Sandra Bontrager v. Indiana Family and Social Ser, et al
Filing
Filed opinion of the court by Judge Kanne. AFFIRMED. Michael S. Kanne, Circuit Judge; Diane P. Wood, Circuit Judge and John Daniel Tinder, Circuit Judge. [6430671-3] [6430671] [11-3710]
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In the
United States Court of Appeals
For the Seventh Circuit
No. 11-3710
S ANDRA M. B ONTRAGER, on her own behalf and
on behalf of a class of those similarly situated,
Plaintiff-Appellee,
v.
INDIANA F AMILY AND S OCIAL S ERVICES A DMINISTRATION,
M ICHAEL A. G ARGANO , and P ATRICIA C ASANOVA,
Defendants-Appellants.
Appeal from the United States District Court
for the Northern District of Indiana, South Bend Division.
No. 3:11-cv-216—Philip P. Simon, Chief Judge.
A RGUED JUNE 4, 2012—D ECIDED S EPTEMBER 26, 2012
Before K ANNE, W OOD , and T INDER, Circuit Judges.
K ANNE, Circuit Judge. On May 5, 2011, Sandra M.
Bontrager filed a putative class action complaint challenging Indiana’s $1,000 annual limit for dental services
covered by Medicaid. The district court granted
Bontrager’s request for a preliminary injunction, holding
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that Indiana is required to cover all medically necessary
dental services, irrespective of the monetary cap.
We affirm.
I. B ACKGROUND
The Medicaid program, 42 U.S.C. § 1396 et seq., allows
states to provide federally subsidized medical assistance
to low-income individuals and families. Collins v.
Hamilton, 349 F.3d 371, 374 (7th Cir. 2003). “Although
participation in Medicaid is optional, once a state has
chosen to take part . . . it must comply with all federal
statutory and regulatory requirements.” Miller ex rel.
Miller v. Whitburn, 10 F.3d 1315, 1316 (7th Cir. 1993).
Indiana participates in the Medicaid program and is
therefore bound by its rules and regulations. See Ind.
Code § 12-15-1-1 et seq.
Under federal Medicaid law, “[a] State plan for
medical assistance must . . . provide . . . for making
medical assistance available . . . to all [eligible] individuals.” 42 U.S.C. § 1396a(a)(10). “Medical assistance”
includes “dental services,” but coverage for these services
is not required. 42 U.S.C. §§ 1396a(a)(10)(A), 1396d(a)(10).
Under its Medicaid plan, Indiana elects to cover certain
dental services, see 405 Ind. Admin. Code 5-14-1 et seq.,
that are “medically reasonable and necessary” and not
listed as “noncovered” or otherwise excluded, id. at 5-217(1)-(2). Whether a service is “medically reasonable
and necessary” is determined by utilizing “generally
accepted standards of medical or professional practice.”
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Id. at 5-2-17(1). Even if medically necessary, “covered
services routinely provided in a dental office will be
limited to one thousand dollars ($1,000) per recipient,
per twelve (12) month period.” Id. at 5-14-1(b). This
$1,000 limit, a cost-cutting measure for Indiana, went
into effect on January 1, 2011.
Bontrager is an Indiana Medicaid recipient in need of
significant dental services, including two endosteal
implants and two implant abutments for her lower
jaw. Bontrager sought payment of these services through
Medicaid, but her claim, although covered and medically
necessary, was denied to the extent her requested treatment exceeded the $1,000 annual limit. Bontrager’s medically necessary procedures, considered separately or in
combination, exceed this cap and she is unable to
pay for the services on her own.
Bontrager’s lawsuit alleges that the Indiana Family
and Social Services Administration, which administers
Indiana’s Medicaid program, and its individually
named administrators (collectively, the “State”), violated
state and federal Medicaid laws by instituting the
$1,000 annual cap on dental services, even when such
services are covered and medically necessary. Bontrager’s
federal claim seeks injunctive and declaratory relief
under 42 U.S.C. § 1983 for the State’s violation of 42 U.S.C.
§ 1396a(a)(10). On November 4, 2011, the district court
granted a preliminary injunction, preventing the State
from enforcing its $1,000 cap on dental services. This
matter is now before us on interlocutory appeal. See 28
U.S.C. § 1292(a)(1).
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II. A NALYSIS
The State presents two issues for our consideration:
(1) whether Bontrager has a private right of action under
42 U.S.C. § 1983 for a violation of 42 U.S.C. § 1396a(a)(10),
and (2) whether the district court erred in granting
the preliminary injunction. We consider each of these
questions in turn.
A. Private Right of Action
First we must consider, as the district court did, whether
Bontrager has a private right of action to challenge Indiana’s $1,000 annual limit on dental services covered by
Medicaid under 42 U.S.C. § 1983. “In order to seek redress
through § 1983, . . . a plaintiff must assert the violation
of a federal right, not merely a violation of federal law.”
Blessing v. Freestone, 520 U.S. 329, 340 (1997). “Once a
plaintiff demonstrates that a statute confers an individual right, the right is presumptively enforceable by
§ 1983.” Gonzaga Univ. v. Doe, 536 U.S. 273, 284 (2002).
Generally, we consider three factors to determine if
a statute creates an enforceable right: (1) whether
Congress intended the provision to benefit the plaintiff,
as evidenced by “rights-creating” language, see id.;
(2) whether the right is not so “vague and amorphous”
that its enforcement would strain judicial competence;
and (3) whether the statute unambiguously imposes
a binding obligation on the States, such that the provision is “couched in mandatory, rather than precatory,
terms.” Blessing, 520 U.S. at 340-41.
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Bontrager’s § 1983 claim is based upon an implied right
of action conferred by the federal Medicaid statute,
42 U.S.C. § 1396a(a)(10)(A). In Miller, we considered
whether this same provision creates an enforceable
federal right under § 1983. 10 F.3d at 1319. We
answered that question in the affirmative, and held that
§ 1396a(a)(10)(A) satisfies the standard set forth in
Wilder v. Virginia Hospital Association, 496 U.S. 498,
509 (1990), and permitted the plaintiff to challenge Wisconsin’s classification of a liver-bowel transplant as “experimental.” 10 F.3d at 1319-20. In Wilder, the Supreme
Court determined that a portion of the Medicaid Act
governing reimbursement of health care providers
was enforceable pursuant to § 1983. 496 U.S. at 509-10. In
doing so, the Court found that the provision at issue
was intended to benefit the putative plaintiff, the
statute created a binding obligation on the governmental unit, and the plaintiff’s interests were not too
vague and amorphous for courts to enforce. Id. at 509.
The State argues that Miller no longer governs
because the post-Wilder cases of Blessing and Gonzaga
changed the standard for determining whether a
private right of action exists. Although we have acknowledged that Gonzaga “may have taken a new analytical
approach,” Bertrand ex rel. Bertrand v. Maram, 495 F.3d
452, 456 (7th Cir. 2007), Wilder has not been overruled,
id.; cf. State Oil Co. v. Khan, 522 U.S. 3, 20 (1997) (“[I]t is
[the Supreme Court’s] prerogative alone to overrule one
of its precedents.”). Further, post-Blessing and Gonzaga,
several circuit courts have held that the Medicaid
provision at issue creates an enforceable federal right.
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See, e.g., Watson v. Weeks, 436 F.3d 1152, 1159-61 (9th Cir.
2006); Sabree ex rel. Sabree v. Richman, 367 F.3d 180,18992 (3d Cir. 2004); S.D. ex rel. Dickson v. Hood, 391 F.3d
581, 604-06 (5th Cir. 2004). We find the reasoning of
these courts persuasive and reaffirm Miller’s holding.
Accordingly, Bontrager has an enforceable federal right
capable of redress through § 1983, and her claim may
proceed.
B. Preliminary Injunction
We next consider whether the district court properly
granted Bontrager’s motion for a preliminary injunction.
On appeal, we review the district court’s grant of a preliminary injunction by considering its legal rulings
de novo, its factual determinations for clear error, and its
balancing of the factors for an abuse of discretion.
Pro’s Sports Bar & Grill, Inc. v. City of Country Club Hills,
589 F.3d 865, 870 (7th Cir. 2009). To justify a
preliminary injunction, Bontrager must show that she is
“likely to succeed on the merits, . . . likely to suffer irreparable harm without the injunction, that the harm [she]
would suffer is greater than the harm that the
preliminary injunction would inflict on the defendants,
and that the injunction is in the public interest.” Judge v.
Quinn, 612 F.3d 537, 546 (7th Cir. 2010).
To determine Bontrager’s likelihood of success, we
must take a closer look at the applicable state and
federal Medicaid statutes and regulations. As noted
previously, Indiana voluntarily participates in the Medi-
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caid program and provides Medicaid coverage for
dental services. Ind. Code § 12-15-5-1. This coverage
includes only those dental services listed in Indiana’s
Administrative Code. 405 Ind. Admin. Code 5-14-1(a), 5-142. The dental service must be a “medically reasonable
and necessary service,” which is defined as “a covered
service . . . that is required for the care or well being of
the patient and is provided in accordance with
generally accepted standards of medical or professional
practice.” Id. at 5-2-17. 1 To be reimbursable, a service
must be “medically reasonable and necessary,” a determination made by utilizing “generally accepted
standards of medical or professional practice,” id. at 5-217(1), and not listed as a noncovered service or otherwise excluded from coverage, id. at 5-2-17(2).
Neither party disputes that the State is required to
provide Medicaid coverage for medically necessary
treatments in those service areas that the State opts to
provide such coverage (such as dental services). The
district court thoroughly discussed this issue, Bontrager
v. Ind. Family & Soc. Servs. Admin., 829 F. Supp. 2d 688, 69698 (N.D. Ind. 2011), and its opinion is well-supported
by state and federal case law. See, e.g., Beal v. Doe, 432
U.S. 438, 444 (1977) (“[S]erious statutory questions
1
A “covered service” is defined as “a service provided by a
Medicaid provider for a Medicaid recipient for which
payment is available under the Indiana Medicaid program
subject to the limitations of [405 Ind. Admin. Code 5].” 405
Ind. Admin. Code 5-2-6.
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might be presented if a state Medicaid plan excluded
necessary medical treatment from its coverage . . . .”);
Lankford v. Sherman, 451 F.3d 496, 511 (8th Cir. 2006)
(“While a state has discretion to determine the
optional services in its Medicaid plan, a state’s failure
to provide Medicaid coverage for non-experimental,
medically-necessary services within a covered Medicaid
category is both per se unreasonable and inconsistent
with the stated goals of Medicaid.”); Thie v. Davis,
688 N.E.2d 182, 186 (Ind. Ct. App. 1997) (Indiana
Medicaid statute’s “language is unequivocal” such that
“medically necessary treatment must be covered.”).
But even though a state is required to cover all
medically necessary treatments in those service areas
in which the state opts to provide coverage, federal regulations grant a state considerable leeway in carrying
out its plan. Under those regulations, a state’s Medicaid
plan must “specify the amount, duration, and scope of
each service that it provides,” 42 C.F.R. § 440.230(a), and
“[e]ach service must be sufficient in amount, duration,
and scope to reasonably achieve its purpose,” id.
§ 440.230(b). Accord Ind. Code § 12-15-21-3(3) (permitting
the State to establish limitations “consistent with
medical necessity concerning the amount, scope, and
duration of the services and supplies to be provided”).
Yet the State “may place appropriate limits on a
service based on such criteria as medical necessity or
on utilization control procedures.” 42 C.F.R. § 440.230(d).
The regulations do not define “utilization control procedures.”
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The State’s primary argument is that Medicaid recipients in need of medically reasonable and necessary
dental services over $1,000 are not categorically excluded from receiving such treatments; instead, their
treatments are merely subject to an appropriate, lawful
limitation put in place by the State. Thus, the State
asserts it is providing the necessary coverage required
under Medicaid. In this way, the State believes the
present case differs from other Indiana Medicaid cases
involving the categorical exclusion of medically necessary
treatments. In Thie, for instance, the Indiana Court of
Appeals examined the State’s exclusion of dentures from
dental service coverage, and held that the exclusion was
inconsistent with the State’s definition of medical necessity. 688 N.E.2d at 188. Because “federal law requires that
medically necessary dental treatments be covered,” id.
at 186, and the State’s dentures regulation excluded
medically necessary treatment, the court determined
that the regulation was invalid, id. at 188. Accord Coleman
v. Ind. Family & Soc. Servs. Admin., 687 N.E.2d 366, 369
(Ind. Ct. App. 1997) (regulation excluding partial
dentures was invalid where treatment was deemed
medically necessary). Similarly, in Davis v. Schrader, the
court held that the exclusion of orthopedic shoes was
inconsistent with the State’s definition of medical necessity, which required the item to be “necessary for the
treatment of an illness or injury or to improve the functioning of a body member.” 687 N.E.2d 370, 373-74 (Ind.
Ct. App. 1997) (quoting 405 Ind. Admin. Code 1-612(h)(1)(A) (repealed)).
In contrast to Thie, Coleman, and Davis, the State asserts
that the $1,000 cap does not prevent coverage of any
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medically necessary dental procedures, but operates as
an appropriate limitation authorized by 42 C.F.R. § 440.230
and Ind. Code § 12-15-21-3(3). The district court found
problems with this reasoning, noting that the cap
conflicts with our traditional understanding of insurance
coverage. Bontrager, 829 F. Supp. 2d at 699 (“This is a
bizarro-world notion of insurance coverage: once the
insurance provider (the State) meets the initial deductible
($1,000), the insured is left covering all the remaining
costs. Under any commonsense notion, this is not insurance ‘coverage.’ ”). We agree with the district court that
the cap prevents the State from providing coverage for
all medically necessary services, and partial payment
for such services does not constitute “some coverage,”
as the State would have us believe. To illustrate, a medically necessary procedure that costs $1,200 is not “covered” since the State’s cap prevents full reimbursement
to the provider. Although the State agrees to pay $1,000,
an indigent individual will likely be unable to pay the
remaining $200 and will have to go without the procedure. The State’s monetary contribution has no
effect (i.e., the State ends up paying nothing) and the
Medicaid recipient is left without recourse. And if the
indigent individual has already used a portion of her
$1,000 allotment toward other dental services, she
would be required to come up with even more money
to pay for the procedure.
According to the State’s own documentation, the effective rates for at least three dental procedures exceed
the $1,000 cap and are therefore—like the treatments in
Thie, Coleman, and Davis—categorically excluded from
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coverage. See Ind. Health Coverage Programs, IHCP
bulletin, BT201012 (April 15, 2010), available at
http://www.indianamedicaid.com/ihcp/Bulletins/BT2010
12.pdf. For instance, a “Mandible—closed reduction”
procedure costs $1,247.59, a “Mandible—open reduction”
procedure costs $2,396.14, and a “Facial bones—complicated reduction” procedure costs $1,114.35. Id. Because
of the $1,000 cap, the State’s Medicaid program will
not cover these procedures, despite their medical necessity. Accord Montoya v. Johnston, 654 F. Supp. 511, 514 (W.D.
Tex. 1987) (“[T]he $50,000 Medicaid cap is arbitrary and
unreasonable in that it functionally excludes the Plaintiffs’ [$200,000] liver transplants from medicaid coverage.”). As noted previously, even if the State offers to pay
$1,000 toward these treatments, a Medicaid recipient is
effectively precluded from receiving such treatments
because the leftover balance remains unpaid.
In finding that the $1,000 cap does not provide
coverage for all medically necessary procedures, it is
important to distinguish this case from other cases
which have upheld similar numerical constraints. For
instance, in Charleston Memorial Hospital v. Conrad, the
Fourth Circuit upheld South Carolina’s reductions in
inpatient and outpatient hospital coverage. 693 F.2d
324, 330 (4th Cir. 1982). Medicaid recipients were
limited to twelve inpatient visits and eighteen outpatient visits per year. Id. The Fourth Circuit held that
the limitations would still meet the needs of most
eligible recipients, and therefore, were sufficient to
satisfy federal law. Id. Similarly, in Curtis v. Taylor, the
Fifth Circuit upheld Florida’s limitation on reimburse-
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ment for up to three physician visits per month (except
in emergency medical situations). 625 F.2d 645, 652 (5th
Cir. 1980). The court held that Florida could limit
services “based upon a judgment of degree of medical
necessity so long as it does not discriminate on the basis
of the kind of medical condition that occasions the
need.” Id. Finally, in Grier v. Goetz, Tennessee’s fiveprescription-per-month limitation was upheld because
“the evidence presented does not demonstrate that
most [Medicaid] enrollees will not receive medically
necessary treatment or that their access to such treatment will be severely curtailed as a result of the [limitation].” 402 F. Supp. 2d 876, 913 (M.D. Tenn. 2005).
In contrast to Charleston Memorial, Curtis, and Grier, the
$1,000 cap in this case denies coverage for medically
necessary services outright by functionally excluding
certain procedures. The cap is not in any way based on
degree or consideration of medical necessity. Moreover,
in those cases, the limitations were “soft,” i.e., exceptions could be granted. Charleston Memorial, 693 F.2d at
327 n.5 (exceptions for “certain vital health care
needs”); Curtis, 625 F.2d at 652 (exceptions for emergency services); Grier, 402 F. Supp. 2d at 914 (exceptions
on case-by-case basis and shortlist of exempt drugs).
Here, the $1,000 cap applies without exception to all
medically necessary, routine dental services. See 405
Ind. Admin. Code 5-14-1(b). Thus, even though the State
asserts that the $1,000 cap still serves over 99% of the
State’s Medicaid recipients, the dental services provided
are not “sufficient in amount, duration, and scope to
reasonably achieve [their] purpose.” 42 C.F.R. § 440.230(b).
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The purpose of Medicaid dental services is to provide
reimbursement for routine dental treatments to
medically needy, indigent individuals. But, in light of
the $1,000 cap, these services are, in some cases, completely excluded from coverage. As the district court
noted, “when a service goes completely unprovided, it
has obviously not been provided in an amount sufficient
to achieve its purpose.” Bontrager, 829 F. Supp.2d at 703.
We also disagree with the State’s classification of the
$1,000 cap as a “utilization control procedure.” As noted
previously, this term is undefined in the state and
federal regulations. But cases from other jurisdictions
have offered various interpretations of the term. First,
Grier held that a five-prescription-per-month limitation
was a proper utilization control procedure, 402 F. Supp. 2d
at 911, but we have already distinguished Grier’s limitation from the $1,000 cap. Other courts hold that a
prior authorization system is an acceptable utilization
control procedure. See, e.g., Ladd v. Thomas, 962 F. Supp.
284, 294 (D. Conn. 1997) (citing Jeneski v. Myers, 209 Cal.
Rptr. 178, 187 (Cal. Ct. App. 1984)). One state court
has held that a points system used to determine the
medical necessity of orthodontic treatment is a reasonable utilization control procedure. Semerzakis v.
Comm’r of Soc. Servs., 873 A.2d 911, 929 (Conn. 2005).
The Southern District of New York notes that a state
is permitted to use reasonable utilization control procedures “to limit unnecessary utilization of Medicaid services,” but an arbitrary cap on personal home-care
services, applicable only to new Medicaid recipients,
was not an appropriate utilization control procedure.
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DeLuca v. Hammons, 927 F. Supp. 132, 136 (S.D.N.Y. 1996).
Finally, the Eastern District of Michigan has held that
“[p]rocedures to promote utilization control cannot
justify precluding funding of medically necessary procedures.” Allen v. Mansour, 681 F. Supp. 1232, 1239 (E.D.
Mich. 1986).
None of these cases indicate that a state’s monetary
cap on medically necessary services constitutes a reasonable utilization control procedure. The State’s $1,000
cap is certainly not a prior authorization process,
or similarly designed to control access, prevent fraud, or
streamline efficiency. Nor is it used as a resource to
determine the medical necessity of a procedure, as
in Semerzakis. We have already determined that the
cap excludes medically necessary treatment, so the cap
cannot be designed to limit only medically unnecessary
coverage. Whatever the interpretation of “utilization
control procedure,” we do not believe implementation
of such a procedure allows a state to shirk its primary
obligation to cover medically necessary treatments.
Accordingly, the State’s monetary cap, which serves to
exclude medically necessary treatment, is not a utilization control procedure.
Having determined that Bontrager has some likelihood of success on the merits, we turn to the remaining
preliminary-injunction considerations. “These considerations are interdependent: the greater the likelihood of
success on the merits, the less net harm the injunction
must prevent in order for preliminary relief to be warranted.” Judge, 612 F.3d at 546. We agree with the
district court that Bontrager and similarly situated indi-
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viduals will likely suffer irreparable harm if the
injunction is not granted, as they would be denied medically necessary care. Bontrager, 829 F. Supp. 2d at 705
(citing cases); accord Camacho v. Tex. Workforce Comm’n,
326 F. Supp. 2d 794, 802 (W.D. Tex. 2004); Olson v. Wing,
281 F. Supp. 2d 476, 486 (E.D.N.Y.) (“The award of retroactive benefits cannot ameliorate the harm suffered if
such a recipient should be forced by circumstances to
[forgo] treatment or medication.”), aff’d, 66 F. App’x
275 (2d Cir. 2003).
In light of the irreparable harm facing Bontrager and
her likelihood of success on the merits, the balance of
the equities likely also favors Bontrager. In making this
determination, we consider whether “the harm to the
defendant would substantially outweigh the benefit to
the plaintiff.” Michigan v. U.S. Army Corps of Eng’rs,
667 F.3d 765, 789 (7th Cir. 2011). The State’s potential
budgetary concerns are entitled to our consideration,
but do not outweigh the potential harm to Bontrager
and other indigent individuals, especially when the
State’s position is likely in violation of state and federal
law. See Tallahassee Mem’l Reg’l Med. Ctr. v. Cook, 109 F.3d
693, 704 (11th Cir. 1997) (budgetary constraints do not
permit a state to evade Medicaid legal requirements); Ark.
Med. Soc’y, Inc. v. Reynolds, 6 F.3d 519, 531 (8th Cir. 1993)
(“[T]he state may not ignore the Medicaid Act’s requirements in order to suit budgetary needs.”).
The same reasoning applies to our consideration of
the public interest. The Medicaid statute was designed
to pay for the healthcare costs of “the most needy in the
country.” Schweiker v. Hogan, 457 U.S. 569, 590 (1982).
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Although we are mindful of potential budgetary concerns, these interests do not outweigh Medicaid recipients’ interests in access to medically necessary health care.
See, e.g., Dominguez v. Schwarzenegger, 596 F.3d 1087, 1098
(9th Cir. 2010) (“[W]e have repeatedly recognized
that individuals’ interests in sufficient access to health
care trump the State’s interest in balancing its budget.”),
vacated on other grounds, Douglas v. Indep. Living Ctr. of
S. Cal., Inc., 132 S. Ct. 1204 (2012). The State cautions that
it may end coverage of all dental services under its
Medicaid plan if the $1,000 cap is no longer in place.
Thus, this lawsuit may result only in a pyrrhic victory
for the plaintiff. But the State’s likely violation of state
and federal law cannot be ignored in order to preserve
the status quo. Moreover, there are other avenues by
which the State can limit its exposure to significant
Medicaid costs. See, e.g., Moore ex rel. Moore v. Reese, 637
F.3d 1220, 1255 (11th Cir. 2011) (“A state may also
limit required Medicaid services based upon its judgment of degree of medical necessity so long as such
limitations do not discriminate on the basis of the kind
of medical condition.”); Coleman, 687 N.E.2d at 368 (the
State may limit coverage “by narrowing the definition
of medical necessity”).
III. C ONCLUSION
Because the balance of the factors weighs in favor of
granting a preliminary injunction, we A FFIRM the judgment of the district court.
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