Union Station: Ninth Circuit panel says California can deduct union dues from state Medicaid payments to home care providers

On June 8, a three-judge panel of the U.S. Court of Appeals for the Ninth Circuit affirmed two district court decisions dismissing challenges to California’s deduction of union dues from Medicaid payments to home care providers. The panel issued a single opinion after consolidating the two appeals. 

About the cases

U.S. Circuit Judge Jacqueline Nguyen summarized the two cases as follows: 

“Appellants provide services through California’s [In-Home Support Services] program. They all became members of the public-sector union with exclusive bargaining rights in their counties … When they signed up, appellants authorized the State Controller to deduct union dues from their paychecks. That authorization included an agreement that they could only revoke their consent during brief annual windows.

“Appellants resigned from their unions outside the annual revocation windows. But they wanted their dues deductions to stop immediately. When the dues deductions continued, they brought these two putative class actions under 42 U.S.C. § 1983 against their former unions and State Controller Betty Yee.

“Appellants alleged that the continuing dues deductions violated their rights under the First Amendment and the Medicaid Act’s anti-reassignment provision.”

Attorneys from the Freedom Foundation and the National Right to Work Legal Defense Foundation represented the plaintiffs in both cases. 

About the ruling

The three-judge panel—Senior U.S. Circuit Judge Richard Paez, Nguyen, and Chief U.S. District Judge for the District of Minnesota John Tunheim—affirmed the dismissals of the cases on June 8. Nguyen wrote in the court’s opinion:

“For a federal statute to confer a right, ‘Congress must have intended that the provision in question benefit the plaintiff.’… Here, the text and legislative history of the anti-reassignment provision make clear that Congress was focused on preventing fraud and abuse in state Medicaid programs rather than on serving the needs of Medicaid providers. Because Congress did not intend to benefit Medicaid providers, we hold that the anti-reassignment provision does not confer a right that they can enforce under § 1983. … 

“Both district courts dismissed these cases for the same reasons. As to the First Amendment claim, the district courts concluded that the unions were not state actors and that appellants’ consent to pay union dues precluded any First Amendment liability. This court subsequently decided Belgau v. Inslee, which rejected a virtually identical First Amendment claim on the same rationale. … Appellants now concede that Belgau forecloses their First Amendment claim. As to the Medicaid Act claim, both district courts held that the anti-reassignment provision does not confer a right on providers that is enforceable under § 1983. … 

“Appellants also point out that the Centers for Medicare and Medicaid Services (CMS) adopted their broad interpretation of the anti-reassignment provision in a 2019 regulation. … More recently, however, CMS issued a rule clarifying that employment-type payroll deductions do not violate the anti-reassignment provision. …

“We therefore hold that the Medicaid Act’s antireassignment provision, 42 U.S.C. § 1396a(a)(32), does not confer a right on Medicaid providers enforceable under § 1983. We affirm the district courts’ dismissals of these cases.”

In May, the Centers for Medicare & Medicaid Services (CMS) issued a final rule “explicitly [authorizing] States to make payments to third parties on behalf of individual practitioners, for individual practitioners’ health insurance and welfare benefits, skills training, and other benefits customary for employees, if the individual practitioner consents to such payments on their behalf.” To read more of the backstory to this ruling, click here

President Bill Clinton (D) nominated Paez to the Ninth Circuit, and President Barack Obama (D) nominated Nguyen. Clinton nominated Tunheim to the U.S. District Court for the District of Minnesota.

About the Ninth Circuit 

The U.S. Court of Appeals for the Ninth Circuit hears appeals from the district courts within its jurisdiction, which includes Alaska, Arizona, California, Hawaii, Idaho, Montana, Nevada, Oregon, and Washington, as well as Guam and the Northern Mariana Islands. The chief judge of the court is Mary Murguia, an Obama appointee. Of the court’s 29 active judges, Clinton nominated five, George W. Bush (R) nominated three, Obama nominated seven, Donald Trump (R) nominated 10, and Joe Biden (D) nominated four.

What we’re reading

The big picture

Number of relevant bills by state

We are currently tracking 144 pieces of legislation dealing with public-sector employee union policy. On the map below, a darker shade of green indicates a greater number of relevant bills. Click here for a complete list of all the bills we’re tracking. 

Number of relevant bills by current legislative status

Number of relevant bills by partisan status of sponsor(s) 

Recent legislative actions

Below is a complete list of relevant legislative actions taken since our last issue.

  • California AB1577: This bill would allow state legislative employees to organize and bargain collectively.
    • Bipartisan sponsorship. 
    • Read second time, amended, and sent back to Senate Labor, Public Employment and Retirement Committee June 15. Committee hearing scheduled for June 22. 
  • California AB1714: This bill would allow unions representing excluded state employees to request arbitration with the Department of Human Resources in certain circumstances.
    • Democratic sponsorship. 
    • Senate Labor, Public Employment and Retirement Committee hearing held June 13. Committee recommends “do pass.” Sent back to Senate Judiciary Committee with recommendation to place on the consent calendar. Senate Judiciary Committee hearing scheduled for June 21.
  • California SB931: This bill would allow a union to bring a claim before the Public Employment Relations Board against a public employer allegedly in violation of California Government Code Section 3550 and sets civil penalties for violations. Section 3550 prohibits public employers from discouraging union membership. 
    • Democratic sponsorship. 
    • Assembly Judiciary Committee hearing held June 14. Committee recommends “do pass.” Sent back to Assembly Public Employment and Retirement Committee.

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