Appeals court weighs Planned Parenthood Medicaid case that could cost up to $1.8 billion

A full panel of judges on the U.S. Court of Appeals for the Fifth Circuit heard oral arguments Thursday in a high-stakes case that could force Planned Parenthood to repay as much as $1.8 billion in Medicaid funds, depending on a jury’s calculations. The dispute centers on Planned Parenthood’s receipt of Medicaid reimbursements in Texas and Louisiana during a period when the two states had disqualified the nonprofit from their programs, raising questions about whether the organization is immune from repayment.

The potential liability hinges on funds Planned Parenthood collected over four years while an injunction blocked the states from enforcing certain Medicaid qualifications. An anonymous litigant identifying as “Alex Doe” joined on behalf of Texas and Louisiana to claw back the payments, with the amount ultimately to be determined by a jury in the lower court. Planned Parenthood has argued it retained immunity because its counsel advised it to continue collecting reimbursements during the injunction period. If the amount stands, it could include the reimbursements plus multipliers, boosting the total toward the $1.8 billion figure.

The central legal question before the Fifth Circuit’s en banc panel is whether Planned Parenthood had immunity when it collected four years’ worth of Medicaid dollars, a defense the nonprofit says rests on its interpretation of guidance from counsel during the injunction period. A prior, three-judge panel on the same court—composed of two Republican-appointed judges and one Democrat-appointed judge—had signaled sympathy toward Planned Parenthood, but the full en banc court is now weighing whether immunity should apply when funds were disbursed under an ongoing court order.

Background matters illuminate the stakes. Texas and Louisiana moved to strip Planned Parenthood affiliates of Medicaid eligibility after undercover videos produced by the Center for Medical Progress and associated activists, including David Daleiden, showed staff discussing the handling of aborted fetal tissue. Daleiden faced lawsuits and prosecution for allegedly recording staff without consent, but his materials helped catalyze a broader push by abortion opponents to defund Planned Parenthood. Planned Parenthood subsequently sued Texas and Louisiana, initially winning an injunction that allowed it to continue receiving Medicaid reimbursements. Those injunctions were later reversed on appeal.

In the wake of the reversals, an anonymous litigant filed a new lawsuit on behalf of the states seeking to recoup the funds collected while the injunction was in place. Court filings indicate the potential liability could be substantial, with the final amount to be set by a jury in the lower court. Planned Parenthood has argued that immunity should shield it from repayment, while the states contend that the organization extracted funds in contravention of state qualifications and rules governing program participation.

The case sits amid a broader legal and political landscape around Medicaid funding for Planned Parenthood. In a related development this year, Congress voted to strip federal Medicaid funding for Planned Parenthood for a one-year period, a policy shift that underscores the contentious nature of the nonprofit’s role in health care. Separately, the U.S. Court of Appeals for the 1st Circuit ruled against Planned Parenthood in a separate defunding dispute, adding to a string of legal setbacks in challenges to federal funding decisions. The Supreme Court has previously ruled against Planned Parenthood in a Medicaid funding dispute, a decision cited by both sides as they frame this Fifth Circuit fight.

Planned Parenthood officials have decried the litigation as politically motivated and warned that a loss could threaten a nationwide network of clinics. Susan Manning, Planned Parenthood Federation of America’s general counselor, called the Texas-Louisiana lawsuit a deliberate effort to shut down Planned Parenthood and limit access to sexual and reproductive health care. She noted that Planned Parenthood health centers serve millions of people each year, including more than 2 million patients nationwide.

Advocates on the other side argue that state budgets and program integrity require clawing back funds obtained during periods when Planned Parenthood was not qualified to participate in Medicaid. They contend that allowing the nonprofit to keep the money could undermine the integrity of public health programs and erode accountability for funds disbursed under injunctions.

Experts say the Fifth Circuit’s decision could have broad implications for similar Medicaid-reimbursement disputes involving other providers and state actions taken in response to health-care policy debates. While the outcome remains uncertain, Thursday’s arguments underscored the court’s focus on immunities, the scope of injunctions, and how judges should apply state-fine recovery principles to complex, multi-year funding flows.

As the case proceeds, health policy observers are watching not only the potential financial impact on Planned Parenthood but also how a ruling might influence access to reproductive health care, particularly in states that have moved to tighten or restrict funding in response to political and social pressures surrounding abortion.