USCA Case #19-5094 Document #1828589 Filed: 02/14/2020 Page 1 of 19
`United States Court of Appeals
`Argued October 11, 2019
`Decided February 14, 2020
`No. 19-5094
`Consolidated with 19-5096
`Appeals from the United States District Court
`for the District of Columbia
`(No. 1:18-cv-01900)
`Alisa B. Klein, Attorney, U.S. Department of Justice,
`argued the cause for federal appellants. With her on the briefs


`USCA Case #19-5094 Document #1828589 Filed: 02/14/2020 Page 2 of 19
`were Mark B. Stern, Attorney, Robert P. Charrow, General
`Counsel, U.S. Department of Health and Human Services, and
`Brenna E. Jenny, Deputy General Counsel.
`Leslie Rutledge, Attorney General, Office of the Attorney
`General for the State of Arkansas, Nicholas J. Bronni, Solicitor
`General, Vincent M. Wagner, Deputy Solicitor General, and
`Dylan L. Jacobs, Assistant Solicitor General, were on the brief
`for appellant State of Arkansas.
`Ian Heath Gershengorn argued the cause for plaintiff-
`appellees. With him on the brief were Jane Perkins, Thomas
`J. Perrelli, Devi M. Rao, Natacha Y. Lam, Zachary S. Blau, and
`Samuel Brooke.
`Kyle Druding was on the brief for amici curiae American
`College of Physicians, et al. in support of plaintiffs-appellees.
`Edward T. Waters, Phillip A. Escoriaza, and Christopher
`J. Frisina were on the brief for amici curiae Deans, Chairs, and
`Scholars in support of plaintiffs-appellees.
`Judith R. Nemsick, Jon M. Greenbaum, and Sunu Chandy
`were on the brief for amici curiae Lawyers Committee for Civil
`Rights Under Law, et al. in support of appellees and
`Before: PILLARD, Circuit Judge, and EDWARDS and
`SENTELLE, Senior Circuit Judges.
`Opinion for the Court filed by Senior Circuit Judge
`SENTELLE, Senior Circuit Judge: Residents of Kentucky
`and Arkansas brought this action against the Secretary of


`USCA Case #19-5094 Document #1828589 Filed: 02/14/2020 Page 3 of 19
`Health and Human Services. They contend that the Secretary
`acted in an arbitrary and capricious manner when he approved
`Medicaid demonstration requests for Kentucky and Arkansas.
`The District Court for the District of Columbia held that the
`Secretary did act in an arbitrary and capricious manner because
`he failed to analyze whether the demonstrations would promote
`the primary objective of Medicaid—to furnish medical
`assistance. After oral argument, Kentucky terminated the
`challenged demonstration project and moved for voluntary
`dismissal. We granted the unopposed motion. The only
`question remaining before us is whether the Secretary’s
`authorization of Arkansas’s demonstration is lawful. Because
`the Secretary’s approval of the plan was arbitrary and
`capricious, we affirm the judgment of the district court.
`I. Background
`Originally, Medicaid provided health care coverage for
`four categories of people: the disabled, the blind, the elderly,
`and needy families with dependent children. 42 U.S.C.
`§ 1396-1. Congress amended the statute in 2010 to expand
`medical coverage to low-income adults who did not previously
`qualify. Id. at § 1396a(a)(10)(A)(i)(VIII); NFIB v. Sebelius,
`567 U.S. 519, 583 (2012). States have a choice whether to
`expand Medicaid to cover this new population of individuals.
`NFIB, 567 U.S. at 587. Arkansas expanded Medicaid coverage
`to the new population effective January 1, 2014, through their
`participation in private health plans, known as qualified health
`plans, with the state paying premiums on behalf of enrollees.
`Appellees’ Br. 14; Gresham v. Azar, 363 F. Supp. 3d 165, 171
`(D.D.C. 2019).
`certain minimum
`requirements that states must include in their plans. 42 U.S.C.
`§ 1396a. States can deviate from those requirements if the


`USCA Case #19-5094 Document #1828589 Filed: 02/14/2020 Page 4 of 19
`Secretary waives them so that the state can engage in
`“experimental, pilot, or demonstration project[s].” 42 U.S.C.
`§ 1315(a). The section authorizes the Secretary to approve
`“any experimental, pilot, or demonstration project which, in the
`judgment of the Secretary, is likely to assist in promoting the
`objectives” of Medicaid. Id.
`Arkansas applied to amend its existing waiver under
`§ 1315 on June 30, 2017. Arkansas Administrative Record
`2057 (“Ark. AR”). Arkansas gained approval for its initial
`Medicaid demonstration waiver in September 2013. In 2016,
`the state introduced its first version of the Arkansas Works
`program, encouraging enrollees to seek employment by
`offering voluntary referrals to the Arkansas Department of
`Workforce Services.
` Dissatisfied with
`level of
`participation in that program, Arkansas’s new version of
`Arkansas Works introduced several new requirements and
`limitations. The one that received the most attention required
`beneficiaries aged 19 to 49 to “work or engage in specified
`educational, job training, or job search activities for at least 80
`hours per month” and to document such activities. Id. at 2063.
`Certain categories of beneficiaries were exempted from
`completing the hours, including beneficiaries who show they
`are medically frail or pregnant, caring for a dependent child
`under age six, participating in a substance treatment program,
`or are full-time students. Id. at 2080–81. Nonexempt
`“beneficiaries who fail to meet the work requirements for any
`three months during a plan year will be disenrolled . . . and will
`not be permitted to re-enroll until the following plan year.” Id.
`at 2063.
`Arkansas Works included some other new requirements in
`addition to the much-discussed work requirements. Typically,
`when someone enrolls in Medicaid, the “medical assistance
`under the plan . . . will be made available to him for care and


`USCA Case #19-5094 Document #1828589 Filed: 02/14/2020 Page 5 of 19
`services included under the plan and furnished in or after the
`third month before the month in which he made application.”
`42 U.S.C. § 1396a(a)(34). Arkansas Works proposed to
`eliminate retroactive coverage entirely. Ark. AR 2057, 2061.
`It also proposed to lower the income eligibility threshold from
`133% to 100% of the federal poverty line, meaning that
`beneficiaries with incomes from 101% to 133% of the federal
`poverty line would lose health coverage. Id. at 2057, 2060–61,
`2063. Finally, Arkansas Works eliminated a program in which
`it used Medicaid funds to assist beneficiaries in paying the
`premiums for employer-provided health care coverage. Id. at
`2057, 2063, 2073. Arkansas instead used Medicaid premium
`assistance funds only to help beneficiaries purchase a qualified
`health plan available on
`the state Health
`Marketplace, requiring all previous recipients of employer-
`sponsored coverage premiums to transition to coverage offered
`through the state’s Marketplace. Id. at 2057, 2063, 2073.
`On March 5, 2018, the Secretary approved most of the new
`Arkansas Works program via a waiver effective until
`December 31, 2021, but with a few changes. He approved the
`work requirements but under the label of “community
`engagement.” Id. at 2. The Secretary authorized Arkansas to
`limit retroactive coverage to thirty days before enrollment
`rather than a complete elimination of retroactive coverage. Id.
`at 3, 12. He also approved Arkansas’s decision to terminate the
`employer-sponsored coverage premium assistance program.
`Id. at 3. The Secretary did not, however, permit Arkansas to
`limit eligibility to persons making less than or equal to 100%
`of the federal poverty line. Id. at 3 n.1, 11. Instead, the
`Secretary kept the income eligibility threshold at 133% of the
`federal poverty line. Id. at 3 n.1, 11.
`In the approval letter, the Secretary analyzed whether
`Arkansas Works would “assist in promoting the objectives of


`USCA Case #19-5094 Document #1828589 Filed: 02/14/2020 Page 6 of 19
`Medicaid.” Id. at 3. The Secretary identified three objectives
`that he asserted Arkansas Works would promote: “improving
`health outcomes; . . . address[ing] behavioral and social factors
`that influence health outcomes; and
`. . . incentiviz[ing]
`beneficiaries to engage in their own health care and achieve
`better health outcomes.” Id. at 4. In particular, the Secretary
`that Arkansas Works’s community engagement
`requirements would “encourage beneficiaries to obtain and
`maintain employment or undertake other community
`engagement activities that research has shown to be correlated
`with improved health and wellness.” Id. Further, the Secretary
`thought the shorter timeframe for retroactive eligibility would
`“encourage beneficiaries to obtain and maintain health
`coverage, even when they are healthy,” which, in turn,
`promotes “the ultimate objective of improving beneficiary
`health.” Id. at 5. The letter also summarized concerns raised
`by commenters that the community engagement requirement
`would “caus[e] disruptions in care” or “create barriers to
`coverage” for beneficiaries who are not exempt. Id. at 6–7.
`In response, the Secretary noted that Arkansas had several
`exemptions and would “implement an outreach strategy to
`inform beneficiaries about how to report compliance.” Id.
`The new work requirements took effect for those aged 30
`to 49 on June 1, 2018, and for those aged 20 to 29 on January
`1, 2019. Gresham, 363 F. Supp. 3d at 172. Charles Gresham
`along with nine other Arkansans filed an action for declaratory
`and injunctive relief against the Secretary on August 14, 2018.
`The district court on March 27, 2019, entered judgment
`vacating the Secretary’s approval, effectively halting the
`program. Gresham, 363 F. Supp. 3d at 176–85. In its opinion
`supporting the judgment, the district court relied on Stewart v.
`Azar, 313 F. Supp. 3d 237 (D.D.C. 2018) (Stewart I), which is
`the district court’s first opinion considering Kentucky’s similar
`demonstration, Gresham, 363 F. Supp. 3d at 176. In Stewart I,


`USCA Case #19-5094 Document #1828589 Filed: 02/14/2020 Page 7 of 19
`the district court turned to the provision authorizing the
`appropriations of funds for Medicaid, 42 U.S.C. § 1396-1, and
`held that, based on the text of that appropriations provision, the
`objective of Medicaid was to “furnish . . . medical assistance”
`to people who cannot afford it. Stewart I, 313 F. Supp. 3d at
`With its previously articulated objective of Medicaid in
`mind, the district court then turned to the Secretary’s approval
`of Arkansas Works. First, the district court noted that the
`Secretary identified three objectives that Arkansas Works
`would promote: “(1) ‘whether the demonstration as amended
`to assist
`improving health outcomes’;
`(2) ‘whether it would address behavioral and social factors that
`influence health outcomes’; and (3) ‘whether it would
`incentivize beneficiaries to engage in their own health care and
`achieve better health outcomes.’” Gresham, 363 F. Supp. 3d
`at 176 (quoting Ark. AR 4). But “[t]he Secretary’s approval
`letter did not consider whether [Arkansas Works] would reduce
`Medicaid coverage. Despite acknowledging at several points
`that commenters had predicted coverage loss, the agency did
`not engage with that possibility.” Id. at 177. The district court
`also explained that the Secretary failed to consider whether
`Arkansas Works would promote coverage. Id. at 179. Instead,
`the Secretary considered his alternative objectives, primarily
`healthy outcomes, but the district court observed that “‘focus
`on health is no substitute for considering Medicaid’s central
`concern: covering health costs’ through the provision of free or
`low-cost health coverage.” Id. (quoting Stewart I, 313 F. Supp.
`3d at 266). “In sum,” the district court held:
`the Secretary’s approval of the Arkansas Works
`Amendments is arbitrary and capricious because it
`did not address—despite receiving substantial
`comments on the matter—whether and how the


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`project would implicate the “core” objective of
`Medicaid: the provision of medical coverage to the
`Id. at 181. The district court entered final judgment on April
`4, 2019, and the Secretary filed a notice of appeal on April 10,
`This case was originally a consolidated appeal from the
`district court’s judgment in both the Arkansas and Kentucky
`cases. The district court twice vacated the Secretary’s approval
`of Kentucky’s demonstration for the same failure to address
`whether Kentucky’s program would promote the key objective
`of Medicaid. Stewart v. Azar, 366 F. Supp. 3d 125, 156
`(D.D.C. 2019) (Stewart II); Stewart I, 313 F. Supp. 3d at 274.
`On December 16, 2019, Kentucky moved to dismiss its appeal
`as moot because
`it “terminated
`the section
`demonstration project.” Intervenor-Def.-Appellant’s Mot. to
`Voluntarily Dismiss Appeal 1–2 (Dec. 16, 2019), ECF No.
`1820334. Neither the government nor the appellees opposed
`the motion. Gov’t’s Resp. (Dec. 18, 2019), ECF No. 1820655;
`Appellees’ Resp. (Dec. 20, 2019), ECF No. 1821219.
`Although the Secretary has considerable discretion to
`grant a waiver, we reject the government’s contention that such
`discretion renders his waiver decisions unreviewable. The
`Administrative Procedure Act’s (APA) exception from judicial
`review for an action committed to agency discretion is “very
`narrow,” Citizens to Preserve Overton Park, Inc. v. Volpe, 401
`U.S. 402, 410 (1971); see also Dep’t of Commerce v. New York,
`139 S. Ct. 2551, 2568 (2019), barring judicial review only in
`those “rare instances” where “there is no law to apply,”
`Overton Park, 401 U.S. at 410 (internal quotation marks and
`citation omitted). The Medicaid statute provides the legal
`standard we apply here: The Secretary may only approve


`USCA Case #19-5094 Document #1828589 Filed: 02/14/2020 Page 9 of 19
`“experimental, pilot, or demonstration project[s],” and only
`insofar as they are “likely to assist in promoting the objectives”
`of Medicaid, 42 U.S.C. § 1315(a). Section 1315 approvals are
`not among the rare “categories of administrative decisions that
`courts traditionally have regarded as committed to agency
`discretion.” Dep’t of Commerce, 139 S. Ct. at 2568.
`Additionally, the government asked that we address “the
`reasoning of the district court’s opinion in Stewart and the
`underlying November 2018 HHS approval of the Kentucky
`demonstration,” and second that we vacate the district court’s
`judgment against the federal defendants in the Kentucky case
`Stewart II, 66 F. Supp. 3d 125. Gov’t’s Resp. 1–2. The
`appellees opposed both of
`those additional
`Appellees’ Resp. 1–4. We granted the motion to voluntarily
`dismiss but declined to vacate the district court’s judgment
`against the federal defendants in Stewart II. As to the
`government’s first request, we do not rely on the Secretary’s
`reasoning in the November 2018 approval of Kentucky’s
`demonstration when considering the Secretary’s approval of
`Arkansas’s demonstration.
`“We review de novo the District Court’s grant of summary
`judgment, which means that we review the agency’s decision
`on our own.” Castlewood Prods., L.L.C. v. Norton, 365 F.3d
`1076, 1082 (D.C. Cir. 2004). Therefore, we will review the
`Secretary’s approval of Arkansas Works in accordance with the
`Administrative Procedure Act and will set it aside if it is
`“arbitrary, capricious, an abuse of discretion, or otherwise not
`in accordance with law.” 5 U.S.C. § 706(2)(A); see also C.K.
`v. New Jersey Dep’t of Health & Human Servs., 92 F.3d 171,
`181–82 (3d Cir. 1996) (applying the arbitrary and capricious
`standard of review to a waiver under § 1315); Beno v. Shalala,
`30 F.3d 1057, 1066–67 (9th Cir. 1994) (same); Aguayo v.
`Richardson, 473 F.2d 1090, 1103–08 (2d Cir. 1973) (same).


`USCA Case #19-5094 Document #1828589 Filed: 02/14/2020 Page 10 of 19
`An agency action that “entirely failed to consider an important
`aspect of the problem, offered an explanation for its decision
`that runs counter to the evidence before the agency, or is so
`implausible that it could not be ascribed to a difference in view
`or the product of agency expertise” is arbitrary and capricious.
`Motor Vehicle Mfrs. Ass’n of U.S., Inc. v. State Farm Mut.
`Auto. Ins. Co., 463 U.S. 29, 43 (1983).
`A. Objective of Medicaid
`The district court is indisputably correct that the principal
`objective of Medicaid is providing health care coverage. The
`Secretary’s discretion in approving or denying demonstrations
`is guided by the statutory directive that the demonstration must
`be “likely to assist in promoting the objectives” of Medicaid.
`42 U.S.C. § 1315. While the Medicaid statute does not have a
`standalone purpose section like some social welfare statutes,
`see, e.g., 42 U.S.C. § 601(a) (articulating the purposes of the
`Temporary Assistance for Needy Families program); 42 U.S.C.
`§ 629 (announcing the “objectives” of the Promoting Safe and
`Stable Families program), it does have a provision that
`articulates the reasons underlying the appropriations of funds,
`42 U.S.C. § 1396-1. The provision describes the purpose of
`Medicaid as
`to furnish (1) medical assistance on behalf of
`families with dependent children and of aged, blind,
`or disabled
`individuals, whose
`income and
`resources are insufficient to meet the costs of
`necessary medical services, and (2) rehabilitation
`and other services to help such families and
`individuals attain or
`retain capability
`independence or self-care.


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`Id. In addition to the appropriations provision, the statute
`defines “medical assistance” as “payment of part or all of the
`cost of the following care and services or the care and services
`themselves.” 42 U.S.C. § 1396d(a). Further, as the district
`court explained, the Affordable Care Act’s expansion of health
`care coverage to a larger group of Americans is consistent with
`Medicaid’s general purpose of furnishing health care
`coverage. See Stewart I, 313 F. Supp. 3d at 260 (citing Pub.
`L. No. 111-148, 124 Stat. 119, 130, 271 (2010)). The text
`consistently focuses on providing access to health care
`Both the First and Sixth Circuits relied on Medicaid’s
`appropriations provision quoted above in concluding that
`“[t]he primary purpose of Medicaid is to enable states to
`provide medical services to those whose ‘income and
`resources are insufficient to meet the costs of necessary
`medical services.’” Pharm. Research & Mfrs. of Am. v.
`Concannon, 249 F.3d 66, 75 (1st Cir. 2001) (quoting 42 U.S.C.
`§ 1396 (2000)), aff’d, 538 U.S. 644 (2003); Price v. Medicaid
`Dir., 838 F.3d 739, 742 (6th Cir. 2016). Similarly, the Ninth
`Circuit relied on both the appropriations provision and the
`definition of “medical assistance” when describing Medicaid
`as “a federal grant program that encourages states to provide
`certain medical services” and identifying a key element of
`“medical assistance” as the spending of federally provided
`funds for medical coverage. Univ. of Wash. Med. Ctr. v.
`Sebelius, 634 F.3d 1029, 1031, 1034–35 (9th Cir. 2011).
`Beyond relying on the text of the statute, other courts have
`consistently described Medicaid’s objective as primarily
`providing health care coverage. For example, the Third
`Circuit succinctly stated, “We recognize, of course, that the
`primary purpose of medicaid is to achieve the praiseworthy


`USCA Case #19-5094 Document #1828589 Filed: 02/14/2020 Page 12 of 19
`social objective of granting health care coverage to those who
`cannot afford it.” W. Va. Univ. Hosps., Inc. v. Casey, 885 F.2d
`11, 20 (3d Cir. 1989), aff’d, 499 U.S. 83 (1991). Likewise, the
`Supreme Court characterized Medicaid as a “program . . .
`[that] provides joint federal and state funding of medical care
`for individuals who cannot afford to pay their own medical
`costs.” Ark. Dep’t of Health & Human Servs. v. Ahlborn, 547
`U.S. 268, 275 (2006); see also Virginia ex rel. Hunter Labs.,
`L.L.C. v. Virginia, 828 F.3d 281, 283 (4th Cir. 2016) (quoting
`Ahlborn in the section of the decision explaining the important
`aspects of Medicaid).
`The statute and the case law demonstrate that the primary
`objective of Medicaid is to provide access to medical care.
`There might be secondary benefits that the government was
`hoping to incentivize, such as healthier outcomes for
`beneficiaries or more engagement in their health care, but the
`“means [Congress] has deemed appropriate” is providing
`health care coverage. MCI Telecomms. Corp. v. Am. Tel. &
`Tel. Co., 512 U.S. 218, 231 n.4 (1994). In sum, “the intent of
`Congress is clear” that Medicaid’s objective is to provide
`health care coverage, and, as a result, the Secretary “must give
`effect to [that] unambiguously expressed intent of Congress.”
`Chevron, U.S.A., Inc. v. Nat. Res. Def. Council, Inc., 467 U.S.
`837, 842–43 (1984).
`Instead of analyzing whether the demonstration would
`promote the objective of providing coverage, the Secretary
`three alternative objectives: “whether
`demonstration as amended was likely to assist in improving
`health outcomes; whether it would address behavioral and
`social factors that influence health outcomes; and whether it
`would incentivize beneficiaries to engage in their own health
`care and achieve better health outcomes.” Ark. AR 4. These
`three alternative objectives all point to better health outcomes


`USCA Case #19-5094 Document #1828589 Filed: 02/14/2020 Page 13 of 19
`as the objective of Medicaid, but that alternative objective
`lacks textual support. Indeed, the statute makes no mention of
`that objective.
`While furnishing health care coverage and better health
`outcomes may be connected goals, the text specifically
`addresses only coverage. 42 U.S.C. § 1396-1. The Supreme
`Court and this court have consistently reminded agencies that
`they are “bound, not only by the ultimate purposes Congress
`has selected, but by the means it has deemed appropriate, and
`prescribed, for the pursuit of those purposes.”
`Telecomms., 512 U.S. at 231 n. 4; see also Waterkeeper All. v.
`EPA, 853 F.3d 527, 535 (D.C. Cir. 2017); Colo. River Indian
`Tribes v. Nat’l Indian Gaming Comm’n, 466 F.3d 134, 139–
`40 (D.C. Cir. 2006). The means that Congress selected to
`achieve the objectives of Medicaid was to provide health care
`coverage to populations that otherwise could not afford it.
`To an extent, Arkansas and the government characterize
`the Secretary’s approval letter as also identifying transitioning
`beneficiaries away from governmental benefits through
`financial independence or commercial coverage as an
`objective promoted by Arkansas Works. Ark. Br. 14, 37–42;
`Gov’t Br. 24–25, 32. This argument misrepresents the
`Secretary’s letter. The approval letter has a specific section
`for the Secretary’s determination that the project will assist in
`promoting the objectives of Medicaid. Ark. AR 3–5. The
`objectives articulated in that section are the health-outcome
`goals quoted above.
` That section does not mention
`transitioning beneficiaries away from benefits. The district
`court’s discussion of the Secretary’s objectives confirms our
`interpretation of this letter. It identifies the Secretary’s
`alternative objective as “improv[ing] health outcomes.”
`Gresham, 363 F. Supp. 3d at 179. There is no reference to
`commercial coverage in the Secretary’s approval letter, and


`USCA Case #19-5094 Document #1828589 Filed: 02/14/2020 Page 14 of 19
`the only reference to beneficiary financial independence is in
`the section summarizing public comments. In response to
`concerns about the community engagement requirements
`creating barriers to coverage, the Secretary stated, “Given that
`employment is positively correlated with health outcomes, it
`furthers the purposes of the Medicaid statute to test and
`these requirements as a means
`independence.” Ark. AR 6. But “[n]owhere in the Secretary’s
`approval letter does he justify his decision based . . . on a belief
`that the project will help Medicaid-eligible persons to gain
`sufficient financial resources to be able to purchase private
`insurance.” Gresham, 363 F. Supp. 3d at 180–81. We will not
`accept post hoc rationalizations for the Secretary’s decision.
`See State Farm, 463 U.S. at 50.
`Nor could the Secretary have rested his decision on the
`objective of transitioning beneficiaries away from government
`benefits through either financial independence or commercial
`coverage. When Congress wants to pursue additional
`objectives within a social welfare program, it says so in the
`text. For example, the purpose section of TANF explicitly
`includes “end[ing] the dependence of needy parents on
`government benefits by promoting job preparation, work, and
`marriage” among the objectives of the statute. 42 U.S.C.
`§ 601(a)(2). Also, both TANF and the Supplemental Nutrition
`Assistance Program (SNAP) condition eligibility for benefits
`upon completing a certain number of hours of work per week
`to support the objective of “end[ing] dependence of needy
`parents on government benefits.” 42 U.S.C. §§ 601(a)(2),
`607(c) (TANF); 7 U.S.C. § 2015(d)(1) (SNAP). In contrast,
`Congress has not conditioned the receipt of Medicaid benefits
`on fulfilling work requirements or taking steps to end receipt
`of governmental benefits.


`USCA Case #19-5094 Document #1828589 Filed: 02/14/2020 Page 15 of 19
`The reference to independence in the appropriations
`provision and the cross reference to TANF cannot support the
`Secretary’s alternative objective either. The reference to
`“independence” in the appropriations provision is in the
`context of assisting beneficiaries in achieving functional
`independence through rehabilitative and other services, not
`financial independence from government welfare programs.
`42 U.S.C. § 1396-1. Medicaid also grants states the “[o]ption”
`to terminate Medicaid benefits when a beneficiary who
`receives both Medicaid and TANF fails to comply with
`TANF’s work
`42 U.S.C.
`§ 1396u-1(b)(3)(A). The provision gives states, therefore, the
`ability to coordinate benefits for recipients receiving both
`TANF and Medicaid. It does not go so far as to incorporate
`TANF work requirements and additional objectives into
`Further, the history of Congress’s amendments to social
`welfare programs supports the conclusion that Congress did
`not intend 42 U.S.C. § 1396u-1(b)(3)(A) to incorporate
`TANF’s objectives and work requirements into Medicaid. In
`1996, SNAP already included work requirements to maintain
`eligibility. 7 U.S.C. § 2015(d)(1) (1994). Also in 1996,
`Congress passed the Personal Responsibility and Work
`Opportunity Reconciliation Act, which replaced Aid to
`Families with Dependent Children with TANF and added
`work requirements. Personal Responsibility and Work
`Opportunity Reconciliation Act of 1996, Pub. L. No. 104-193,
`sec. 103, § 407, 110 Stat. 2105, 2129–34. At the same time, it
`added 42 U.S.C. § 1396u-1(b)(3)(A) to Medicaid. Id. at sec.
`114, § 1931, 110 Stat. at 2177–80. The fact that Congress did
`not similarly amend Medicaid to add a work requirement for
`all recipients—at a time when the other two major welfare
`programs had those requirements and Congress was in the
`process of amending welfare statutes—demonstrates that


`USCA Case #19-5094 Document #1828589 Filed: 02/14/2020 Page 16 of 19
`Congress did not intend to incorporate work requirements into
`Medicaid through § 1396u-1(b)(3)(A).
`In short, we agree with the district court that the
`alternative objectives of better health outcomes and
`beneficiary independence are not consistent with Medicaid.
`The text of the statute includes one primary purpose, which is
`providing health care coverage without any restriction geared
`to healthy outcomes, financial independence or transition to
`commercial coverage.
`B. The Approvals Were Arbitrary and Capricious
`With the objective of Medicaid defined, we turn to the
`of Arkansas’s
`demonstration, and we find it wanting. In order to survive
`arbitrary and capricious review, agencies need to address
`“important aspect[s] of the problem.” State Farm, 463 U.S. at
`43. In this situation, the loss of coverage for beneficiaries is an
`important aspect of the demonstration approval because
`coverage is a principal objective of Medicaid and because
`commenters raised concerns about the loss of coverage. See,
`e.g., Ark. AR 1269–70, 1277–78, 1285, 1294–95.
` critical issue in this case is the Secretary’s failure to
`account for loss of coverage, which is a matter of importance
`under the statute. The record shows that the Arkansas Works
`amendments resulted in significant coverage loss. In Arkansas,
`more than 18,000 people (about 25% of those subject to the
`work requirement) lost coverage as a result of the project in just
`five months. Ark. Dep’t of Human Servs., Arkansas Works
`AWReport.pdf. Additionally, commenters on the Arkansas
`Works amendments detailed the potential for substantial
` A


`USCA Case #19-5094 Document #1828589 Filed: 02/14/2020 Page 17 of 19
`coverage loss supported by research evidence. Ark. AR 1269–
`70, 1277–78, 1285, 1294–95, 1297, 1307–08, 1320, 1326,
`1337–38, 1341, 1364–65, 1402, 1421. The Secretary’s
`analysis considered only whether the demonstrations would
`increase healthy outcomes and promote engagement with the
`beneficiary’s health care. Id. at 3–5. The Secretary noted that
`some commenters were concerned that “these requirements
`would be burdensome on families or create barriers to
`coverage.” Id. at 6. But he explained that Arkansas would have
`“outreach and education on how to comply with the new
`community engagement requirements” and that Centers for
`Medicare and Medicaid Services could discontinue the
`program if data showed that it was no longer in the public
`interest. Id. The Secretary also concluded that the “overall
`health benefits to the [a]ffected population . . . outweigh the
`health-risks with respect to those who fail to” comply with the
`new requirements. Id. at 7. While Arkansas did not have its
`own estimate of potential coverage loss, the estimates and
`concerns raised in the comments were enough to alert the
`Secretary that coverage loss was an important aspect of the
`problem. Failure to consider whether the project will result in
`coverage loss is arbitrary and capricious.
`In total, the Secretary’s analysis of the substantial and
`important problem is to note the concerns of others and dismiss
`those concerns in a handful of conclusory sentences. Nodding
`to concerns raised by commenters only to dismiss them in a
`conclusory manner
`is not a hallmark of
`decisionmaking. See, e.g., Am. Wild Horse Pres. Campaign v.
`Perdue, 873 F.3d 914, 932 (D.C. Cir. 2017) (critiquing an
`agency for “brush[ing] aside critical facts” and not “adequately
`analyz[ing]” the consequences of a decision); Getty v. Fed.
`Savs. & Loan Ins. Corp., 805 F.2d 1050, 1055 (D.C. Cir. 1986)
`(analyzing whether an agency actually considered a concern
`rather than merely stating that it considered the concern).


`USCA Case #19-5094 Document #1828589 Filed: 02/14/2020 Page 18 of 19
`True, the Secretary’s approval letter is not devoid of
`analysis. It does contain the Secretary’

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