Health Law Daily Wrap Up, MEDICAID—M.D. Fla.: Court lacks subject matter jurisdiction over Florida’s challenge to changes in continuous eligibility requirements for CHIP, Medicaid participants, (Jun 7, 2024)

By Robert Margolis, J.D.

Statutory review process in 42 U.S.C. § 1316 impliedly precludes district court jurisdiction.

The federal district court in Florida has denied the State of Florida’s motion for preliminary injunction and dismissed without prejudice the State’s lawsuit challenging CMS’ implementation of amendments to the Social Security Act that, among other things, purport to eliminate states’ ability to terminate CHIP coverage during a continuous eligibility period due to non-payment of premiums. The court held that it lacks subject matter jurisdiction over the dispute because the Social Security Act’s comprehensive administrative review scheme impliedly precludes district court jurisdiction (State of Florida v. Centers for Medicare and Medicaid Services, No. 8:21-cv-317-WFJ-AAS (M.D. Fla. May 31, 2024)).

Continuous eligibility. Under the Social Security Act and CMS regulations, prior to January 1, 2024, states had the option of providing children with 12 months of “continuous eligibility” for Medicaid as well as for CHIP benefits under 42 U.S.C. § 1396a(e)(12)(Medicaid); 42 C.F.R. § 457.342(a) (CHIP). Thus, a child determined to be eligible for benefits would remain eligible for 12 months even if the child’s circumstances changed in a way that otherwise would render the child ineligible. Also before that date, CMS regulations under 42 C.F.R. § 457.342(b) provided five exceptions to continuous eligibility for Medicaid, and also provided that CHIP participants may “be terminated during the continuous eligibility period for failure to pay required premiums or enrollment fees.” Florida’s CHIP program requires monthly premiums, and interprets its law as requiring disenrollment of CHIP participants for failure to pay premiums even during a period of continuous eligibility. Fla. Stat. §§ 409.8132(8), 624.91(5(b)(9).

2023 amendments. The Consolidated Appropriations Act of 2023 (CAA Amendments), Pub. L. No. 117-328, which itself amended the Social Security Act, made changes to the continuous eligibility rules. In Medicaid, it reduced the number of exceptions from five to two (a child attains the age of 19, or moves out of state). It also made those changes applicable to CHIP by reference in 42 U.S.C. § 1397gg(e)(1). Those amendments, however, did not discuss CHIP enrollment for CHIP eligible children.

On September 29, 2023, CMS issued a State Health Official Letter and FAQs, which partially concerned continuous eligibility requirements for Medicaid and CHIP participants. The letter indicated it was still assessing the intersection of non-payment of premiums and continuous eligibility. One month later, it issued FAQ’s which indicated that States may not terminate CHIP coverage during a continuous eligibility period for non-payment of premiums.

Florida sues. Florida then sued CMS, arguing that the FAQs violate the Administrative Procedure Act (APA) because they (1) are contrary to law, (2) exceed CMS’s authority in implementing the 2023 CAA amendments, and (3) are arbitrary and capricious. Further, Florida contended the FAQs are a legislative rule that confuse eligibility and enrollment, and can only be issued through notice-and-comment rulemaking. Florida moved for a preliminary injunction preventing CMS from enforcing the FAQs. CMS responded with several arguments, including that the Social Security Act, in particular 42 U.S.C. § 1316, impliedly precludes district court jurisdiction. Agreeing with CMS on the jurisdictional argument, the court did not address any of the others.

Implied preclusion. Where Congress has created a “comprehensive review process … that oust[s] district court jurisdiction,” Axon Enter., Inc. v. FTC, 598 U.S. 175, 186 (2023), it impliedly precludes a district court from exercising subject matter jurisdiction. The district court found that such a valid and comprehensive review process is established in the Social Security Act, 42 U.S.C. § 1316(a)(1), and is made applicable to CHIP. 42 U.S.C. § 1397gg(e)(2). The statute provides for administrative review of state CHIP plans and allows states dissatisfied by any CMS determination to file a petition with CMS for reconsideration of whether the plan conforms to the requirements for approval under CHIP under 42 U.S.C. § 1316(a)(2). If the state is unsatisfied by CMS’s final determination, it may petition for review in the appropriate circuit court per 42 U.S.C. § 1316(a)(3). The court noted that Florida did not contest the constitutionality of this statutory review scheme, and the Supreme Court routinely holds similar agency review schemes to be valid.

Next, the court addressed the question at “the heart of the implied preclusion inquiry,” and found that the issues Florida raised are of the type that Congress intended to be reviewed by the administrative agency, in this case CMS. Looking at the factors the Supreme Court has indicated should be considered in addressing this question, the court first found that precluding district court jurisdiction would not rule out all meaningful judicial review of Florida’s claims. Such review would occur, though at the appellate level rather than the district court level. The court rejected Florida’s argument that it would somehow be “betting the farm” on a decision to ignore the FAQs and proceed through the administrative process. This is not a case where Florida would be subjected to illegitimate proceedings led by an illegitimate decision-maker. Any injuries Florida may suffer are dependent on the outcome of the review process, are financial in nature, and would not result from inherent constitutional deficiencies, the court held.

The court then found that Florida’s claims are not wholly collateral to the statute’s review provisions. The claims are not outside CMS’s expertise, as they will largely turn on properly interpreting the Medicaid and CHIP statutes.

Based on this analysis of the relevant factors, the court found that Congressional intent to allocate initial review of Florida’s claims to CMS can fairly be discerned from 42 U.S.C. § 1316. Therefore, the court lacked jurisdiction and dismissed the claims without prejudice.

The case is No. 8:24-cv-00317-WFJ-AAS.

Judge: Jung, W.

Attorneys: Natalie Christmas, Florida Attorney General's Office, for State of Florida and Florida Agency for Health Care Administration. Madeline McMahon, U.S. Department of Justice, for Centers for Medicare and Medicaid Services, Department of Health and Human Services, Chiquita Brooks-LaSure and Xavier Becerra.

Companies: Florida Agency for Health Care Administration; Centers for Medicare and Medicaid Services; Department of Health and Human Services

Cases: CaseDecisions CMSNews MedicaidNews EligibilityNews MedicaidPaymentNews FloridaNews