Poor Nebraska parents cannot be denied Medicaid-funded health care simply because they do not follow rules for the separate Employment First program, according to the Nebraska Supreme Court.

Friday's ruling restores Medicaid-funded health care to at least 400 parents who lost benefits because the state tied the two programs together, said James Goddard, an attorney for Nebraska Appleseed Center for Law in the Public Interest.

"This is a really important ruling for low-income parents," said Becky Gould, executive director of Nebraska Appleseed, which represented the Medicaid clients in the lawsuit.

"From our perspective, access to health care is critical to helping low-income parents successfully move out of poverty," she said.

The Department of Health and Human Services will not know until next week the decision's budget implications, said spokeswoman Kathie Osterman.

HHS staff spent Friday figuring out how to comply with the decision, so future Aid to Dependent Children clients will not lose Medicaid benefits for sanctions, and lifting sanctions on current clients, she said.

Appleseed filed the lawsuit on behalf of a Nebraska woman who had qualified for both Medicaid and other employment-related benefits through a program called Employment First.

Participants in Employment First get job training, help finding work and a small monthly cash benefit. They must follow an assortment of rules, including participating in training, volunteering or looking for work for at least 30 hours a week.

Jennifer Davio, who has a heart condition requiring medication, monthly visits to a cardiologist and the draining of fluid around her heart, lost both the ADC cash benefits and Medicaid when she failed to follow all Employment First rules.

The court ruled HHS overstepped its authority, violating the principles of separation of powers, by tying together two separate programs that are covered by separate laws.

The intent of Welfare Reform and the Employment First program was to promote economic self-sufficiency, providing people the support needed to move away from public assistance, according to the decision.

The goal of the Medical Assistance Act is to provide medical care to people in need and makes no reference to Employment First contracts, the high court said.

Nothing in state law specifically states HHS may remove Medicaid benefits as a part of the sanctioning process for Employment First.

If the Legislature had intended Medicaid to be removed as a sanction, senators could have stated that in state law, according to the decision.

The Supreme Court upheld a decision last summer by Lancaster County District Court Judge Karen Flowers.

Appleseed initially filed the suit as a class action lawsuit.

But the lower court and Supreme Court refused to consider the case as a class action because the other unnamed members of the class had not appealed their Medicaid cutoff to a state hearing officer before filing a lawsuit. That means there will be no retroactive relief and no monetary damages, Goddard said.

But the decision will affect all future ADC recipients. If sanctioned, they will lose only their ADC cash benefit -- not their Medicaid funded health care.

Reach Nancy Hicks at 402-473-7250 or nhicks@journalstar.com.