Freedom Foundation

West Coast states and unions conspiring to keep skimming Medicaid funds

Documents recently obtained by the Freedom Foundation from the Washington State Attorney General’s Office (AGO) indicate West Coast state governments have partnered with two national unions to fight efforts by the Trump administration to stop states from illegally skimming union dues from Medicaid payments to home caregivers serving disabled and elderly clients.

However, because the AGO over-redacted certain documents and simply refused to produce others, the Freedom Foundation today filed litigation against the AGO in Thurston County Superior Court for violating Washington’s Public Records Act (PRA).

The lawsuit is the latest development in the Freedom Foundation’s two-year effort to press for and support federal action to end the illegal union deductions from Medicaid.

Beginning in the 1990s, unions like the Service Employees International Union (SEIU) and the American Federation of State, County and Municipal Employees (AFSCME) worked to unionize Medicaid-paid home caregivers by persuading sympathetic state governments to pass laws permitting them to do so. As of 2017, Freedom Foundation research concluded that at least eight states were deducting nearly $150 million in union dues each year from the Medicaid payments of more than 350,000 home caregivers.

However, as the Freedom Foundation report also explained, federal law requires Medicaid payments to be made in full to home caregivers, and states violate the law when they divert part of a caregiver’s wages to a third party, like a union, that provides no services to Medicaid beneficiaries.

Nonetheless, in direct contradiction of the statute, the Obama administration in 2014 adopted a regulation purporting to authorize deductions from home caregivers’ wages for “benefits customary to employees.”

However, in July 2018 the Center for Medicaid Services (CMS) issued a notice of proposed rulemaking (NPRM) announcing its intent to repeal the Obama-era rule. The public comment period on the NPRM ended in August.

Emails provided to the Freedom Foundation by the AGO in response to an information request reveal the states of Washington, Oregon and California are working with SEIU and AFSCME to coordinate their legal activity once the regulation is finally repealed. It’s not clear from the emails whether the coalition intends to bring suit against CMS for repealing the regulation or if it intends to jointly defend against enforcement action brought by CMS for continuing to skim union dues from Medicaid payments illegally.

The first email was sent on June 8, 2018, by Casey Pitts — a partner at the San Francisco labor law firm Altshuler Berzon LLP —  to:

  • Stacey Leyton and Peder J. Thoreen, partners at Altshuler Berzon LLP;
  • Shane Esquibel, chief deputy in the Washington Attorney General’s Office;
  • Anna Rich, deputy attorney general for the California Department of Justice’s “Healthcare Strike Force;”
  • Kamala Shugar, special counsel to the attorney general in the Oregon Department of Justice;
  • Scott Kaplan, assistant attorney in charge of the special litigation unit of the Oregon Department of Justice;
  • Melanie Fontes Rainer, senior advisor to California Attorney General Xavier Becerra;
  • Kathleen Boergers, deputy solicitor general at the California Department of Justice;
  • Renee Gerni, associate general counsel for the SEIU; and,
  • Teague Paterson, deputy general counsel for AFSCME.

The content of the email was entirely redacted by the AGO, but the subject line read, “CONFIDENTIAL COMMON INTEREST AGREEMENT – Inquiries from CMS?”

Several additional emails were exchanged periodically throughout June. On June 22, another email was sent by Donna Cobb in the Washington Attorney General’s Office to the individuals listed above.

Again, the email was redacted in its entirety, but the subject line read, “A challenges to CMS guidance by State of Washington.”

Lastly, on June 27, Stacey Leyton of Altshuler Berzon emailed the group, again under the subject line, “CONFIDENTIAL COMMON INTEREST AGREEMENT – Inquiries from CMS?” stating:

“As you probably have realized, the NPRM was not released today. We are seeing what we can find out about the length of and reasons for the delay, and will let you know what we are able to find out.”

The NPRM to repeal the Obama-era regulation was issued by CMS just two weeks later, on July 12.

When the Freedom Foundation requested a copy of the referenced “common interest agreement” between the parties involved, the AGO refused to provide it in violation of the PRA.

Given the amount of dues money involved and the political reliance of all three West Coast state governments on the support of unions like SEIU and AFSCME, it is unsurprising they would oppose CMS’ attempt to enforce federal law and prevent states from continuing to skim union dues out of Medicaid.

However, the discovery that these entities have created a formal legal alliance dedicated to perpetuating exploitation of home caregivers for financial and political gain, all while attempting to shield their activities from scrutiny by ignoring open government laws, is both noteworthy and unfortunate.

Given these realities, the Freedom Foundation has no choice but to continue working to protect caregivers from being taken advantage of and to protect the public’s right to know what state government officials are up to.