Planned Parenthood of Ind., Inc. v. Comm'r of the Ind. State Dep't of Health

Decision Date23 October 2012
Docket NumberNo. 11–2464.,11–2464.
Citation699 F.3d 962
PartiesPLANNED PARENTHOOD OF INDIANA, INC., et al., Plaintiffs–Appellees, v. COMMISSIONER OF the INDIANA STATE DEPARTMENT OF HEALTH, et al., Defendants–Appellants.
CourtU.S. Court of Appeals — Seventh Circuit

OPINION TEXT STARTS HERE

Validity Called into Doubt

West's A.I.C. 5–22–17–5.5(b)Kenneth J. Falk (argued), Attorney, Indiana Civil Liberties Union, Indianapolis, IN, Talcott Camp, Attorney, American Civil Liberties Union, Reproductive Freedom Project, Roger K. Evans, Attorney, Planned Parenthood Federation of America, Legal Action for Reproductive Rights, New York, NY, for PlaintiffsAppellees.

Thomas M. Fisher (argued), Attorney, Office of the Attorney General, Indianapolis, IN, for DefendantsAppellants.

Paul Benjamin Linton, Attorney, Northbrook, IL, for Amicus Curiae, Members of the Indiana General Assembly.

Lawrence J. Joseph, Attorney, Washington, DC, for Amicus Curiae, Eagle Forum Education & Legal Defense Fund.

Jay A. Sekulow, Attorney, American Center for Law & Justice, Washington DC, for Amicus Curiae, American Center for Law and Justice and Committee to Defund Planned Parenthood's Abortions at State Level.

John J. Bursch, Attorney, Officer of the Solicitor General, Lansing, MI, for Amicus Curiae, State of Michigan.

Martha Jane Perkins, Attorney, National Health Law Program, Carrboro, NC, for Amicus Curiae, National Health Law Program and National Partnership for Women and Families.

Alisa B. Klein (argued), Attorney, Department of Justice, Civil Division, Appellate Staff, Washington, DC, for Amicus Curiae, United States of America.

Before CUDAHY, KANNE, and SYKES, Circuit Judges.

SYKES, Circuit Judge.

In 2011 Indiana adopted a law prohibiting state agencies from providing state or federal funds to “any entity that performs abortions or maintains or operates a facility where abortions are performed.” Ind.Code § 5–22–17–5.5(b). The Hyde Amendment already forbids states from using federal funds to pay for most non-therapeutic abortions; Indiana has a similar ban on the use of state funds. The new law goes a step further by prohibiting abortion providers from receiving any state-administered funds, even if the money is earmarked for other services. The point is to eliminate the indirect subsidization of abortion.

Immediately after the defunding law was enacted, Planned Parenthood of Indiana and several individual plaintiffs filed this lawsuit seeking to block its implementation.1 As an enrolled Medicaid provider, Planned Parenthood provides reimbursable medical services to low-income patients, two of whom are named as plaintiffs. Planned Parenthood claims that the defunding law violates the Medicaid Act's “free choice of provider” provision, which requires state Medicaid plans to allow patients to choose their own medical provider. See42 U.S.C. § 1396a(a)(23). The United States, as amicus curiae, supports this claim. Planned Parenthood also contends that the defunding law is preempted by a federal block-grant statute that authorizes the Secretary of Health and Human Services (“HHS”) to make grants to the states for programs related to sexually transmitted diseases. See42 U.S.C. § 247c(c). Finally, Planned Parenthood claims that the defunding law places an unconstitutional condition on its receipt of state-administered funds because it must choose between providing abortion services and receiving public money.

The district court held that the first two claims were likely to succeed and enjoined Indiana from enforcing the defunding law with respect to Planned Parenthood's Medicaid and § 247c(c) grant funding. The court did not address the unconstitutional-conditions claim. Indiana appealed.

We affirm in part and reverse in part. A threshold question on the two statutory claims is whether the plaintiffs have a right of action. To create private rights actionable under 42 U.S.C. § 1983, the statutes in question must meet the requirements of Gonzaga University v. Doe, 536 U.S. 273, 122 S.Ct. 2268, 153 L.Ed.2d 309 (2002). The free-choice-of-provider statute does. Under § 1396a(a)(23) state Medicaid plans “must” allow beneficiaries to obtain medical care from “any institution, agency, ... or person, qualified to perform the service.” This is individual-rights language, stated in mandatory terms, and interpreting the right does not strain judicial competence. See Gonzaga Univ., 536 U.S. at 284, 122 S.Ct. 2268.

Planned Parenthood is likely to succeed on this claim. Although Indiana has broad authority to exclude unqualified providers from its Medicaid program, the State does not have plenary authority to exclude a class of providers for any reason—more particularly, for a reason unrelated to provider qualifications. In this context, “qualified” means fit to provide the necessary medical services—that is, capable of performing the needed medical services in a professionally competent, safe, legal, and ethical manner. The defunding law excludes Planned Parenthood from Medicaid for a reason unrelated to its fitness to provide medical services, violating its patients' statutory right to obtain medical care from the qualified provider of their choice.

The remaining claims are not likely to succeed, however, so the scope of the injunction must be modified. First, the block-grant statute does not create private rights actionable under § 1983, and the district court's conclusion that the Supremacy Clause supplies a preemption claim of its own force is probably wrong. In any event, the defunding law does not conflict with § 247c(c), which attaches no strings to the federal money other than a general requirement that the recipient state spend it on programs for the surveillance of sexually transmitted diseases. Finally, the unconstitutional-conditions claim does not supply an alternative basis for relief. This doctrine, sometimes murky, requires close attention to the potentially implicated right. Here, Planned Parenthood's claim is entirely derivative of a woman's right to obtain an abortion. It is settled law that the government's refusal to subsidize abortion does not impermissibly burden a woman's right to obtain an abortion. If a ban on public funding for abortion does not directly violate the abortion right, then Indiana's ban on other forms of public subsidy for abortion providers cannot be an unconstitutional condition that indirectly violates the right.

I. Background

Medicaid “is a cooperative federal-state program through which the Federal Government provides financial assistance to States so that they may furnish medical care to needy individuals.” Wilder v. Va. Hosp. Ass'n, 496 U.S. 498, 502, 110 S.Ct. 2510, 110 L.Ed.2d 455 (1990). Indiana participates in Medicaid, and as a condition of receiving federal funds, its Medicaid program must comply with federal requirements. See42 U.S.C. § 1396a(a); see also Collins v. Hamilton, 349 F.3d 371, 374 (7th Cir.2003) ([O]nce a state elects to participate [in Medicaid], it must abide by all federal requirements and standards as set forth in the Act.”). Assuming the federal requirements are met, states have “substantial discretion to choose the proper mix of amount, scope, and duration limitations on coverage, as long as care and services are provided in ‘the best interests of the recipients.’ Alexander v. Choate, 469 U.S. 287, 303, 105 S.Ct. 712, 83 L.Ed.2d 661 (1985) (quoting 42 U.S.C. § 1396a(a)(19)).

To ensure compliance with federal rules, participating states must submit proposed Medicaid plans and any subsequent amendments to the Centers for Medicare and Medicaid Services (“CMS”) for approval.2Douglas v. Indep. Living Ctr. of S. Cal., Inc., ––– U.S. ––––, 132 S.Ct. 1204, 1208, 182 L.Ed.2d 101 (2012). The HHS Secretary may withhold Medicaid funding—either in whole or in part—from any state whose plan does not comply with federal requirements. See42 U.S.C. § 1396c; 42 C.F.R. § 430.12(c); cf. Nat'l Fed'n of Indep. Bus. v. Sebelius, ––– U.S. ––––, 132 S.Ct. 2566, 2607–08, 183 L.Ed.2d 450 (2012).

At issue here is the Medicaid Act's requirement that state Medicaid plans “must ... provide that ... any individual eligible for medical assistance ... may obtain such assistance from any institution, agency, community pharmacy, or person, qualified to perform the service or services required.” 42 U.S.C. § 1396a(a)(23); see also42 C.F.R. § 431.51(b)(1) (requiring that a state plan provide that “a recipient may obtain Medicaid services from any institution ... that is [q]ualified to furnish the services[ ] ... and [w]illing to furnish them to that particular recipient”). This is known as the free-choice-of-provider requirement.

A. Indiana House Enrolled Act 1210, the Abortion–Provider Defunding Law

In the spring of 2011, the Indiana General Assembly adopted a law prohibiting abortion providers from receiving any state contracts and grants, including those involving state-administered federal funds. More specifically, the defunding law providesthat state agencies “may not[ ] enter into a contract with[ ] or make a grant to[ ] any entity that performs abortions or maintains or operates a facility where abortions are performed.” Ind.Code § 5–22–17–5.5(b). The new law, known as House Enrolled Act 1210, also cancelled existing contracts with abortion providers. See id. § 5–22–17–5.5(c), (d). The defunding law does not apply to hospitals and ambulatory surgical centers. See id. § 5–22–17–5.5(a).

Act 1210 fills a gap in Indiana law regarding public funding of abortion. The Hyde Amendment prohibits the use of federal funds to pay for non-therapeutic abortions except in the case of pregnancies resulting from rape or incest. 3 Indiana law contains similar restrictions on the use of state funds. See id. §§ 12–15–5–1(17), 16–34–1–2; 405 Ind. Admin. Code 5–28–7; Humphreys v. Clinic for Women, Inc., 796 N.E.2d 247, 250–51 (Ind.2003). Act 1210 aims to prevent the indirect subsidization of abortion by stopping the flow of all...

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