W.D. Wash: Enjoins Disenrollment of non-citizens from state-funded health insurance program

Pursuant to a directive by Washington State’s Governor, a state agency disenrolled thousands of beneficiaries of a state-funded health insurance program due to their immigration status. A district court responded by entering a preliminary injunction against the state agency after concluding that the state’s actions most likely violate the Fourteenth Amendment’s due process and equal protection clauses. The court also certified two classes of Plaintiffs. Unthaksinkun v. Porter, No. C11-0588JLR, 2011 WL 4502050 (W.D. Wash. Sept. 28, 2011). Judge James L. Robart, a George W. Bush nominee, wrote the opinion.

Since 1987, the Washington State Basic Health Program (“Program”) has offered subsidized state-funded health insurance benefits to eligible Washington residents. The Program is governed by Washington’s Health Care Access Act of 1987 (“Act”) and is administered by Washington’s Health Care Authority (“HCA”). The HCA administrator can disenroll Program members not only for good cause, but also to prevent the HCA from exceeding funding limits. See Wash. Rev. Code § 70.47.060(6); Wash. Admin. Code § 182-24-070(2).

In January 2011, the Secretary of the United States Department of Health and Human Services approved Washington State’s Medicaid Act demonstration waiver. As a result, Washington State can now rely on federal funding to help cover some of the costs of the Program. Under the terms of Washington’s demonstration waiver, federal funds are available for Program members who are “transition eligible.” The waiver provides that “qualified non-citizens” are “transition eligible,” but that they must have been a “qualified alien,” as defined by a federal statute, for at least five years, or must qualify for one of the exceptions to the five-year bar. See 8 U.S.C. § 1601, et seq., 8 U.S.C. § 1641(b)-(c). Notably, the demonstration waiver’s citizenship requirement is stricter than Washington’s eligibility requirements for the Program.

Later in 2011, Washington Governor Chris Gregoire signed into law the fiscal year 2011 supplemental budget (“ESHB 2011”), which directed the HCA administrator to limit enrollment to the Program to those who are eligible under state law and are either “transition eligible” or licensed foster parents. ESHB 1086 § 213(8). As a result of this directive, the HCA Administrator mailed disenrollment notices to approximately 15,350 Program members for whom it did not have a Social Security number or proof of citizenship or immigration status. The notice, however, did not inform the former recipients of their appeal rights, nor did it inform them that they could continue receiving benefits during the appeal process.

After being disenrolled from the Program, the named Plaintiffs in the instant case, all of whom relied on the Program and were adversely affected by their disenrollment, appealed their disenrollment. Their appeals were all denied, however, because they were found not to be “transition eligible” since they had all been “qualified aliens” for less than five years.

After having their appeals denied, the named Plaintiffs filed a lawsuit in federal court, alleging that the Administrator of the HCA violated their due process and equal protection rights under the Fourteenth Amendment. The current issue in front of the district court is whether to certify two classes, and whether to grant a preliminary injunction against the HCA.

The court began its opinion by addressing the class certification issue. The court first certified the “Due Process class,” which includes all Washington state residents who were disenrolled from the Program on March 1, 2011, due to their immigration status, and whose benefits have not since been reinstated. In doing so, the court rejected several “justiciability” arguments made by the Defendant, including the argument that individuals who are not lawful residents lack standing to be in the Due Process class. The court next addressed the “Equal Protection class,” which includes all Washington state residents who are immigrants lawfully present in the United States, and (a) who were disenrolled from the Program on March 1, 2011, due to their immigration status, and whose benefits have not been reinstated, or (b) who would be eligible for the Program in the future but for their immigration status. Although the court certified the first subset of the Equal Protection class, it refused to certify the second subset because it concluded that the Plaintiffs failed to demonstrate that the members of this subset have standing, since the subset includes members who will never apply for Basic Health benefits.

Moving on to the Plaintiffs’ motion for preliminary injunction, the court began by noting the scope of the request, which would: (1) require the HCA to reinstate all previously enrolled immigrants’ benefits during the pendency of the litigation; (2) require continued enrollment for all eligible legal immigrants; (3) restore coverage for eligible medical care received since disenrollment; and (4) prevent the HCA from disenrolling class members’ benefits without providing constitutionally adequate notice.

Regarding the due process claim, the court first addressed the Plaintiffs’ likely success on the merits, which requires determining: (1) whether there is a protected property interest, and (2) whether the interest was taken away without providing sufficient process. See Pinnacle Armor, Inc. v. United States, 648 F.3d 708, 716 (9th Cir. 2011). Rejecting the Defendant’s argument that there is no property interest in Basic Health because the HCA Administrator can disenroll members to prevent over-expenditure, the court concluded that the Act likely creates a property interest in Basic Health benefits.

Moving on to the sufficiency of the disenrollment process, the court first outlined the Plaintiffs’ arguments: (1) that the process was lacking because the disenrollment letter did not apprise them of their right to request and received benefits during their appeal, and (2) that the process was lacking because it did not give them a “meaningful individualized explanation” for their disenrollment, which would allow them to decide whether to appeal. After concluding that due process likely requires notifying the disenrolled members of their right to request continued benefits during their appeal, the court addressed the constitutional sufficiency of the disenrollment notice. Applying the Mathews v. Eldridge test, the court concluded that additional procedures would not be “futile or duplicative” but would instead likely remedy the constitutional violation by: (1) including an individualized explanation for the individual’s disenrollment; (2) describing the eligibility requirements so that an individual can submit the relevant documents; and (3) apprising individuals of their right to request and receive continuing benefits during the appeal process. See Mathews v. Eldridge, 424 U.S. 319 (1976). Consequently, the court concluded that the Plaintiffs are likely to prevail on their due process claim.

Regarding the equal protection claim, the court first outlined the Plaintiffs’ argument: that the HCA Administrator violated the equal protection clause by disenrolling Program members on the basis of alienage while continuing to use state funds to provide United State citizens and eligible non-citizens with benefits. To assess this claim, the court stated that it was necessary to determine the appropriate standard of review: rational basis, intermediate scrutiny, or strict scrutiny. Because the Plaintiffs established a likelihood that the HCA Administrator employed a classification based on alienage and because the classification does not establish a uniform rule, the court concluded that the decision to disenroll the Plaintiffs is subject to strict scrutiny. The court went on to explain that the only state interest asserted by the Defendant – reducing the state budget – is not a compelling interest. Consequently, the court held that the Plaintiffs are likely to prevail on their equal protection claim.

Finally, the court addressed the other requirements for a preliminary injunction, noting that this portion of the analysis applies to both the due process and the equal protection claim.  The court first agreed with the Plaintiffs that they would be irreparably harmed absent a preliminary injunction because they cannot afford necessary medical care or alternative insurance. The court also found that the balance of hardships and public interest tilted in the Plaintiffs’ favor because an injunction would ensure access to public assistance and would ensure government compliance with the Fourteenth Amendment. The court ended its opinion by entering a preliminary injunction order against the Defendant as requested by the Plaintiffs.

–Scott Herrig, University of California, Berkeley-School of Law 2012

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