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State v. United States Department of State

United States Court of Appeals, Sixth Circuit

July 24, 2019

State of Tennessee, by and through the Tennessee General Assembly, et al., Plaintiffs-Appellants,
United States Department of State, et al., Defendants-Appellees.

          Argued: March 19, 2019

          Appeal from the United States District Court for the Western District of Tennessee at Jackson. No. 1:17-cv-01040-S. Thomas Anderson, District Judge.


          John J. Bursch, BURSCH LAW PLLC, Caledonia, Michigan, for Appellants.

          Samantha L. Chaifetz, UNITED STATES DEPARTMENT OF JUSTICE, Washington, D.C., for Appellees.

         ON BRIEF:

          Richard Thompson, B. Tyler Brooks, Kate Oliveri, THOMAS MORE LAW CENTER, Ann Arbor, Michigan, for Appellants.

          Samantha L. Chaifetz, Alisa B. Klein, UNITED STATES DEPARTMENT OF JUSTICE, Washington, D.C., for Appellees.

          Sarah Grusin, NATIONAL HEALTH LAW PROGRAM, Carrboro, North Carolina, Cody Wofsy, AMERICAN CIVIL LIBERTIES UNION FOUNDATION IMMIGRANTS' RIGHTS PROJECT, San Francisco, California, for Amici Curiae.

          Before: COLE, Chief Judge; and BOGGS, Circuit Judge. [*]



         This case presents the question of whether the Tennessee General Assembly ("General Assembly") has standing to file suit on its own behalf, as well as on behalf of the State of Tennessee. The General Assembly alleged that the federal government violated the Spending Clause and the Tenth Amendment to the United States Constitution through enacting and implementing certain statutes that require states to provide Medicaid coverage to eligible refugees. The district court dismissed the General Assembly's complaint for lack of standing. Tennessee v. U.S. Dep't of State, 329 F.Supp.3d 597, 616-17 (W.D. Tenn. 2018). Because the General Assembly has not alleged an injury that gives it standing, and because the General Assembly has not established that it has the authority to bring suit on behalf of Tennessee, we affirm the district court's judgment.


         Before turning to the parties' arguments, we briefly discuss the statutory schemes that are relevant to this case. In 1980, Congress amended the Immigration and Nationality Act by passing the Refugee Act, Pub. L. No. 96-121, 94 Stat. 102 (1980) (codified in scattered sections of 8 U.S.C.). The Refugee Act created the Office of Refugee Resettlement ("ORR") within the Department of Health and Human Services ("HHS").[1] 8 U.S.C. § 1521(a). ORR administers the Refugee Resettlement Program. See id. (b). ORR consults with state and local governments and private nonprofit agencies concerning "the sponsorship process and the intended distribution among the States and localities before their placement in those States and localities." 8 U.S.C. § 1522(a)(2)(A). The parties do not dispute that states cannot prevent the federal government from settling refugees within their borders. See Tennessee, 329 F.Supp.3d at 607 (citing H.R. Rep. No. 132, at 19 (1985)); see also Exodus Refugee Immigration, Inc. v. Pence, 838 F.3d 902, 904 (7th Cir. 2016).

         The Refugee Resettlement Program assists refugees in achieving economic self-sufficiency in the United States through federal grants to provide employment training, English-language education, and other skill development. 8 U.S.C. § 1522(a)(1)(A); Exodus Refugee Immigration, 838 F.3d at 903; 45 C.F.R. § 400.11. States may choose to administer this program. To participate, a state must submit a proposal for ORR's approval, describing how the state will "coordinate cash and medical assistance and other services to promote refugee resettlement and economic self-sufficiency." Tennessee, 329 F.Supp.3d at 607; 8 U.S.C. § 1522(a)(6)(A)-(C); 45 C.F.R. § 400.4. If a state chooses not to participate, or withdraws from participation, then the state does not receive or administer the grant funding. 45 C.F.R. § 400.301. ORR may then "authorize a replacement designee or designees to administer the provision of assistance and services, as appropriate, to refugees in that State." Id. (c); see also 8 U.S.C. § 1152(c)(1)(A), (e)(1); Exodus Refugee Immigration, 838 F.3d at 905; 60 Fed. Reg. 33584, 33588 (June 28, 1995). ORR funds thirteen such programs in twelve states. Tennessee, 329 F.Supp.3d at 608.

         The Refugee Act authorizes, but does not require, ORR to reimburse states, subject to available appropriations, "for 100 per centum of the cash assistance and medical assistance provided to any refugee" during the first three years of the refugee's residence in the United States. 8 U.S.C. § 1522(e)(1); see also Tennessee, 329 F.Supp.3d at 607. "[B]y the early 1990s, ORR no longer reimbursed the states for the full cost of providing cash and medical assistance to refugees due to an insufficiency of funds appropriated for that purpose." Tennessee, 329 F.Supp.3d at 607. ORR amended the program regulations in light of the "steady decline in Federal refugee funding for the State share of . . . Medicaid . . . due to insufficient appropriated funds." 60 Fed. Reg. 33584, 33588 (June 28, 1995).

         Medicaid is a "cooperative federal-state public assistance program that makes federal funds available to states electing to furnish medical services to certain impoverished individuals." Mowbray v. Koslowski, 914 F.2d 593, 595 (4th Cir. 1990). Medicaid assists states in providing medical care to "pregnant women, children, needy families, the blind, the elderly, and the disabled . . . ." Nat'l Fed'n of Indep. Bus. v. Sebelius (NFIB), 567 U.S. 519, 541 (2012). Participation in Medicaid is voluntary, but to receive federal funding, states must have an approved state Medicaid plan satisfying federal criteria that establish who is eligible for care, the services provided, and the cost of services. Id. at 541-42; see also 42 U.S.C. § 1396a(10); 42 C.F.R. § 430.10. Tennessee has participated in Medicaid since 1968. Tennessee, 329 F.Supp.3d at 605.

         A state must submit its Medicaid plan, or any proposed amendments, to the Centers for Medicare & Medicaid Services ("CMS") for approval. 42 C.F.R. § 430.12. Once the plan is approved, the state receives reimbursement from the federal government for a percentage of the costs of providing care to eligible individuals: the "Federal Medical Assistance Percentage" ("FMAP"). West Virginia v. U.S. Dep't of Health & Human Servs., 289 F.3d 281, 284 (4th Cir. 2002); see also 42 U.S.C. § 1396d(b). If a state plan is not in compliance with the Medicaid Act's requirements, "after reasonable notice and opportunity for hearing," HHS may withhold the state's FMAP or limit the FMAP to the parts of the state plan that are not affected by noncompliance. 42 U.S.C. § 1396c. The Medicaid Act provides for a system of administrative and judicial review for HHS's decisions concerning state plans and a determination to reduce or withhold a state's FMAP.[2] See 42 U.S.C. § 1316. Medicaid spending accounts for a substantial portion of the average state's budget, and the FMAP covers "50 to 83 percent of those costs." NFIB, 567 U.S. at 581. In recent years, Tennessee's annual FMAP has ranged from four to seven billion dollars, which represents 17 to 21% of the state's total budget for all purposes.

         The original Medicaid Act "was . . . silent on the availability of Medicaid to aliens." Lewis v. Thompson, 252 F.3d 567, 571 (2d Cir. 2001). In 1971, the Supreme Court held in Graham v. Richardson, 403 U.S. 365, 376 (1971), that states violated the Equal Protection Clause of the Fourteenth Amendment by denying public assistance to noncitizens on that basis, or because the noncitizen had not resided in the United States for a certain number of years. Following Graham, HHS proposed a rule to implement the decision that was also consistent with recent amendments to the Social Security Act that denied Social Security benefits to noncitizens. See 38 Fed. Reg. 16910, 16910-11 (June 27, 1973); see also Lewis, 252 F.3d at 571. The rule, codified at the time at 45 C.F.R. § 248.50 (1974), required states that participated in Medicaid to provide benefits to eligible noncitizens "lawfully admitted for permanent residence or otherwise permanently residing in the United States under color of law[.]" 38 Fed. Reg. 30259, 30259 (Nov. 2, 1973). A noncitizen's eligibility for Medicaid depended on whether the noncitizen fit the criteria for coverage in the Medicaid Act.

         In 1996, Congress passed the Personal Responsibility and Work Opportunity Reconciliation Act, Pub. L. No. 104-193, 110 Stat. 2015 (1996). The Act restricts the availability of public benefits for noncitizens to promote self-sufficiency as part of the United States' national immigration policy. See 8 U.S.C. § 1601(5)-(6). To that end, the Act provided that "an alien who is not a qualified alien . . . is not eligible for any Federal public benefit[.]" 8 U.S.C. § 1611(a); see also Bruns v. Mayhew, 750 F.3d 61, 63-64 (1st Cir. 2014). "Qualified alien" is defined at 8 U.S.C. § 1641(b)-(c), and includes, inter alia, "a refugee who is admitted to the United States under section 207 of [the Immigration and Nationality] Act." Id. (b)(3). Most qualified aliens are subject to additional restrictions on federal program participation. See 8 U.S.C. §§ 1612(a)(1), 1613(a). Five years after entry into the United States, qualified aliens may be able to participate in certain federal programs, if they are eligible, including Medicaid. Tennessee, 329 F.Supp.3d at 606. Congress identified some classes of qualified aliens, [3]including refugees, who may participate in identified federal programs, including Medicaid, immediately upon admission to the United States, until seven years after the refugee was admitted to the United States. 8 U.S.C. § 1612(a)(2)(A)(i).

         Therefore, if a state participates in Medicaid, it "must determine a refugee applicant's eligibility for Medicaid as medically needy[, ]" and provide assistance "to all refugees eligible under its State plans." 45 C.F.R. § 400.94(b)-(c). If the refugee is in one of the groups that must be covered, see 8 U.S.C. § 1396a(10), then the refugee's status as a noncitizen does not bar the refugee from receiving Medicaid. See 8 U.S.C. § 1612(a)(2)(A)(i); 45 C.F.R. § 400.94(c). If a refugee is not eligible for Medicaid under a state plan, then the refugee may be eligible for the federally funded Refugee Medical Assistance Program. 45 C.F.R. § 400.94(d).


         Tennessee withdrew from participation in the Refugee Resettlement Program in 2008. Tennessee, 329 F.Supp.3d at 608. ORR designated the Catholic Charities of Tennessee, and its subsidiary the Tennessee Office for Refugees, to administer refugee services in Tennessee. Ibid. The General Assembly asserts that, from the time of the state's withdrawal until 2016, the federal government resettled more than 13, 000 refugees in Tennessee. Refugees who satisfy eligibility criteria can enroll in TennCare, Tennessee's Medicaid program. The General Assembly states in its complaint that in 2015, it spent over $31 million dollars in state funds "to support the federal refugee resettlement program through TennCare."

         In 2016, the General Assembly passed Senate Joint Resolution 467 ("SJR 467"), directing the Tennessee Attorney General[4] to "initiate or intervene" in a civil action on behalf of Tennessee for alleged violations of the Tenth Amendment with respect to the operation and implementation of the Refugee Resettlement Program. S. Res. 467, 109th Gen. Assembly, at 3 (Tenn. 2016). SJR 467 stated that if the Attorney General declined to file suit, then "the Speaker of the Senate and the Speaker of the House of Representatives are authorized to employ outside counsel to commence a civil action effectuating the purposes of this resolution." Id. at 4. The General Assembly sent SJR 467 to the Governor of Tennessee. He returned it without his signature. The Governor explained in an accompanying statement that he "trust[ed] the Attorney General to determine whether the state has a claim in this case or in any other," and noted his "constitutional concerns about one branch of government telling another what to do." The General Assembly took no further legislative action on SJR 467.

         The Attorney General did not file suit. In a letter to the General Assembly, he explained that he thought that the Tenth Amendment theories "that underpin SJR 467 are unlikely to provide a viable basis for legal action." Letter from Herbert H. Slatery, III, Attorney General and Reporter, Tennessee, to Tennessee Senate Chief Clerk Russell Humphrey and Tennessee House of Representatives Chief Clerk Joe McCord, at 3 (July 5, 2016) (hereinafter "Slatery Letter"). The Attorney General then, "to the extent allowed by Tennessee law delegate[d his] constitutional . . . and statutory . . . authority to commence litigation on behalf of the State of Tennessee to staff counsel for the General Assembly for the limited purpose of pursuing litigation to address the issues raised in SJR 467 in the manner provided for by SJR 467." Id. at 4.

         The General Assembly, acting for itself and on behalf of Tennessee, along with two members of the Tennessee General Assembly, Senator John Stevens and Representative Terri Lynn Weaver, in their official and individual capacities, filed suit in the Western District of Tennessee against the United States Department of State, HHS, ORR, and several federal government officials in their official capacities (collectively "State Department").[5] It alleged that, despite Tennessee's withdrawal from the Refugee Resettlement Program, the federal government "coerced" Tennessee to continue funding the program "by threatening the state with the loss of federal Medicaid funding." The General Assembly claimed that, because Tennessee must enroll eligible refugees in TennCare, the state "is forced to expend substantial amounts of state taxpayer money to fund the resettlement program" despite its withdrawal. It asserted that 42 U.S.C. § 1396c represents impermissible coercion, because if Tennessee does not enroll eligible refugees in TennCare, Tennessee could lose of 20% of its state budget.[6] The General Assembly sought a declaratory judgment that the State Department had violated the Spending Clause and Tenth Amendment in its implementation of the Refugee Act. It also requested injunctive relief prohibiting the federal government from settling refugees in Tennessee until the United States paid for all resettlement costs, and to compel the State Department to comply with the Spending Clause and the Tenth Amendment by "fund[ing] refugee resettlement from federal dollars and without any involuntary contribution from the State of Tennessee[.]"

         The State Department moved to dismiss for lack of subject-matter jurisdiction. It asserted that the General Assembly and the individual legislators lacked Article III standing, and challenged the General Assembly's authority to bring suit on behalf of the state of Tennessee. Tennessee, 329 F.Supp.3d at 610. The State Department disputed that the case was ripe because Tennessee had not amended its Medicaid plan, and so did not actually face the loss of its FMAP. Id. at 617. The State Department also contended that 42 U.S.C. § 1316 of the Medicaid Act precluded district-court review of the General Assembly's claims. Tennessee, 329 F.Supp.3d at 619. Finally, it also moved to dismiss for failure to state a claim upon which relief can be granted under Fed.R.Civ.P. 12(b)(6), because the General Assembly had not shown that Tennessee's obligation to provide Medicaid to eligible refugees violated the Tenth Amendment or that the possible loss ...

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