AACHC V. AHCCCS, No. 21-16262 (9th Cir. 2022)
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The Ninth Circuit reversed in part and vacated in part the district court’s grant of Defendants’ motion to dismiss, and remanded for further proceedings, in an action in which federally-qualified health centers operating in Arizona and their membership organization alleged that the Arizona Health Care Cost Containment System, which administers Arizona’s Medicaid program, and its director violated 42 U.S.C. Section 1396a(bb) and binding Ninth Circuit precedent by failing or refusing to reimburse Plaintiffs for the services of dentists, podiatrists, optometrists, and chiropractors.
First, the panel held that the court’s precedent in California Ass’n of Rural Health Clinics v. Douglas (“Douglas”), 738 F.3d 1007 (9th Cir. 2013), established that FQHC services are a mandatory benefit under Section 1396d(a)(2)(C) for which Plaintiffs have a right to reimbursement under Section 1396a(bb) that is enforceable under 42 U.S.C. Section 1983. The panel rejected Defendants’ interpretation of Section 1396d(a)(2)(C)’s phrase “which are otherwise included in the plan” as applying to both the phrases “FQHC services” and “other ambulatory services offered by a [FQHC.]” The panel, therefore, rejected Defendants’ assertion that Section 1396d(a)(2)(C) only required states to cover FQHC services that are included in the state Medicaid plan.
The panel recognized that Douglas held that the mandatory benefit of “FQHC services” under § 1396d(a)(2)(C) includes “services furnished by . . . dentists, podiatrists, optometrists, and chiropractors” as well as doctors of medicine and osteopathy. The panel held that Arizona’s categorical exclusion of adult chiropractic services violated the unambiguous text of the Medicaid Act as interpreted in Douglas.
Court Description: Civil Rights/Medicaid. The panel reversed in part and vacated in part the district court’s grant of defendants’ motion to dismiss, and remanded for further proceedings, in an action in which federally-qualified health centers operating in Arizona and their membership organization alleged that the Arizona Health Care Cost Containment System, which administers Arizona’s Medicaid program, and its director violated 42 U.S.C. § 1396a(bb) and binding Ninth Circuit precedent by failing or refusing to reimburse plaintiffs for the services of dentists, podiatrists, optometrists, and chiropractors. Federally-qualified health centers treat medically underserved areas or populations and may seek mandatory reimbursement from state Medicaid plans under § 1396a(bb) for providing Medicaid recipients with services under the Medicaid Act. Section 1396d(a)(2)(C) requires state Medicaid plans to “cover [FQHC] services (as defined in subsection (l)(2)) and any other ambulatory services offered by a [FQHC] and which are otherwise included in the [state Medicaid] plan.” First, the panel held that this court’s precedent in California Ass’n of Rural Health Clinics v. Douglas (“Douglas”), 738 F.3d 1007 (9th Cir. 2013), established that FQHC services are a mandatory benefit under § 1396d(a)(2)(C) for which plaintiffs have a right to reimbursement under § 1396a(bb) that is enforceable under 4 AACHC V. AHCCCS 42 U.S.C. § 1983. The panel rejected defendants’ interpretation of § 1396d(a)(2)(C)’s phrase “which are otherwise included in the plan” as applying to both the phrases “FQHC services” and “other ambulatory services offered by a [FQHC.]” The panel therefore rejected defendants’ assertion that § 1396d(a)(2)(C) only required states to cover FQHC services that are included in the state Medicaid plan. The panel agreed with the district court that defendants could not rely on § 1396d(a)(2)(C) as a basis for excluding mandatory coverage of FQHC services because the phrase “which are otherwise included in the plan,” modified only the immediately preceding phrase, “and any other ambulatory services offered by a [FQHC.]” Second, the panel recognized that Douglas held that the mandatory benefit of “FQHC services” under § 1396d(a)(2)(C) includes “services furnished by . . . dentists, podiatrists, optometrists, and chiropractors” as well as doctors of medicine and osteopathy. Although Arizona may impose limitations on the mandatory benefit of FQHC services, it may not impose a categorical exclusion of adult chiropractic services. Third, the panel held that Arizona’s categorical exclusion of adult chiropractic services violated the unambiguous text of the Medicaid Act as interpreted in Douglas. The panel reversed the district court’s grant of defendants’ Rule 12(b)(6) motion to dismiss in that regard and remanded for further proceedings. Fourth, the panel concluded that the record did not establish that Chevron deference applied to Arizona’s limitations on adult dental, optometry, and podiatry services, which are components of the mandatory benefit of FQHC services. The record lacked any evidence about the AACHC V. AHCCCS 5 reasoning for approving Arizona’s plan and consideration of the potential impact of Arizona’s limited coverage of adult dental, optometry, and podiatry services even when provided by FQHCs. Thus, the panel vacated the district court’s grant of defendants’ motion to dismiss in that regard and remanded for the parties to further develop the record and for the district court to rule in the first instance on whether Arizona’s limitations on adult dental, optometry, and podiatry services, which are components of the mandatory benefit of FQHC services, were entitled to Chevron deference.
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