On Petition for Review of a Decision of the Grant Appeals Board of the Department of Health and Human Services.
Weis, Higginbotham and Sloviter, Circuit Judges.
The Commonwealth of Pennsylvania appeals from a decision by the Department of Health and Human Services (HHS) denying reimbursement for funds that the Commonwealth expended under the Medicaid program for abortions performed immediately after the Hyde amendment took effect. We must resolve two major issues: first, whether this court has jurisdiction to review directly the decision of the Secretary, and second, whether the Hyde amendment should be interpreted as requiring the state to pay the entire share of abortions performed while Medicaid recipients were being notified of the reduction in benefits. We conclude that we do have jurisdiction and that the federal government is obligated to continue paying its share for abortions during the reasonable time needed to provide the required notice.
Facts and Procedural History
Under the Medicaid program, Title XIX of the Social Security Act, 42 U.S.C. §§ 1396 et seq., each participating state administers a program financed jointly by the state and federal government to pay medical expenses for the needy. The federal matching funds are conditioned on the state's compliance with federal requirements. HHS advances funds to the state quarterly on the basis of estimated expenditures, and this sum is adjusted when, at the end of the quarter, the state reports its actual expenses. See 42 U.S.C.A. § 1396b (1974 & West Supp. 1975-1982); 45 C.F.R. § 201.5.
The administration of this system was complicated, at least from the Commonwealth's point of view, by the enactment of the Hyde amendment withdrawing federal funding for almost all abortions.*fn1 Funds remained available to the states while the Hyde amendment was challenged in the courts. In McRae v. Califano, 491 F. Supp. 630 (E.D.N.Y. 1980), implementation of the Hyde amendment was enjoined. On June 30, 1980, the Supreme Court reversed. Harris v. McRae, 448 U.S. 297, 65 L. Ed. 2d 784, 100 S. Ct. 2671. The injunction remained in effect, however, while plaintiffs' petition for rehearing was pending.
In the meantime, Pennsylvania, like other participating states, received notice from HHS that (1) it was uncertain when the amendment would become effective; (2) funding for medically necessary abortions would continue until that time; (3) states were not obligated to finance those abortions for which federal funds would not be available; and (4) the states were bound by 42 C.F.R. § 431.211 to give Medicaid recipients ten days' notice before cutting benefits, even if federal funds were cut off before the ten-day period ended. Further, the agency said that because it did not expect advance notice of the date that the Supreme Court's decision would become effective, Pennsylvania would be informed of that event by telephone. The Supreme Court denied rehearing, and the decision became effective on September 19, 1980 when the district court vacated its injunction.
On October 3, 1980, HHS notified the Pennsylvania Department of Public Welfare (DPW) that the reduction in funds had taken effect and that the version of the Hyde amendment included in the Joint Resolution of October 1, 1980 was more restrictive in its funding of abortions than the earlier version. This mailgram also reminded the Commonwealth of the ten-day notice requirement. It is the Commonwealth's position that it needed to draft, translate into Spanish, and print a notice to be included with DPW's regular October mailing to Medicaid recipients; that this mailing could not be completed until the end of October, and that it could therefore not reduce the recipients' abortion benefits until November 10.*fn2
The Commonwealth subsequently submitted claims to the Secretary for reimbursement for abortions performed between September 19 and November 10 that were medically necessary but not in the categories for which the Hyde amendment authorized reimbursement. The claim, for a total of $166,924, was disallowed. The Commonwealth appealed to the departmental Grant Appeals Board, which upheld the Secretary's decision. The Board's conclusion, and HHS ' contention here, is that as of September 19, 1980, the Hyde amendment terminated HHS ' authority to disburse funds for the abortions at issue. Before we can reach the merits of Pennsylvania's appeal, we must first consider HHS ' motion to dismiss the appeal on the ground that there is no direct court of appeals review of the Secretary's determination.