Tennessee v. U.S. Dep't of State

Decision Date19 March 2018
Docket NumberNo. 1:17–cv–01040–STA–egb,1:17–cv–01040–STA–egb
Citation329 F.Supp.3d 597
Parties State of TENNESSEE, et al., Plaintiffs, v. U.S. DEPARTMENT OF STATE, et al., Defendants, v. Tennessee Immigrant and Refugee Rights Coalition, et al., Intervenor–Defendants.
CourtU.S. District Court — Western District of Tennessee

Brennan Tyler Brooks, Richard Thompson, Jay Robert Combs, Kate Margaret Oliveri, Thomas More Law Center, Ann Arbor, MI, for Plaintiffs.

James Jordan Gilligan, U.S. Department of Justice, Washington, DC, Stuart Justin Robinson, U.S. Department of Justice, San Francisco, CA, for Defendants.

Thomas Hauser Castelli, American Civil Liberties Union Foundation of Tennessee, Nashville, TN, Cody H. Wofsy, Pro Hac Vice, ACLU Immigrants' Rights Project, San Franciso, CA, Omar Cassim Jadwat, Pro Hac Vice, ACLU Immigrants' Rights Project, New York, NY, for Intervenor Defendant.



Plaintiffs Tennessee General Assembly, in its own right and on behalf of the State of Tennessee, State Senator John Stevens, individually and in his official capacity, and State Representative Terri Lynn Weaver, individually and in her official capacity, have brought this action contending that federal laws requiring the State of Tennessee to provide Medicaid benefits to refugees, under threat of losing its federal Medicaid funding, coerce the State into subsidizing the federal Refugee Resettlement Program. Plaintiffs have sued the United States Department of State; Rex Tillerson, in his official capacity as Secretary of State; the Bureau of Population, Refugees, and Migration ("PRM"); Simon Henshaw, in his official capacity as Acting Assistant Secretary of State for the PRM; United States Department of Health and Human Services ("HHS"); Thomas E. Price, in his official capacity as Secretary of HHS; the Office of Refugee Resettlement ("ORR"); and Ken Tota, in his official capacity as Acting Director of ORR (collectively the "Federal Government"). Plaintiffs seek a declaration that the challenged laws exceed Congress's authority under the United States Constitution's Spending Clause and violate the Tenth Amendment to the Constitution. They also seek injunctive relief prohibiting further refugee resettlements in Tennessee until the Federal Government absorbs all costs of those resettlements.

Defendants have filed a motion to dismiss for lack of subject-matter jurisdiction or, in the alternative, for failure to state a claim upon which relief can be granted. (ECF No. 24.) Plaintiffs have filed a response to the motion (ECF No. 38), Defendants have filed a reply to the response (ECF No. 39), and Plaintiffs have filed a sur-reply.1 (ECF No. 40.) For the reasons set forth below, the motion to dismiss is GRANTED .

Tennessee Immigrant and Refugee Rights Coalition, on behalf of itself and its members, Bridge Refugee Services Inc., and Nashville International Center for Empowerment, has filed a motion to intervene on behalf of Defendants. (ECF No. 25). Because the Court grants Defendants' motion to dismiss, the motion to intervene is DENIED as moot.


Congress created the Medicaid program through enactment of Title XIX of the Social Security Act, Pub. No. L. 89–97, 79 Stat. 286, codified at 42 U.S.C. § 1396 et seq. See generally Pharm. Research & Mfrs. of Am. v. Walsh , 538 U.S. 644, 650–51, 123 S.Ct. 1855, 155 L.Ed.2d 889 (2003)(discussing the Medicaid program and its purpose).2 "Medicaid is a cooperative federal-state program through which the Federal Government provides financial assistance to States so 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) (citation omitted). See also In re Estate of Trigg , 368 S.W.3d 483, 499 (Tenn. 2012) ("The program is jointly funded by the federal government and the states, and each state operates its own program in accordance with federal requirements.").

Tennessee's participation in the Medicaid program began when the General Assembly enacted the Medical Assistance Act of 1968. Roberts v. Sanders , 2002 WL 256740 at *5 (Tenn. Ct. App. Feb. 22, 2002) (citing Act of Apr. 3, 1968, ch. 551, 1968 Tenn. Pub. Acts 496 (codified as amended at Tenn. Code Ann. §§ 71–5–101–119 (1995 & Supp. 2001) ) ).3 Participation in the program is voluntary, but participating states must comply with the requirements imposed by the statute and with regulations promulgated by the Secretary of HHS. Wilder , 496 U.S. at 502, 110 S.Ct. 2510. See also Roberts , 2002 WL 256740 at *5 (While each state operates its own Medicaid program, each state must conform to federal requirements in order to receive federal matching funds.")

One of those requirements is that each state must have an approved plan that provides coverage for specified groups. 42 U.S.C. § 1396a(a)(10)(A)(i), (b) ; 42 C.F.R. § 430.10. That is, participating states must provide full Medicaid services under the approved state plan to groups of individuals who meet the eligibility criteria. See Lewis v. Thompson , 252 F.3d 567, 570 (2d Cir. 2001) ("States enjoy some flexibility in determining the breadth of a Medicaid plan, but are nonetheless cabined by a set of eligibility rules.")

Each state with an approved plan receives payments from the Federal Government according to a formula set out by statute. 42 U.S.C. § 1396d. If there is a determination that the state's plan or its administration of the plan no longer complies with Medicaid requirements, the Secretary will either withhold further payments to the state or may "limit payments to categories under or parts of the State plan not affected" by the non-compliance. 42 U.S.C. § 1396c.

A finding of non-compliance results in the following administrative process. First an attempt is made by the HHS Centers for Medicare & Medicaid Services ("CMS") to resolve the matter informally. 42 C.F.R. §§ 430.32, 430.35. If these efforts are unsuccessful, CMS initiates a formal compliance action by letter to the state which sets forth the finding of non-compliance, provides notice that some or all federal funding will be withheld absent compliance, and explains that the state has an opportunity for an evidentiary hearing before any payments will be withheld. 42 C.F.R. §§ 430.35(a) & (d), 430.70, 430.83 – 430.88. If an adverse ruling is made, the state may seek review by the Administrator. Id. §§ 430.80(a)(11), 430.102(b). The Administrator's decision constitutes the final decision of the agency and is the earliestpoint at which federal funds can be withheld. Id. §§ 430.102(c), 430.104(c). A state may seek review of the final agency decision in the United States Court of Appeals for the circuit in which the state is located. 42 U.S.C. § 1316(a)(3) ; 42 C.F.R. § 430.38(a)(b). A similar administrative process allows a state to seek appellate-court review of CMS's disapproval of a proposed plan amendment. 42 U.S.C. § 1316(a).

The original Medicaid statute was "silent on the availability of Medicaid to aliens." Lewis , 252 F.3d at 571. However, in 1973 the Secretary issued a rule requiring coverage of all lawful permanent residents and other aliens "permanently residing in the United States under color of law." 45 C.F.R. § 248.50 (1973). The purpose of the 1973 rule was to implement the Supreme Court's decision in Graham v. Richardson , 403 U.S. 365, 376, 380, 91 S.Ct. 1848, 29 L.Ed.2d 534 (1971), see 37 Fed. Reg. 11977 (June 16, 1972), in which the Court held that state laws denying welfare benefits to resident aliens violated the Equal Protection Clause of the Fourteenth Amendment and impermissibly encroached upon exclusive federal power over the admission of aliens and the conditions of their residence.

In 1996 Congress passed the Personal Responsibility and Work Opportunity Reconciliation Act, Pub. L. No. 104–193, 110 Stat. 2105 (1996), known as the Welfare Reform Act of 1996. In this Act, Congress announced a "national policy with respect to welfare and immigration." Korab v. Fink , 797 F.3d 572, 580 (9th Cir. 2014) (quoting 8 U.S.C. § 1601 ). The Act "establish[ed] a uniform federal structure for providing welfare benefits to distinct classes of aliens." Id. at 581. Reaffirming national policy that "aliens within the Nation's border [should] not depend on public resources to meet their needs," 8 U.S.C. § 1601(2)(A), the Act "impos[ed] sweeping restrictions on aliens' access to federally sponsored government aid" such as Medicaid. Lewis , 252 F.3d at 577–78 ; see also Bruns v. Mayhew , 750 F.3d 61, 63 (1st Cir. 2014) (citation omitted) ("For years, federal Medicaid extended medical assistance to eligible individuals without regard to citizenship status or durational residency. By act of Congress, however, the alien eligibility requirements for publicly-funded benefits, including Medicaid, changed dramatically in 1996.").

The Act separated aliens in the United States into two classes—qualified aliens who may be eligible for certain federally funded benefits and all other aliens who generally are not. 8 U.S.C. §§ 1611 – 1613, 1641. The definition of "qualified alien[s]" includes lawfully admitted refugees. 8 U.S.C. § 1641(b)(3). Five years following their entry into the United States, qualified aliens may be considered eligible for certain designated federal programs, including Medicaid; however, refugees are covered under Medicaid without regard to the five-year residency rule. Id. §§ 1612(b)(1), (2)(A)(i)(I)(V), 1612(b)(3)(A)(C), 1613(a), (b)(1). Medicaid coverage must be provided to eligible refugees for seven years following their admission to the United States, after which coverage of refugees becomes optional at the state's discretion. Id. § 1612(b)(1), (2)(A)(i). If the refugee resettlement agency determines that a refugee is not eligible for Medicaid under the state plan, the agency looks to the Refugee Medical Assistance ("R...

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