Lawsuit: State officials illegally disqualified Nashville nonprofit from longstanding HIV grant

State health officials have declined to re-up a grant with Nashville CARES, a nonprofit sexual health clinic that has administered the Ryan White Insurance Assistance Program in Tennessee for more than 20 years, connecting thousands of low-income HIV-positive individuals to federally subsidized medical care.

The decision, upheld by a state panel in May, serves as the latest disruption in longstanding federal HIV funding to LGBTQ-serving community groups in Tennessee, which — like the South as a whole — experiences higher-than-average rates of infection.

In January, state officials shocked nonprofit staff across the state with notice that Tennessee would no longer accept more than $8 million in annual federal HIV prevention funding from the Centers for Disease Control and Prevention. Tennessee LGBTQ-serving community groups have long relied on the CDC funding to serve the approximately 20,000 Tennesseans living with HIV. At the time, state officials said no federal Ryan White funding would be affected.

Gov. Bill Lee then announced that $9 million in state funding would be directed toward HIV-prevention services aimed at first responders, mothers and children and victims of human trafficking, an announcement that did not mention the highest-risk groups for HIV, which include men who have sex with men and IV drug users.  The Lee administration has not yet released the names of the recipients of those state funds. A spokesperson for the Department of Health did not respond to questions for this story on Monday.

Late last week, Nashville CARES filed suit in Davidson County Chancery Court, alleging the state’s decision to disqualify the nonprofit from the Ryan White funding was “illegal, arbitrary, and endorses unlawful procedure.” The funding exceeds $80 million annually, with the majority of funding used to pay patient medical costs.

‘At first glance it looks like it fits the recent pattern’

The lawsuit seeks to vacate the state’s decision to shut Nashville CARES out of consideration for the grant. The nonprofit’s lawyers are asking that  state officials be ordered to restart the process of vetting organizations for the funding.

The dispute between Nashville CARES and state officials rests in differing interpretations of federal rules attached to the HIV funding, but has raised broader concerns that it fits a pattern of state officials targeting trusted LGBTQ-serving organizations in Tennessee.

“In this political climate, when another program is suffering an adverse impact it is natural for the LGBTQ community to put it in the broader context — the latest in a string of attacks on our community,” said Chris Sanders, executive director of the Tennessee Equality Project, which advocates for LGBTQ rights. “The lawsuit will bear all that out, but at first glance it looks like it fits the recent pattern.”

Nashville CARES has served about 5,000 low-income HIV-positive Tennesseans with funding from the Ryan White Insurance Assistance Program since 2001. The program provides federal funding that states distribute to nonprofit agencies, which in turn use the funds to cover health insurance premiums, drug co-pays and the administrative costs of the program, much like insurance companies operate.

A dispute over federal grant rules

In disqualifying Nashville CARES, state administrators claimed Nashville CARES was effectively serving as a pass-through to a for-profit company that handled the lion’s share of responsibilities for the federal grant — a suggestion that Nashville CARES disputes.

Federal rules require states to favor nonprofits in distributing Ryan White funding, unless there is no viable alternative. State officials reviewing Nashville CARES’ proposal concluded that the non-profit could not be considered for the grant, because of its reliance on a subcontractor.

The for-profit company, SGRX, has served as a subcontractor for Nashville CARES’ grant for several years, providing the technical expertise to track real-time pharmacy sales to meet requirements of the grant to make prompt payments for patients’ drug purchases. According to the lawsuit, SGRX serves in a similar role to nonprofits in other states who receive the same federal funding. Amna Osman, Nashville CARES CEO, declined to comment on the dispute.

A state “Protest Committee” consisting of the deputy commissioner of the Department of Finance and Administration, deputy treasurer with the Department of Treasury and director of financial management for the Department of General Services reviewed the decision to disqualify Nashville CARES and concluded in May that the state had followed the right procedures.

State health officials instead awarded the Ryan White grant to Broward Regional Health Planning Council, a south Florida nonprofit affiliated with the Florida Department of Health. The nonprofit, which has not yet provided HIV services in Tennessee, was created to serve the needs of Broward County residents, according to its website. Half of its board members are appointed by the Broward County Commission, the website says.

The Broward Regional Health Planning Council joined the state in opposing Nashville CARES, claiming it had an “improper relationship” with SGRX and that the for-profit company would be performing all the essential services required of the grant, contrary to federal rules. Lawyers for the council said Nashville Cares “respectfully, is nothing more than a Trojan horse for SGRX.”