## Facts

- Colorado participates in Medicaid and receives federal matching funds conditioned on compliance with the Medicaid Act, 42 U.S.C. § 1396 et seq., and implementing regulations.
- Federal welfare reform legislation (PRWORA), 8 U.S.C. §§ 1601–1646, altered non-citizen eligibility rules and permitted states to decide whether to provide certain public benefits, including some Medicaid coverage, to specified non-citizen categories.
- Colorado had provided optional Medicaid coverage to legal aliens eligible under federal law.
- In response to a budget shortfall, Colorado enacted Senate Bill 03-176 (effective April 1, 2003) to repeal optional Medicaid coverage for approximately 3,500 indigent legal immigrants.
- A class of affected legal aliens sued the executive director of Colorado’s Medicaid agency in her official capacity, seeking to enjoin implementation.
- Plaintiffs alleged (1) SB 03-176 violated equal protection by discriminating against legal aliens, and (2) the state’s termination process violated the Medicaid Act and due process by failing to provide adequate notice and hearing procedures, risking erroneous terminations of those still eligible under other categories.

## Issues

1. Whether Colorado’s termination of optional Medicaid coverage for certain lawfully present aliens under SB 03-176 violates the Equal Protection Clause.
2. Whether Colorado’s implementation procedures for terminating benefits comply with the Medicaid Act’s notice and fair-hearing requirements (and related due process concerns).

## Decision

- The Tenth Circuit affirmed in part and reversed in part the district court’s denial of a preliminary injunction in a 2–1 decision.
- The court rejected the equal protection challenge and allowed Colorado to implement SB 03-176’s substantive eligibility change.
- The court held the state’s procedures likely violated the Medicaid Act by denying some class members a right to a hearing before benefits were terminated.
- The court vacated its prior appellate injunction that had temporarily blocked the benefit terminations and limited relief to enforcing the hearing requirement.

## Legal Principles

- When a state acts pursuant to explicit congressional authorization in an area connected to federal immigration policy, equal protection review of state alienage-related benefit restrictions may be more deferential than strict scrutiny.
- Under PRWORA, Congress permitted states to choose whether to provide certain optional public benefits, including Medicaid coverage, to specified categories of non-citizens; a state may discontinue optional Medicaid coverage consistent with that authorization.
- Even where a state may lawfully narrow optional Medicaid eligibility, the Medicaid Act and regulations require adequate notice and an opportunity for a fair hearing before terminating or reducing benefits for individuals who may remain eligible, to reduce erroneous deprivation.

## Conclusion

Colorado could, consistent with equal protection, end optional Medicaid coverage for certain lawfully present aliens under PRWORA-authorized state discretion, but it had to comply with the Medicaid Act’s procedural protections by providing hearing rights to affected recipients before terminating benefits.


Soskin v. Reinertson, 353 F.3d 1242 (10th Cir. 2004)