Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

State v. U.S. Department of State

United States District Court, W.D. Tennessee, Eastern Division

March 19, 2018

STATE OF TENNESSEE, et al. Plaintiffs,
v.
U.S. DEPARTMENT OF STATE, et al., Defendants,
v.
TENNESSEE IMMIGRANT AND REFUGEE RIGHTS COALITION, et al., Intervenor-Defendants.

          ORDER GRANTING DEFENDANTS' MOTION TO DISMISS AND DENYING MOTION TO INTERVENE AS MOOT

          S. THOMAS ANDERSON, CHIEF UNITED STATES DISTRICT JUDGE.

         Plaintiffs Tennessee General Assembly, in its own right and on behalf of the State of Tennessee, State Senator John Stevens, individually and in his official capacity, and State Representative Terri Lynn Weaver, individually and in her official capacity, have brought this action contending that federal laws requiring the State of Tennessee to provide Medicaid benefits to refugees, under threat of losing its federal Medicaid funding, coerce the State into subsidizing the federal Refugee Resettlement Program. Plaintiffs have sued the United States Department of State; Rex Tillerson, in his official capacity as Secretary of State; the Bureau of Population, Refugees, and Migration (“PRM”); Simon Henshaw, in his official capacity as Acting Assistant Secretary of State for the PRM; United States Department of Health and Human Services (“HHS'); Thomas E. Price, in his official capacity as Secretary of HHS; the Office of Refugee Resettlement (“ORR”); and Ken Tota, in his official capacity as Acting Director of ORR (collectively the “Federal Government”). Plaintiffs seek a declaration that the challenged laws exceed Congress's authority under the United States Constitution's Spending Clause and violate the Tenth Amendment to the Constitution. They also seek injunctive relief prohibiting further refugee resettlements in Tennessee until the Federal Government absorbs all costs of those resettlements.

         Defendants have filed a motion to dismiss for lack of subject-matter jurisdiction or, in the alternative, for failure to state a claim upon which relief can be granted. (ECF No. 24.) Plaintiffs have filed a response to the motion (ECF No. 38), Defendants have filed a reply to the response (ECF No. 39), and Plaintiffs have filed a sur-reply.[1] (ECF No. 40.) For the reasons set forth below, the motion to dismiss is GRANTED.

         Tennessee Immigrant and Refugee Rights Coalition, on behalf of itself and its members, Bridge Refugee Services Inc., and Nashville International Center for Empowerment, has filed a motion to intervene on behalf of Defendants. (ECF No. 25). Because the Court grants Defendants' motion to dismiss, the motion to intervene is DENIED as moot.

         Background

         Congress created the Medicaid program through enactment of Title XIX of the Social Security Act, Pub. No. L. 89-97, 79 Stat. 286, codified at 42 U.S.C. § 1396 et seq. See generally Pharm. Research & Mfrs. of Am. v. Walsh, 538 U.S. 644, 650-51 (2003) (discussing the Medicaid program and its purpose).[2] “Medicaid is a cooperative federal-state program through which the Federal Government provides financial assistance to States so they may furnish medical care to needy individuals.” Wilder v. Va. Hosp. Ass'n, 496 U.S. 498, 502 (1990) (citation omitted). See also In re Estate of Trigg, 368 S.W.3d 483, 499 (Tenn. 2012) (“The program is jointly funded by the federal government and the states, and each state operates its own program in accordance with federal requirements.”).

         Tennessee's participation in the Medicaid program began when the General Assembly enacted the Medical Assistance Act of 1968. Roberts v. Sanders, 2002 WL 256740 at *5 (Tenn. Ct. App. Feb. 22, 2002) (citing Act of Apr. 3, 1968, ch. 551, 1968 Tenn. Pub. Acts 496 (codified as amended at Tenn. Code Ann. §§ 71-5-101-119 (1995 & Supp. 2001))).[3] Participation in the program is voluntary, but participating states must comply with the requirements imposed by the statute and with regulations promulgated by the Secretary of HHS. Wilder, 496 U.S. at 502. See also Roberts, 2002 WL 256740 at *5 (While each state operates its own Medicaid program, each state must conform to federal requirements in order to receive federal matching funds.”)

         One of those requirements is that each state must have an approved plan that provides coverage for specified groups. 42 U.S.C. § 1396a(a)(10)(A)(i), (b); 42 C.F.R. § 430.10. That is, participating states must provide full Medicaid services under the approved state plan to groups of individuals who meet the eligibility criteria. See Lewis v. Thompson, 252 F.3d 567, 570 (2d Cir. 2001) (“States enjoy some flexibility in determining the breadth of a Medicaid plan, but are nonetheless cabined by a set of eligibility rules.”)

         Each state with an approved plan receives payments from the Federal Government according to a formula set out by statute. 42 U.S.C. § 1396d. If there is a determination that the state's plan or its administration of the plan no longer complies with Medicaid requirements, the Secretary will either withhold further payments to the state or may “limit payments to categories under or parts of the State plan not affected” by the non-compliance. 42 U.S.C. § 1396c.

         A finding of non-compliance results in the following administrative process. First an attempt is made by the HHS Centers for Medicare & Medicaid Services (“CMS”) to resolve the matter informally. 42 C.F.R. §§ 430.32, 430.35. If these efforts are unsuccessful, CMS initiates a formal compliance action by letter to the state which sets forth the finding of non-compliance, provides notice that some or all federal funding will be withheld absent compliance, and explains that the state has an opportunity for an evidentiary hearing before any payments will be withheld. 42 C.F.R. §§ 430.35(a) & (d), 430.70, 430.83-430.88. If an adverse ruling is made, the state may seek review by the Administrator. Id. §§ 430.80(a)(11), 430.102(b). The Administrator's decision constitutes the final decision of the agency and is the earliest point at which federal funds can be withheld. Id. §§ 430.102(c), 430.104(c). A state may seek review of the final agency decision in the United States Court of Appeals for the circuit in which the state is located. 42 U.S.C. § 1316(a)(3); 42 C.F.R. § 430.38(a) - (b). A similar administrative process allows a state to seek appellate-court review of CMS's disapproval of a proposed plan amendment. 42 U.S.C. § 1316(a).

         The original Medicaid statute was “silent on the availability of Medicaid to aliens.” Lewis, 252 F.3d at 571. However, in 1973 the Secretary issued a rule requiring coverage of all lawful permanent residents and other aliens “permanently residing in the United States under color of law.” 45 C.F.R. § 248.50 (1973). The purpose of the 1973 rule was to implement the Supreme Court's decision in Graham v. Richardson, 403 U.S. 365, 376, 380 (1971), see 37 Fed. Reg. 11977 (June 16, 1972), in which the Court held that state laws denying welfare benefits to resident aliens violated the Equal Protection Clause of the Fourteenth Amendment and impermissibly encroached upon exclusive federal power over the admission of aliens and the conditions of their residence.

         In 1996 Congress passed the Personal Responsibility and Work Opportunity Reconciliation Act, Pub. L. No. 104-193, 110 Stat. 2105 (1996), known as the Welfare Reform Act of 1996. In this Act, Congress announced a “national policy with respect to welfare and immigration.” Korab v. Fink, 797 F.3d 572, 580 (9th Cir. 2014) (quoting 8 U.S.C. § 1601). The Act “established] a uniform federal structure for providing welfare benefits to distinct classes of aliens.” Id. at 581. Reaffirming national policy that “aliens within the Nation's border [should] not depend on public resources to meet their needs, ” 8 U.S.C. § 1601(2)(A), the Act “impos[ed] sweeping restrictions on aliens' access to federally sponsored government aid” such as Medicaid. Lewis, 252 F.3d at 577-78; see also Bruns v. Mayhew, 750 F.3d 61, 63 (1st Cir. 2014) (citation omitted) (“For years, federal Medicaid extended medical assistance to eligible individuals without regard to citizenship status or durational residency. By act of Congress, however, the alien eligibility requirements for publicly-funded benefits, including Medicaid, changed dramatically in 1996.”).

         The Act separated aliens in the United States into two classes - qualified aliens who may be eligible for certain federally funded benefits and all other aliens who generally are not. 8 U.S.C. §§ 1611 - 1613, 1641. The definition of “qualified alien[s]” includes lawfully admitted refugees. 8 U.S.C. § 1641(b)(3). Five years following their entry into the United States, qualified aliens may be considered eligible for certain designated federal programs, including Medicaid; however, refugees are covered under Medicaid without regard to the five-year residency rule. Id. §§ 1612(b)(1), (2)(A)(i)(I)-(V), 1612(b)(3)(A)-(C), 1613(a), (b)(1). Medicaid coverage must be provided to eligible refugees for seven years following their admission to the United States, after which coverage of refugees becomes optional at the state's discretion. Id. § 1612(b)(1), (2)(A)(i). If the refugee resettlement agency determines that a refugee is not eligible for Medicaid under the state plan, the agency looks to the Refugee Medical Assistance (“RMA”) program for benefits for the refugee. 45 C.F.R. § 400.94(d).

         Pursuant to its authority to regulate the “admission, naturalization, and residence of aliens in the United States or the several states, ” Toll v. Moreno, 458 U.S. 1, 11 (1982) (citation omitted), Congress enacted the Immigration and Nationality Act (“INA”), 8 U.S.C. § 1101, et seq., to establish a “comprehensive and complete code covering all aspects of admission of aliens to this country.” Elkins v. Moreno, 435 U.S. 647, 664 (1978). Congress passed the Refugee Act of 1980, Pub. L. No. 96-212, 94 Stat. 102 (1980), an amendment to the INA, which sets forth “a permanent and systematic procedure for the admission [of refugees] to this country” and “provide[s] comprehensive and uniform provisions for [their] effective resettlement.” Id. § 101(b). The Act allows for the annual admission of refugees in “such number as the President determines . . . is justified by humanitarian concerns or is otherwise in the national interest.” 8 U.S.C. § 1157(a)(2). One year following their admission, refugees must apply for permanent-resident status, and they may apply for citizenship within five years. Id. §§ 1159(a), 1427(a).

         The Refugee Act also “provides for federal support of the refugee resettlement process, ” S. Rep. No. 96-256 at 2, authorizing the Federal Government to issue grants to and contract with state and local governments and private non-profit agencies to manage the initial admission and placement of refugees to the United States and provide subsequent resettlement assistance. 8 U.S.C. § 1522. Pursuant to this authority, the PRM maintains and oversees the United States Refugee Admissions Program, a public-private partnership involving federal agencies, domestic non-profit organizations, and international organizations to screen, transport, and provide initial resettlement services for refugees. Id. § 1522(b)(1), (7).

         The PRM works with the non-profit organizations with which it has entered into cooperative agreements to determine where refugees will be resettled in the United States. Although the PRM consults with state and local governments “concerning the sponsorship process and the intended distribution of refugees among the States and localities before their placement, ” 8 U.S.C. § 1522(a)(2)(A), the Refugee Act does not provide for the involvement of state or local governments in determining where individual refugees are resettled once admitted to the United States. See H. R. Rep. No. 132, 99th Cong., 1st Sess., 19 (1985) (observing that the Act is “not intended to give States and localities any veto power over refugee placement decisions”).

         Under the Refugee Resettlement Program administered by the HHS Office of Refugee Resettlement (“ORR”), the Federal Government makes grants to and contracts with states and local and private non-profit agencies to assist refugees after their initial resettlement in achieving economic self-sufficiency. See 45 C.F.R. § 400.1(a), (b). States may receive grants for refugee assistance programs. 8 U.S.C. § 1522(e). ORR is authorized to reimburse a state for its costs of assisting refugees during their first three years of residence in the United States. Id. § 1522(e)(1). However, by 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. See 60 Fed. Reg. 33584, 33588 (June 28, 1995).

         A state wishing to participate in the Refugee Resettlement Program must submit a plan, approved by ORR, describing how it will coordinate cash and medical assistance and other services to promote refugee resettlement and economic self-sufficiency. 8 U.S.C. § 1522(a)(6); 45 C.F.R. §§ 400.4(a), 400.5(b). A state may withdraw from the program with proper notice to ORR. 45 C.F.R § 400.301(a). However, the Refugee Act does not condition the resettlement of refugees in a state on that state's participation in the program. If a state chooses to withdraw from the program, under the 1984 “Wilson/Fish Amendment” ORR may select one or more other grantees, usually private non-profit organizations, to administer federal funding for cash and medical assistance and social services provided to eligible refugee populations in that state. 8 U.S.C. § 1522(e)(7); 45 C.F.R. § 400.301(c); see also 69 Fed. Reg. 17692 (Apr. 5, 2004) (announcing availability of funding for applicants “to continue the provision of refugee program services and assistance … in a State when the State elects to discontinue participation” in the Refugee Resettlement Program). ORR currently funds thirteen Wilson/Fish programs operating in twelve states, including Tennessee.

         By letter dated October 29, 2007, Tennessee withdrew from participation in the Refugee Resettlement Program effective June 30, 2008. (Compl. ¶ 32, ECF No. 1.) Subsequently, Catholic Charities of Tennessee, through its affiliate the Tennessee Office of Refugees, was designated to administer the Wilson/Fish program of refugee services and assistance in Tennessee. (Id. ¶¶ 38-39.)

         Background to the Complaint

         In 2016 the Tennessee General Assembly adopted Senate Joint Resolution 467 (“SJR 467”) (Gilligan Decl. Exh. A, ECF No. 24-3) “regarding the commencement of legal action seeking relief … from the federal government's mandated appropriation of state revenue … with respect to refugee resettlement in Tennessee.” SJR 467 at 1.[4] Reciting that requiring Tennessee to provide Medicaid benefits to eligible refugees or “risk losing all Medicaid funding” subjects the State to coercion in violation of the Tenth Amendment, the resolution calls on the Attorney General of Tennessee to initiate or intervene in litigation on the State's behalf to seek relief regarding “any actions taken by the federal government … prohibited by the Tenth Amendment.” Id. at 1-3. Alternatively, the resolution authorizes the General Assembly “to employ outside counsel to commence a civil action” against the Federal Government if the Attorney General fails to do so. Id. at 4.

         On July 5, 2016, the Tennessee Attorney General sent a letter to the General Assembly (“AG Letter”) declining to bring suit against the Federal Government as requested by SJR 467. (Gilligan Decl. Exh. A, ECF No. 24-3.) The Attorney General explained that “extensive review of the legal issues raised by SJR 467” had led his office “to conclude that the 10th Amendment theories that underpin SJR 467 are unlikely to provide a viable basis for legal action, ” inasmuch as “[i]mmigration and refugee resettlement are matters largely reserved for federal jurisdiction.” Id. at 1, 3. However, due to the General Assembly's “desire to resolve [its] concerns through the adjudicative process, ” for purposes of this matter the Attorney General delegated his authority to bring litigation on the State's behalf to staff counsel for the General Assembly “to the extent allowed by Tennessee law.” Id. at 4. This lawsuit then ensued.

         Allegations of the Complaint

         Plaintiffs allege that, by enacting and implementing provisions of the Refugee Act and the Welfare Reform Act, the Federal Government has unconstitutionally “coerc[ed] the state into subsidizing, ” and “commandeer[ed] state funds to finance” the Refugee Resettlement Program in Tennessee, thus “impermissibly intrud[ing] on Tennessee's state sovereignty.” (Compl. ¶¶ 3, 4, 7.) Specifically, Plaintiffs contend that, following Tennessee's withdrawal from the Refugee Resettlement Program in 2008, (id. ¶ 32), the Federal Government, rather than discontinuing refugee resettlements in Tennessee, “bypassed” the State and appointed Catholic Charities of Tennessee to continue the resettlement program in Tennessee. (Id. ¶¶ 38-39.) Plaintiffs allege that, under the mandate to provide Medicaid benefits to otherwise eligible refugees located in the State, 8 U.S.C. § 1612, Tennessee must spend in excess of $30 million each year to fund the Refugee Resettlement Program, (id. ¶ 29), despite its withdrawal from the program. (Id. ¶¶ 36, 37, 41.)

         Plaintiffs further allege that “[i]f Tennessee refuses to expend state funds to provide these refugee services through Medicaid, the state is subject to a loss of nearly $7 billion” in federal Medicaid funds which amounts to “20% of its total state budget.” (Id. ¶¶ 35, 42, 54.) According to Plaintiffs, by “threatening” Tennessee with this loss, the Federal Government has “coerced the state to continue funding the refugee resettlement program” and “thereby commandeered state funds to support a federal initiative.” (Id. ¶ 33.) Additionally, the Federal Government's actions allegedly “deprive …Tennessee of its sovereignty, ” (id. ¶¶ 46, 56), in excess of Congress's power under the Spending Clause and in violation of the Tenth Amendment. (Id. ¶¶ 3, 48, 50, 51, 59.)

         According to Plaintiffs, the “refugee resettlement program also commandeers other state funds and instrumentalities through health and welfare programs and public schooling, including the program known as ‘English Language Learners, ' as mandated by 20 U.S.C. § 1703.” (Id. ¶ 47.)

         Plaintiffs seek declaratory relief and an injunction prohibiting resettlement of additional refugees in Tennessee unless and until the Federal Government pays for and absorbs the costs of the resettlement program “without any involuntary contribution” from the State. (Id., Prayer for Relief, ¶¶ 1-3.)

         Motion to Dismiss for Lack of Subject Matter Jurisdiction

         A complaint may be dismissed pursuant to Rule 12(b)(1) of the Federal Rules of Civil Procedure for lack of jurisdiction. Under Rule 12(b)(1), a motion to dismiss “may either attack the claim of jurisdiction on its face or it can attack the factual basis of jurisdiction.” Golden v. Gorno Bros., Inc., 410 F.3d 879, 881 (6th Cir. 2005). “A facial attack is a challenge to the sufficiency of the pleading itself, ” and “the court must take the material allegations of the petition as true and construed in the light most favorable to the nonmoving party.” United States v. Ritchie, 15 F.3d 592, 598 (6th Cir. 1994) (citation omitted). “A factual attack, on the other hand, is . . . a challenge to the factual existence of subject matter jurisdiction.” Id. With a factual attack, “no presumptive truthfulness applies to the factual allegations, and the court is free to weigh the evidence and satisfy itself as to the existence of its power to hear the case.” Id. (citation omitted). The plaintiff bears the burden of proving that jurisdiction exists. Moir v. Greater Cleveland Reg'l Transit Auth., 895 F.2d 266, 269 (6th Cir. 1990) (explaining that, when “subject matter jurisdiction is challenged pursuant to Rule 12(b)(1), the plaintiff has the burden of proving jurisdiction in order to survive the motion”).

         “Proper jurisdiction is a requirement in determining the validity of a claim, and as such, Rule 12(b)(1) motions must be considered prior to any other challenges.” Lemke v. H&R Block Mortg. Corp., 2012 WL 715894 at *1 (E.D. Mich. Mar. 6, 2012) (citing Bell v. Hood, 327 U.S. 678 (1946)). See also Moir, 895 F.2d at 269 (quoting Bell v. Hood for the proposition that, when a defendant moves to dismiss under both Rule 12(b)(1) and (b)(6), the court should consider the 12(b)(1) motion first because “the 12(b)(6) challenge becomes moot if this court lacks subject matter jurisdiction.”).

         Because Defendants contend that this Court lacks subject matter jurisdiction over the complaint, the Court will first consider the request for relief under Rule 12(b)(1). Defendants specifically contend that this Court lacks subject-matter jurisdiction over Plaintiffs' claims for the following reasons: (1) Plaintiffs lack standing to bring their claim; (2) the claim is not ripe for review; and (3) review of Plaintiffs' claim in this Court is precluded by the Medicaid Act. The Court finds Defendants' contentions to be meritorious.

         Standing

         Defendants argue that neither the General Assembly nor the individual legislators have alleged that the State's duty to cover refugees under Medicaid inflicts concrete and particularized injuries on them as required to establish standing under Article III. Also according to Defendants, although the General Assembly asserts that it may sue on the State's behalf under a delegation of authority from the Attorney General, Tennessee law does not permit the Attorney General to delegate such authority to the General Assembly.

         Article III of the United States Constitution endows federal courts with “[t]he judicial Power of the United States;” however, this power extends only to “cases” and “controversies.” “No principle is more fundamental to the judiciary's proper role in our system of government than the constitutional limitation of federal-court jurisdiction to actual cases or controversies.” Raines v. Byrd, 521 U.S. 811, 818 (1997) (citation omitted). The standing requirement limits federal court jurisdiction to actual controversies so that the judicial process is not transformed into “a vehicle for the vindication of the value interests of concerned bystanders.” Valley Forge Christian Coll. v. Ams. United for Separation of Church & State, Inc., 454 U.S. 464, 473 (1982) (quoting United States v. SCRAP, 412 U.S. 669, 687 (1973)).

         Because Tenth Amendment challenges “often involve controversial policy questions that courts are ill-equipped to handle and that put the courts at particular risk of encroaching on the proper domain of the political branches, ” before proceeding to the merits of a claim, it is “incumbent upon a federal court to ensure that a State asserting such a claim has alleged a ‘particularized, concrete, and otherwise judicially cognizable' injury.” West Virginia v. United States Dep't of Health & Human Servs., 145 F.Supp.3d 94, 110 (D.D.C. 2015), aff'd sub nom. West Virginia ex rel. Morrisey v. U.S. Dep't of Health & Human Servs., 827 F.3d 81 (D.C. Cir. 2016).

         As explained in Spokeo, Inc. v. Robins, 136 S.Ct. 1540 (2016), as revised (May 24, 2016),

Standing to sue is a doctrine rooted in the traditional understanding of a case or controversy. The doctrine developed in our case law to ensure that federal courts do not exceed their authority as it has been traditionally understood. The doctrine limits the category of litigants empowered to maintain a lawsuit in federal court to seek redress for a legal wrong. In this way, “[t]he law of Article III standing ... serves to prevent the judicial process from being used to usurp the powers of the political branches, ” and confines the federal courts to a properly judicial role.
Our cases have established that the “irreducible constitutional minimum” of standing consists of three elements. The plaintiff must have (1) suffered an injury in fact, (2) that is fairly traceable to the challenged conduct of the defendant, and (3) that is likely to be redressed by a favorable judicial decision. The plaintiff, as the party invoking federal jurisdiction, bears the burden of establishing these elements. [When], as here, a case is at the pleading stage, the plaintiff must “clearly ... allege facts demonstrating” each element.

Spokeo, 136 S.Ct. at 1547; see also United States v. Hall, 877 F.3d 676, 681 (6th Cir. 2017) (reiterating the requirements of Article III standing). A plaintiff must plead the elements of standing with specificity. See Coyne v. Am. Tobacco Co., 183 F.3d 488, 494 (6th Cir. 1999) (stating that a “plaintiff bears the burden of demonstrating standing and must plead its components with specificity”). “[E]ach element must be supported in the same way as any other matter on which the plaintiff bears the burden of proof, i.e., with the manner and degree of evidence required at the successive stages of the litigation.” Lujan v. Defenders of Wildlife, 504 U.S. 555, 561 (1992).

         Injury in fact is the “[f]irst and foremost” of the three elements. Steel Co. v. Citizens forBetter Environment, 523 U.S. 83, 103 (1998). To establish injury in fact, a plaintiff must show that he suffered “an invasion of a legally protected interest” that is “concrete and particularized” and “actual or imminent, not conjectural or hypothetical.” Lujan, 504 U.S. at 560. For an injury to be “particularized, ” it “must affect the plaintiff in a personal and individual way.” Id. at 560 n.1. For an injury to be “concrete, ” it “must actually exist.” Spokeo, 136 S.Ct. at 1548. For an injury to be “actual or imminent, ” the “threatened injury must be certainly impending to constitute injury in fact” - “[a]llegations of possible future injury” are not sufficient. Clapper v. Amnesty Int'l USA,568 U.S. 398, 409-10 (2013) (citations omitted).[5] The injury-in-fact requirement helps to ensure that the plaintiff has a “personal stake in the outcome of the controversy.” Susan B. Anthony List v. Driehaus,134 S.Ct. 2334, 2341 (2014) (quoting Warth v. Seldin,422 U.S. 490, 498 (1975)). Only one party to a lawsuit ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.