GAB Decision 346
September 30, 1982 Pennsylvania Department of Public Welfare; Docket
No. 82-71-PA-HC Ford, Cecilia; Garrett, Donald Settle, Norval
The Pennsylvania Department of Public Welfare (State) appealed a
disallowance by the Health Care Financing Administration (Agency) of
$166,924 in federal financial participation (FFP) in the costs of
certain medically necessary abortions performed from September 19
through November 10, 1980. The disallowed costs were claimed under
Title XIX of the Social Security Act (Medicaid) for medically necessary
abortions which did not meet the criteria for federal funding stated in
the Hyde Amendment. /1/
The State claimed, primarily, that it should receive FFP for all
medically necessary abortions because federal regulations required the
State to provide 10 days notice prior to reducing Medicaid benefits and
these abortions were performed while the State was giving recipients
notice. 42 CFR 431.211 (1979).
This appeal is denied because we conclude that the Agency has
reasonably determined that its authority to pay for non-Hyde abortions
was limited by the Amendment's unequivocal restriction on the use of
appropriated funds. The Board is bound by applicable laws and
regulations.
(2) I. Background.
The Hyde Amendment and implementing regulations in effect in 1979
prohibited federal funding of abortions except where there was rape,
incest, or a threat to the life of the mother. Suits had been filed in
federal court challenging the legislation and the regulations. In
January, 1980 a federal court ruled that the restrictions on abortion
funding were unconstitutional and ordered the Agency to cease to give
effect to the Hyde Amendment or the federal regulations. McRae v.
Califano, 491 F. Supp. 630 (E.D.N.Y. 1980). While the court order was
in effect, the Agency provided all states with FFP for medically
necessary abortions.
In July, 1980 the Supreme Court reversed the District Court and ruled
that the Hyde Amendment was constitutional and could be implemented by
the Agency. McRae v. Harris, 448 U.S. 297 (1980). The decision also
said that states were not required to fund abortion services for which
no FFP was available.
The Agency informed the State of the Supreme Court's decision by
mailgrams dated July 3 and July 16, 1980. In the first mailgram the
Agency said that funding for all medically necessary abortions would
continue until the Supreme Court decision went into effect, but that
when the decision became effective, federal funding for non-Hyde
abortions would cease. The Agency also said that the State could stop
funding non-Hyde abortions when the decision became effective, but that
the State would have to provide recipients with timely notice in
accordance with regulations at 42 CFR 431.211. The Agency said further
that the State would have to provide the notice even if there was no FFP
during the notice period. The second mailgram informed the State that
the effective date of the decision would be delayed because a rehearing
in the case had been requested. The Agency said that since it was
unlikely that there would be any advance notice of the date that the
decision would take effect, the State would be informed by telephone as
soon as the decision was effective. The mailgram suggested that if the
State sent notice to recipients of a potential reduction in services
prior to the effective date of the decision, the State should inform
recipients that they were entitled to medically necessary abortions
until further informed of a specific date for benefit reduction.
The Supreme Court decision in McRae became effective September 19,
1980. Federal funding of abortion services was further reduced by the
continuing resolution for Fiscal Year (FY) 1981. Pub. L. 96-369 Secs.
102, 110, October 1, 1980. By mailgram dated October 3, (3) 1980, the
Agency informed the State of these changes and said that the State was
required to provide notice to recipients if it also chose to reduce
benefits.
The State notified recipients by November 10, 1980 that Medicaid
covered abortion services were being reduced. This appeal is for FFP
during the period after the McRae injunction was lifted on September 19
and until notice was provided on November 10, 1980.
II. Previous Board Decisions on Funding Non-Hyde Abortions.
The Board has previously upheld the Agency's determination that, even
where the State was required to give notice prior to reducing Medicaid
abortion services, FFP was not available because the Agency's authority
to expend funds for abortions was specifically limited by the Hyde
Amendment. Ohio Department of Public Welfare, Decision No. 305, May 28,
1982. The Board there said that the State had not shown that the Agency
had an obligation to provide FFP during the notice period which
superceded the specific prohibition in the Hyde Amendment against using
the Department's funds to pay for abortions. In another decision the
Board held that the Agency and this Board are without authority to
overcome the Hyde Amendment's unequivocal restriction on the use of
appropriated funds, however equitably compelling the circumstances may
be. Joint Consideration--Abortion Funding, Decision No. 260, February
26, 1982. The Board cited to 31 U.S.C. 628 which provides that "sums
appropriated shall be applied solely to the objects for which they are
respectively made, and for no others."
We conclude that those decisions apply here as well. Below we
discuss the State's arguments on why this appeal should be granted, and
our analysis of why it cannot.
III. The State's Basis for Claiming FFP.
The State claimed that the Agency's interpretation of the Hyde
Amendment is inconsistent with the holdings of the Supreme Court in
McRae v. Harris, 448 U.S. 297 (1980) and Pennhurst State School and
Hospital v. Halderman, 451 U.S. 1 (1981); is contrary to the rules of
statutory construction; and is conradicted by the Agency's admission
that the State was obligated to provide recipients with notice of any
proposed reduction in abortion services. The State also claimed that
the Agency is estopped from denying FFP for non-Hyde abortion services.
A. The Supreme Court Cases.
The State admitted that Congress intended by the Hyde Amendment to
restrict federal funding for abortions. The State argued, however, (4)
that Congress did not intend the restriction to be applied so as to
require the State to fully fund the costs of any abortions. The State
said that the Amendment's restrictions on the availability of FFP should
be read to allow the State a reasonable opportunity to alter its
Medicaid program to comply with that restriction. The State quoted
portions of McRae and Pennhurst in support of its position.
The State relied on language in McRae which said that Congress did
not intend states to assume unilateral funding obligations for Medicaid
services and that Medicaid was designed as a cooperative program of
shared financial responsibility, not as a device for the federal
government to compel a state to provide services that Congress is
unwilling to fund. The State argued that since it had to fund abortions
during the period in which federal regulations required the State to
provide notice, there should be federal participation in those payments.
We are not persuaded that McRae compels the Agency to fund the
abortions at issue here. McRae held that states could stop funding
non-Hyde abortions; the Court never said that the Hyde Amendment could
be read to authorize the Agency to provide FFP for non-Hyde abortions
which states did fund. The Court in McRae considerecd the broader issue
of whether the states would have to continue to provide funding for
abortion services in its Medicaid plan once Congress withdrew federal
funding, and said that "Title XIX does not require a participating state
to include in its plan any services for which . . . Congress has
withheld federal funding." 448 U.S. at 309. The Agency did not here
require the State to continue funding abortions as part of the State's
Medicaid services; it just required that the State provide 10 days
notice before the State stopped funding them. The State has not shown
that McRae prohibited the Agency from requiring the 10 days notice if
the Agency could not provide FFP; or that McRae interpreted the Hyde
Amendment to permit FFP for a period of time in order for states to
implement restrictions. The Agency's regulations required the 10 days
notice, and the Hyde Amendment, as upheld by the Supreme Court, clearly
prohibited the expenditure of the Agency's funds for these abortions
without providing for FFP during the time the State may have needed to
also restrict funding. The Board is bound by all applicable laws and
regulations. 45 CFR 16.14 (1981).
We conclude that the State's reliance on Pennhurst is also misplaced.
The State cited Pennhurst and said that the Supreme Court has held that,
on questions concerning the extent of a State's financial obligations
under joint federal-state programs, Congress must be deemed not to have
imposed financial obligations on the (5) State for which federal
reimbursement is not available. We note, however, that the portion of
the Pennhurst decision which the State quoted spoke only to the
requirement that Congress be clear in stating obligations to be imposed
on the states. /2/ The State has not shown that the Hyde Amendment was
not clear in its restrictions on abortion funding. Congress clearly
stated that (with certain exceptions not relevant here) no funds from
this Department's appropriation should be used to pay for abortions.
B. Statutory Construction.
The State argued that the rules of statutory construction require
that an absurd construction of a statute is to be avoided. The State
claimed further that the Agency's construction of the Hyde Amendment is
irrational because, as discussed above, it imposed a unilateral funding
obligation on the State.
The Board is not persuaded that the Agency's interpretation is
irrational or absurd. The Agency's position is that it was without
authority to participate in the State's payments for abortions because
of the Hyde Amendment's prohibition against using HHS funds to pay for
those abortions. The Board has held in previous cases that this
interpretation is reasonable based on the clear and explicit language in
the Amendment restricting federal funding. The Amendement could have
had a delayed "effective date" or otherwise provided to allow for
FFP
during a notice period, but did not. See, Decisions No. 260 and No. 305
for more detailed analysis. Since we have concluded that the Agency's
interpretation of the (6) Hyde Amendment is not irrational or
unreasonable, we reject the State's argument.
C. Estoppel.
The State claimed that because the Agency advised the State that the
State was required to give beneficiaries 10 days notice of a reduction
in benefits, the Agency was estopped from denying FFP for non-Hyde
abortions performed before the notice was provided.
The State said that it met the requirements for establishing estoppel
as set out in a previous Board decision. (South Dakota Department of
Social Services, Decision No. 198, July 27, 1981) The four elements
listed as necessary to establish estoppel were that:
(1) the party to be estopped must know the facts;
(2) he must intend that his conduct shall be acted on or must so act
that the party asserting estoppel has a right to believe it was so
intended;
(3) the latter must be ignorant of the true facts;
(4) he must rely on the former's conduct to his injury.
The State claimed that it satisfied those requirements because: (1)
the Agency knew the facts relating to its coverage of abortion services;
(2) the Agency intended the State to act on the basis of the written
directive dated October 3, 1980; (3) the State was unaware of any
decision by the Agency to deny FFP for such services after September 19,
1980; and (4) the State relying on the directive continued funding
non-Hyde abortions services pending the distribution of receipient
notices.
We conclude that the State has not shown that the circumstances here
met the four elements listed above. Although the Agency said that the
State was required to provide 10 days notice before reducing abortion
services, there is no indication in the record that the Agency said that
there would be FFP for abortions performed during the notice period.
See, correspondence dated July 3, July 16, and October 3, 1980. To the
contrary, in the July 3 mailgram the Agency informed the State that the
Supreme Court had on June 30 issued its decision in McRae and that:
. . . federal funding will not be available for all medically
necessary abortions performed on or after the date the Supreme Court's
decision goes into effect. (emphasis added)
(7) The mailgram said further:
. . . HHS regulations at 42 CFR 431.211 require states to provide 10
days' written notification to all recipients of any reduction in
benefits. . . . This is true even if federal funding is not available
during the 10 day period. (emphasis added)
The Board therefore concludes that the State has not shown that it
paid for abortions based on an indication from the Agency that the State
would receive FFP during the notice period.Without that showing, the
State has not established all the listed elements which are necessary to
a claim of estoppel, and this appeal cannot be granted on that basis.
/3/
IV. Conclusion.
For the reasons stated above, and based on analysis set forth in
Decisions No. 260 and 305, the disallowance of $166,924 in FFP for
abortion services is upheld. /1/ Some version of the Hyde Amendment has
been a rider to this Department's appropriation bill since 1977.
Each version of the Amendment said that none of the funds appropriated
to the Department could be used to perform abortions except under
specific circumstances listed in the Amendment. See, Pub. L. 95-205,
Sec. 101; Pub. L. 95-480, Sec. 210; Pub. L. 96-86, Sec. 118; Pub. L.
96-123, Sec. 109. Although the versions of the Amendment (and the
implementing regulations at 42 CFR Part 441) varied with respect to the
types of abortions which could be funded, the State did not raise those
substantive differences as an issue in this case. Therefore, we use the
term "Hyde Amendment" in a generic sense. /2/ The Court in
Pennhurst decided claims by residents of a Pennsylvania facility for the
care and treatment of the mentally retarded that residents were denied
constitutional and statutory rights, including certain rights under the
Developmentally Disabled Assistance and Bill of Rights Act of 1975, a
federal-state grant program. The State quoted from Pennhurst: Turning
to Congress's power to legislate pursuant to the spending power, our
cases have long recognized that Congress may fix the terms on which it
shall disburse federal money to the states. . . . If Congress intends
to impose a condition on the grant of federal monies, it must do so
unambiguously. (citations omitted) By insisting that Congress speak
with a clear voice, we enable states to exercise their choice knowingly,
congnizant of the consequences of their participation. Appeal Brief, p.
7. /3/ We do not intend by this decision to imply that estoppel
necessarily would lie against the federal government if the four
elements were present. See, e.g., Schweiker v. Hansen, 450 U.S. 785
(1981). But, having concluded that the State has not satisfied all of
these four elements, we do not here discuss further considerations
involved in determining whether a federal agency may be estopped.
OCTOBER 22, 1983