Planned Parenthood of Greater Tex. Family Planning & Preventative Health Servs., Inc v. Smith

• Decision Date: 17 January 2019
• Docket Number: No. 17-50282,17-50282
• Citation: 913 F.3d 551
• Parties: PLANNED PARENTHOOD OF GREATER TEXAS FAMILY PLANNING AND PREVENTATIVE HEALTH SERVICES, INC; Planned Parenthood San Antonio; Planned Parenthood Cameron County; Planned Parenthood Gulf Coast, Inc; Planned Parenthood South Texas Surgical Center; Jane Doe #1; Jane Doe #2; Jane Doe #4; Jane Doe #7; Jane Doe #9; Jane Doe #10; Jane Doe #11, Plaintiffs - Appellees v. Charles SMITH, in His Official Capacity as Executive Commissioner of HHSC; Sylvia Hernandez Kauffman, in Her Official Capacity as Acting Inspector General of HHSC, Defendants - Appellants
• Court: U.S. Court of Appeals — Fifth Circuit

913 F.3d 551

PLANNED PARENTHOOD OF GREATER TEXAS FAMILY PLANNING AND PREVENTATIVE HEALTH SERVICES, INC; Planned Parenthood San Antonio; Planned Parenthood Cameron County; Planned Parenthood Gulf Coast, Inc; Planned Parenthood South Texas Surgical Center; Jane Doe #1; Jane Doe #2; Jane Doe #4; Jane Doe #7; Jane Doe #9; Jane Doe #10; Jane Doe #11, Plaintiffs - Appellees

v.Charles SMITH, in His Official Capacity as Executive Commissioner of HHSC; Sylvia Hernandez Kauffman, in Her Official Capacity as Acting Inspector General of HHSC, Defendants - Appellants

No. 17-50282

United States Court of Appeals, Fifth Circuit.

FILED January 17, 2019

Jennifer Sandman, Roger K. Evans, Planned Parenthood Federation of America, New York, NY, Alice J. Clapman, Planned Parenthood Federation of America, Washington, DC, Thomas Hart Watkins, Esq., Husch Blackwell, L.L.P., Austin, TX, for Plaintiffs - Appellees.

Heather Gebelin Hacker, Assistant Solicitor General, Office of the Attorney General for the State of Texas, Andrew Bowman Stephens, Assistant Attorney General, Office of the Attorney General, General Litigation Division, Austin, TX, for Defendants - Appellants.

Adam Gustafson, Boyden Gray & Associates, Washington, DC, for Amicus Curiae KEVIN DONOVAN, M.D., Director of the Center for Clinical Bioethics and Professor of Pediatrics at Georgetown University Medical Center

Michael Cantrell, Assistant Attorney General, Office of the Attorney General for the State of Arkansas, Little Rock, AR, for Amici Curiae STATE OF ARKANSAS, STATE OF INDIANA, STATE OF KANSAS, STATE OF KENTUCKY, by and through Governor Matthew G. Bevin, STATE OF LOUISIANA, STATE OF MICHIGAN, STATE OF MISSOURI, STATE OF NEBRASKA, STATE OF OHIO, STATE OF OKLAHOMA, STATE OF SOUTH CAROLINA, STATE OF UTAH, STATE OF WEST VIRGINIA, STATE OF WISCONSIN, and PHIL BRYANT, Governor of the State of Mississippi.

Lawrence John Joseph, Washington, DC, for Amicus Curiae EAGLE FORUM EDUCATION AND LEGAL DEFENSE FUND.

Jonathan F. Mitchell, Stanford Law School, Stanford, CA, for Amicus Curiae 42 MEMBERS OF CONGRESS.

Hillary Schneller, Center for Reproductive Rights, U.S. Litigation, New York, NY, for Amici Curiae BLACK MAMAS MATTER ALLIANCE, AFIYA CENTER, BLACK WOMEN'S HEALTH IMPERATIVE, NATIONAL BIRTH EQUITY COLLABORATIVE, SISTERSONG: THE NATIONAL WOMEN OF COLOR REPRODUCTIVE JUSTICE COLLECTIVE, and WOMEN WITH A VISION.

Martha Jane Perkins, National Health Law Program, Carrboro, NC, for Amici Curiae NATIONAL HEALTH LAW PROGRAM, NATIONAL FAMILY PLANNING & REPRODUCTIVE HEALTH ASSOCIATION, IPAS, NATIONAL LATINA INSTITUTE FOR REPRODUCTIVE HEALTH, ASIAN & PACIFIC ISLANDER AMERICAN HEALTH FORUM, and SEXUALITY INFORMATION AND EDUCATION COUNCIL OF THE UNITED STATE.

Boris Bershteyn, Skadden, Arps, Slate, Meagher & Flom, L.L.P., New York, NY, for Amicus Curiae TWENTY-FIVE UNITED STATES SENATORS.

Before JOLLY, JONES, and HAYNES¹ , Circuit Judges.

EDITH H. JONES, Circuit Judge:

The Texas Health and Human Services Commission’s Office of Inspector General ("OIG") sought to terminate the Medicaid provider agreements of Planned Parenthood affiliates throughout the state. The agency based this decision largely on undercover video footage of graphic discussions with Planned Parenthood personnel concerning the prospective sale of liver, thymus, and neural tissue from fetuses aborted during the second trimester of pregnancy. The videos justified terminating the affiliates’ provider agreements, the agency contended, because they indicated noncompliance with accepted medical and ethical standards. Three Planned Parenthood affiliates ("Provider Plaintiffs") and several Medicaid beneficiaries ("Individual Plaintiffs") sought a preliminary injunction against the termination decision. The district court held that the Individual Plaintiffs possessed a private right of action under the "qualified-provider" provision of the Medicaid Act, 42 U.S.C. § 1396a(a)(23), and issued a preliminary injunction preventing Texas from terminating Medicaid funding to the Planned Parenthood facilities statewide. The state agency has appealed.

We are constrained to affirm the district court’s conclusion that the plaintiffs possess a private right of action, as held by this court in Planned Parenthood Gulf Coast v. Gee , 862 F.3d 445 (5th Cir.2017) (hereafter, " Gee ") (cert denied , ––– U.S. ––––, 139 S.Ct. 408, ––– L.Ed.2d –––– ). But Judge Jones, in a separate concurrence, urges rehearing en banc on that issue, which has divided the appellate courts. We vacate the preliminary injunction and remand for the district court to limit its review to the agency record under an arbitrary-and-capricious standard.

I. BACKGROUND

A. Planned Parenthood Affiliates

The Provider Plaintiffs operate health centers and provide family planning services to about 12,500 Medicaid patients and the general public. Planned Parenthood Gulf Coast ("PPGC") runs seven health centers in the Houston area. Planned Parenthood Greater Texas ("PPGT") and Planned Parenthood South Texas ("PPST")² operate an additional 23 health centers. As affiliates of Planned Parenthood Federation of America ("PPFA"), they must adhere to various organizational standards to use the Planned Parenthood name and trademark.

Among the Provider Plaintiffs, only PPGC has sold fetal tissue for use in outside research.³ Melissa Farrell has served as PPGC’s Research Director since 2006. In this role, she provides information about PPGC’s services to outside researchers, develops budgets and contracts, and facilitates Institutional Review Board ("IRB") submissions. Ms. Farrell has been involved in several outside studies involving fetal tissue research. In 2006, PPGC participated in a first-trimester fetal tissue study. A second study, conducted in conjunction with the University of Texas Medical Branch in Galveston ("UTMB"), ran from 2010 to 2011 and concerned first-trimester placental tissue.

To facilitate these studies, Ms. Farrell stated that she would modify certain clinical procedures and require consent from the abortion patients whose procedures yielded fetal tissue. Both studies required that fetal tissue be processed and packaged following the abortions. The UTMB study additionally required PPGC to use a sterile process to collect the placental tissue after the abortion. Dr. Regan Theiler, a researcher involved in the UTMB project, also performed abortions at PPGC’s facility.

Ms. Farrell communicated with Baylor College of Medicine regarding another fetal tissue donation project from 2013 through 2015. They discussed IRB approval, next steps, and draft contract terms, but no contract or budget was finalized.

B. Undercover Videos and Ensuing Investigations

In 2015, the Center for Medical Progress ("CMP"), a pro-life organization, released more than eight hours of undercover videos disclosing conversations held at the PPGC headquarters. In the CMP videos, two individuals posed as representatives from a fetal tissue procurement company. They claimed to be interested in purchasing liver, thymus, and neural tissue from fetuses aborted during the second trimester of pregnancy. Ms. Farrell features prominently in the video, as she discusses the possibility of a research partnership, provides a tour of PPGC’s surgical facilities, and displays tissue samples from recently aborted fetuses.

Dr. Tram Nguyen, the director of PPGC’s abortion facility, confirmed many of Ms. Farrell’s statements.

The release of these graphic videos prompted federal and state investigations into numerous Planned Parenthood affiliates. The Harris County District Attorney, the Texas Rangers, and the Houston Police Department investigated but brought no charges. Likewise, the Texas Attorney General’s Office, the Texas Department of State Health Services, and the Texas Health and Human Services Commission conducted investigations.

Additionally, the U.S. House of Representatives formed a Select Investigative Panel ("Select Panel") to investigate abortion providers’ medical practices involving fetal tissue procurement. Representative Marsha Blackburn of Tennessee, a Republican, was named Chair of the bipartisan Select Panel. In December 2016, Blackburn emailed the Texas Attorney General Ken Paxton evidence the Select Panel had gathered about PPGC and asked Texas to investigate possible violations of Tex. Penal Code § 48.02, which prohibits the purchase and sale of human organs, and Tex. Penal Code § 37.08, which prohibits making a false report to a law enforcement officer.

C. Termination of Medicaid Provider Agreements

As participants in the Texas Medicaid program,⁴ the Provider Plaintiffs and each of their related health centers signed Medicaid provider agreements and agreed to comply with all Texas Medicaid policies and applicable state and federal regulations. The Provider Plaintiffs received $3.4 million from Texas Medicaid funds.⁵ Texas Health and Human Services Commission Office of Inspector General ("OIG" or "the agency") oversees compliance with state Medicaid policies and may conduct investigations and terminate Medicaid provider agreements for noncompliance.

OIG may terminate a Medicaid provider agreement when "prima facie evidence" establishes that a provider has committed a "program violation" or is "affiliated with a person who commits a program violation." 1 Tex. Admin. Code § 371.1703(c), (c)(6)-(8). A "program violation" includes any violation of federal law, state law, or the Texas Medicaid program policies. For instance, as explained in the Texas Medicaid Provider Procedures Manual, a provider violates Texas Medicaid rules if it fails to offer health services in accordance with "accepted medical community standards." See 1 Tex. Admin. Code § 371.1659(2).

In October 2015, OIG sent each Provider Plaintiff a Notice of Termination, stating that each was "no longer capable of performing medical services in a professionally competent, safe, and legal manner." The Notice listed the bases for termination and stated that, unless the...