a second category to whom states may not give any benefits at all (aliens who are not qualified aliens, nonimmigrants, or parolees), id. § 1621(a); and a third category for whom Congress authorizes states to make their own eligibility determinations (qualified aliens, nonimmigrants, and aliens paroled into the United States for less than a year), id. § 1622(a). In articulating the immigration policy advanced by the Welfare Reform Act, Congress emphasized that a state that “follow[s] the Federal classification in determining the eligibility of ... aliens for public assistance shall be considered to have chosen the least restrictive means available for achieving the compelling governmental interest of assuring that aliens be self-reliant in accordance with national immigration policy.” Id. § 1601(7).

II. Medicaid and Cofa Residents

Medicaid is a cooperative state-federal program in which the federal government approves a state plan to fund medical services for low-income residents and then reimburses a significant portion of the state's expenses in financing that medical care. See Pub.L. No. 89–97, 79 Stat. 286, 343 (1965) (codified as amended at 42 U.S.C. § 1396 et seq.); see also Wilder v. Virginia Hosp. Ass'n, 496 U.S. 498, 502, 110 S.Ct. 2510, 110 L.Ed.2d 455 (1990). Participation by states is voluntary, but in order to receive federal funds, participating states must comply both with the statutory requirements of the Medicaid Act and with regulations promulgated by the Secretary of Health and Human Services. See Alaska Dep't of Health & Soc. Servs. v. Ctrs. for Medicare & Medicaid Servs., 424 F.3d 931, 935 (9th Cir.2005). In 1993, Hawai‘i obtained a waiver from compliance with some of the guidelines pursuant to § 1115 of the Social Security Act so that it could create a privatized managed care demonstration project that allows Hawai‘i to contract with health-maintenance organizations (“HMOs”) for the provision of state health insurance. AlohaCare v. Hawaii Dep't of Human Servs., 572 F.3d 740, 743 (9th Cir.2009).

Before the Welfare Reform Act, COFA Residents were eligible for federal Medicaid subsidies and received medical services through Hawai‘i's state-sponsored managed care plans. The Welfare Reform Act changed the landscape dramatically by rendering nonimmigrants and others ineligible for federal public benefits. As nonimmigrants, COFA Residents are thus ineligiblefor Medicaid.⁵ For purposes of state benefits, however, nonimmigrants fall within the category of aliens for whom states are authorized...