California can deduct union dues from Medi-Cal payments to a caretaker who provides in-home care to an elderly or disabled person, a federal appeals court ruled Wednesday.
A state law authorizing the deductions was challenged by anti-union groups representing eight providers of In-Home Supportive Services. The eight automatically became public employees when they began caring for their patients, with standard payroll deductions, including dues for the unions that represented the employees. They quickly resigned from the unions but, under the law, were required to continue paying dues until a specified withdrawal date that occurs once each year.
Their lawsuit argued that the continued payments violated the workers’ free-speech rights and a provision of the federal Medicaid law, known as Medi-Cal in California, that requires all payments under the program to be made to the patients or their providers and says they cannot be “reassigned” to others.
But the Ninth U.S. Circuit Court of Appeals said constitutional rights of free speech can be enforced only against the government and not against private parties such as unions. The court also said the anti-reassignment provision was intended to prevent payments to others unconnected with the program and did not give providers of health care any right to control the funds or limit payroll deductions.
The provision, the court said, was aimed at ending a practice known as “factoring,” in which contractors bought Medicaid providers’ accounts at discount rates, then collected the payments from the states. A 1972 congressional report found that factoring had led to inflated claims and fraudulent practices, the court said.
The anti-reassignment rule “reflects Congress’s goal of ensuring that state Medicaid payments are not lost to fraud and abuse,” Judge Jacqueline Nguyen said in a 3-0 ruling upholding decisions by federal judges in San Diego and Sacramento. She cited an opinion last month by the U.S. Centers for Medicare and Medicaid Services saying “employment-type deductions” did not violate the law, reversing a contrary decision by the agency under President Donald Trump in 2019.
The eight providers were represented by the National Right-to-Work Legal Defense Foundation and the Freedom Foundation. Rebekah Millard, a lawyer for the Freedom Foundation, said the organization was weighing its options, which could include an appeal to the full Ninth Circuit or the U.S. Supreme Court.
The state’s defense of the law was joined by units of the Service Employees’ International Union and United Domestic Workers of America. Stacey Leyton, a lawyer for the unions, said the court had correctly interpreted the law.
“This is yet another one of the many unsuccessful cases filed by the Freedom Foundation in an effort to use the courts to drain union resources by forcing the unions to defend against meritless claims,” Leyton said.
Bob Egelko is a San Francisco Chronicle staff writer. Email: begelko@sfchronicle.com Twitter: @BobEgelko
