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Court Rules States Can Continue Facilitating Voluntary Paycheck Deductions from Medicaid Workers

  • Six Democratic AGs, led by California AG Xavier Becerra, obtained a decision from the United States District Court for the Northern District of California that vacated a Department of Health and Human Services (“HHS”) rule that would have banned state payroll systems from processing voluntary deductions, like health insurance, union dues, and taxes, from the paychecks of Medicaid in-home supportive services workers.
  • According to the complaint, the rule, titled “Medicaid Program; Reassignment of Medicaid Provider Claims,” was promulgated under an erroneous reading of the Medicaid Act’s prohibition against the reassignment of payments for care received to anyone other than the provider of those services. The states argued that the misreading of the Medicaid Act’s provision was a pretext to create a barrier for workers to pay union dues. The complaint further alleged that HHS violated the Administrative Procedure Act because the rule was not in accordance with the Medicaid Act.
  • The court’s decision vacated the rule and remanded it back to the agency for further consideration.