NO. 11-15132
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCIJIT
TONY KORAB, et al.,
Plaintiffs - Appellees
1•
PATRICIA ...
TABLE OF CONTENTS
INTRODUCTION.
JURISDICTIONAL STATEMENT 4
STATEMENT OF ISSUES PRESENTED FOR REVIEW 5
STANDARD OF REVIEW 6...
B. Even If Basic Health Hawai’i Discriminates Against Aliens, Rational
Basis Review Applies 29
1. The Federal Government M...
TABLE OF AUTHORITIES
CASES
Aleman v. Glickman,
217F.3d 1191 (9thCir. 2000) 21
Aliessa v. Novello,
96 N.Y.2d 418, 754 N.E.2...
Graham v. Richardson,
403 U.S. 365 (1971) 20, 33,47,48,49
Guerrero v. Clinton,
157 F.3d 1190 (1998) 51,53
Heller v. Doe,
5...
Soskin v. Reinertson,
353 F.3d 1242 (10th Cir. 2004) 21, 22, 23, 31, 33, 35, 45-46
Southwest Voter Registration Education ...
8 U.S.C. § 1611(a). 1,10,11,49
8U.S.C. 1611(b) .10
8 U.S.C. § 1612(b) . 23
8U.S.C.16l3 10
8 U.S.C. § 1622 36
8 U.S.C. § 16...
2003 Compact, sec. 104(e). 50
2003 Compact, sec. 104(e)(1) 50
2003 Compact, sec. L04(e)(3) 51
2003 Compact, sec. 104(e)(6)...
INTRODUCTION
This case addresses the question whether the State of Hawai ‘i is
constitutionally required to replace — enti...
Residents). COFA Residents are nonimmigrants, which are nonqualified aliens
under the Welfare Reform Act, and were therefo...
benefit was only for COFI4 Residents who were ineligible for federal Medicaid, to
lessen the impact of the federal governm...
although the Basic Health Hawai ‘i benefits provided by Hawai ‘i do not match the
federal Medicaid benefits provided citiz...
December 13, 2010. CRIER 42. Defendants timely appealed that order on January
10,2011. CR/ER47.
STATEMENT OF ISSUES PRESEN...
STANDARD OF REVIEW
“We review the district court’s decision to grant or deny a preliminary
injunction for abuse of discret...
Plaintiffs, who are COFA Residents, filed a class action lawsuit against the
Department in August 2010. CRIER 1 (complaint...
The district court denied the Department’s Motion to Dismiss by Order on
November 10, 2010, and granted Plaintiffs’ Motion...
and other medically needy individuals.. . and assuring compliance with federal
requirements to maximize federal financial ...
permanent residence and those admitted pursuant to certain statutes.7 8 U.S.C. §
1641(b). Subject to certain exceptions, q...
provisions of the Immigration and Nationality Act (INA) relating to labor
certification and nonimmigrant visas. 2003 Compa...
C. Since the Welfare Reform Act, the Department Provided Medicaid-Like
State-Funded Medical Assistance Benefits to COFA Re...
below the federal poverty level. j Under the terms of the waiver, non-disabled
childless adults were subject to an enrollm...
eligibles for QUEST, QUEST-Net, QUEST-ACE and QExA “specifically excludes
unqualified aliens, including aliens from the Co...
Programs” in the lawsuit, CRIER 37 at 3-4 (stip. re class), they were not receiving
federal Medicaid, but receiving state-...
The named plaintiffs, Tony Korab, Tojio Clanton, and Keben Enoch, are
citizens of the Republic of the Marshall Islands, an...
Therefore, the court determined that strict scrutiny applied, and held that the
Plaintiff COFA Residents were likely to pr...
SUMMARY OF THE ARGUMENT
The district court erred in holding that the State may not reduce the level of
state-funded medica...
benefits to replace the federal Medicaid benefits that were taken away under the
Welfare Reform Act.
Ultimately, equalprot...
same State program. Here, thefederal government created the discrimination, and
the State gratuitously mitigated part of t...
“classifications based on alienage, like those based on nationality or race, are
inherently suspect and subject to close j...
In Massachusetts created an alien-only cash assistance program for
qualified aliens who were made ineligible for federal T...
otherwise eligible for assistance in their state Medicaid program (including
meeting the five year rule, if applicable), b...
Rather than discriminating against aliens, Hawai ‘i’s state-only-funded program was
helping aliens.
Directly on point is t...
Because only aliens, and not citizens, ever have benefitedfrom
[the program], and because no citizens presently receive as...
424, 754 N.E.2d at 1089-90. Pursuant to the Welfare Reform Act, New York
excluded alien plaintiffs (which included qualifi...
Welfare Reform Act’ s five year rule, and were barred from receiving the ASP
payments by virtue of state law because of th...
equal protection challenge.” j at 487, 909 N.E.2d at 76. Because this case is
analogous to the facts of Khrapunskiy, not A...
against aliens in the federal Medicaid program, the State surely must be able to
first voluntarily create a matching state...
government’s discrimination, by creating a BHH program only for aliens such as
the COFA Residents.
But if this Court were ...
branches of the Federal Government.” Id. at 80-81. Therefore, the Court applied
rational basis review and held that “it is...
court of appeals to consider the [Welfare Reform) Act’s deprivation of other
government benefits to unqualified aliens has...
2. The State ‘s Actions in Following a Uniform Rule Established by
Congress Respecting Aliens Will Be Subject to Rational ...
these powers to legislate with regard to aliens, the proper standard of judicial
review is rational-basis review. That is ...
funded alien-only BHH program, whose benefits are less than those provided
citizens under thefederal Medicaid program. The...
Congress’s discrimination is constitutional, and not subject to any standard of
review. See infra p. 24.
The district cour...
restrictive means available for achieving the compelling governmental interest of
assuring that aliens be self-reliant in ...
expense — benefits equivalent to the federal benefits that aliens lost under the
Welfare Reform Act.
The district court di...
aliens because of their status as noncitizens.” Id. at 646. Like BHH in this case,
the state medical assistance program in...
The district court’s reliance on Ehrlich is also misplaced. Following
enactment of the Welfare Reform Act, the court of ap...
state-funded alien-only program. Aliessa, 96 N.Y.2d at 424, 754 N.E.2d at 1089-
90, fn. 3. Therefore, any discussion of th...
pending action on their applications for asylum, were permanently residing in the
country under color of law. j.ç1 at 1459...
issue of whether the AFDC statute dictated particular state action as to aliens for
state public benefits was not before t...
had followed the federal classification under the Welfare Reform Act and
eliminated the Medicaid-like state-funded medical...
basis review. “[R]ational-basis review in equal protection analysis is not a license
for courts to judge the wisdom, fairn...
at 1255 (“In exercising that discretion each state is to make its own assessment of
whether it can bear the burden of prov...
& Game Comm’n., 334 U.S. 410 (1948) (issuance of fishing licenses), and
Graham, 403 U.S. 365 (state and federal welfare be...
federally funded categorical assistance benefits for persons who were disabled, in
need of old-age assistance, or blind, t...
eligibility requirements on aliens than they did on citizens who were applying for
the same general assistance programs.’5...
C. The Rational Basis Test Also Applies Because the Federal Government
Established a Uniform Rule Relating to COFA Residen...
of healthcare benefits that the federal Medicaid program provides for citizens.
Hawai’i’s decision to provide limited heal...
fraction of the cost of providing state-funded services, including but not limited to
health care, to COFA Residents. CR/E...
enforceable right to obtain any additional funding under the Compacts.
Guerrero, 157 F.3d at 1194. Therefore, the only log...
to provide even more benefits to COFA Residents in the form of increased
healthcare obligations plainly violates the feder...
immigrant visa requirements of the INA disregarded. 2003 Compact and Palau
Compact, sec. 141(a). Nonimniigrants are, as a ...
involuntarily burdened by COFA Residents, Hawai ‘i’s decision to provide only
some health assistance to COFA Residents is ...
Accordingly, the State respectfully requests that the district court’s order
granting plaintiffs’ motion for preliminary i...
CERTIFICATE OF COMPLIANCE
This brief complies with the type-volume limitation of Fed. R. App. P.
32(a)(7)(B) because this ...
State's opening brief korab
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  1. 1. NO. 11-15132 UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCIJIT TONY KORAB, et al., Plaintiffs - Appellees 1• PATRICIA McMANAMAN, in her official capacity as Director of the State of Hawai ‘i, Department of Human Services and KENNETH FINK, in his official capacity as State of Hawai’i, Department of Human Services, Med-QUEST Division Administrator, Defendants — Appellants On Appeal From the Interlocutory Order Granting a Preliminary Injunction of the United States District Court for the District of Hawai’i Case No. D.C. No. 1:1 0-cv-00483-JMS-KSC BRIEF OF APPELLANTS DAVID M. LOUIE Attorney General State ofHawaii HEIDI M. RIAN LEE ANN N.M. BREWER JOHN F. MOLAY Deputy Attorneys General Department of the Attorney General 465 South King Street, Room 200 Honolulu, Hawaii 96813 (808) 587-3050 Attorneysfor Defendant- Appellants Case: 11-15132 06/20/2011 Page: 1 of 127 ID: 7791851 DktEntry: 9
  2. 2. TABLE OF CONTENTS INTRODUCTION. JURISDICTIONAL STATEMENT 4 STATEMENT OF ISSUES PRESENTED FOR REVIEW 5 STANDARD OF REVIEW 6 STATEMENT OF CASE 6 STATEMENT OF FACTS 8 A. COFA Residents Used to be Eligible for Federal Medicaid 8 B. The Welfare Reform Act Limited COFA Residents’ Access to Federal and State Public Benefits 9 C. Since the Welfare Reform Act, the Department Provided Medicaid- Like State-Funded Medical Assistance Benefits to COFA Residents, but Not to Citizens 12 D. The Department Reduced the State-Funded Alien-Only Medical Assistance Benefit that Was Available to COFA Residents by Implementing Basic Health Hawai’i 15 E. Applying Strict Scrutiny, the District Court Preliminarily Enjoined the Department from Implementing Basic Health Hawai’i 16 SUMMARY OF THE ARGUMENT 18 ARGUMENT 19 A. Basic Health Hawai ‘i Does Not Violate the Equal Protection Clause Because It Does Not Discriminate Against Aliens 19 1. Providing Aliens Who Are Barred from Federal Medicaid with State-Funded Alien-Only Benefits Is Not a Classification Based on Alienage 20 2. The Past Receipt of State-Funded Alien-Only Medical Assistance Benefits is Irrelevant to Determining Whether Reduction of Those Benefits Discriminates Against Aliens 28 1 Case: 11-15132 06/20/2011 Page: 2 of 127 ID: 7791851 DktEntry: 9
  3. 3. B. Even If Basic Health Hawai’i Discriminates Against Aliens, Rational Basis Review Applies 29 1. The Federal Government May Discriminate Against Aliens in Federal Benefit Programs Under Rational Basis Review 30 2. The State’s Actions in Following a Uniform Rule Established by Congress Respecting Aliens Will Be Subject to Rational Basis Review 33 3. The State’s Implementation of Basic Health Hawai’i Satisfies Rational Basis Review 44 4. Only When the State Classifies Based on Alienage Within a Program Will Strict Scrutiny Apply 46 C. The Rational Basis Test Also Applies Because the Federal Government Established a Uniform Rule Relating to COFA Residents’ Conditions of Entry Under the Compacts 50 CONCLUSION 56 CERTIFICATE OF COMPLIANCE 58 STATEMENT OF RELATED CASES 59 GLOSSARY 60 ADDENDUM 11 Case: 11-15132 06/20/2011 Page: 3 of 127 ID: 7791851 DktEntry: 9
  4. 4. TABLE OF AUTHORITIES CASES Aleman v. Glickman, 217F.3d 1191 (9thCir. 2000) 21 Aliessa v. Novello, 96 N.Y.2d 418, 754 N.E.2d 1085 (Ct. App. 2001) 25,26,36,41 Ball v. Rodgers, 492 F.3d 1094 (9th Cir. 2007) 8 Bernal v. Fainter, 467 U.S. 216 (1984) 46 Children’s Hosp. & Health Ctr. v. Belshe, 188 F.3d 1090 (9th Cir. 1999) 8 City of Chicago v. Shalala, 189 F.3d 598 (7th Cir. 1999) 32 Dep’t of Health Servs. v. Sec’y of Health & Human Servs., 823 F.2d 323 (9th Cir. 1987) 8 Doe v. Comm’r of Transitional Assistance, 773 N.E.2d 404 (Mass. 2002) 21,22,29,31 Ehrlich v. Perez, 908 A.2d 1220 (Md. 2006) 21, 40 Examining Bd. of Engineers, Architects & Surveyors v. Flores de Otero, 426 U.S. 572 (1976) 46 F.S. Royster Guano Co. v. Virginia, 253 U.S. 412 (1920) 20 FCC v. Beach Communications, Inc., 508 U.S. 307 (1993) 45 1 Case: 11-15132 06/20/2011 Page: 4 of 127 ID: 7791851 DktEntry: 9
  5. 5. Graham v. Richardson, 403 U.S. 365 (1971) 20, 33,47,48,49 Guerrero v. Clinton, 157 F.3d 1190 (1998) 51,53 Heller v. Doe, 509 U.S. 312 (1993) 45 Hong Pham v. Starkowski, 16 A.3d 635 (Conn. 2011) 9,21,24,25,29,38,39,40 Hong Pham v. Starkowski, 2009 WL 5698062 (Conn. Super. 2009) 38 In re Griffiths, 413U.S.717(1973) 46 K & A Radiologic Technology Services, Inc. v. Comm’r of the Dept. of Health, 189 F.3d 273 (2d Cir. 1999) 8 Khrapunskiy v. Doar, 12N.Y.3d 478, 909 N.E.2d 70 (2009) 21,26,27,28,41 Lewis v. Thompson, 252 F.3d 567 (2d Cir. 2001) 31 Mathews v. Diaz, 426 U.S. 67(1976) 30,31 Nyguist v. Mauclet, 432 U.S. 1(1977) 21,46 Paige v. California, 102 F.3d 1035 (9th Cir. 1996) 4 Plyler v. Doe, 457 U.S. 202 (1982) 20,34,43 11 Case: 11-15132 06/20/2011 Page: 5 of 127 ID: 7791851 DktEntry: 9
  6. 6. Soskin v. Reinertson, 353 F.3d 1242 (10th Cir. 2004) 21, 22, 23, 31, 33, 35, 45-46 Southwest Voter Registration Education Project v. Shelley, 344 F.3d 914 (9th Cir. 2003) 6 Spry v. Thompson, 487 F.3d 1272 (9th Cir. 2007) 8 Sudomir v. McMahon, 767 F.2d 1456 (9th Cir. 1985) 32, 34, 41,42,43, 44 Takahashi v. Fish and Game Comrn’n., 334 U.S. 410 (1948) 21,46-47 Tigner v. Texas, 310 U.S. 141 (1940) 20 CONSTITUTIONAL PROVISIONS U.S. Const. amend. XIV, § 1 20 FEDERAL STATUTES 28 U.S.C. § 1292(a)(1) 4 28 U.S.C. § 1331 4 28U.S.C.1343 4 28 U.S.C. § 2107(a) 4 8 U.S.C. § 1101(a)(15) 11,55 8 U.S.C. § 1601 9 8 U.S.C. § 1601(2) 54 8 U.S.C. § 160 1(4) 45, 46 8 U.S.C. § 1601(7) 37 111 Case: 11-15132 06/20/2011 Page: 6 of 127 ID: 7791851 DktEntry: 9
  7. 7. 8 U.S.C. § 1611(a). 1,10,11,49 8U.S.C. 1611(b) .10 8 U.S.C. § 1612(b) . 23 8U.S.C.16l3 10 8 U.S.C. § 1622 36 8 U.S.C. § 1622(a) 10,11 8 U.S.C. § 1622(b) 10 8U.S.C.1624 36 8 U.S.C. § 1641(b) 10,11 8 U.S.C. § 1641(c) 10 P.L. 104-193, August 22, 1996, title IV 9 FEDERAL RULES Fed. R. App. P. 4(a)(1) 4 Fed. R. App. P. 43(c)(2) 1 COMPACTS OF Fiun AssocIATIoN P.L. 99-239, January 14, 1986, 99 Stat. 1770 1 P.L. 99-658, November 14, 1986, 100 Stat. 3672 (Palau Compact) 1-2 Palau Compact, sec. 14 1(a) 11, 55 Palau Compact, sec. 2 11(d) 52 P.L. 108-188, December 17, 2003, 117 Stat. 2720 (2003 Compact) 2 2003 Compact, sec. 103(f) 52-53 2003 Compact, sec. 103(h) 53 iv Case: 11-15132 06/20/2011 Page: 7 of 127 ID: 7791851 DktEntry: 9
  8. 8. 2003 Compact, sec. 104(e). 50 2003 Compact, sec. 104(e)(1) 50 2003 Compact, sec. L04(e)(3) 51 2003 Compact, sec. 104(e)(6) 53 2003 Compact, sec. 104(e)(7) 53 2003 Compact, sec. 141(a) 11, 55 2003 Compact, sec. 141(c) 55 2003 Compact, sec. 141(d) 11 2003 Compact, sec. 141(f) 55 2003 Compact, sec. 141(f)(1) 50 2003 Compact, sec. 141(h) 55 2003 Compact, sec. 177 53 2003 Compact, sec. 211(a) 52 2003 Compact, sec. 21 1(a)(2) 52 V Case: 11-15132 06/20/2011 Page: 8 of 127 ID: 7791851 DktEntry: 9
  9. 9. INTRODUCTION This case addresses the question whether the State of Hawai ‘i is constitutionally required to replace — entirely at its own expense -- federal Medicaid benefits that were taken away from certain aliens byfederal law. The answer is “no.’ Historically, federal Medicaid was available to aliens legally residing in the United States. However, in 1996 Congress barred “nonqualified aliens” from eligibility for federal public benefits such as Medicaid. Under the Welfare Reform Act of 1996, only United States citizens and certain “qualified aliens” are eligible for federal public benefits. 8 U.S.C. § 1611(a). Plaintiffs1 in this case are citizens of island nations with a Compact of Free Association (COFA) with the United States2 who reside in Hawai’i (COFA 1Parties. The named Plaintiffs-Appellees are Tony Korab, Tojio Clanton and Keben Enoch. CRIER 1 (compi.). They are together referred to as Plaintiffs. The defendants are Patricia McManaman, in her official capacity as Director of the State of Hawai ‘i Department of Human Services, and Kenneth Fink, in his official capacity as State of Hawai’i Department of Human Services, Med-QUEST Division Administrator. Defendant McManaman is substituted for former DHS Director Lillian B. Koller, pursuant to Fed. R. App. P. 43(c)(2). Defendants McManaman and Fink are together referred to as the “State” or the “Department.” 2 The United States entered into Compacts of Free Association with the Republic of the Marshall Islands (RMI), the Federated States of Micronesia (FSM), and the Republic of Palau. See Compact of Free Association Act of 1985, P.L. 99-239, January 14, 1986, 99 Stat. 1770; Compact of Free Association between the Government of the United States of America and the Government of Palau, P.L. 1 Case: 11-15132 06/20/2011 Page: 9 of 127 ID: 7791851 DktEntry: 9
  10. 10. Residents). COFA Residents are nonimmigrants, which are nonqualified aliens under the Welfare Reform Act, and were therefore made ineligible for federal Medicaid benefits. CR/ER3 24 at 3 ¶7 (stip. facts). In response to the Welfare Reform Act, the State could have simply stopped providing COFA Residents with federal Medicaid benefits — and provided COFA Residents with nothing — without itself discriminating against aliens. Instead, rather than leaving the COFA Residents without medical benefits, the State of Hawai ‘i, through its Department of Human Services (Department), chose to voluntarily provide COFA Residents with state-funded medical assistance benefits that were equivalent to the benefits that were available to citizens and certain qualified aliens under the federal Medicaid program.4 This separate state public 99-658, November 14, 1986, 100 Stat. 3672 (the Palau Compact). These countries are collectively referred to as the “Freely Associated States.” The Compact with the RMI and the FSM was renegotiated and amended in 2003. See Compact of Free Association Amendments of 2003, P.L. 108-188, December 17, 2003, 117 Stat. 2720 (the 2003 Compact). The Palau Compact and the 2003 Compact are collectively referred to herein as “the Compacts.” Citations. CR refers to the Clerk’s Record and the docket number. ER refers to the excerpts of record. Citations to large documents with multiple parts are given with the part number, as listed on the district court’s docket. For example, CR 13-3 refers to part 3 of document 13. Page numbers reflect the docket page numbers, except for the Complaint (CRIER 1), which reflects the page numbers as noted on the original document. For purposes of this opening brief, the term “citizens” generally refers to U.S. citizens and certain qualified aliens who, under the Welfare Reform Act, are eligible for federal public benefits and federal means-tested public benefits. 2 Case: 11-15132 06/20/2011 Page: 10 of 127 ID: 7791851 DktEntry: 9
  11. 11. benefit was only for COFI4 Residents who were ineligible for federal Medicaid, to lessen the impact of the federal government’s discrimination. In 2010, facing unprecedented budget deficits, the Department reduced the level of state-funded benefits provided to COFA Residents by implementing a new state-funded medical assistance program, called Basic Health Hawai’i, that provided less benefits than federal Medicaid. Basic Health Hawai’i similarly covered only aliens who, as a result of the Welfare Reform Act, were ineligible for federal Medicaid. The State did not provide citizens who were ineligible for Medicaid with any state-funded benefit. The district court issued a preliminary injunction, finding that the State discriminated against COFA Residents by providing them with a state-funded alien-only medical assistance benefit that was less than the federal Medicaid benefit available to citizens, in violation of the COFA Residents’ right to equal protection. There is no equal protection violation by the State where thefederal government grants only citizens eligibility for federal Medicaid, and the State, in an attempt to partially make up for the federal discrimination, voluntarily provides COFA Residents eligibility for a separate, state-funded medical assistance program for aliens only. The State does not discriminate against aliens when it gives COFA Residents Basic Health Hawai ‘i benefits not provided at all to citizens. And 3 Case: 11-15132 06/20/2011 Page: 11 of 127 ID: 7791851 DktEntry: 9
  12. 12. although the Basic Health Hawai ‘i benefits provided by Hawai ‘i do not match the federal Medicaid benefits provided citizens, this different treatment for aliens stems wholly from an act of Congress excluding COFA Residents from federal Medicaid. Equalprotection does not require the State to replace, at its own expense, that which thefederal government took away. It does not require the Department to maintain an optional, state-funded benefit for aliens only at levels equivalent to those offered to citizens through federal Medicaid. Accordingly, the district court’s order for preliminary injunction should be reversed. JURISDICTIONAL STATEMENT District Court. The district court had jurisdiction over this case pursuant to 28 U.S.C. § 1331 and 1343. On December 13, 2010, the district court granted Plaintiff’s motion for preliminary injunction. CR/ER 42 (inj. order). This Court. This court has jurisdiction to consider an appeal from an interlocutory order granting a preliminary injunction without a showing of irreparable harm. 28 U.S.C. § 1292(a)(i); see Paige v. California, 102 F.3d 1035, 1038 (9th Cir. 1996) (involving appeal from grant of preliminary injunction). Timeliness ofAppeal. An appeal from a district court must be filed within 30 days of the judgment or order appealed from. 28 U.S.C. § 2107(a); Fed. R. App. P. 4(a)(1). The district court entered its preliminary injunction order on 4 Case: 11-15132 06/20/2011 Page: 12 of 127 ID: 7791851 DktEntry: 9
  13. 13. December 13, 2010. CRIER 42. Defendants timely appealed that order on January 10,2011. CR/ER47. STATEMENT OF ISSUES PRESENTED FOR REVIEW The issue on appeal in this case is whether the district court erred in ruling that Hawai ‘i violates the Equal Protection clause when it creates a programjustfor aliens to lessen the discriminatory impact of thefederal government’s Medicaid alienage discrimination, simply because its state-funded program doesn’t completely make up for the federal government’s Medicaid program discrimination. The district court ruled on this constitutional question in two orders: the order denying the Department’s motion to dismiss, which concluded that strict scrutiny standard of review applied, and the order granting Plaintiffs’ motion for preliminary injunction, which contained no analysis of the standard of review, but incorporated the court’s earlier finding of strict scrutiny. ER/CR 30 (dismiss order) and ER/CR 42 (inj. order). Pertinent statutes that are not quoted verbatim in this brief and pertinent portions of the Compacts of Free Association are attached as an Addendum to this brief. 5 Case: 11-15132 06/20/2011 Page: 13 of 127 ID: 7791851 DktEntry: 9
  14. 14. STANDARD OF REVIEW “We review the district court’s decision to grant or deny a preliminary injunction for abuse of discretion.” Southwest Voter Registration Education Project v. Shelley, 344 F.3d 914, 918 (9th Cir. 2003) (citation omitted). “The district courts interpretation of the underlying legal principles, however, is subject to de novo review and a district court abuses its discretion when it makes an error of law.” Id. (citation omitted). STATEMENT OF CASE This case raises the question whether the State may voluntarily provide COFA Residents -- who are barred byfederal law from receiving federal public benefits such as Medicaid -- with a state-funded alien-only benefit (not available to citizens) that is less than the benefits available to citizens underfederal Medicaid, without violating their right to equal protection under the Fourteenth Amendment of the United States Constitution. It isfederal law that bars the aliens from receiving the higher federal Medicaid benefits. The State could have done nothing, but instead voluntarily chose to provide alien COFA Residents with some state funded benefits to mitigate some of the impact of thefederal Medicaid discrimination. 6 Case: 11-15132 06/20/2011 Page: 14 of 127 ID: 7791851 DktEntry: 9
  15. 15. Plaintiffs, who are COFA Residents, filed a class action lawsuit against the Department in August 2010. CRIER 1 (complaint). Plaintiffs set forth three causes of action, for violation of (1) the equal protection clause of the fourteenth amendment of the U.S. Constitution, (2) the Americans with Disabilities Act, and (3) article I, sections 2 and 5 of the Constitution of the State of Hawai’i. Id. at 18- 21. Plaintiffs dropped their State constitutional claim. CR/ER 10-1 at 1, n. 1 (prelirn. inj. mtn.) (“Plaintiffs intend to dismiss their claim premised on the Constitution of the State of Hawai’i.”) Plaintiffs sought declaratory and injunctive relief. CR/ER 1 at 21-22 (complaint). In September 2010, the Department filed a Motion to Dismiss and Plaintiffs filed a Motioi for Preliminary Injunction.6 CR 8, 10. The parties stipulated that the action be certified and maintained as a class action pursuant to FRCP 23(a), as to the COFA Residents only, with the named Plaintiffs as class representatives. CR/ER 37 (stip. re class). The complaint also asserted claims on behalf of permanent resident aliens who have resided in the United States for less than five years (New Residents), but there was no named Plaintiff representing the class of New Residents. Plaintiffs withdrew their request for interim injunctive relief relating to the New Residents, without prejudice. CR/ER 32 (notice of withdrawal of inj. relief). 6 Per Circuit Rule 30-1.5, the memoranda of law filed in support of these motions have not been included in the excerpts of record, except those specific portions of the memoranda that may otherwise be required under Circuit Rule 30-1. 7 Case: 11-15132 06/20/2011 Page: 15 of 127 ID: 7791851 DktEntry: 9
  16. 16. The district court denied the Department’s Motion to Dismiss by Order on November 10, 2010, and granted Plaintiffs’ Motion for Preliminary Injunction on December 13, 2010, both as to COFA Residents only. CRIER 30 (dismiss order), 42 (inj. order). STATEMENT OF FACTS A. COFA Residents Used to be Eligiblefor Federal Medicaid The Medicaid program is “a cooperative federal-state program that directs federal funding to states to assist them in providing medical assistance to low- income individuals.” Ball v. Rodgers, 492 F.3d 1094, 1098 (9th Cir. 2007) (citation and quotation marks omitted). “A state is not required to participate in Medicaid, but once it chooses to do so, it must create a plan that conforms to the requirements of the Medicaid statute and the federal Medicaid regulations.” Dep’t of Health Servs. v. Sec’y of Health & Human Servs., 823 F.2d 323, 325 (9th Cir. 1987). In return for its conformity with federal requirements, participating state governments get substantial reimbursement from the federal government to subsidize the cost of the program. Spry v. Thompson, 487 F.3d 1272, 1273 (9th Cir. 2007); Children’s Hosp. & Health Ctr. v. Belshe, 188 F.3d 1090, 1093 (9th Cir. 1999); K & A Radiologic Technology Services, Inc. v. Comm’r of the Dept. of Health, 189 F.3d 273, 277 (2d Cir. 1999). The Department is authorized by State statute to “[a]dminister the medical assistance programs for eligible public welfare 8 Case: 11-15132 06/20/2011 Page: 16 of 127 ID: 7791851 DktEntry: 9
  17. 17. and other medically needy individuals.. . and assuring compliance with federal requirements to maximize federal financial participation.” Haw. Rev. Stat. § 346- 14(7). Before August 1996, COFA Residents were eligible for federal Medicaid benefits because the eligibility rules for the federal Medicaid program did not discriminate in any way against lawfully-admitted alien residents, including COFA Residents. CR/ER 37 at 3 (stip. re class). B. The Welfare Reform Act Limited COFA Residents’ Access to Federal and State Public Benefits In August 1996, Congress enacted the Personal Responsibility and Work Opportunity Reconciliation Act of 1996, P.L. 104-193, August 22, 1996, title IV, codified at 8 U.S.C. § 1601 et seq. (Welfare Reform Act), which imposed limitations on the availability of Medicaid benefits to aliens. “Congress included several statements regarding national immigration policy indicating that Congress favored self-sufficiency by immigrants, immigrants were applying for and receiving public assistance at greater rates and, through the Welfare Reform Act, Congress intended to discourage immigrants from relying on publicly funded assistance.” Hong Pham v. Starkowski, 16 A.3d 635 (Conn. 2011) (hereinafter Hong Pham 2011), citing 8 U.S.C. § 1601. The Welfare Reform Act created two classes of aliens. The first, “qualified aliens,” generally includes aliens lawfully admitted to the United States for 9 Case: 11-15132 06/20/2011 Page: 17 of 127 ID: 7791851 DktEntry: 9
  18. 18. permanent residence and those admitted pursuant to certain statutes.7 8 U.S.C. § 1641(b). Subject to certain exceptions, qualified aliens are not eligible for any Federal means-tested public benefit, such as Medicaid, for a period of five years after the alien’s date of entry into the United States (the five year rule). 8 U.S.C. § 1613. Any alien who does not meet the definition of a qualified alien is a nonqualified alien. 8 U.S.C. § 1641(b). “Nonimmigrants” do not meet the definition of a qualified alien and are, therefore, nonqualified aliens. With certain exceptions, all nonqualified aliens are ineligible for federal public benefits, including federal Medicaid. 8 U.S.C. § 1611(a) and (b). If a State has a state benefit program, then it must include certain groups of aliens, and may include others. 8 U.S.C. § 1622(a) (“a State is authorized to determine the eligibility for any State public benefits” of qualified aliens, nonimmigrants and parolees for state public benefits); 8 U.S.C. § 1622(b) (listing categories of aliens that “shall be eligible for any State public benefits.”) COFA Residents who enter the United States under the Compacts are admitted to work and establish residence as a “nonimmigrant” without regard to Qualified aliens include legal permanent residents, refugees, asylees, certain parolees, aliens whose deportation is being withheld, aliens granted conditional entry, Cuban or Haitian entrants, and certain battered aliens. 8 U.S.C. § 164 1(b) and (c). 10 Case: 11-15132 06/20/2011 Page: 18 of 127 ID: 7791851 DktEntry: 9
  19. 19. provisions of the Immigration and Nationality Act (INA) relating to labor certification and nonimmigrant visas. 2003 Compact, sec. 141(a) and (d); see, also, Palau Compact sec. 14 1(a). A nonimmigrant alien is a person admitted to the United States for a temporary period of time and for a specific purpose, as set forth in the INA. 8 U.S.C. § 1 lOl(a)(15) (defining the term “nonimmigrants” to include representatives of foreign governments, foreign students, tourists, and others). The Department of Homeland Security has confirmed that citizens of the Freely Associated States “may reside, work and study in the United States, but they are not ‘lawful permanent residents.” CRIER 13-5 and 13-6 at 3 (fed. Fact Sheets re COFA Res. immig. status). COFA Residents, as nonimmigrants, are nonqualified aliens, and thus are not eligible for federal Medicaid benefits under the Welfare Reform Act. 8 U.S.C. § 1611(a); see 8 U.S.C. § 1641(b). COFA Residents are not among the categories of aliens that must be provided with state public benefits, therefore the State is not required to provide state-funded benefits, although it may provide them if it so chooses. 8 U.S.C. § 1622(a). 11 Case: 11-15132 06/20/2011 Page: 19 of 127 ID: 7791851 DktEntry: 9
  20. 20. C. Since the Welfare Reform Act, the Department Provided Medicaid-Like State-Funded Medical Assistance Benefits to COFA Residents, but Not to Citizens In order to fully understand Plaintiffs’ claims in this case, it is necessary to describe the structure of Hawai’i’s federal Medicaid and state-funded medical assistance programs. Hawai ‘i’s federal Medicaid program is operated pursuant to a waiver approved by the federal government under section 1115 of the Social Security Act (the waiver). CR/ER 29 at 3 ¶10 (stip. re coy, for COFA Res.). Originally approved in 1993, the waiver authorized the Department to provide Medicaid benefits through a managed care program, known as QUEST, to Medicaid enrollees who were covered under Medicaid’s various coverage categories for children and parents, and through fee-for-service8 for other Medicaid-eligible individuals who were aged, blind or disabled (ABD). CR/ER 13-7 at 1 ¶11 (2008 waiver). The Department also received authority to cover certain groups (with federal funding) who were not otherwise eligible for Medicaid, known as “demonstration-eligibles” because they are made eligible for coverage pursuant to the section 1115 demonstration project. Id. at 5-6. The principal non-Medicaid group eligible for QUEST coverage is non-disabled, childless adults with income 8 Fee-for-service (FFS) is a payment mechanism in which a health care provider is paid for each individual service rendered to a patient. 12 Case: 11-15132 06/20/2011 Page: 20 of 127 ID: 7791851 DktEntry: 9
  21. 21. below the federal poverty level. j Under the terms of the waiver, non-disabled childless adults were subject to an enrollment cap. j at 8-9 ¶24. In 1993, federal law did not bar legally resident aliens from eligibility for federal Medicaid. Therefore, federal Medicaid benefits, including QUEST, were available to COFA Residents who were otherwise eligible for Medicaid, and non- disabled childless adult COFA Residents were subject to the QUEST enrollment cap. Over time, the waiver was amended to allow the Department to implement QUEST-Net, a program to provide full Medicaid benefits to children and less comprehensive benefits to adults who previously had QUEST coverage but lost eligibility because they had too much income or assets to qualify for Medicaid. CR/ER 37 at 4 ¶IV. QUEST-ACE (QUEST Adult Coverage Expansion) was added to cover nondisabled childless adults who cannot be enrolled in QUEST due to the enrollment cap. IcL at 4-5 ¶IV. And most recently, QUEST Expanded Access (QExA) provided ABD individuals with Medicaid benefits through managed care, similar to QUEST, with the addition of institutional and home-and community-based long term care benefits. CR/ER 13-8 at 1, 6-7 (2013 waiver); CR/ER 29 at 3 ¶8 (stip. re coy, for COFA Res.). Because the Welfare Reform Act denied COFA Residents eligibility for federal Medicaid, the terms of Hawai’i’s 1115 waiver state that the demonstration 13 Case: 11-15132 06/20/2011 Page: 21 of 127 ID: 7791851 DktEntry: 9
  22. 22. eligibles for QUEST, QUEST-Net, QUEST-ACE and QExA “specifically excludes unqualified aliens, including aliens from the Compact of Free Association countries.” CR/ER 13-7 at 17 ¶50(c) (2008 waiver), 13-9 at 8 ¶60(c) (2013 waiver). Therefore, although the waiver does provide federal funding for some groups not otherwise eligible for Medicaid, the terms of the waiver make clear that there is no federal funding available for nonqualified aliens, including COFA Residents. In short, federal law -- specifically, the Welfare Reform Act -- barred COFA Residents from any federal Medicaid eligibility. But rather than simply doing nothing, which was the State’s prerogative, the State voluntarily chose to continue providing COFA Residents with the same level of medical assistance benefits that they would have received from the federal Medicaid program if they were U.S. citizens. CR/ER 29 at 2 ¶1 (stip. re coy, for COFA Res.). At that time the Department did not adopt administrative rules to create a state-funded medical assistance program. at 2 ¶2. COFA Residents who met the income and asset eligibility requirements for Hawai ‘i’s federal Medicaid program received the same benefits as those provided to citizens under the Medicaid fee-for-service, QUEST, QUEST-Net, QUEST-ACE and/or QExA programs, thus creating a “de facto” state-funded medical assistance program. at 2 ¶93, 5. Although the services received by COFA Residents were identical to those received by citizens under federal Medicaid programs, referred to as the “Old 14 Case: 11-15132 06/20/2011 Page: 22 of 127 ID: 7791851 DktEntry: 9
  23. 23. Programs” in the lawsuit, CRIER 37 at 3-4 (stip. re class), they were not receiving federal Medicaid, but receiving state-funded medical assistance. State-funded medical assistance was not, and is not, available to citizens or qualified aliens who are eligibleforfederal public benefits. D. The Department Reduced the State-Funded Alien-Only Medical Assistance Benefit that Was Available to COFA Residents by Implementing Basic Health Hawai’i In the face of a serious fiscal crisis, the Department implemented Basic Health Hawai’i (BHH) on July 1, 2010, a limited state-funded medical assistance program for COFA Residents and qualified aliens who have resided in the United States for less than five years (New Residents). BHH generally provides less comprehensive annual benefits than those offered to citizens through the federal Medicaid program (implemented via Hawai’i’s QUEST and QExA Medicaid managed care programs), as follows: 12 outpatient physician visits, 6 mental health visits, 10 inpatient hospital days, 10 inpatient physician visits, and 4 prescription drugs per month.9 CRIER 10-14 at 1 (BHH flyer), CR/ER 24 at 4-5 9[9f14-18 (slip, facts). Eligible COFA Residents receive emergency medical care services, emergency dental services, and renal dialysis. CR/ER 10-14 at 1 (BHH flyer). The BHH benefit package is similar to the QUEST-ACE and QUEST-Net programs for Medicaid-eligible individuals, but the QUEST-ACE and QUEST-Net programs do not include prescription drugs. CR/ER 13-8 at 24 (2013 waiver). 15 Case: 11-15132 06/20/2011 Page: 23 of 127 ID: 7791851 DktEntry: 9
  24. 24. The named plaintiffs, Tony Korab, Tojio Clanton, and Keben Enoch, are citizens of the Republic of the Marshall Islands, and are therefore COFA Residents. CR/ER 1 at 4915, & 5 ¶9 (complaint); CR/ER 24 at 3 ¶4 (stip. facts). Before July 2010, Plaintiffs Korab and Clanton received state-funded medical assistance that was equivalent tofederal QExA Medicaid managed care benefits for ABD citizens. CRIER 1 at 4 ¶6, 6 ¶10 (complaint)’0. Effective July 2010, Korab and Clanton were disenrolled from QExA and enrolled into BHH by the Department. Id. at 5-6 ¶91 7, 11. Plaintiff Enoch had no health coverage since September 2009. CRIER 38 at 291911-3 (stip. re Enoch). In June 2010, Enoch applied for, and was denied, federal Medicaid benefits by the Department because of his alien status, and was not automatically enrolled into BHH because he did not meet the requirements for automatic enrollment. Id. at 2-3 ¶915 & 8. E. Applying Strict Scrutiny, the District Court Preliminarily Enjoined the Departmentfrom Implementing Basic Health Hawai ‘i The district court assumed that the provision of a state-funded medical assistance benefit for aliens only that was more limited than thefederal Medicaid Old Programs available to citizens was state discrimination based on alienage. 10 The State disagrees with Plaintiffs’ characterization of QUEST Expanded Access (QExA) as a “state program.” $ CRIER 1 at 4916 (complaint) Plaintiffs Korab and Clanton were receiving state-funded medical assistance equivalent in benefits to the federal QExA benefits that are available to citizens. 16 Case: 11-15132 06/20/2011 Page: 24 of 127 ID: 7791851 DktEntry: 9
  25. 25. Therefore, the court determined that strict scrutiny applied, and held that the Plaintiff COFA Residents were likely to prevail on their claim that the Department violated their right to equal protection by providing them with limited state-funded benefits for aliens only, even though their exclusion from the more generous Old Programs was required by thefederal Welfare Reform Act. CR/ER 42 at 11; 30 at 28 (inj. order & dismiss order). The district court went on to hold that the Department must “mirror the federal eligibility requirements for Medicaid in creating BHH.” CR/ER 30 at 30 (dismiss order). In other words, the district court ruled that the Department is constitutionally required to set up a state-only-funded program that completely “fills the void” created by thefederal Welfare Reform Act’s discrimination against aliens. Pursuant to the Injunction Order, the Department has reinstated the benefits that the COFA Residents were receiving as of June 1, 2010, and is processing applications from COFA Residents for medical assistance without regard to citizenship. Therefore, under the injunction, a COFA Resident who meets all eligibility requirements, other than citizenship, may apply for and receive state funded medical assistance that is equivalent to federal Medicaid benefits available to a similarly situated U.S. citizen. 17 Case: 11-15132 06/20/2011 Page: 25 of 127 ID: 7791851 DktEntry: 9
  26. 26. SUMMARY OF THE ARGUMENT The district court erred in holding that the State may not reduce the level of state-funded medical assistance benefits provided only to aliens who are barred from federal Medicaid by the Welfare Reform Act, while continuing to provide citizens with federal Medicaid, without violating Plaintiffs’ right to equal protection. In evaluating claims involving equal protection, the court must first establish whether there is a discriminatory classification. The State’s implementation of BHH does not discriminate against aliens, because it does not benefit citizens as opposed to aliens. Because there is no discrimination by the State (any discrimination is by Congress through the Welfare Reform Act), it was not necessary for the district court to determine which standard of review applies. But even if BHH is found to classify on the basis of alienage because it covers only aliens that are ineligible for federal Medicaid, while citizens continue to receive federal Medicaid benefits, then rational basis — and not strict scrutiny — should apply. The State’s actions are consistent with the “uniform rules” established by both the Welfare Reform Act and the Compacts, warranting rational basis review. The uniform immigration policy established by Congress is undermined by a finding that states must provide state-funded medical assistance 18 Case: 11-15132 06/20/2011 Page: 26 of 127 ID: 7791851 DktEntry: 9
  27. 27. benefits to replace the federal Medicaid benefits that were taken away under the Welfare Reform Act. Ultimately, equalprotection does not require the State to replace or maintain, at its own expense, federal Medicaid benefits that Congress took away. Therefore, the district court erred in finding discrimination by the State when it implemented BHH and applying strict scrutiny standard of review, which established Plaintiffs’ likelihood of success on the merits. Accordingly, the district court’s grant of Plaintiffs’ Motion for Preliminary Injunction is in error, and should be reversed. ARGUMENT A. Basic Health Hawai ‘i Does Not Violate the Equal Protection Clause Because It Does Not Discriminate Against Aliens The district court ruled that the Department discriminated against COFA Residents based on alienage because citizens and certain aliens are eligible to participate in federal Medicaid, while COFA Residents — who are ineligible for federal Medicaid — are only eligible for BHH, a limited state-funded medical assistance program for aliens only. CR/ER 30 at 27-28 (dismiss order). Benefits received by nonqualified aliens, such as COFA Residents, under BHH, a state-funded benefit for aliens only, cannot be compared to the benefits available to citizens under the federal Medicaid program. The cases relied upon by the district court involved discrimination against aliens relative to citizens in the 19 Case: 11-15132 06/20/2011 Page: 27 of 127 ID: 7791851 DktEntry: 9
  28. 28. same State program. Here, thefederal government created the discrimination, and the State gratuitously mitigated part of that discrimination by creating a state- funded aliens only program. But the district court ruled that the state was constitutionally required to be even more generous and tofully mitigate the federal government’s discrimination. The district court erred in finding that the State discriminated against aliens and, on that basis, applying strict scrutiny review. 1. Providing Aliens Who Are Barredfrom Federal Medicaid with State- Funded Alien-Only Benefits Is Not a Classification Based on Alienage. The Fourteenth Amendment provides that “[nb state. . . shall deny to any person within its jurisdiction the equal protection of the laws.” U.S. Const. amend. XIV, § 1. The word “person” in this context includes “lawfully admitted resident aliens as well as citizens of the United States.” Graham v. Richardson, 403 U.S. 365, 371 (1971)). While equal protection directs that “all persons similarly circumstanced shall be treated alike,” Plyler v. Doe, 457 U.S. 202, 216 (1982) (quoting F.S. Royster Guano Co. v. Virginia, 253 U.S. 412, 415 (1920)), “[t]he Constitution does not require things which are different in fact or opinion to be treated in law as though they were the same.” RI. quoting Tigner v. Texas, 310 U.S. 141, 147 (1940). “Under traditional equal protection principles, a State retains broad discretion to classify as long as its classification has a reasonable basis [i.e. rational basis review].” Graham, 403 U.S. at 371 (citations omitted). However, 20 Case: 11-15132 06/20/2011 Page: 28 of 127 ID: 7791851 DktEntry: 9
  29. 29. “classifications based on alienage, like those based on nationality or race, are inherently suspect and subject to close judicial scrutiny” [i.e. strict scrutiny). Içi at 372; Nyquist v. Mauclet, 432 U.S. 1, 7 (1977); Takahashi v. Fish and Game Comm’n., 334 U.S. 410, 420 (1948). “In resolving [an) equal protection challenge, [the court) must first determine what classification has been created” by the legal provision in question. Aleman v. Glickman, 217 F.3d 1191, 1195 (9th Cir. 2000). Only then does the court determine which level of scrutiny to apply. Here, the district court found that the Department is making a classification based on alienage because citizens are eligible for federal Medicaid, while COFA Residents are only eligible for a state- funded alien-only program that provides less benefits than federal Medicaid. CR/ER 30 at 1718 (dismiss order). This finding is without merit. The equal protection clause does not “require the state to treat individuals in a manner similar to how others are treated in a different program governed by a different government.” Hong Pham 2011, 16 A.3d at 650, citing to Doe v. Comm’r of Transitional Assistance, 773 N.E.2d 404, 411, 414 (Mass. 2002) ; Soskin v. Reinertson, 353 F.3d 1242, 1255 (10th Cir. 2004); Khrapunskiy v. Doar, 12 N.Y.3d 478, 488-89, 909 N.E.2d 70, 76-77 (2009).” ‘ But cf. Ehrlich v. Perez, 908 A.2d 1220, 1243-44 (Md. 2006) (invalidating state’s decision to eliminate funding for program benefitting only aliens when 21 Case: 11-15132 06/20/2011 Page: 29 of 127 ID: 7791851 DktEntry: 9
  30. 30. In Massachusetts created an alien-only cash assistance program for qualified aliens who were made ineligible for federal Temporary Assistance for Needy Families (TANF) assistance by the Welfare Reform Act’s five year rule, but imposed a durational state residency requirement. Doe, 773 N.E.2d at 407. Thus, some qualified aliens who were made ineligible for federal TANF could not qualify for the alien-only state benefit program. The court held that the statutory limitation was not discriminatory because the Massachusetts Legislature was not required to establish the supplemental program. It is also undisputed that the supplemental program provides no benefits for citizens, and that the only persons eligible for its benefits are qualified aliens. It is therefore apparent that the supplemental program itself does not discriminate against aliens and in favor of citizens. Id. at 411. The same reasoning applies here, where the entirely optional BHH program provides no benefits for citizens, and the only persons eligible for its benefits are aliens. Therefore, like the alien-only cash assistance program in Doe, BHH does not discriminate against aliens and in favor of citizens. Similarly, in Soskin, the Tenth Circuit addressed Colorado’s discretionary election to terminating Medicaid benefits of aliens who would be eligible to participate in Colorado’s federal Medicaid program. S Soskin, 353 F.3d at 1243. Federal Medicaid law requires the states to cover qualified aliens who are neitherparty contested issue of whether decision discriminated on basis of alienage.) 22 Case: 11-15132 06/20/2011 Page: 30 of 127 ID: 7791851 DktEntry: 9
  31. 31. otherwise eligible for assistance in their state Medicaid program (including meeting the five year rule, if applicable), but affords the states the option to define additional groups of lawfully-admitted aliens as being eligible to participate in the federal program. Id. at 1246, citing 8 U.S.C. § 16 12(b). colorado initially elected to cover a more expansive group of eligible aliens, but then, faced with a budget crunch, cut back to the mandatory group of qualified aliens. Although the federal Medicaid program serves both eligible citizens and eligible aliens, the option to serve additional aliens only applied to, and only benefited, aliens. Under these circumstances, Soskin followed Doe and ruled that, “[a] state’s exercise of the federal option to include fewer aliens in its alien-only program, then, should not be treated as discrimination against aliens as compared to citizens. That aspect of the discrimination is Congress’s doing. “ Soskin, 353 F.3d at 1255-56. The reasoning of Doe and Soskin regarding the absence of State discriminatory treatment between aliens and citizens in a limitation to a program that serves only aliens fully applies to the facts of this case, and requires the district court’s order to be reversed. Any discrimination suffered by plaintiffs here is Congress ‘s doing, through its federal Medicaid alien restrictions. Hawai’i could have done nothing for the excluded aliens, as it was free to do. Instead, Hawai’i gratuitously mitigated at least some of thefederal discrimination by providing a limited program for aliens only. 23 Case: 11-15132 06/20/2011 Page: 31 of 127 ID: 7791851 DktEntry: 9
  32. 32. Rather than discriminating against aliens, Hawai ‘i’s state-only-funded program was helping aliens. Directly on point is the recent Connecticut Supreme Court decision in Hong Pham 2011, which upheld the elimination of Connecticut’s State Medical Assistance for Noncitizens Program (the program) that provided medical coverage exclusively to certain qualified aliens who were barred from federal Medicaid. Hong Pham 2011, 16A.3d at 635. In Hong Pham 2011, [the State] defendant argues that [the elimination of the program] does not discriminate against aliens in favor of. . . citizens because only aliens, and not citizens, ever were eligible for [the program]. The defendant further contends that the trial court improperly looked beyond the state-funded program at issue and improperly compared the treatment of the class members. . . with the federal government’s treatment of individuals under the separatefederal Medicaid program. The defendant maintains that, because the state does not have to remediate the effects of the federal Welfare Reform Act, the equal protection clause does not require the states to ‘fill the gap’ in coverage for the class members that the federal government had created under the Welfare Reform Act. The defendant further argues that, because the equal protection clause does not require the state to provide its residents with coverage under [the alien medical program], the substantial elimination of that program cannot violate the equal protection clause. . . . We agree with the defendant. We conclude that, in substantially eliminating [the program], the state did not draw a classification on the basis ofalienage because that program does not benefit citizens as opposed to aliens. To draw a classtfication on the basis ofalienage, the state statute in question typically must afford some benefit to citizens but deny that benefit to at least some aliens because oftheir status as noncitizens. at 646 (bold emphasis added). 24 Case: 11-15132 06/20/2011 Page: 32 of 127 ID: 7791851 DktEntry: 9
  33. 33. Because only aliens, and not citizens, ever have benefitedfrom [the program], and because no citizens presently receive assistance under the program, the state is not.. . treating aliens disparately as compared to citizens. j at 648-649 (bold emphasis added). The Connecticut Supreme Court in Hong Pham 2011 and the Massachusetts Supreme court in Doe agree that the State does not classify based on alienage when aliens are eligible for an alien-only state benefit that is not equivalent to the federal benefit available to citizens. Likewise, BHH does not classify based on alienage since it is a state benefit for aliens only. The district court disregarded Soskin and Doe, and instead relied upon Aliessa v. Novello, 96 N.Y.2d 418, 754 N.E.2d 1085 (Ct. App. 2001), which “applied strict scrutiny to a New York statute that terminated state-funded Medicaid benefits for certain non-qualified aliens, but maintained benefits for other aliens.”12 CR/ER 30 at 20 (dismiss order), citing Aliessa, 754 N.E.2d at 1092 (sic). The district court’s reliance upon Aliessa is misplaced. In addition to a federally subsidized Medicaid program, the state of New York also had a State Medicaid program, funded entirely by the state, which provided benefits to certain categories of individuals who are not otherwise eligible for federal Medicaid, including legal aliens and citizens. Aliessa, 96 N.Y.2d at 12 The district court’s characterization of the case is incomplete, as Aliessa made a distinction between aliens and citizens, not just between classes of aliens. Aliessa, 96 N.Y.2d at 423-424, 754 N.E.2d at 1089-90 (“New York had long provided State Medicaid to needy recipients without distinguishing between legal aliens and citizens. It ceased to do so ... after Congress enacted the [Welfare Reform Act].”). 25 Case: 11-15132 06/20/2011 Page: 33 of 127 ID: 7791851 DktEntry: 9
  34. 34. 424, 754 N.E.2d at 1089-90. Pursuant to the Welfare Reform Act, New York excluded alien plaintiffs (which included qualified aliens and non-qualified aliens) from the State Medicaid program, but did not exclude citizens. Id. at 427, 754 N.E.2d at 1091-92. Therefore, the court in Aliessa correctly ruled that plaintiffs were discriminated against on the basis of alienage in violation of the equal protection clause because the state was depriving aliens of a state benefit that the state provided to citizens. Id. at 424, 436, 754 N.E.2d. at 1089-90, 1098. Unlike the state of New York in Aliessa, the Department in this case did not deprive COFA Residents of a state benefit that the state provided to citizens. The discrimination that occurred in Aliessa did not occur here. Citizens are eligible for the federal Medicaid program, but they were never eligible for the de facto state- funded medical assistance program following the Welfare Reform Act, nor the state-funded BHH program. In fact, the New York Court of Appeals itself distinguished Aliessa in a subsequent decision. $ Khrapunskiy, 12 N.Y.3d 478, 909 N.E.2d 70. Khrapunskiy involved a claim by legal aliens who were barred from participating in the federal Supplemental Security Income (SSI) program, which provided cash payments to certain categories of needy individuals along with additional payments funded by the state of New York (ASP) (collectively SSI/ASP). Id. at 482—83, 909 N.E.2d at 72-73. The plaintiffs were barred from receiving SSI benefits by the 26 Case: 11-15132 06/20/2011 Page: 34 of 127 ID: 7791851 DktEntry: 9
  35. 35. Welfare Reform Act’ s five year rule, and were barred from receiving the ASP payments by virtue of state law because of their ineligibility under the SSI program. Id. Plaintiffs were, however, eligible for a “safety net assistance” program which provided significantly less cash payments than that provided to citizens through SSIIASP. Id., at 483, 909 N.E.2d at 73. Like the COFA Residents, the plaintiffs in Khrapunskiy claimed that the state violated their equal protection rights because they were provided less state- funded benefits than similarly situated citizens who remained eligible for the federal-state SSJJASP benefits, and claimed that the state must provide them with benefits equivalent to that received by citizens under SSI/ASP. Id. at 483-484, 909 N.E.2d at 73. However, the court in Khrapunskiy held that the state was under no obligation to provide, under the state-funded SNA program, the same level of coverage that citizens received under the federal-state SSJJASP program, distinguishing its earlier decision in Aliessa, which involved a state-funded program “which provided benefits to citizens but excluded assistance to aliens.” jç1 at 488-489, 909 N.E.2d at 76-77. The court determined that “strict scrutiny is to be invoked only where a challenged law can be said to create classifications along suspect lines. . . . Because the State did not create a program of benefits which excluded plaintiffs, levels of scrutiny are inapplicable and there is no basis for an 27 Case: 11-15132 06/20/2011 Page: 35 of 127 ID: 7791851 DktEntry: 9
  36. 36. equal protection challenge.” j at 487, 909 N.E.2d at 76. Because this case is analogous to the facts of Khrapunskiy, not Aliessa, in that only aliens, and not citizens, are eligible for BHH, the district court erred in finding that the State discriminated against aliens. 2. The Past Receipt ofState-Funded Alien-Only Medical Assistance Benefits is Irrelevant to Determining Whether Reduction of Those Benefits Discriminates Against Aliens The lower court observes that the Department has “treated COFA Residents the same as citizens and other qualified aliens by allowing them access to the same programs, with the only difference being that COFA Residents’ participation was funded through State dollars only,” and that the Department is “only now [singling] out COFA Residents for lesser benefits than are provided to citizens and other classes of aliens.” CR/ER 30 at 17-18 (dismiss order). On that basis, the district court said “the issue is not whether a state must create a benefits program for certain groups of individuals where no program exists, but rather where a program involving state funding already exists, whether a state may then exclude certain groups from that program based on alienage.” Id. at 28. Thus, when the State subsequently reduced those voluntary benefits for aliens, the District Court saw that as state discrimination against aliens. But logic, and caselaw, says that cannot be right. Because the State could have constitutionally done nothing in the face of the federally-mandated discrimination 28 Case: 11-15132 06/20/2011 Page: 36 of 127 ID: 7791851 DktEntry: 9
  37. 37. against aliens in the federal Medicaid program, the State surely must be able to first voluntarily create a matching state-only-funded program for federally excluded aliens out of its generosity, and then reduce it, or even eliminate it, later on. To rule otherwise is to burn into law the injustice that “no good deed goes unpunished.” See Hong Pham 2011, 16 A.3d at 661. (“If the equal protection clause did not require the state to enact [a state-funded medical assistance program for aliens only in the first placel, then the state’s decision to eliminate that program or to reduce its scope does not violate the constitutional rights of those formerly eligible for assistance under the program because the provision of public assistance does not establish a right to continue receiving assistance.”) To so hold would create a perverse incentive to states to never provide optional state-funded assistance to aliens only, because once given it could never be reduced or taken away. See Doe, 773 N.E. 2d at 414. (“In concluding that a rational basis standard of review applies, we have also considered the context in which the supplemental program was enacted [including] . . . the potential harm to those families if the Legislature could only choose to create an all-or-nothing program as a remedy to their disqualification from federally funded programs.”) B. Even IfBasic Health Hawai’i Discriminates Against Aliens, Rational Basis Review Applies For the reasons given above, the State did not discriminate against aliens in favor of citizens at all. Instead, it generously made up for part of the federal 29 Case: 11-15132 06/20/2011 Page: 37 of 127 ID: 7791851 DktEntry: 9
  38. 38. government’s discrimination, by creating a BHH program only for aliens such as the COFA Residents. But if this Court were to somehow find the State’s failure to fully make up for Congress’s discrimination to be discrimination by the State, the district court wrongly held that “the Defendants’ determination that COFA Residents should no longer receive the same benefits as citizens and other aliens is subject to strict scrutiny.” CR/ER 30 at 24 (dismiss order). Instead, rational basis review should apply. 1. The Federal Government May Discriminate Against Aliens in Federal Benefit Programs Under Rational Basis Review The Supreme Court held that thefederal government may treat aliens differently from citizens in a federal benefit program so long as the classification satisfies rational basis review. Mathews v. Diaz, 426 U.S. 67, 82-83 (1976). In that case, the Court upheld Congress’s decision to “condition an alien’s eligibility for participation in [Medicare]’3 on continuous residence in the United States for a five-year period and admission for permanent residence.” j at 69. The Court emphasized Congress’s broad constitutional power over naturalization and immigration and noted that “the responsibility for regulating the relationship between the United States and our alien visitors has been committed to the political 13 Medicare is a federal medical insurance program established under the Social Security Act. Mathews, 426 U.S. at 69-70. 30 Case: 11-15132 06/20/2011 Page: 38 of 127 ID: 7791851 DktEntry: 9
  39. 39. branches of the Federal Government.” Id. at 80-81. Therefore, the Court applied rational basis review and held that “it is unquestionably reasonable for Congress to make an alien’s eligibility [for federal Medicare benefits) depend on both the character and the duration of his residence.” Id. at 82-83. Following Mathews, lower courts have uniformly applied rational basis review to uphold federal statutes that exclude certain aliens from various state- administered federal public benefit programs, such as Medicaid, as follows: • Soskin, 353 F.3d at 1255 (state administration of Medicaid, finding that “the decision to have separate programs for aliens and citizens is a Congressional choice, subject only to rational-basis review.”); • Doe, 773 N.E.2d at 414 (state administration of TANF (Temporary Assistance for Needy Families), recognizing that when “citizens are eligible to receive benefits from a different [federal) program on conditions less restrictive than those imposed on qualified aliens [in a separate state program, this) is a direct result of the enactment of uniform Federal policies, subject. . . to a separate rational basis review.”); • Lewis v. Thompson, 252 F.3d 567, 583-84 (2d Cir. 2001) (state administered pre-natal Medicaid benefits, upholding under rational basis review Welfare Reform Act restrictions on alien eligibility based on Welfare Reform Act’s stated purpose of removing incentive for illegal immigration provided by the availability of public benefits, and observing that “every 31 Case: 11-15132 06/20/2011 Page: 39 of 127 ID: 7791851 DktEntry: 9
  40. 40. court of appeals to consider the [Welfare Reform) Act’s deprivation of other government benefits to unqualified aliens has found the denial to survive rational basis scrutiny,” (citations omitted); • City of Chicago v. Shalala, 189 F.3d 598, 604-05 (7th Cir. 1999) (supplemental social security income and food stamps, finding that “for purposes of equal protection analysis, Congress’s interest in regulating the relationship between our alien visitors and the national government ought not to be defined in such narrow terms as to preclude application of the rational basis test in a case such as the present one involving eligibility for government benefits”); • Sudomir v. McMahon, 767 F.2d 1456, 1465-66 (9th Cir. 1985) (in a state- administered AFDC (Aid to Families with Dependent Children) program, applying a pre-Welfare Reform Act federal statutory limitation, the Sudomir court disagreed with alien appellants that “a state’s refusal to adopt more liberal eligibility standards is a matter of state, not federal, policy” requiring strict scrutiny, because “[tjo so hold would amount to compelling the states to adopt each and every more generous classification which, on its face, is not irrational.”). Thus, thefederal Welfare Reform Act provisions that exclude COFA Residents from receiving state-administered federal Medicaid benefits are clearly constitutional. 32 Case: 11-15132 06/20/2011 Page: 40 of 127 ID: 7791851 DktEntry: 9
  41. 41. 2. The State ‘s Actions in Following a Uniform Rule Established by Congress Respecting Aliens Will Be Subject to Rational Basis Review While Congress’s authority to make classifications based on alienage is clear, the court in Graham recognized in dicta that Congress may not authorize the state’s discriminatory treatment so as to reduce the applicable standard of review. See Graham, 403 U.S. at 382 (“... Congress does not have the power to authorize the individual States to violate the Equal Protection Clause.”)’4 This is because “[a] congressional enactment construed so as to permit state legislatures to adopt divergent laws on the subject of citizenship requirements forfederally supported welfare programs would appear to contravene this explicit constitutional requirement of uniformity” given Congress’s constitutional authority under Art. I, § 8, ci. 4 “[t]o establish an uniform Rule of Naturalization . . .“. Id. The proposition that Congress does not have the power to authorize the individual states to violate the Equal Protection Clause, however, “is almost tautological,” and the real question is “not whether Congress can authorize such a constitutional violation,” but whether there is a violation “when Congress has expressed its will,” given Congress’s plenary authority over immigration. Soskin, 353 F.3d at 1254, (quoting Graham, 403 U.S. at 382.) Furthermore, “[wjhen Congress exercises 14 This is clearly dicta because Congress did not authorize any state discriminatory treatment of aliens in Arizona’s federal benefit program or in Pennsylvania’s state benefit program. 33 Case: 11-15132 06/20/2011 Page: 41 of 127 ID: 7791851 DktEntry: 9
  42. 42. these powers to legislate with regard to aliens, the proper standard of judicial review is rational-basis review. That is the lesson of Mathews.” Id. at 1255. Thus, if the State simply follows the federal mandate -- here, by not affording federal Medicaid benefits to COFA Residents -- which itself is justified by a rational basis, the State has not violated the Equal Protection clause. See Plyler, 457 U.S. at 219 n. 19 (“if the Federal Government has by uniform rule prescribed what it believes to be appropriate standards for the treatment of an alien subclass, the States may of course, follows the federal direction.”). Given the federal government’s plenary authority to “establish a uniform Rule of Naturalization,” the district court recognized the “seemingly clear line between state action that is subject to strict scrutiny on the one hand, and federal action that is subject to rational basis review on the other,” and found that “where Congress has established a uniform rule regarding alienage for the states to follow, the state’s action infollowing Congress ‘s mandate is subject to rational basis review.” CR/ER 30 at 14-16 (dismiss order), citing Plyler, 457 U.S. at 219, n. 19, Sudomir, 767 F.2d at 1464-66. Thus, the State’s not providingfederal Medicaid benefits to COFA Residents is subject to rational basis review, which is easily satisfied here, as explained earlier. The inquiry then turns to the separate question of the State’s action in not fully making up for the federal government’s discrimination by providing a state 34 Case: 11-15132 06/20/2011 Page: 42 of 127 ID: 7791851 DktEntry: 9
  43. 43. funded alien-only BHH program, whose benefits are less than those provided citizens under thefederal Medicaid program. The district court went astray in finding that the Welfare Reform Act “does not establish a uniform rule that would subject BHH to rational basis review because the [Welfare Reform Act] does not require that Defendants provide lesser benefits to COFA Residents than it does to those qualified under the [federal] Old Programs.” CRIER 30 at 24 (dismiss order). Although it is true that the Welfare Reform Act does not prohibit Hawai’i from voluntarily making up for Congress’s discrimination against COFA Residents, that is beside the point. Hawai’i is not responsible for Congress’s discrimination against COFA Residents, and Congress did not instruct Hawai’i to do anything to make up for Congress’s discrimination. Hawai’i surely could have done nothing in response to Congress’s discrimination. Instead, it voluntarily made up for part of Congress’s discrimination by providing state-funded medical assistance, which was not available to citizens. A state does not discriminate against aliens when, in response to the federal discrimination, it then voluntarily provides state-funded benefits only to aliens who are excluded from federal Medicaid due to the Welfare Reform Act. Any discrimination was Congress’s doing. Soskin, 353 F.3d at 1255-56. Because BHH did not discriminate against aliens and in favor of citizens, the State’s action in not completely making up for 35 Case: 11-15132 06/20/2011 Page: 43 of 127 ID: 7791851 DktEntry: 9
  44. 44. Congress’s discrimination is constitutional, and not subject to any standard of review. See infra p. 24. The district court determined that BHH classifies individuals based on alienage — “citizens and qualified residents receive benefits under the [federal] Old Programs, while COFA Residents are eligible for BHH only,” CR/ER 30 at 17 (dismiss order), reasoning that the Welfare Reform Act’s grant of discretion to the states “to determine for itself the extent to which it will discriminate against legal aliens for State Medicaid eligibility” violated the uniformity requirement because it allowed different states to do different things. at 20-21, citing Aliessa, 96 N.Y.2d at 433, 435. Of course, the fundamental flaw in the district court’s analysis is its assumption that the State - as opposed to the federal government -- is discriminating at all against aliens, as explained above. But even if we assume, arguendo, that the State is discriminating against aliens by not fully making up for Congress’s discrimination, the rational basis test is the appropriate standard, not strict scrutiny. The uniform rule does not require a total lack of discretion on the part of the state. Certain groups of qualified aliens “shall be” eligible for state public benefits, 8 U.S.C. § 1622, but the State may include others. 8 U.S.C. § 1624. Further, “a State that chooses to follow the Federal classification in determining the eligibility of such aliens for public assistance shall be considered to have chosen the least 36 Case: 11-15132 06/20/2011 Page: 44 of 127 ID: 7791851 DktEntry: 9
  45. 45. restrictive means available for achieving the compelling governmental interest of assuring that aliens be self-reliant in accordance with national immigration policy.” 8 U.S.C. § 1601(7). Therefore, this grant of discretion to the states with respect to state benefits is not unconstitutional provided the states do not discriminate against aliens in the provision of those state benefits. As already noted, there is no discrimination by the State of Hawai’i because it is not providing a benefit to citizens that it withholds from aliens. Hawai’i providesfederal Medicaid to citizens, and state- funded medical assistance to only aliens. The District Court concludes that the broad grant of discretion in the Welfare Reform Act “creates neither a federal classification nor a uniform federal policy because the states can do as they please regarding these individuals — under the [Welfare Reform Act], states may provides these individuals with no benefits, some benefits, or the same benefits provided to citizens and qualified aliens.” CR/ER 30 at 23. The logical extension of the District Court’s characterization of the “uniform rule” is that the state’s choice to exercise its discretion under the Welfare Reform Act and not provide any state-funded medical assistance must be subject to strict scrutiny. Therefore, every state would, in essence, be required to fill the gap created by the Welfare Reform Act and provide — entirely at the State’s 37 Case: 11-15132 06/20/2011 Page: 45 of 127 ID: 7791851 DktEntry: 9
  46. 46. expense — benefits equivalent to the federal benefits that aliens lost under the Welfare Reform Act. The district court discounted the decisions in Soskin and Doe, which found the Colorado and Massachusetts laws in question subject to rational basis review, and credited Hong Pham v. Starkowski, 2009 WL 5698062 (Conn. Super. 2009) (“Hong Pham 2009,” a lower state court ruling), Ehrlich, and Aliessa, which held that the Welfare Reform Act prescribes no uniform rule and the state law in question terminating or denying benefits to legal aliens was subject to strict scrutiny. CR/ER 30 at 18-19 (dismiss order). The district court’s reliance on the latter three cases is without basis. Hong Pham 2009 was recently overturned by a unanimous Connecticut Supreme Court, which not only rejected strict scrutiny, but found no state discrimination at all. See Hong Pham 2011, 16 A.3d at 646. The Connecticut legislature enacted statutes that effectively terminated certain state-funded medical assistance for needy legal immigrants who were barred from federal Medicaid by the Welfare Reform Act’s five year rule. at 637. The Connecticut Supreme court in Hong Pham 2011 held that the state “did not draw a classification based on alienage because [the state-funded medical assistance] program does not benefit citizens as opposed to aliens. To draw a classification on the basis of alienage, the state statute in question must afford some benefit to citizens but deny that benefit to at least some 38 Case: 11-15132 06/20/2011 Page: 46 of 127 ID: 7791851 DktEntry: 9
  47. 47. aliens because of their status as noncitizens.” Id. at 646. Like BHH in this case, the state medical assistance program in Connecticut “provides assistance only to aliens who are barred by the federal government from participating in federal Medicaid,” and never provided benefits to citizens because citizens were never eligible for the program. at 648. The Hong Pham 2011 court reasoned that if any state establishes a program to benefit only aliens, any attempt to eliminate or reduce the benefit provided only to aliens under that program would [under plaintiffs’ incorrect view] be subject to strict scrutiny review simply because such action necessarily will harm only aliens, regardless of how aliens are treated as compared to citizens. This argument, then, is more akin to a [baseless] due process argument, i.e., that once the state has provided assistance to a certain class, it is forever barred from eliminating or diminishing that assistance. Id. at648 n. 23. The plaintiffs in this case similarly argue, and the district court agreed, that the prior provision of a state-funded medical assistance benefit only for aliens requires that the reduction of that benefit — which necessarily affects only aliens — is a classification based on alienage that is subject to strict scrutiny review. CR/ER 30 at 28 (dismiss order). The Connecticut Supreme Court’decision in Hong Pham 2011 is well-reasoned and persuasive, and this honorable court would do well to follow its analysis. 39 Case: 11-15132 06/20/2011 Page: 47 of 127 ID: 7791851 DktEntry: 9
  48. 48. The district court’s reliance on Ehrlich is also misplaced. Following enactment of the Welfare Reform Act, the court of appeals of Maryland considered Maryland’s creation of a separate alien-only state medical assistance program for aliens who became ineligible for federal Medicaid as a result of the federal five year rule. Ehrlich, 908 A.2d at 1227. As a result of budget constraints, Maryland eliminated funding for the program, effectively eliminating assistance that was previously afforded to the plaintiffs. IcJ., at 1227-28. “The defendants in Ehrlich did not contest the plaintiffs’ claims on the issue ofdiscrimination but, instead, focused exclusively on the appropriate level ofjudicial scrutiny.” Hong Pham 2011, 16 A.3d at 652, citing Ehrlich, 908 A.2d at 1230-32. The Connecticut Supreme Court in Hong Pham 2011 found Ehrlich to be unpersuasive because that case did not address the issue of discrimination, specifically the issue of “whether the decision to eliminate funding for the alien- only program discriminated against aliens in favor of citizens who received coverage under federal Medicaid.” j This court should likewise discount the Maryland Court of Appeals’ decision in Ehrlich, which was rooted in Maryland’s failure to contest the critical issue. Finally, as noted above, the state of New York in Aliessa discriminated against aliens in favor of citizens within a wholly state-funded and state controlled public assistance program, and did not involve the treatment of aliens under a 40 Case: 11-15132 06/20/2011 Page: 48 of 127 ID: 7791851 DktEntry: 9
  49. 49. state-funded alien-only program. Aliessa, 96 N.Y.2d at 424, 754 N.E.2d at 1089- 90, fn. 3. Therefore, any discussion of the uniform rule in Aliessa cannot be extended to this case, in which the COFA Residents are eligible for a state-funded alien-only program. Moreover, the district court’s reliance on Aliessa is questionable given that the New York Court of Appeals itself distinguished Aliessa on that very point in a subsequent decision. $. Khrapunskiy, 12 N.Y.3d 478, 488, 909 N.E.2d 70, 76-77 (distinguishing Aliessa because in Aliessa the state-funded program provided benefits to citizens but excluded assistance to aliens). The district court relies on the Ninth Circuit’s opinion in Sudomir for the proposition that the uniformity requirement is met where the federal government dictates “both what the states may or may not do” regarding the classification of aliens in state programs. CR/ER 30 at 22 (dismiss order). The district court reads the court’s decision in Sudomir too broadly. Sudomir involved the Aid to Families with Dependent Children (AFDC) program, a federal-state program established by Congress to furnish financial assistance to certain needy families with dependent children. Sudomir, 767 F.2d at 1457. With certain qualifications, only citizens, permanent resident aliens, and aliens “otherwise permanently residing in the United States under color of law” are eligible for AFDC benefits. The issue in Sudomir hinged on whether plaintiffs, aliens illegally present in the U.S. whose deportation proceedings were stayed 41 Case: 11-15132 06/20/2011 Page: 49 of 127 ID: 7791851 DktEntry: 9
  50. 50. pending action on their applications for asylum, were permanently residing in the country under color of law. j.ç1 at 1459. The Secretary of the U.S. Department of Health and Human Services (the Secretary) denied plaintiffs’ applications for AFDC benefits on the basis that an application for asylum does not “confer any status or right to reside in the United States permanently” and, therefore, asylum applicants are not permanently residing under color of law. Id. at 1460. Concluding that the Secretary’s construction of the statute was permissible, the Sudomir court found that California had “employed both a federal classification and a uniform policy regarding the appropriate treatment of a particular subclass of aliens,” which was subject to rational basis review. i at 1466. This was because the state was required to follow federal eligibility restrictions for the federal-state AFDC program. Likewise, the State of Hawai ‘i is required to follow federal eligibility restrictions for its federal-state Medicaid program. Clearly, rational basis review applies to the State’s exclusion of COFA Residents from its Medicaid program. The district court extended the holding in Sudomir to apply to a state public benefit such as BHH, stating that the AFDC statute in Sudomir dictates particular state action as to aliens for state public benefits, unlike the Welfare Reform Act in this case. CRIER 30 at 23 (dismiss order). This is incorrect. The AFDC benefits are not a state public benefit, but are a federal public benefit, and therefore the 42 Case: 11-15132 06/20/2011 Page: 50 of 127 ID: 7791851 DktEntry: 9
  51. 51. issue of whether the AFDC statute dictated particular state action as to aliens for state public benefits was not before the Sudomir court. j at 1457. Sudomir is instructive, however, in recognizing that states may not employ “the federal classification ‘for its own discriminatory policy.” Sudomir, 767 F.2d at 1466, quoting Plyler, 457 U.S. at 226. In Plyler, the Supreme Court held that a Texas statute withholding state funds from local school districts for the education of illegal alien children and authorizing the school districts to deny enrollment to such children, violated their right to equal protection. Plyler, 457 U.S. at 224-230. Once again, Plyer is distinguishable because in Plyler certain aliens (illegal ones) were excluded from the public schools, while citizen children were eligible to attend public school. (In Hawai’i, citizens are not eligible for BHH.) The court in Plyler did not find Congressional intent to withhold basic education from the children of illegal aliens, and therefore it was the state’s choice — with nofederal direction — to bar alien children from the same state benefit that was made available to citizens. Id. at 226. Whether a policy is discriminatory must be determined by looking at how aliens are treated relative to citizens in the same program. There is no State discrimination when the state creates a limited state-funded benefit for COFA Residents that is not available at all to citizens. Therefore, even if the Department 43 Case: 11-15132 06/20/2011 Page: 51 of 127 ID: 7791851 DktEntry: 9
  52. 52. had followed the federal classification under the Welfare Reform Act and eliminated the Medicaid-like state-funded medical assistance benefits for COFA Residents, rather than just reduced them, the Department would not be employing the federal classification for its own “discriminatory policy.’ For the State, in creating BHH for certain aliens, is not discriminating against aliens in favor of citizens at all. Notably, the court in Sudomir disagreed with the plaintiffs in that case, who argued that nothing prevents a state from adopting more liberal eligibility standards than the federal standards as long as the benefits are fully state-funded, and that the state’s refusal to adopt more liberal eligibility standards is a matter of state, not federal, policy, and therefore subject to strict or intermediate scrutiny. Sudomir, 767 F.2d at 1465 (citations omitted); see CR/ER 16 at 11 (P1. Reply to Opp. to Mtn. for Prelim. Inj.). “To so hold would amount to compelling the states to adopt each and every more generous classification which, on its face, is not irrational.” Id. at 1466. Consequently, if any standard of review is to apply, rational basis, not strict scrutiny, is the appropriate standard. 3. The State ‘s Implementation ofBasic Health Hawai ‘i Satisfies Rational Basis Review Again assuming, arguendo, that BHH discriminates against aliens, Defendants’ decision to provide nonqualified aliens with less benefits than the federal Medicaid program provides to those who are eligible for it satisfies rational 44 Case: 11-15132 06/20/2011 Page: 52 of 127 ID: 7791851 DktEntry: 9
  53. 53. basis review. “[R]ational-basis review in equal protection analysis is not a license for courts to judge the wisdom, fairness, or logic” of government choices. Heller v. Doe, 509 U.S. 312, 319 (1993). Therefore, the state’s decision to provide health benefits to nonqualified aliens through BHH must be upheld “if there is a rational relationship between the disparity of treatment and some legitimate governmental purpose.” jçj. at 320. Furthermore, a State “that creates these categories need not actually articulate at any time the purpose or rationale supporting its classification.” Id. (quotation omitted). Rather, a classification “must be upheld against equal protection challenge if there is any reasonably conceivable state of facts that could provide a rational basis for the classification.” FCC v. Beach Communications, Inc., 508 U.S. 307, 313 (1993). The state “has no obligation to produce evidence to sustain the rationality of a statutory classification”; “[t]he burden is on [Plaintiffs] to negative every conceivable basis which might support it.” Heller, 509 U.S. at 320. Although it was under no legal obligation to do so, Hawai’i chose to use state funds to provide health benefits to COFA Residents through BHH. While not as comprehensive as the full Medicaid package, it is not illegitimate for the State, in making this determination, to take into account its current budget situation, given Congress’s goal in the Welfare Reform Act that “individual aliens not burden the public benefits system.” 8 U.S.C. § 1601(4); see also Soskin, 353 F.3d 45 Case: 11-15132 06/20/2011 Page: 53 of 127 ID: 7791851 DktEntry: 9
  54. 54. at 1255 (“In exercising that discretion each state is to make its own assessment of whether it can bear the burden of providing any optional coverage. When a state determines that the burden is too high and decides against optional coverage, it is addressing the Congressional concern (not just a parochial state concern) that ‘individual aliens not burden the public benefits system.’ 8 U.S.C. § 1601(4). This may be bad policy, but it is Congressional policy; and we review it only to determine whether it is rational.”). The state’s decision to transfer COFA Residents to BHH was rationally related to these legitimate state and federal governmental interests. Therefore, the state has satisfied rational basis review and has not violated Plaintiffs’ rights under the Equal Protection Clause. 4. Only When the State Classifies Based on Alienage Within a Prograin Will Strict Scrutiny Apply The district court cites to several cases for the proposition that “in general, state classifications based on alienage are subject to strict scrutiny.” CR/ER 30 at 10-11 (dismiss order). However, each of those cases involved situations where the state denied aliens access to a program or benefit that the state made available to citizens under the same statutes: Bernal v. Fainter, 467 U.S. 216 (1984) (certification for notaries public), Nyciuist v. Mauclet, 432 U.S. 1 (eligibility for college scholarships), Examining Bd. of Engineers, Architects & Surveyors v. Flores de Otero, 426 U.S. 572 (1976) (civil engineering licensure), In re Griffiths, 413 U.S. 717 (1973) (qualification to take the bar examination), Takahashi v. Fish 46 Case: 11-15132 06/20/2011 Page: 54 of 127 ID: 7791851 DktEntry: 9
  55. 55. & Game Comm’n., 334 U.S. 410 (1948) (issuance of fishing licenses), and Graham, 403 U.S. 365 (state and federal welfare benefits). CR/ER 30 at 10-1 1 (dismiss order). In each case, at least certain groups of aliens were discriminated against in comparison to how citizens were treated under the same statute. None of these cases involved treatment of aliens in an alien-only state program that differed from treatment of citizens in a separate federal program. Therefore, none of these cases support the district court’s conclusion that the State’s “implementation of the [federal] Old Programs and BHH classify individuals based on alienage.” CR/ER 30 at 27 (dismiss order). The federal Old Programs discriminated against aliens, but the State did not; instead it mitigated part of the federal government’s discrimination. The district court relied heavily on the U.S. Supreme Court’s Graham case, even though the facts of Graham are clearly distinguishable, since the states in Graham treated aliens differently from citizens within the same program. The Graham case was decided in 1971, before enactment of the Welfare Reform Act, at which time there was no federal prohibition on the receipt of federal or state public benefits by aliens. Graham resolved a consolidated appeal of two cases in which legal aliens challenged welfare programs in Arizona and Pennsylvania on equal protection grounds. Graham, 403 U.S. at 366-69. Arizna limited eligibility for 47 Case: 11-15132 06/20/2011 Page: 55 of 127 ID: 7791851 DktEntry: 9
  56. 56. federally funded categorical assistance benefits for persons who were disabled, in need of old-age assistance, or blind, to U.S. citizens and persons who had resided in the U.S. for at least 15 years. Id. at 366-67. Pennsylvania limited eligibility for a state-funded welfare program to residents who were U.S. citizens or who had filed a declaration of intention to become citizens. Id. at 368. The Supreme Court observed that “the Arizona and Pennsylvania statutes in question create two classes of needy persons, indistinguishable except with respect to whether they are or are not citizens of this country.” Id. at 371. Consequently, the Court reviewed these classifications under strict scrutiny and concluded “a state statute that denies welfare benefits to resident aliens and one that denies them to aliens who have not resided in the United States for a specified number of years violate (sic) the Equal Protection Clause.” RI. at 376. Although Arizona’s program was a federal public benefit, and Pennsylvania’s was a state public benefit, the common thread between the two was that each program was also available to citizens. Accordingly, the Arizona and Pennsylvania statutes granted a welfare benefit to citizens, but not to some or all aliens. Id.,at37l. Before the Welfare Reform Act, there was no directive from the federal government to restrict public benefits to aliens. Therefore, it was Arizona and Pennsylvania, and not the federal government, which imposed more restrictive 48 Case: 11-15132 06/20/2011 Page: 56 of 127 ID: 7791851 DktEntry: 9
  57. 57. eligibility requirements on aliens than they did on citizens who were applying for the same general assistance programs.’5 The state of Hawai’i, on the other hand, does not treat aliens less favorably than citizens. Rather, it was Congress that did so through the Welfare Reform Act: citizens and certain qualified aliens are eligible for federal Medicaid, and nonqualified aliens are not eligible for federal Medicaid. 8 U.S.C. § 1611. Hawai’i actually voluntarily helps aliens through BHH, a program not available to citizens. Therefore, the district court misconstrues Graham’s general admonition that “a state statute that denies welfare benefits to resident aliens and one that denies them to aliens who have not resided in the United States for a specified number of years violate the Equal Protection clause.” CR/ER 30 at 12 (dismiss order), quoting Graham, 403 U.S. at 376. As noted above, Graham involved statutes that denied benefits to aliens while at the same time providing benefits to citizens. The district court’s extension of this holding to apply to BHH -- a state program that provides benefits only to aliens — is in error. 15 Pennsylvania’s discrimination against aliens in its state-funded general assistance program would, even post-Welfare Reform Act, violate equal protection. 49 Case: 11-15132 06/20/2011 Page: 57 of 127 ID: 7791851 DktEntry: 9
  58. 58. C. The Rational Basis Test Also Applies Because the Federal Government Established a Uniform Rule Relating to COFA Residents’ Conditions of Entry Under the Compacts As will be demonstrated below, the federal government, in designing the Compacts, set forth a de facto uniform policy of encouraging self-sufficiency of COFA Residents and not involuntarily burdening states with having to provide public benefits to COFA Residents. Hawai’i’ s decision, therefore, to provide COFA Residents with BHH, but not all of the benefits Congress provided to citizens under Federal Medicaid, was consistent with this uniform federal policy, and is thus reviewable under the rational basis test. This Court must take into consideration the restrictions and conditions of entry into the United States imposed on COFA Residents by Congress through the Compacts. Significantly, Congress did not intend for the Compacts to result in any adverse economic impact to affected jurisdictions,’6 including Hawai’i. , 2003 Compact, sec. 104(e). In fact, the 2003 Compact expressly states that a COFA Resident “who cannot show that he or she has sufficient means of support in the United States, is deportable.” 2003 Compact, sec. 141(0(1). Given this clear federal mandate, federal policy under the 2003 Compact is inconsistent with the notion that States may be forced, against their will, to provide the full complement 16 The “affected jurisdictions” under the Compacts include the state of Hawai ‘i, Guam, American Samoa, and the Commonwealth of the Northern Marianas Islands. CR/ER 24 at 3, ¶8; 2003 Compact, sec. 104(e)(1). 50 Case: 11-15132 06/20/2011 Page: 58 of 127 ID: 7791851 DktEntry: 9
  59. 59. of healthcare benefits that the federal Medicaid program provides for citizens. Hawai’i’s decision to provide limited health benefits to COFA Residents is thus consistent with the uniform federal policy with respect to COFA Residents of not involuntarily burdening the States with having to support COFA Residents. Nevertheless, the state of Hawai ‘i spends in excess of $100 million on services rendered to or on behalf of COFA Residents each year, $40 million on health care alone through state-funded medical assistance. CR/ER 13-3 at 6 ¶9115 & 17 (Fink dec.). Plaintiffs argue that the federal government pays the State of Hawai’i to provide health care to the COFA Residents, and that Hawai’i may “seek additional funds for reimbursement to its health care and other institutions as a result of increased demands related to public services provided to COFA Residents.” CR/ER 10-1 at 29-30. This is not true.17 The Compacts provide for “Compact impact” assistance of $30 million annually to the affected jurisdictions. 2003 Compact, sec. 104(e)(3). The State currently receives about $11.2 million of that amount, which is only a small In fact, the Ninth Circuit Court of Appeals ordered a case brought by Guam and Hawai ‘i challenging the sufficiency of reports to be submitted by the Director of the Department of the Interior to Congress regarding the impact of the Compacts on the affected jurisdictions be dismissed on remand, because “[a]lthough the governments’ complaint alleges that the Director’ s failure to submit complete reports deprived them of ‘the benefit of the statutory commitment to act sympathetically and to expeditiously redress the adverse consequences from implementation of the Compact,’ the governments recognize that they lack standing to contest the absence of appropriations. . .“. Guerrero v. Clinton, 157 F.3d 1190, 1194 (1998). 51 Case: 11-15132 06/20/2011 Page: 59 of 127 ID: 7791851 DktEntry: 9
  60. 60. fraction of the cost of providing state-funded services, including but not limited to health care, to COFA Residents. CR/ER 13-3 at 6 ¶16 (Fink dec.). The Compacts also include grant assistance that is provided directly to the Freely Associated States -_ not to Hawai’i -- to address, among other things, health care in those countries, “with priorities in the education and health care sectors.” 2003 Compact, sec. 211(a); see, also, Palau Compact sec. 211(d) (grant of $631,000 annually for fifteen years ... for health and medical programs). Specifically, this grant assistance is made “to support and improve the delivery of preventive, curative and environmental care and develop the human, financial, and material resources necessary for the [FSM and RMI] to perform these services.” 2003 Compact, sec. 2ll(a)(2). Other than the grant assistance noted above, the Palau Compact contains no provision for health care services to its citizens within the United States. The 2003 Compact, on the other hand, has several specific, but limited, health care provisions, addressing health care to citizens of the Freely Associated States in their home countries and the United States, but none address the provision of state or federal public benefits such as Medicaid.’8 Moreover, the State has no 18 The specific health care provisions in the 2003 Compact are as follows: • The RMI government may request that the United States “continue to provide special medical care and logistical support thereto for the remaining members of the population of Rongelap and Utrik who were exposed to 52 Case: 11-15132 06/20/2011 Page: 60 of 127 ID: 7791851 DktEntry: 9
  61. 61. enforceable right to obtain any additional funding under the Compacts. Guerrero, 157 F.3d at 1194. Therefore, the only logical reading of the Compacts is that COFA Residents are granted leave to work and reside in the United States, with limited provision in the Compacts of health services in the Freely Associated States and through federal Department of Defense facilities. One stated intent of the Compacts is to not have “adverse consequences” to the State. Forcing Hawai’i radiation resulting from the 1954 United States thermo-nuclear “Bravo” test ...“. 2003 Compact, sec. 103(f); • The Four Atoll Health Care Program limits services provided by the United States Public Health Service or any other United States agency pursuant to the separate agreement between the United States and the RMI to peoples of the Bikini, Enewetak, Rongelap, and Utrik Atolls. S.., 2003 Compact, sec. 103(h). The separate agreement was “for the just and adequate settlement of all such claims which have arisen in regard to the Marshall Islands and its citizens .. . for the continued administration by the Government of the United States of direct radiation related medical surveillance and treatment programs.” 2003 Compact, sec. 177 (emphasis added). • Authorization for appropriations for health care reimbursement to “health care institutions in the affected jurisdictions for costs resulting from the migration of citizens of the RMI, FSM and Palau to the affected jurisdictions” as a result of the Compacts, as amended. 2003 Compact, sec. 104(e)(6) (emphasis added). These appropriations are directed to private health care institutions, and not to the State of Hawai ‘i. • Department of Defense medical facilities are to be made available on a limited basis “for use by citizens of the FSM and the RMI who are properly referred to the facilities by government authorities responsible for provision of medical services in the FSM, RMI, Palau and the affected jurisdictions.” 2003 Compact, sec. 104(e)(7)(A). The services of the National Health Service Corps are made “available to the residents of the [FSM] and the [RMI] to the same extent and for so long as such services are authorized to be provided to persons residing in any other areas within or outside the United States.” 2003 Compact, sec. 104(e)(7)(B) 53 Case: 11-15132 06/20/2011 Page: 61 of 127 ID: 7791851 DktEntry: 9
  62. 62. to provide even more benefits to COFA Residents in the form of increased healthcare obligations plainly violates the federal policy of the Compacts to not involuntarily burden the States. Moreover, the federal policy to not involuntarily burden states with COFA Residents public assistance obligations is made clear not only under the Compacts, but also under the Welfare Reform Act. Congress stated in that Act that the immigration policy of the United States is that “aliens within the Nation’s borders not depend on public resources to meet their needs, but rather rely on their own capabilities and the resources of their families, their sponsors, and private organizations, and ... the availability of public benefits not constitute an incentive for immigration to the United States.” 8 U.S.C. § 1601(2). By requiring “sufficient means of support in the United States,” the 2003 Compact is consistent with Congressional intent under the Welfare Reform Act, which eliminated COFA Resident’s eligibility for federal public assistance benefits. Again, forcing Hawai ‘i to provide even more benefits to COFA Residents completely undermines this federal policy. Hawai ‘i’s decision to act consistently with that federal policy can thus only be reviewed for, at most, a rational basis. The Compacts are also consistent with Congressional intent under immigration law. A COFA Resident entering under the Compact is admitted to the United States as a noninmiigrant, with only the labor certification and non 54 Case: 11-15132 06/20/2011 Page: 62 of 127 ID: 7791851 DktEntry: 9
  63. 63. immigrant visa requirements of the INA disregarded. 2003 Compact and Palau Compact, sec. 141(a). Nonimniigrants are, as a general matter, individuals who are in the United States temporarily and would not be eligible for medical assistance benefits. See 8 U.S.C. § I 101(a)(15) (listing classes of nonimniigrant aliens).’9 In sum, because any ruling forcing Hawai ‘i to provide even more public health assistance to COFA Residents would violate the uniform federal policy -- explicit in both the Compacts and the Welfare Reform Act -- that the states not be 19 Plaintiffs deny that COFA Residents may enter the United States either under the Compacts or through normal immigration channels. CR/ER 16 at 7, n. 5 (P1. Reply to Opp. to Mtn. for Prelim. Inj.). This is not true. Admission under the Compacts is optional, not mandatory. The INA expressly applies, with limited exceptions, to any person admitted or seeking admission to the United States under the Compact. 2003 Compact. sec. 141(f). And the 2003 Compact provides that citizens of the Freely Associated States “may be admitted to, lawfully engage in occupations, and establish residence as a nonimmigrant in the United States ...“. 2003 Compact, sec. 141(a). Admission to the United States under the Compact does not confer on a COFA Resident the right to establish the residence necessary for naturalization under the INA. See, 2003 Compact, sec. 14 1(h). However, the option to enter the United States freely under the Compact “shall not prevent a citizen of the [Freely Associated States] from otherwise acquiring such rights or lawful permanent resident alien status in the United States.”. 2003 Compact, sec. 14 1(c) Therefore, individuals who exercise the option to enter into the United States under the Compact subject themselves to the terms and conditions set forth in the Compact, and are precluded from enjoying the benefits of permanent resident alien or naturalized citizen status. However, individuals from the Freely Associated States who acquire permanent resident alien status in the United States would, after five years, be eligible for federal public benefits to the same extent as citizens and other qualified aliens. 55 Case: 11-15132 06/20/2011 Page: 63 of 127 ID: 7791851 DktEntry: 9
  64. 64. involuntarily burdened by COFA Residents, Hawai ‘i’s decision to provide only some health assistance to COFA Residents is at most reviewable for a rational basis. CONCLUSION Hawai’i has not discriminated against aliens at all, as it has not created a program that benefits citizens at the expense of aliens. Instead, faced with federally mandated discrimination against aliens, rather than simply doing nothing as was its prerogative, the State voluntarily and gratuitously chose to mitigate the federal government’s discrimination by creating a program for aliens only. This is not discrimination by Hawai’i at all, and thus no equal protection scrutiny is warranted. But even if one assumes, arguendo, that Hawai’i’s decision not to completely make up for Congress’s discrimination is discrimination by Hawai’i, that decision must be reviewed under the rational basis test, as the uniform federal policy that can be derived from federal law is that Congress did not intend states to be involuntarily burdened by having to provide public assistance benefits to COFA Residents. Because Hawai ‘i acts rationally in not subjecting itself to the financial burdens Congress never intended to force upon any State, plaintiffs’ equal protection challenge must be rejected. 56 Case: 11-15132 06/20/2011 Page: 64 of 127 ID: 7791851 DktEntry: 9
  65. 65. Accordingly, the State respectfully requests that the district court’s order granting plaintiffs’ motion for preliminary injunction be REVERSED. DATED: Honolulu, Hawai’i, June 20, 2011. STATE OF HAWAI’I DAVID LOUIE Attorney General State of Hawai ‘i Is! Lee Ann N.M. Brewer LEE-ANN N.M. BREWER JOHN F. MOLAY Deputy Attorneys General Attorney for Defendants-Appellants Patricia McManaman and Kenneth Fink 57 Case: 11-15132 06/20/2011 Page: 65 of 127 ID: 7791851 DktEntry: 9
  66. 66. CERTIFICATE OF COMPLIANCE This brief complies with the type-volume limitation of Fed. R. App. P. 32(a)(7)(B) because this brief contains 13,861 words, excluding the parts of the brief exempted by Fed. R. App. P. 32(a)(7)(B)(iii). This brief complies with the typeface requirements of Fed. R. App. P. 32(a)(5) and the type style requirements of Fed. R. App. P. 32(a)(6) because this brief has been prepared in a proportionally spaced typeface using Microsoft Word, Times New Roman, 14 point. DATED: Honolulu, Hawai’i, June 20, 2011. STATE OF HAWAI’I DAVID LOUIE Attorney General State of Hawai’i /s/ Lee Ann N.M. Brewer HEIDI M. RIAN LEE-ANN N.M. BREWER JOHN F. MOLAY Deputy Attorneys General Attorneys for Defendants-Appellants Patricia McManaman and Kenneth Fink 58 Case: 11-15132 06/20/2011 Page: 66 of 127 ID: 7791851 DktEntry: 9

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