Federal Judge tosses Florida Gov. DeSantis lawsuit on children's health insurance

A U.S. district judge Friday rejected a lawsuit filed by Florida challenging new federal guidelines in a program that provides subsidized health insurance to children.

Tampa-based Judge William Jung issued a 16-page ruling that said federal law required Florida to go through an administrative process to challenge the guidelines. After that process, the state could take the issue to a federal appeals court.

Jung denied a request by Florida for a preliminary injunction and dismissed the lawsuit against the federal Centers for Medicare & Medicaid Services and the U.S. Department of Health and Human Services.

The dispute involves the federal Children's Health Insurance Program, which operates in Florida as KidCare. The program provides low-cost health insurance to children whose families make too much money to qualify for Medicaid. In Florida, that has meant families have paid $15 or $20 a month for coverage.

Florida filed the lawsuit in February, challenging new guidelines that would prevent states from cutting off coverage for non-payment of premiums after children have been found eligible for the program. Eligibility is determined each year, so the state contends the guidelines could lead to coverage being provided for months without premiums being paid.

With KidCare financed by the state, the federal government and premiums, the lawsuit said family payments play an important role in "maintaining the long-term stability" of the program.

But Jung, who was appointed to the federal bench by former President Donald Trump, said Florida needed to pursue an administrative challenge at the Centers for Medicare & Medicaid Services, rather than filing the lawsuit in district court. The federal agency issued the guidelines in fall 2023 through what is described in Jung's ruling as a "frequently asked questions" or FAQ document.

"CMS (the Centers for Medicare & Medicaid Services) released the FAQs and requested amended CHIP (Children's Health Insurance Program) plans from states that treated nonpayment of premiums as an exception to continuous eligibility," Jung wrote. "Rather than submitting an amended plan or risking an adverse determination, Florida filed this action in federal court seeking a preliminary injunction. This Florida cannot do."

Florida contends that federal officials violated a law known as the Administrative Procedure Act. But Jung wrote that it "is undisputed that any analysis of Florida's APA (Administrative Procedure Act) claims will largely turn on properly interpreting the Medicaid and CHIP statutes. Interpretation of these statutes falls squarely within CMS' realm of expertise, especially considering Medicaid and CHIP's recognized complexities."

U.S. Department of Justice attorneys have argued that the guidelines properly carry out a federal law known as the Consolidated Appropriations Act, 2023, which made changes to the Children's Health Insurance Program. In a February court filing, Justice Department attorneys said the law required the children's program to match a "continuous eligibility requirement" in Medicaid that does not allow dropping coverage for non-payment of premiums.

"These changes were intended to reduce 'churn'—cycles of termination and re-enrollment that increase administrative costs and cause coverage lapses for vulnerable children," the document said.

Florida's children's health program dates to the 1990s, with subsidized insurance available to families with incomes up to 210 percent of the federal poverty level. As an example, a family of four at 200 percent of the poverty level this year would have income of $62,400, according to federal calculations.

The Legislature and Gov. Ron DeSantis last year approved a bill that would expand eligibility in the subsidized health program to 300 percent of the poverty level with higher premiums than have been charged in the past. The expansion requires federal approval, and court documents said the state would have to comply with the new guidelines to get approval.

"CMS indicated that it would not approve Florida's proposed expansion without accompanying modifications to Florida CHIP's continuous eligibility provisions, namely, the provisions that allow the state to disenroll an eligible child for nonpayment of premiums during the continuous eligibility period," the lawsuit said.