Tony Korab v. Patricia McManaman
748 F.3d 875
9th Cir.2014Background
- In 1996 Congress enacted the Welfare Reform Act (PRWORA), classifying aliens for federal and state benefits: (1) must receive full state benefits, (2) may receive no state benefits, and (3) discretionary — states may decide eligibility. COFA residents fall in the third category.
- COFA Residents (citizens of the Marshall Islands, Micronesia, Palau under Compacts of Free Association) were initially covered by Hawaii’s Medicaid-equivalent managed care program funded partly by federal Medicaid and partly by the State; after PRWORA federal reimbursement was unavailable for them but Hawaii continued full coverage at state expense for years.
- In 2010 Hawaii moved COFA Residents into Basic Health Hawaii (BHH), a wholly state-funded program with reduced benefits, citing budgetary constraints.
- Plaintiffs (Korab et al.) sued under the Equal Protection Clause (and ADA, not pursued here) seeking reinstatement of the prior, fuller coverage, arguing Hawaii’s action discriminates on the basis of alienage and must meet strict scrutiny.
- The district court enjoined the reduction, applying strict scrutiny; the Ninth Circuit (majority) vacated that injunction, holding Hawaii’s decision is authorized by Congress and governed by rational‑basis review.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Hawaii is constitutionally required to restore full Medicaid-level benefits to COFA Residents | Korab: State must treat lawfully present aliens like citizens; removing coverage violates Equal Protection and needs strict scrutiny; state must "fill the gap" left by Congress | Hawaii: Congress authorized states to decide eligibility for this class; State may decline to backfill federal funding; its funding choice is an expenditure decision | Held: No constitutional duty to backfill; Hawaii’s choice is subject to rational‑basis review and injunction vacated |
| Proper level of scrutiny for state action that follows PRWORA discretionary scheme | Korab: Because state action discriminates on alienage it triggers strict scrutiny (Graham) | Hawaii: Because PRWORA is a uniform federal policy and it authorized state discretion, the state action is part of federal scheme and merits rational‑basis review | Held: Rational‑basis review applies where state is implementing Congress’s discretionary scheme for aliens in PRWORA’s third category |
| Does PRWORA’s grant of discretion to states violate the uniformity/Naturalization Clause or permit states to evade Equal Protection? | Korab: Congress cannot delegate power to permit states to violate Equal Protection; PRWORA’s discretion is illusory | Hawaii: PRWORA creates a uniform federal framework; limited state discretion does not undermine uniformity and effectuates congressional policy | Held: PRWORA’s structure does not undermine uniformity of national policy; states may implement discretionary coverage without triggering strict scrutiny |
| Whether plaintiffs have shown a state‑created disparity (per‑capita expenditure or other) sufficient to raise Equal Protection problem | Korab: BHH provides significantly lesser coverage; this is disparate treatment | Hawaii: BHH is wholly state‑funded and no evidence plaintiffs received less per‑capita state spending than citizens/eligible aliens | Held: Court expressed doubts on the evidentiary record about a per‑capita state‑funding disparity but did not decide the merits; outcome governed by scrutiny issue (rational basis) and injunction vacated |
Key Cases Cited
- Graham v. Richardson, 403 U.S. 365 (1971) (state alienage classifications are suspect and ordinarily subject to strict scrutiny)
- Mathews v. Diaz, 426 U.S. 67 (1976) (federal alienage classifications are reviewed under rational‑basis because of federal immigration authority)
- Plyler v. Doe, 457 U.S. 202 (1982) (states may follow federal direction; discusses limits of state power re: aliens)
- Arizona v. United States, 567 U.S. 387 (2012) (federal supremacy in immigration; preemption/field‑analysis principles)
- Soskin v. Reinertson, 353 F.3d 1242 (10th Cir. 2004) (upholding rational‑basis review where state declines optional coverage under PRWORA)
- Sudomir v. McMahon, 767 F.2d 1456 (9th Cir. 1985) (states are not compelled to replace federal funds when following federal guidelines)
- Chamber of Commerce v. Whiting, 563 U.S. 582 (2011) (Congress may expressly allow states limited tools; preemption and express non‑preemption analysis)