A federal judge in California on Tuesday overturned a federal rule that prohibited home health workers from using Medicaid payments to pay for their union dues.
The final HHS rule has been in effect since 2019 and overturned a 2014 rule specifically allowing Medicaid payments to be diverted from providers to third parties for expenses like union dues.
"There is no clear prohibition on these payroll practices in the Medicaid statute. At a minimum, the statute is ambiguous regarding their permissibility," San Francisco-based U.S. District Judge Vince Chhabria said in the ruling. "The only reasonable interpretation of the statute is that it does not bar the payroll practices."
Chhabria said CMS' "interpretation appears contrary to the overall purpose of the Medicaid statute." States' payroll practices improve "conditions for home care workers, which in turn improves the quality of care those workers provide to Medicaid patients themselves," he said. "It is unclear how barring the payroll practices would serve the purposes of the Medicaid program."
The judge denied CMS' motion to dismiss the lawsuit and issued a summary judgment against the rule. The agency had yet to take action against any states for violating the 2019 rule.
CMS said it does not comment on court cases.
California Attorney General Xavier Becerra, who led the multistate lawsuit challenging the ruling, said the rule "would have unlawfully created barriers for states to deduct employee benefits and union dues from workers' paychecks, a practice which makes it easier for workers to stand up together for their workplace rights and to provide quality home- and community-based care to those in need."
"This ruling is a victory for our state and for the collective bargaining rights of homecare workers who play a vital role in our healthcare system," Becerra said in a statement.
