Stewart v. Azar

308 F.Supp.3d 239

Ronnie Maurice STEWART, et al., Plaintiffs,

v.Alex M. AZAR II, et al., Defendants.

Civil Action No. 18–152 (JEB)

United States District Court, District of Columbia.

Signed April 10, 2018

MEMORANDUM OPINION

JAMES E. BOASBERG, United States District Judge

Plaintiffs are sixteen Kentucky Medicaid enrollees who brought this action under the Administrative Procedure Act, 5 U.S.C. §§ 701 – 706, challenging the federal government's approval of a new Kentucky Medicaid program, Kentucky HEALTH. Defendants—the Department of Health and Human Services, the Centers for Medicare and Medicaid Services, and four officials—now move to transfer the case to the Eastern District of Kentucky pursuant to 28 U.S.C. § 1404(a). Because the Court finds that convenience and the interests of justice warrant keeping the matter in the District of Columbia, it will deny the Motion.

I. Background

A. Medicaid Program

Since 1965 the federal government and the states have worked together to provide medical care to certain vulnerable populations under Title XIX of the Social Security Act, colloquially known as Medicaid. See 42 U.S.C. § 1396–1. The Centers for Medicare and Medicaid Services (CMS), a federal agency within the Department of Health and Human Services (HHS), has primary responsibility for overseeing Medicaid programs. Under the cooperative federal-state arrangement, participating states submit their "plans for medical assistance" and receive federal funding to offset some of the costs if the plan is "approved by the Secretary [of HHS]." Id. Currently, all states have chosen to participate in the program.

The Medicaid Act sets out certain parameters for states to follow, but each state is free to administer its Medicaid program as it wishes within those strictures. See 42 U.S.C. § 1396a. One such provision requires state plans to "mak[e] medical assistance available" to certain low-income individuals, including pregnant women, children, and their families; former foster children under the age of 26; the elderly; and people with certain disabilities. Id. § 1396a(a)(10)(A) ; see ECF No. 1 (Complaint), ¶ 44. In 2010, Congress enacted the Patient Protection and Affordable Care Act, Pub. L. No. 111–148, 124 Stat. 119 (2010), "to increase the number of Americans covered by health insurance." Id., ¶ 45 (quoting Nat'l Fed'n of Indep. Bus. v. Sebelius, 567 U.S. 519, 538, 132 S.Ct. 2566, 183 L.Ed.2d 450 (2012) ). Under the ACA, states can choose to expand their Medicaid coverage to include low-income adults under 65 who would not otherwise qualify. See 42 U.S.C. § 1396a(a)(10)(A)(i)(VIII). While generally a state must cover all qualified individuals to receive any Medicaid funding, id. § 1396a(a)(10)(B), it may choose not to cover this "expansion population." Compl., ¶ 46; see NFIB, 567 U.S. at 587, 132 S.Ct. 2566. If the state decides to cover the expansion group, however, those individuals become part of the state's mandatory population.

Both before and after the ACA, a state that wishes to deviate from the Medicaid Act's requirements must obtain a Section 1115 waiver from the Secretary of HHS. See 42 U.S.C. § 1315. These waivers allow the Secretary to approve "experimental, pilot, or demonstration project[s]" in state medical plans outside of the statutory parameters of the Medicaid Act, "which, in the judgment of the Secretary, [are] likely to assist in promoting the [Act's] objectives." Id. § 1315(a). The ultimate decision whether to grant a waiver rests with the Secretary, but his discretion is not boundless. Before HHS can act on a waiver application, the state "must provide at least a 30–day public notice and comment period regarding" the proposed program and hold at least two hearings at least 20 days before submitting the application. See 42 C.F.R. §§ 431.408(a)(1), (3). Once a state completes those prerequisites, it then sends an application to CMS. Id. § 431.412 (listing application requirements). After the agency notifies the state that it has received the waiver application, a federal 30–day public-notice period commences, and the agency must wait at least 45 days before rendering a final decision. Id. §§ 431.416(b), (e)(1). Under very limited circumstances—e.g. , "natural disaster" or "public health emergency"—CMS or the Secretary may waive the federal or state public-comment period. Id. § 431.416(g).

On January 11, 2018, Brian Neale, Director of CMS, issued a letter to state Medicaid Directors "announcing a new policy designed to assist states in their efforts to improve Medicaid enrollee health and well-being through incentivizing work and community engagement among" certain adult mandatory Medicaid groups. See Compl., Exh. D at 1. The nine-page letter noted that work-requirement-based eligibility for Medicaid "is a shift from prior agency policy," id. at 3, but that the agency was committed to "support state efforts to test incentives that make participation in work or other community engagement a requirement for continued Medicaid eligibility" and encouraged states to apply for Section 1115 waivers for this purpose. Id. at 1. It then "identified a number of issues for states to consider as they develop" work-requirement Medicaid programs. Id. at 4–9. To date, ten states have applied for such Medicaid waivers. See ECF No. 40 (Amicus Brief of AARP, et al. ) at 2 n.1.

B. Kentucky HEALTH

Kentucky, like all other states and the District of Columbia, participates in Medicaid. After the ACA went into effect, the state broadened Medicaid to include the expansion population. See Compl., ¶ 79. On August 24, 2016, Governor Matt Bevin submitted an application to CMS requesting a Section 1115 waiver to implement an experimental project, Helping to Engage and Achieve Long Term Health, or Kentucky HEALTH. See Compl., Exh. B. The project as approved "transform[s]" the state's Medicaid program to include "commercial market health insurance features," id. at 7, including a deductible account, an incentive and savings account, and a requirement that enrollees pay premiums on a sliding scale. Id. at 9–10. It also predicates Medicaid eligibility for most of the expansion population on workforce participation or community service. Id. at 15–16.

Prior to submitting the application, Kentucky's Department for Medicaid Services held three public hearings and conducted two public-comment periods. See Compl., Exh. B. Throughout this process, the state and CMS were engaged in "continued negotiations" regarding the program's terms. Id., Exh. A at 5 & Exh. C. CMS also opened a federal public-comment period on Kentucky HEALTH. Id., Exh. C at 7. On January 12, 2018, CMS notified the Governor's office that the application had been approved. Id. at 1.

Two weeks later, Plaintiffs brought this nine-count suit seeking declaratory and injunctive relief on behalf of themselves and a "statewide proposed class ... of all residents of Kentucky who are enrolled in the Kentucky Medicaid program on or after January 12, 2018." Compl., ¶ 33. The Complaint alleges that Defendants violated the Constitution and the Administrative Procedures Act by both sending the January 11 letter to state Medicaid directors and by approving Kentucky HEALTH. See Compl., ¶¶ 339–408. Soon thereafter, Defendants filed this Motion to Transfer, asking the Court to send the case to Kentucky, specifically the Frankfort Docket of the Central Division of the Eastern District of that state. See Mot. to Transfer at 2 n.2. On March 30, 2018, the Court granted Kentucky's Motion for Intervention. See Minute Order.

II. Legal Standard

Even if a plaintiff has brought its case in a proper venue, a district court may, "for the convenience of parties and witnesses, in the interests of justice ... transfer [it] ... to any other district or division where [the case] might have been brought." 28 U.S.C. § 1404(a). The only textual limitation on the Court's power to transfer a case under § 1404(a), then, is the requirement that the case "might have been brought" in the forum to which the defendant is seeking transfer. Van Dusen v. Barrack, 376 U.S. 612, 623, 84 S.Ct. 805, 11 L.Ed.2d 945 (1964). In other words, the transfer statute requires that venue be proper in the new forum.

Once that threshold condition is met, district courts have "discretion ... to adjudicate motions for transfer according to an ‘individualized, case-by-case consideration of convenience and fairness.’ " Stewart Org., Inc. v. Ricoh Corp., 487 U.S. 22, 29, 108 S.Ct. 2239, 101 L.Ed.2d 22 (1988) (quoting Van Dusen, 376 U.S. at 622, 84 S.Ct. 805 ); see also Pres. Soc'y of Charleston v. U.S. Army Corps of Eng'rs, 893 F.Supp.2d 49, 53 (D.D.C. 2012). This analysis "calls on the district court to weigh in the balance a number of case-specific factors," which typically relate to the private interests of the parties and the public interest of justice. See Stewart Org., 487 U.S. at 29–30, 108 S.Ct. 2239.

In evaluating motions to transfer venue, courts in this circuit are instructed to guard against "the danger that a plaintiff might manufacture venue in the District of Columbia ... [b]y naming high government officials as defendants...." Cameron v. Thornburgh, 983 F.2d 253, 256 (D.C. Cir. 1993). Still, to prevail, the movant must show that "considerations of convenience and the interest of justice weigh in favor of transfer." Sierra Club v. Flowers, 276 F.Supp.2d 62, 65 (D.D.C. 2003) ; Trout Unlimited v. U.S. Dep't of Agric., 944 F.Supp. 13, 16 (D.D.C. 1996) (movant bears burden to show that transfer is proper).

III. Analysis

A. Propriety of New Venue

Before assessing the "case-specific factors," Stewart Org., 487 U.S. at 29, 108 S.Ct. 2239, Defendants must show that this case might have been brought in the Eastern District of Kentucky. They easily clear this hurdle, as venue in a suit against the federal government will lie in any district in which a plaintiff resides. See 28 U.S.C. § 1391(e)(1)(C) ; Gardner v. Mabus, 49 F.Supp.3d 44, 47 (D.D.C....