Texas is suing Planned Parenthood for $1.8B over $10M in allegedly fraudulent services it rendered – a health care economist explains what’s going on

Graham Gardner, Assistant Professor of Economics, Texas Christian University

Planned Parenthood no longer provides abortions in Texas, Louisiana and the other 10 states that have essentially banned abortion since the Supreme Court handed down its Dobbs v. Jackson decision in June 2022.

But the nonprofit is still providing other services for patients in those places, including cancer screening, contraception and the treatment of HIV and sexually transmitted infections. And Texas hasn’t given up on its long-running quest to force the group, which provides reproductive health care in its nearly 600 U.S. clinics, to stop operating within its borders.

Alongside an anonymous whistleblower identified as “Alex Doe,” Texas authorities are suing Planned Parenthood for more than US$1.8 billion in penalties and fees over what they allege are fraudulent Medicaid reimbursements.

Planned Parenthood denies having committed Medicaid fraud. It calls the lawsuit “another political attack.”

As an economist who studies the health effects of restricted abortion access, I believe that if Texas prevails in this federal lawsuit, Texans will have even less access to sexual and reproductive health care. Notably, the state ranked 50th in access to high-quality prenatal and maternal health care in 2022, and maternal mortality rates in the state more than doubled between 1999 and 2019. The elimination of Planned Parenthood facilities across Texas will likely exacerbate the dismal conditions of reproductive care in the state.

Blocking Medicaid funds

Medicaid, a government program that helps low-income people get health care, provides roughly $728 billion in services annually. The federal and state governments split its costs.

In 2016, Texas removed Planned Parenthood from its list of qualified Medicaid providers, blocking Planned Parenthood clinics across the state from receiving any federal or state dollars to pay for expenses covered by Medicaid. Lower courts initially prevented this policy from going into effect.

But in 2020, the 5th U.S. Circuit Court of Appeals ruled that the state may exclude Planned Parenthood from receiving Medicaid reimbursement. Since then, Planned Parenthood has continued to operate in Texas, but the availability of health services to the nearly 8,000 Planned Parenthood patients who rely on Medicaid in the state has been put at risk.

New legal salvo

Texas now alleges that Planned Parenthood defrauded the state by billing expenses through Medicaid between 2016 and 2020 while its litigation was pending. The group counters that it legitimately billed Medicaid while the law was blocked by pending legal challenges.

Although Texas doesn’t dispute that the nonprofit provided the health care services for which it billed the state, and which the state paid for, Texas seeks the repayment of $10 million in Medicaid reimbursements.

The potential liability is far larger because it also includes interest, legal fees and civil penalties adding up to more than $1.8 billion. Planned Parenthood says the financial burden of the lawsuit, if the state wins, would significantly limit its ability to continue to operate in Texas.

This litigation originated in 2021, when the anonymous whistleblower brought a case against Planned Parenthood under the False Claims Act, which allows an individual to file a lawsuit on behalf of the government.

The state of Texas joined the lawsuit under the direction of Attorney General Ken Paxton in 2022. The case was filed in Amarillo, an area without a Planned Parenthood facility – a jurisdiction that might seem an unlikely choice. There’s one good explanation, however: All cases filed there are heard by U.S. District Judge Matthew Kacsmaryk.

The Trump-appointed judge made headlines in early 2023 when he suspended the approval of a common abortion-inducing pill. Kascmaryk’s anti-abortion history on the bench makes him a strategic choice to rule on the case against Planned Parenthood.

Reduced health care access

Texas has been curtailing public funding to Planned Parenthood clinics since at least 2011, when the state cut its family planning budget from $111 million to $38 million.

Following those cuts, 82 Texas clinics subsequently closed or stopped providing family planning services, about one-third of which were Planned Parenthood affiliates. Many that remained open reduced their hours under the financial strain.

Texas’ publicly funded family planning clinics served 54% fewer patients after the budget cuts. Then, in 2013, Texas stopped letting abortion providers and affiliates get any funding through the Texas Women’s Health Program – a decision that caused the federal government to remove all financial support to it.

In response, Texas restructured the program under a new name: “Healthy Texas Women,” entirely funded through the state.

Having lost those funds, 31 of Texas’ remaining 74 Planned Parenthood-affiliated clinics closed by 2017.

Trial slated for April 2024

This case, which goes to trial in April 2024, targets the three remaining Texas Planned Parenthood affiliates that operate roughly 35 clinics – two of which are in Louisiana.

By late 2023, 18 states had abortion-related laws on their books restricting state funds for family planning. Most of these laws target abortion providers, but in only six states does this restriction apply to clinics affiliated with those organizations.

Currently, only Texas prevents Planned Parenthood from receiving any Medicaid funds. Louisiana had an opportunity to join the lawsuit in Texas but instead settled with Planned Parenthood, which allowed the organization to continue to receive Medicaid funds in the state.

But legislation in Texas often spurs copycat bills elsewhere. A 2022 Texas restriction on abortion procedures after six weeks of gestation was quickly copied by Oklahoma, South Dakota and Idaho.

It’s reasonable to expect that other states may pass similar restrictions on Medicaid funding to Planned Parenthood. Already, related litigation filed in South Carolina is pending.

IUDs and cancer screening

Planned Parenthood clinic closures and the reimbursement restrictions it faces are reducing the availability of reproductive health services, particularly for low-income people.

After the change in the Healthy Texas Women program, the provision of Medicaid-funded, long-acting reversible contraceptives – a category that includes intrauterine devices (IUDs) and contraceptive implants – fell by 35%, and Medicaid-paid obstetric care for people giving birth increased by 27%.

In 2015, Texas prohibited Planned Parenthood from receiving state funds for breast and cervical cancer screenings and terminated a contract with Planned Parenthood Gulf Coast to financially support its HIV prevention program.

If the court rules against Planned Parenthood, and the ruling stands after the appeals process that would certainly follow such a decision, access to sexual and reproductive health services in Texas will decline further.

While the lawsuit could bankrupt Planned Parenthood affiliates in the state, driving the organization out at last, it does not appear likely that the national organization would have to foot this massive legal bill and face jeopardy on a larger scale.

And I have no doubt that Texas’ remaining reproductive health care clinics would surely experience an overwhelming demand for their services while trying to fill the gaps left behind.