Seventh Circuit Blocks Indiana Law Defunding Planned Parenthood

The U.S. Court of Appeals for the Seventh Circuit affirmed aspects of a district court injunction against an Indiana law barring Planned Parenthood from participating in Medicaid. The opinion, written by Judge Diane Sykes, begins as follows:

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 nontherapeutic 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. 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. See 42 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. See 42 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 (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.

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.

As the WSJ notes, this decision creates a circuit split with the U.S. Court of Appeals for the Fifth Circuit, and a similar suit is pending within the Ninth Circuit, so don’t be surprised if this issue makes it’s way up to the Supreme Court.

UPDATE/CORRECTION: Although the U.S.Court of Appeals for the Fifth Circuit upheld a Texas law barring state funding for organizations that perform or promote abortion, these two decisions do not create a circuit split. The Seventh Circuit rested its decision on statutory grounds and held Planned Parenthood’s other claims (including an unconstitutional conditions claim) were unlikely to succeed. The Fifth Circuit also rejected the abortion providers’ constitutional claims (in this case their First Amendment associational rights).