Stewart v. Azar

Issue: Was the HHS Secretary’s approval of Kentucky’s Section 1115 demonstration waiver, which conditioned Medicaid eligibility on meeting a work reporting requirement, arbitrary and capricious?

Background: Medicaid enrollees sued to challenge the HHS Secretary’s approval of Kentucky’s Section 1115 demonstration waiver, which conditioned Medicaid eligibility on meeting a work reporting requirement. In 2018, the district court vacated the approval, finding that the Secretary’s decision was arbitrary and capricious and therefore violated the Administrative Procedure Act (APA) because he failed to consider the demonstration’s impact on Medicaid’s core purpose of providing health coverage to low-income people. The Secretary then reapproved Kentucky’s demonstration, which the Medicaid enrollees again challenged in court. In 2019, the district court vacated the second approval, again finding that the Secretary’s decision was arbitrary and capricious, and therefore violated the Administrative Procedure Act. On appeal, the D.C. Circuit affirmed.

Current Status: Final decision issued

D.C. Circuit Court of Appeals Amicus Brief, June 27, 2019*

*Combined with Becerra v. Gresham

Amici: 63 public health deans and scholars

Argument Summary: Congress enacted Section 1115 to permit states to test new approaches to expand access, provide better services, and strengthen social programs. Early Section 1115 demonstrations heeded congressional intent that experiments strengthen Medicaid. Since 1965, Congress has added important protections to ensure demonstrations promote Medicaid’s purpose. The Secretary cannot use Section 1115 as a shortcut for reversing the Affordable Care Act’s Medicaid expansion. The Secretary’s approvals of eligibility restriction experiments in Arkansas and Kentucky violated research norms by lacking a basis in evidence and by failing to ensure states conduct adequate demonstration evaluations. HHS consistently sidestepped evaluation principles contained in their own Section 1115 guidance.

Medicaid expansion’s remarkable achievements in providing medical assistance to uninsured adults made the impact of imposing work requirements, coverage lock-outs and limited retroactive eligibility even more catastrophic. Expansion in Arkansas and Kentucky achieved dramatic reductions in total uninsured adults. Extensive commentary in the administrative record made clear the risks created by work requirements and coverage restrictions. There is no realistic expectation that those leaving Medicaid for work will find alternative sources of health insurance. 

D.C. District Court Amicus Brief, Jan. 18, 2019

Amici: 48 public health deans and scholars

Argument Summary: The Secretary’s reapproval of Kentucky’s demonstration failed to provide any evidence that the project can fulfill its stated goals; did not adequately consider properly conducted research contradicting the demonstration’s hypotheses; willfully ignored the harm that will befall Kentucky’s Medicaid beneficiaries; violated the Medicaid Act by failing to ensure that an objective thorough evaluation was in place; and ignored readily available evidence from Arkansas that imposing work requirements causes significant harm to Medicaid beneficiaries. 

D.C. District Court Amicus Brief, April, 10, 2018

Amici: 43 public health deans and scholars

Argument Summary: The purpose of Section 1115 demonstrations is to improve the program, not cull the rolls. Congress intended Section 1115 Medicaid demonstrations to improve the program, not to remove thousands of eligible people. Because Section 1115 cannot be a pretext to restrict Medicaid eligibility or coverage, the Secretary’s approval of Kentucky’s demonstration was arbitrary, capricious, and contrary to law. Kentucky’s remarkable achievements in providing medical assistance to uninsured adults make the impact of imposing work requirements, coverage lock-outs, and limited retroactive eligibility even more catastrophic. Kentucky’s demonstration will affect access to healthcare community-wide.

Outside Counsel: Feldesman Tucker Leifer Fidell LLP

Citations: Our brief was cited twice in the district court’s 2019 opinion:

“As the Court noted before, ‘Amici maintain that such number is conservative and peg the real figure as between 175,000 and 297,500’ people losing coverage in the first year of the program.  Id. (citing ECF No. 44 (Amicus Brief of Deans, Chairs, and Scholars) at 18).  Whatever the precise calculation, the number is undoubtedly substantial.” Slip opin. at 18-19.

“Nevertheless, Kentucky itself provided an estimate equivalent to 95,000, while amici suggest ‘Medicaid losses will be much higher and faster than the Commonwealth predicted.’  Am. Br. of Deans, Chairs, and Scholars at 18; see Stewart I, 313 F. Supp. 3d at 262; see also, e.g., AR 13175, 14665.” Slip opin. at 20.

Stewart v. Azar, No. 18-152-JEB, Memorandum Opinion (March 27, 2019), https://affordablecareactlitigation.com/wp-content/uploads/2019/03/5938346-0-15792.pdf

Our brief was cited twice in the district court’s 2018 opinion:

"While Plaintiffs and their amici assert that these proclaimed health benefits are unsupported by substantial evidence, see Pl. MSJ at 38; Deans Br. at 8–17; see also AR 3917, 3701, 3684, 3464, 3643, the Court need not enter that thicket." Slip opin. at 37.

"The Secretary never provided a bottom-line estimate of how many people would lose Medicaid with Kentucky HEALTH in place. This oversight is glaring, especially given that the risk of lost coverage was ‘factually substantiated in the record.’ Humane Soc'y, 865 F.3d at 606. In its application, Kentucky estimated that the project would cause more than 95,000 people to leave its Medicaid rolls by the fifth year. Compare AR 5421 (listing eligible member months for Demonstration Year 5 without waiver) with AR 5422 (listing eligible member months for Demonstration Year 5 with waiver); see also Tr. 40:18–21. Amici maintain that such number is conservative and peg the real figure as between 175,000 and 297,500. See ECF No. 44 (Amicus Br. of Deans Chairs & Scholars) at 18." Slip opin. at 44.

Stewart v. Azar, No. 18-152-JEB, Memorandum Opinion (June 29, 2018), https://affordablecareactlitigation.com/wp-content/uploads/2018/09/stewart-opinion.pdf

Related Resources:

Rosenbaum S. Why the court once again struck down federal approval of Medicaid work experiments. To the Point (blog). Commonwealth Fund. March 29, 2019. https://doi.org/10.26099/md1n-ya31

Rosenbaum S. Stewart v. Azar and the future of Medicaid work requirements: what are the takeaways and what happens next? To the Point (blog). Commonwealth Fund. July 3, 2018. https://doi.org/10.26099/rh1b-p364