Comments: Big Labor’s $100 million a year scheme violates Medicaid statute’s prohibition on diverting payments intended for caregivers

Washington, DC (August 13, 2018) – The National Right to Work Legal Defense Foundation has today submitted formal comments to the U.S. Centers for Medicare & Medicaid (CMS) in support of the agency’s proposed rule to clarify that the diversion of Medicaid payments from providers to third parties, including unions, violates federal law.

The Foundation’s comments demonstrate how schemes enacted by roughly a dozen states have resulted in well over $100 million per year being diverted from health-care providers to union officials, in violation of federal law. The comments call on CMS to finalize a rule that definitively states that siphoning off union dues or fees from taxpayer-funded payments intended for healthcare providers violates the prohibition on assigning benefits to third parties under Section 1396a(a)(32) of the federal Medicaid statute.

As a gift to the Obama Administration’s political backers, in 2014 that administration promulgated a new regulation to give legal cover to ongoing schemes by the SEIU and other unions that have to date siphoned off over $1 billion in Medicaid funds. However, as the Foundation’s comments to CMS point out, agency rules cannot conflict with the underlying statute, which is why CMS should both repeal the Obama rule and replace it with explicit language to give states notice that continuing to divert payments puts their Medicaid funding at risk.

National Right to Work Foundation President Mark Mix issued the following statement about the filing of those comments in response to the CMS rulemaking notice:

“It is long past time that this outrageous attempt to create another exemption in federal law for union officials be ended. We encourage the CMS to expeditiously issue a final rule to stop the illegal siphoning off of funds from Medicaid providers. Despite the wishes of the politicians they back, union officials are not exempt from federal law. All the current proposed rule change would do is close the illegal loophole the Obama Administration attempted to create.

“Our 2014 National Right to Work Foundation-won 2014 Harris decision made it illegal for states to require these providers pay fees to union officials, but the current scheme to deduct union fees from Medicaid payments is part of union bosses’ attempts to undermine that ruling. Nothing in the proposed CMS rule would stop providers from sending truly voluntary dues to union officials with a check or credit card each month. It would merely stop union bosses from using public payment systems to intercept tax dollars intended for providers caring for those in need.”

Background: The 2014 Foundation-won Harris v. Quinn Supreme Court decision held that it is unconstitutional for states to force home care providers paid through Medicaid programs to pay union fees. That case still continues as 80,000 providers seek the return of over $30 million in funds seized from them in violation of their First Amendment rights.

Despite the Supreme Court’s ruling, the illegal dues skim has not stopped. That is why in 2017 the National Right to Work Foundation sent a letter to the Department of Health and Human Services to bring their attention to this issue. Additionally, Foundation President Mix personally raised the issue with Trump Administration officials at the White House earlier this year.

The National Right to Work Legal Defense Foundation is a nonprofit, charitable organization providing free legal aid to employees whose human or civil rights have been violated by compulsory unionism abuses. The Foundation, which can be contacted toll-free at 1-800-336-3600, assists thousands of employees in more than 250 cases nationwide per year.

Posted on Aug 13, 2018 in News Releases