Health Law Daily Wrap Up, MEDICAID—M.D. Tenn.: Disenrolled Medicaid patients’ class action claims under Medicaid Act against Tennessee Medicaid program dismissed, (Jul 16, 2026)

By K. C. Salcedo

The Medicaid Act, while providing opportunity for a fair hearing to individuals whose medical claims were denied, did not create an individual right enforceable through the federal due process standard.

In a class action lawsuit against the director of Tennessee’s Medicaid Program (TennCare), the district court determined that the Medicaid Act’s provision for a fair hearing did not establish an individual right enforceable under 42 U.S.C. § 1983. As a result, claims alleging due process violations under the Medicaid Act were dismissed. However, the court upheld class certification for the Medicaid patients, finding that the essential questions of law or fact were shared among all class members and were central to at least one element of their claims (A.M.C. v. Smith, No. 3:20-cv-00240 (M.D. Tenn. July 13, 2026)).

In a prior proceeding, a class action of Tennessee Medicaid patients (Medicaid Patients) who had received notice of termination of coverage and were foreclosed from receiving fair hearings proved at trial that TennCare’s policies and practices violated their rights under the Due Process Clause of the Fourteenth Amendment, Americans with Disabilities Act, and Medicaid Act.

Medicaid Act provision offers enrollees no “right” to a hearing enforceable under Due Process statute. The applicable due process statute, 42 U.S.C. § 1983, provided a cause of action if a “right, privilege, or immunity had been deprived.” The Medicaid Act provision, 42 U.S.C. § 1396a(a)(23)(A), provided for a fair hearing if a claim for medical assistance was denied, yet failed to satisfy the prerequisites to establishing an enforceable right under Section 1983, specifically:

1. The Medicaid Act provision did not expressly create a “right” to a hearing. Though it provided an important benefit to Medicaid enrollees, it did not indicate any entitlement to a hearing nor include any “rights-creating terms.”

2. The Medicaid Act provision did not clearly focus on the Medicaid enrollee’s rights. Instead, it focused on the state’s services to the extent it must “substantially comply” with federal funding requirement, not the needs of any individual enrollee.

Class certification affirmed on Due Process and Medicaid Act violations. The court affirmed the prior finding of commonality of questions on the Medicaid Patients’ Due Process and Medicaid Act claims, having found that, among other things: TennCare’s notices misled Medicaid Patients when stating that it “considered all bases of eligibility” when in fact TennCare’s computerized system failed to consider all such eligibility categories in determining coverage; TennCare failed to cite for Medicaid Patients any specific section justifying termination or denial of coverage, instead sending a 98-page document of its regulations; and TennCare’s policy on valid factual disputes essentially enabled it to screen appeals before any hearing, thus barring Medicaid Patients from receiving any fair hearing upon loss of coverage.

The court parsed through the certified issues identified in the prior proceeding and affirmed the commonality questions of material elements comprising the claims at issue. The existence of differences among individual Medicaid Patients, including the varying extent to which each Medicaid Patient is affected, did not invalidate class certification, contrary to TennCare’s argument otherwise. It was sufficient that Medicaid Patients alleged a pattern or practice that generally applied to the class, even if some Medicaid Patients had not been harmed by the pattern or practice at issue.

TennCare’s subsequent remedy of certain system and process errors did not invalidate class certification either, given that it had not yet addressed the “the core underlying deficiencies in its notices or appeals process.” The fact alone that some Medicaid Patients may no longer be affected as a result of TennCare’s remedies do not nullify the class action. These arguments may, however, be considered at a future remedies hearing.

The case is No. 3:20-cv-00240.

Judge: Crenshaw Jr., W.

Attorneys: Amy Nemetz (Selendy Gay, PLLC) for A.M.C. Athanasia O. Livas (Cooper & Kirk, PLLC) for Stephen Smith.

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