California V. Azar

FOR PUBLICATION UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT STATE OF CALIFORNIA, by and No. 19-15974 through Attorney General Xavier Becerra, D.C. No. Plaintiff-Appellee, 3:19-cv-01184-EMC v. ALEX M. AZAR II, in his Official Capacity as Secretary of the U.S. Department of Health & Human Services; U.S. DEPARTMENT OF HEALTH & HUMAN SERVICES, Defendants-Appellants. ESSENTIAL ACCESS HEALTH, No. 19-15979 INC.; MELISSA MARSHALL, M.D., Plaintiffs-Appellees, D.C. No. 3:19-cv-01195-EMC v. ALEX M. AZAR II, Secretary of U.S. Department of Health and Human Services; U.S. DEPARTMENT OF HEALTH & HUMAN SERVICES, Defendants-Appellants. 2 STATE OF CALIFORNIA V. AZAR Appeal from the United States District Court for the Northern District of California Edward M. Chen, District Judge, Presiding STATE OF OREGON; STATE OF No. 19-35386 NEW YORK; STATE OF COLORADO; STATE OF D.C. Nos. CONNECTICUT; STATE OF 6:19-cv-00317-MC DELAWARE; DISTRICT OF 6:19-cv-00318-MC COLUMBIA; STATE OF HAWAII; STATE OF ILLINOIS; STATE OF MARYLAND; COMMONWEALTH OF MASSACHUSETTS; STATE OF MICHIGAN; STATE OF MINNESOTA; STATE OF NEVADA; STATE OF NEW JERSEY; STATE OF NEW MEXICO; STATE OF NORTH CAROLINA; COMMONWEALTH OF PENNSYLVANIA; STATE OF RHODE ISLAND; STATE OF VERMONT; COMMONWEALTH OF VIRGINIA; STATE OF WISCONSIN; AMERICAN MEDICAL ASSOCIATION; OREGON MEDICAL ASSOCIATION; PLANNED PARENTHOOD FEDERATION OF AMERICA, INC.; PLANNED PARENTHOOD OF SOUTHWESTERN OREGON; PLANNED PARENTHOOD COLUMBIA WILLAMETTE; THOMAS N. EWING, M.D.; MICHELE P. MEGREGIAN, STATE OF CALIFORNIA V. AZAR 3 C.N.M., Plaintiffs-Appellees, v. ALEX M. AZAR II; U.S. DEPARTMENT OF HEALTH & HUMAN SERVICES; DIANE FOLEY; OFFICE OF POPULATION AFFAIRS, Defendants-Appellants. Appeal from the United States District Court for the District of Oregon Michael J. McShane, District Judge, Presiding 4 STATE OF CALIFORNIA V. AZAR STATE OF WASHINGTON; No. 19-35394 NATIONAL FAMILY PLANNING AND REPRODUCTIVE HEALTH D.C. Nos. ASSOCIATION; FEMINIST 1:19-cv-03040-SAB WOMEN’S HEALTH CENTER; 1:19-cv-03045-SAB DEBORAH OYER, M.D.; TERESA GALL, Plaintiffs-Appellees, OPINION v. ALEX M. AZAR II, in his official capacity as Secretary of the United States Department of Health and Human Services; U.S. DEPARTMENT OF HEALTH & HUMAN SERVICES; DIANE FOLEY, M.D., in her official capacity as Deputy Assistant Secretary for Population Affairs; OFFICE OF POPULATION AFFAIRS, Defendants-Appellants. Appeal from the United States District Court for the Eastern District of Washington Stanley Allen Bastian, District Judge, Presiding Argued and Submitted En Banc September 23, 2019 San Francisco, California Filed February 24, 2020 STATE OF CALIFORNIA V. AZAR 5 Before: Sidney R. Thomas, Chief Judge, and Edward Leavy, Kim McLane Wardlaw, William A. Fletcher, Richard A. Paez, Jay S. Bybee, Consuelo M. Callahan, Milan D. Smith, Jr., Sandra S. Ikuta, Eric D. Miller and Kenneth K. Lee, Circuit Judges. Opinion by Judge Ikuta; Dissent by Judge Paez 6 STATE OF CALIFORNIA V. AZAR SUMMARY* Title X of the Public Health Service Act The en banc court vacated preliminary injunctions entered by three district courts in three states against the U.S. Department of Health and Human Services’s (“HHS”) enforcement of a 2019 rule, promulgated by HHS under Title X of the Public Health Service Act, concerning grants to support voluntary family projects, and prohibition of funds being used in programs where abortion is a method of family planning. Section 1008 of Title X prohibits grant funds from “be[ing] used in programs where abortion is a method of family planning.” Regulations issued in 1988, and upheld by the Supreme Court in 1991, completely prohibited the use of Title X funds in projects where clients received counseling or referrals for abortion as a method of family planning. Rust v. Sullivan, 500 U.S. 173, 177-79 (1991). Regulations issued in 2000 were more permissive. In March 2019, HHS promulgated the 2019 rule, which was similar to the regulations adopted in 1988 and upheld by Rust. Plaintiffs, including several states and private Title X grantees, brought various suits challenging the 2019 Final Rule. The en banc court first considered plaintiffs’ argument that the 2019 Final Rule was facially invalid because two intervening congressional enactments altered the legal landscape so that Rust’s holdings were no longer valid. The * This summary constitutes no part of the opinion of the court. It has been prepared by court staff for the convenience of the reader. STATE OF CALIFORNIA V. AZAR 7 court held that plaintiffs failed to provide evidence that Congress intended to alter Rust’s conclusion that the 1988 Rule was a permissible interpretation of Title X and § 1008. The en banc court held that the 2019 Final Rule was not contrary to the 1996 appropriations rider, which was enacted to ensure no federal funds were used to support abortion services. Specifically, the panel held that because HHS can reasonably interpret “nondirective pregnancy counseling” as not including referrals, plaintiffs failed at the first step of their arguments, that “pregnancy counseling” must be deemed to include referrals. Plaintiffs also failed at the second step of their argument that the term “nondirective” meant the presentation of all options on an equal basis. The court held that HHS reasonably interpreted “nondirective” to refer to the neutral manner in which counseling was provided rather than to the scope of topics that must be covered in counseling. The court rejected plaintiffs’ and the dissent’s argument that the Final Rule was directive because it required referrals for medically necessary prenatal health care. The court also held that requiring referrals for medically necessary prenatal health care but not for nontherapeutic abortions did not make pregnancy counseling directive. Nor was the Final Rule directive because it allowed referrals for adoption. Finally, the court held that the Final Rule’s restrictions on referral lists did not render pregnancy counseling directive because a referral list did not present information in a way that encouraged or promoted a specific option. The en banc court held that the 2019 Final Rule was consistent with § 1554 of the Affordable Care Act (“ACA”). The court held that the ACA did not address the implementation of Congress’s choice not to subsidize certain activities. The Final Rule placed no substantive barrier on 8 STATE OF CALIFORNIA V. AZAR individuals’ ability to obtain appropriate medical care or on doctors’ ability to communicate with clients or engage in activity when not acting within a Title X project, and therefore the Final Rule did not implicate § 1554. The en banc court concluded that the Final Rule was not contrary to the appropriations rider, § 1554 of the ACA, or Title X. The court held that plaintiffs’ claims based on these provisions would not succeed, and plaintiffs, accordingly, did not demonstrate a likelihood of success on the merits based on these grounds. The en banc court next turned to plaintiffs’ arguments that the 2019 Final Rule was arbitrary and capricious under the Administrative Procedure Act. First, plaintiffs argued that HHS’s promulgation of the physical and financial separation requirement in 42 C.F.R. § 59.15 was arbitrary and capricious. The court held that HHS examined the relevant considerations and provided a reasoned analysis for adopting this provision. In light of HHS’s reasoned explanation of its decisions and its consideration of the comments raised, the court rejected plaintiffs’ arguments that HHS failed to base its decision on evidence, failed to consider potential harms in its cost-benefit analysis, failed to explain its reasons for departing from the 2000 Rule’s provisions, and failed to consider the reliance interest of providers who have incurred costs relying on HHS’s previous regulation. Second, plaintiffs argued that HHS’s cost-benefit analysis of the 2019 Final Rule was arbitrary and capricious. The court held that HHS reasonably concluded that the harms flowing from a gap in care would not develop, and on this record, the court would not second-guess HHS’s consideration of the risks and benefits of its action. Third, plaintiffs asserted that the referral restrictions were arbitrary and capricious. Because STATE OF CALIFORNIA V. AZAR 9 HHS’s decisionmaking path could reasonably be determined, the court rejected plaintiffs’ claims that the counseling and referral restrictions were arbitrary and capricious. Fourth, the court rejected plaintiffs’ arguments that HHS’s technical determination of which medical professionals could provide pregnancy counseling was arbitrary and capricious. Finally, the court rejected plaintiffs’ argument that HHS was arbitrary and capricious in reestablishing the language of the 1988 Rule’s requirement that all family planning methods and services be “acceptable and effective,” instead of retaining the 2000 Rule’s revision requiring that such methods and services also be “medically approved.” The court held that HHS adequately explained its reasons for reestablishing the 1988 Rule, and sufficiently addressed comments that its decision to omit the phrase “medically approved” would promote political ideology over science, lead to negative health consequences for clients, and undermined recommendations from other agencies. The en banc court held that plaintiffs would not prevail on the merits of their legal claims, and they were not entitled to the extraordinary remedy of a preliminary injunction. Accordingly, the court vacated the district courts’ preliminary injunction orders, and remanded for further proceedings. The government’s motion for a stay pending appeal was denied as moot. Judge Paez, joined by Chief Judge Thomas, and Judges Wardlaw and W. Fletcher, dissented. Judge Paez would hold that the 2019 Final Rule breached Congress’ limitations on the scope of HHS’s authority, and he would uphold the district courts’ preliminary injunctions enjoining enforcement of the Rule. Among other things, the Final Rule gags health care providers from fully counseling women about their 10 STATE OF CALIFORNIA V.

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