Wright-Gray
Filing
140
MEMORANDUM Opinion and Order Signed by the Honorable Edmond E. Chang on 2/2/2012:Mailed notice(slb, )
UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
KIMBERLY WRIGHT-GRAY,
individually and on behalf of all
others similarly situated,
Plaintiff,
v.
JULIE HAMOS, in her official capacity
as Director of the Illinois Department
of Healthcare and Family Services,
Defendant.
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Case No. 09 C 04414
Judge Edmond E. Chang
MEMORANDUM OPINION AND ORDER
Plaintiff Kimberly Wright-Gray, as a putative class representative, has sued
Julie Hamos,1 in her official capacity as Director of the Illinois Department of
Healthcare and Family Services.2 Wright-Gray seeks to enjoin the Department from
1
Plaintiff originally named Barry S. Maram, who served as the Director of the Illinois
Department of Healthcare and Family Services before Julie Hamos, as a defendant. However,
because Plaintiff brings suit against Maram solely in his official capacity, the claim against
Maram must be treated as a suit against the government entity itself, see Walker v. Sheahan,
526 F.3d 973, 977 (7th Cir. 2008). Hamos became Acting Director of the Department in April
2010, and was automatically substituted as the proper party defendant pursuant to Federal
Rule of Civil Procedure 25(d). See R. 63 at 1 n.1; R. 93 (Def.’s Stmt. of Facts) ¶ 9.
2
The Court has subject matter jurisdiction pursuant to 28 U.S.C. § 1331. Count 5, which
is based on the allegations in Count 1, alleges an ongoing violation of the federal Medicaid
statutes, 42 U.S.C. § 1396 et seq. Wright-Gray can use 42 U.S.C. § 1983 as a vehicle to pursue
her claim that Defendant imposes liens on workers’ compensation settlements in violation of
Medicaid’s anti-lien provision, § 1396p. The Medicaid Act does not explicitly preclude private
actions. See generally Fitzgerald v. Barnstable Sch. Comm., 555 U.S. 246, 252 (2009); Wilder
v. Virginia Hosp. Ass’n, 496 U.S. 498, 521 (1990) (“The Medicaid Act contains no . . . provision
for private judicial or administrative enforcement” comparable to those in Middlesex Cnty.
Sewerage Auth. v. Nat’l Sea Clammers Ass’n, 453 U.S. 1, 19-20 (1981) and Smith v. Robinson,
468 U.S. 992, 1012 (1984).); see also Bertrand v. Maram, 495 F.3d 452, 456 (7th Cir. 2007)
(Ҥ 1983 allows the enforcement of federal law (such as the Medicaid statute) against state
actors (such as the Illinois Department of Health and Family Services)”). Although Hamos
continuing to assert liens that she claims violate federal Medicaid law, 42 U.S.C.
§ 1396p. Wright-Gray has filed a motion for class certification [R. 57], and the parties
also have filed cross-motions for summary judgment [R. 92, 96]. For the reasons
discussed below, the Court concludes that the case must be dismissed for lack of Article
III jurisdiction because Wright-Gray’s claim for injunctive relief is moot (indeed, she
never had standing to assert it). To the extent that the Department’s summaryjudgment motion seeks the jurisdiction-based dismissal, the motion is granted. In light
of the dismissal, the formal rulings on the class-certification motion and the summary
judgment motions on the merits are that they are denied as moot. But the Court
explains, as alternative grounds for entering judgment for the Department, how it
would have ruled on those motions.
I.
In deciding the parties’ cross-motions for summary judgment, the Court views
the evidence in the light most favorable to the respective non-moving party. WrightGray began working for the Cook County Forest Preserve District in 2002. R. 93, Def.’s
Stmt. of Facts (DSOF) ¶ 3. In 2005 and 2007, Wright-Gray was injured on the job. Id.
¶¶ 7-8. After each injury, Wright-Gray filed a case with the Illinois Workers’
Compensation Commission. Id. ¶¶ 12-13. As a Medicaid recipient, Wright-Gray
received medical care for her work-related injuries from physicians and other providers
continues to assert that this Court does not have subject matter jurisdiction, see DSOF ¶ 11,
this argument was rejected by the district judge previously assigned to the case [R. 45, 52] and
this Court agrees there is subject matter jurisdiction over Count 5.
2
who were enrolled in Medicaid. Id. ¶ 21; R. 98, Pl.’s Stmt. of Facts (PSOF) ¶¶ 2-3.
These providers billed and received payment from Illinois’ Medicaid program, which
is administered by the Illinois Department of Healthcare and Family Services. DSOF
¶ 16; PSOF ¶ 2. Through the Medicaid program, the Department paid several of
Wright-Gray’s medical claims. DSOF ¶ 21.
In December 2005, the Department3 sent a document titled “Subrogation Notice”
to the Forest Preserve, notifying the Forest Preserve that the Department “has become
subrogated to Kimberly Wright’s right of action to recover medical expenses.” Id. ¶ 18.
This Notice is sent to third-party employers in situations where a Medicaid recipient
has filed a workers’ compensation claim and the Department has paid medical bills
related to the claim. PSOF ¶ 20. The substance of the Subrogation Notice has not
changed in over seventeen years. Id. ¶ 21. The attachment to the Subrogation Notice
states: “The Department is not attempting to place a lien on any settlement the injured
person may receive.” DSOF ¶ 19. Wright-Gray’s workers’ compensation attorney,
Lawrence Mack, also received a copy of the Department’s Subrogation Notice. Id. ¶ 20.
Indeed, the Department relies on the Medicaid recipient’s workers’ compensation
attorney to inform the Department whether his client’s settlement includes medical
costs. PSOF ¶ 22. In this case, Mack reviewed Wright-Gray’s medical claims to
determine which ones paid by Medicaid were related to the work injuries she sustained
in 2005 and 2007. DSOF ¶ 25. Between June and December 2008, Mack and the
3
The Illinois Department of Healthcare and Family Services was formerly known as the
Illinois Department of Public Aid.
3
Department communicated about the medical claims Mack had identified as being
properly related to Wright-Gray’s workers’ compensation cases. Id. ¶¶ 26-31.
Ultimately, the parties agreed that the Department should receive $538.82 for the
medical expenses it paid on Wright-Gray’s behalf. Id. ¶ 31.
Wright-Gray settled both of her workers’ compensation cases against the Forest
Preserve. Id. ¶ 33. In April 2009, pursuant to the settlement agreement, the Forest
Preserve issued a check for $8,500 payable to Wright-Gray and her attorney, Mack. Id.
¶ 35. The following month Mack sent a letter to the Department; along with the letter
was a check, which the letter described as a “check for $538.82 in satisfaction of your
disputed subrogation interest in this matter.” Id. ¶ 38.
Wright-Gray now claims that the Department’s subrogation letter was an
improper “lien” on her workers’ compensation settlement in violation of federal
Medicaid law. R. 1 (Compl.) ¶¶ 1-3. She filed the instant putative class action in July
2009. See id. Wright-Gray is still employed by the Forest Preserve. DSOF ¶ 5. She has
medical insurance through Cook County, but also continues to receive Medicaid. Id. ¶¶
6-7.
Wright-Gray seeks to certify a class of “[a]ll Illinois citizens who have received,
or may receive in the future, Medicaid benefits, for medical care or services related to
injuries sustained at work, who have received, or may in the future receive, a
subrogation lien/notice letter from The Illinois Department of Healthcare and Family
Services.” R. 58 (Pl.’s Class Cert. Br.) at 2. The Department opposes class certification
4
in this case [R. 66], and also filed a motion for summary judgment on the merits [R.
82]. Wright-Gray filed a cross-motion for summary judgment. R. 92.
II.
The threshold question is whether Wright-Gray’s claim for injunctive relief is
moot. Evers v. Astrue, 536 F.3d 651, 662 (7th Cir. 2008). The Department argues that
it is because her worker’s compensation claims were settled, and because she currently
has medical insurance. R. 94 (Def.’s Br.) at 2-5. Article III of the Constitution limits the
federal courts to adjudicating actual “cases or controversies.” U.S. Const. art. III, § 2;
Damasco v. Clearwire Corp., 662 F.3d 891, 894 (7th Cir. 2011). Thus, “cases that do not
involve actual, ongoing controversies are moot and must be dismissed for lack of
jurisdiction.” Wis. Right to Life, Inc. v. Schober, 366 F.3d 485, 490-91 (7th Cir. 2004).
Ensuring that a case is not moot is really a way of ensuring that the
requirement of standing is met throughout the litigation. The question of standing
focuses “on whether the party invoking jurisdiction had the requisite stake in the
outcome when the suit was filed,” and is an essential part of the case or controversy
requirement of Article III. Davis v. FEC, 554 U.S. 724, 734 (2008) (citing Friends of the
Earth, Inc. v. Laidlaw Envtl. Servs. (TOC), Inc., 528 U.S. 167, 180 (2000)). Mootness,
on the other hand, has been referred to as “a subset of the standing doctrine.”
Laskowski v. Spellings, 546 F.3d 822, 824 (7th Cir. 2008). “Mootness is ‘the doctrine of
standing set in a time frame: The requisite personal interest that must exist at the
commencement of the litigation (standing) must continue throughout its existence
(mootness).’” Laskowski, 546 F.3d at 824 (quoting Friends of the Earth, 528 U.S. at
5
189)). When a party loses standing during the litigation due to intervening events, “the
inquiry is . . . one of mootness.’” Parvati Corp. v. City of Oak Forest, 630 F.3d 512, 516
(7th Cir. 2010).
At this stage of the litigation, the Department does not challenge Wright-Gray’s
standing and instead confines its argument to the issue of mootness. Def.’s Br. at 2-5.
The Department argues that this case is moot because even if Wright-Gray prevailed
on the merits, her legal rights would not be affected. Wright-Gray responds that her
case is not moot because there is a possibility that she will be injured on the job again
in the future and receive the same allegedly unlawful Subrogation Notice from the
Department. R. 109 (Pl.’s Resp. Br.) at 3. Here, the undisputed facts demonstrate that
Wright-Gray’s request for injunctive relief in Count 5 – the only claim remaining in
this case – is moot as a matter of law.
First, it is undisputed that, before filing this lawsuit, Wright-Gray agreed that
the Department had an interest in her right of action to recover medical expenses
related to the injuries she sustained at work. Wright-Gray, through her attorney,
communicated with the Department about her medical claims, and ultimately agreed
to send the Department a check for $538.82 as satisfaction of the Department’s
disputed subrogation interest. The money was paid, and the check was cashed. Once
Wright-Gray voluntarily made the agreed-upon payment to the Department, the
alleged “lien” (if there actually was one) against her was extinguished. It is also
undisputed that, as of September 13, 2010, Wright-Gray did not have any cases
6
pending before the Illinois Workers’ Compensation Commission. DSOF ¶ 39. And there
is no evidence in the record that Wright-Gray has a case pending today.
Wright-Gray fails to demonstrate how enjoining the Department from
continuing to disseminate Subrogation Notices to Medicaid recipients would remedy
an injury she suffers. Such an order would not affect Wright-Gray’s legal rights.
Indeed, the Court concludes that Wright-Gray did not have standing at the start of this
case to pursue the claim for injunctive relief. A plaintiff must demonstrate standing
for each claim she seeks to press and for each form of relief that is sought.
DaimlerChrysler Corp. v. Cuno, 547 U.S. 332, 352 (2006). Although Wright-Gray’s
complaint alleges an actual injury that is directly traceable to the Department’s alleged
unlawful practice of asserting liens on workers’ compensation awards, Wright-Gray
must also show that “it is likely, as opposed to merely speculative, that the injury will
be redressed by a favorable decision.” Friends of the Earth, 528 U.S. at 180-81. It is
true that Wright-Gray initially sought damages in addition to injunctive relief (to
repeat, injunctive relief is the sole remaining claim), but the fact that she had standing
to pursue monetary relief does not mean that she had blanket standing to bring the
action as a whole.
Of course, at the pleading stage, questions regarding proof of a plaintiff’s
standing are often premature. See Lujan v. Defenders of Wildlife, 504 U.S. 555, 561
(1992) (at pleading stage, “general factual allegations of injury . . . may suffice,” but
thereafter standing “must be supported in the same way as any other matter on which
the plaintiff bears the burden of proof, i.e., with the manner and degree of evidence
7
required at successive stages of litigation”). However, when asking for injunctive relief,
the plaintiff is required to allege a real and immediate threat that the alleged harm
will occur. City of Los Angeles v. Lyons, 461 U.S. 95, 102 (1983). Here, Wright-Gray’s
complaint does not contain sufficient facts to confer standing with respect to the
injunctive relief requested in Count 5. Although Wright-Gray alleged that the
Department had “improperly taken” a portion of her workers’ compensation award,
“past exposure to illegal conduct does not in itself show a present case or controversy
regarding injunctive relief.” Lyons, 461 U.S. at 102. In short, granting the requested
injunction would not have affected Wright-Gray’s rights at the time she filed the
complaint and, after discovery and at the summary-judgment stage, this remains true.
Wright-Gray cannot base her claim on her anticipation that she will receive a
Subrogation Notice from the Department in the future. As the Department points out,
the possibility that Wright-Gray might get injured on the job, file a workers’
compensation action, and receive medical treatment from a Medicaid-enrolled provider
is speculative. R. 113 (Def.’s Reply) at 4. And Wright-Gray does not have a case
pending before the Illinois Workers’ Compensation Commission. Rather, her lawsuit
is based on the alleged lien placed on the settlement she received for the 2005 and 2007
workers’ compensation cases. Wright-Gray settled the dispute over the payment of
medical expenses by the Department, forgoing her opportunity to sue and challenge the
alleged lien. In addition, Wright-Gray’s insurance coverage has changed. Wright-Gray
now has primary medical insurance through her employer, the Cook County Forest
8
Preserve. R. 108-1 (Pl.’s Aff.) ¶¶ 3-4. Her secondary medical insurance is through
Medicaid. Id. ¶ 5.
The Supreme Court has “repeatedly recognized that what is required for
litigation to continue is essentially identical to what is required for litigation to begin:
There must be a justiciable case or controversy as required by Article III. ‘Simply
stated, a case is moot when the issues presented are no longer “live” or the parties lack
a legally cognizable interest in the outcome.’” Friends of the Earth, 528 U.S. at 721
(quoting Powell v. McCormack, 395 U.S. 486, 496 (1969)). The theoretical possibility
that Wright-Gray might again receive a Subrogation Notice from the Department is
not enough to keep her claim for prospective injunctive relief alive. Nor is her
argument that an injunction would redress the complained-of conduct because it would
allow her “and all future beneficiaries of healthcare benefits to be assured that Illinois’
governmental bodies will follow applicable laws” persuasive. See Pl.’s Resp. Br. at 6.
Although this case has been litigated for years, resulting in sunk costs to the judicial
system (and the parties), courts do not have a license to retain jurisdiction over a case
in which one or both of the parties plainly lack an interest. See Friends of the Earth,
528 U.S. at 192. For all of these reasons, Wright-Gray does not have an actual stake
in the outcome of this lawsuit, and her claim for injunctive relief must be dismissed as
moot.
Moreover, Wright-Gray’s claim does not meet either of the exceptions to the
mootness doctrine: cases involving “voluntary cessation,” and cases that are “capable
of repetition yet evading review.” Walsh v. U.S. Dep’t of Veterans Affairs, 400 F.3d 535,
9
537 (7th Cir. 2005). Although Wright-Gray argues that, unless enjoined by the Court,
she will be subject to repeated violations of the law in the event she is injured at work
again, she does not appear to be invoking the latter exception to mootness. See Pl.’s
Resp. Br. at 3. Indeed, the “capable of repetition yet evading review” exception only
applies where “(1) the challenged action is in its duration too short to be fully litigated
prior to cessation or expiration, and (2) there is a reasonable expectation that the same
complaining party will be subject to the same action again.” Wis. Right to Life State
Political Action Comm. v. Barland, 664 F.3d 139, 149 (7th Cir. 2011). Here, it is
undisputed that the Department continues to issue Subrogation Notices (so other
recipients might bring a suit), and as already discussed, there is not a “reasonable
expectation” that Wright-Gray herself will receive a Notice again. The exception does
not apply.4
Nor does it help that Wright-Gray filed this case as a putative class action.
Wright-Gray, the sole named plaintiff, has never had a personal stake in attaining
injunctive relief pursuant to Count 5. This is not a situation where the named
plaintiff’s personal stake evaporated after moving for class certification. See Damasco
v. Clearwire Corp., 662 F.3d 891, 895-96 (7th Cir. 2011). In Damasco, the Seventh
Circuit reaffirmed its rule that a complete offer of settlement made prior to the filing
4
In addition, the “capable of repetition, yet evading review” doctrine applies only where
a plaintiff had standing when the lawsuit is commenced, and later loses standing. As discussed,
Wright-Gray never had standing to bring a claim for injunctive relief; therefore, the doctrine
is not applicable here. Friends of the Earth, Inc. v. Laidlaw Environmental Serv., 528 U.S. 167,
191 (2000) (“if a plaintiff lacks standing at the time the action commences, the fact that the
dispute is capable of repetition yet evading review will not entitle the complainant to a federal
judicial forum”).
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for class certification moots a plaintiff’s claim. Id. (citing Holstein v. City of Chicago,
29 F.3d 1145, 1147 (7th Cir. 1994)). The court noted that it has “long held that a
defendant cannot moot a case by making an offer after a plaintiff moves to certify a
class, observing that ‘[o]therwise the defendant could delay the action indefinitely by
paying off each class representative in succession.’” Id. at 895 (quoting Primax
Recoveries v. Sevilla, 324 F.3d 544, 546-47 (7th Cir. 2003)).
The “buy-off problem” addressed in Damasco is not present here. Wright-Gray’s
decision to settle her medical expenses dispute with the Department before filing this
lawsuit mooted her claim. Thus, her claim for injunctive relief was moot even before
she filed her complaint, and well before she filed her motion for class certification.
III.
Even if the Court is wrong in concluding that there is no Article III jurisdiction
over this case, the Court would have denied Plaintiff’s motion for class certification and
summary judgment motion on the merits, and the Court would have entered summary
judgment for the Department. (And if Wright-Gray appeals from the jurisdictional
dismissal, explaining these alternative grounds for decision will permit the parties to
present all of the disputes to the Seventh Circuit, giving the Court of Appeals the
chance to decide, if it so chooses, all of the issues in one appeal if the jurisdictional
dismissal turns out to be incorrect.)
Courts usually should decide the question of class certification before turning
to the merits of a given action. See Weismueller v. Kosobucki, 513 F.3d 784, 786-87 (7th
Cir. 2008). Here, Wright-Gray argues that a class action would be the best way to
11
resolve the dispute in this case. The Department responds that Wright-Gray’s motion
for certification must be denied because Wright-Gray cannot meet the requirements
of Federal Rule of Civil Procedure 23.
“To be certified, a proposed class must satisfy the requirements of Federal Rule
of Civil Procedure 23(a), as well as one of the three alternatives in Rule 23(b).” Messner
v. Northshore Univ. HealthSystem, – F.3d –, 2012 WL 129991, at *4 (7th Cir. Jan. 13,
2012). First, under Rule 23(a), the party seeking certification must demonstrate that:
(1) the class is so numerous that joinder of all members is impracticable; (2) there are
questions of law or fact common to the class; (3) the claims or defenses of the
representative parties are typical of the claims or defenses of the class; and (4) the
representative parties will fairly and adequately protect the interests of the class.
Second, the proposed class must satisfy at least one of the three requirements listed
in Rule 23(b). Wright-Gray relies on Rule 23(b)(2), which applies when “the party
opposing the class has acted or refused to act on grounds that apply generally to the
class, so that final injunctive relief . . . is appropriate respecting the class as a whole.”
See R. 131 (Pl.’s Resp. to Def.’s Supp. Br.) at 2.
“A class may be certified only if ‘the trial court is satisfied, after a rigorous
analysis, that the prerequisites of Rule 23(a) have been satisfied.” Creative Montessori
Learning Ctrs. v. Ashford Gear LLC, 662 F.3d 913, 916 (7th Cir. 2011) (emphasis added
by Creative Montessori) (quoting Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct. 2541, 2551
(2011)). The named plaintiff bears the burden of showing that each requirement is
satisfied. See Retired Chicago Police Ass’n v. City of Chicago, 7 F.3d 584, 596 (7th Cir.
12
1993). The Court “must make whatever factual and legal inquiries are necessary to
ensure that requirements for class certification are satisfied before deciding whether
a class should be certified, even if those considerations overlap the merits of the case.”
Am. Honda Motor Co. v. Allen, 600 F.3d 813, 815 (7th Cir. 2010) (citing Szabo v.
Bridgeport Machs., 249 F.3d 672, 676 (7th Cir. 2001)); see also Dukes, 131 S. Ct. at
2551 (class certification analysis “[f]requently . . . will entail some overlap with the
merits of the plaintiff's underlying claim”). The Court has “broad discretion to
determine whether certification of a class-action lawsuit is appropriate.” Chavez v. Ill.
State Police, 251 F.3d 612, 619 (7th Cir. 2001).
Wright-Gray moves the Court to certify a class of “[a]ll Illinois citizens who have
received, or may receive in the future, Medicaid benefits, for medical care or services
related to injuries sustained at work, who have received, or may in the future receive,
a subrogation lien/notice letter from The Illinois Department of Healthcare and Family
Services.”5 R. 58 (Pl.’s Class Cert. Br.) at 2. In support of her motion, Wright-Gray
states that “the proposed Class members’ claims relate to [the Department’s] standard
practice of asserting a lien on every worker’s compensation settlement and award
5
To conform with the rulings of the previously-assigned judge, this definition differs
from the class Wright-Gray proposed in her complaint. Specifically, in her complaint, WrightGray sought certification of “Illinois citizens who have received Medicaid and who had liens
asserted and/or moneys taken by Defendants out of their third-party workers’ compensation
settlements from July 22, 2004, where said settlements were unrelated to medical care and
services, or where the liens asserted and or monies taken by Defendants were in excess of the
amount of said settlement related to medical care and services in violation of 42 U.S.C. Section
1396p(a)(1).” R. 1 ¶ 11. After the previously-assigned judge granted the Department’s motion
to dismiss four out of the five claims, leaving only the injunctive relief claim, Wright-Gray
revised the class definition “in order to reflect that the injunctive relief count is the only
remaining count in this action.” R. 72 (Pl.’s Reply Br.) at 12.
13
received by persons who filed a worker’s compensation claim and had their medical
bills relating to the claim paid by [the Department] through public aid payments,
regardless of whether a settlement or award represented payment for medical care,
disability or permanent injury.” R. 131 at 1-2. Wright-Gray claims that the
Department’s “standard practice violates federal law, which prohibits states from
asserting liens on any amount of a worker’s compensation settlement or award that
does not represent payment for medical care.” R. 131 at 2. In Count 5, Wright-Gray
contends that the Department should be enjoined from asserting such liens. Thus, she
argues that the issue (and answer) for every member of the class will be the same –
does it violate federal law for the Department to send Subrogation Notices to all
Medicaid recipients who have workers’ compensation claims, regardless of whether the
settlement includes compensation for medical expenses? R. 57 (Pl.’s Motion for Class
Certification) ¶ 6.
A.
Before addressing the specific requirements of Rule 23, the Department argues
that Wright-Gray’s motion must be denied because the proposed class definition is not
sufficiently definite to warrant class certification. In addition to the Rule 23
requirements, “[t]he plaintiff must also show . . . that the class is indeed identifiable
as a class.” Oshana v. Coca-Cola, 472 F.3d 506, 513 (7th Cir. 2006) (citing Alliance to
End Repression v. Rochford, 565 F.2d 975, 977 (7th Cir. 1977)) (class definitions must
be definite enough that the class can be ascertained). Because “the outcome of a class
action suit is res judicata as to all unnamed class members, it is crucial to have a clear
14
definition of what groups or individuals are members of the class.” Alliance to End
Repression, 565 F.2d at 977 n.6. The Court agrees with the Department that there are
problems with the proposed class definition in this case.
First, it will be difficult to definitively ascertain, with objective precision, which
Medicaid recipients received Medicaid benefits (paid by the Department) for medical
services “related to injuries sustained at work.” The Department only sends
Subrogation Notices to Medicaid recipients when it believes that the medical services
paid by the Department are related to a claim the Medicaid recipient filed with the
Illinois Workers’ Compensation Commission. DSOF ¶ 17. In order to determine
whether “related” services were likely paid, a Department recovery consultant first
references either (1) a monthly document that “cross-matches” the Department’s
Medicaid recipient database with the Commission’s records, or (2) letters sent to the
Department by hospitals or attorneys indicating that the Department may have paid
some of the Medicaid recipient’s medical bills related to a workers’ compensation claim.
R. 66-1, Def.’s Exh. C (Thornton Dep.) at 36-37, 40. From there, the Department
consultant visits the Commission’s website to see if the workers’ compensation case has
been settled. Id. at 41. If the case is still pending, the consultant then makes another
inquiry into whether the Department paid any medical bills “related to [the recipient’s]
claim.” Id. If the consultant determines that the Department did not pay anything
related to the claim, he will not send out the Subrogation Notice. Id. at 42. However,
if the Department has paid medical bills that appear to be related to the workplace
15
injury, it sends a Notice to the Medicaid recipient, her employer, and any attorney of
record. Id.
The Department argues that this “process of determining, at the outset, what
paid Medicaid claims are ‘related’ to the pending workers compensation claim is a
matter for Defendant’s judgment” and, thus, the Court would have to engage in an
individualized, factual review of the Department’s paid Medicaid claims to determine
if they were “related to injuries sustained at work,” thereby making the Medicaid
recipient part of the class (assuming the recipient also received a Subrogation Notice).
R. 66 at 9-10. Wright-Gray does not respond to this argument in her reply brief. She
does not propose a method for ascertaining class membership via a “ministerial review”
of available records. See Ramirez v. Palisades Collection LLC, 250 F.R.D. 366, 370
(N.D. Ill. 2008) (proposed class is sufficiently identifiable only if the information
necessary to identify members is available through a “ministerial review” rather than
“arduous individual inquiry”). Nor does she explain how class membership can be
ascertained by reference to objective criteria. See Wallace v. Chicago Hous. Auth., 224
F.R.D. 420, 425 (N.D. Ill. 2004) (citing Gomez v. Ill. State Bd. of Educ., 117 F.R.D. 394,
397 (N.D. Ill. 1987)).
The Department has put forth evidence showing that its recovery consultants
review each Medicaid recipient’s file separately to determine (1) which services are
potentially related to the recipient’s worker’s compensation action, and (2) whether the
Department paid for any of those related services. The facts of this case show that it
is not always clear which medical services are “related” to the injury sustained at work.
16
Here, Wright-Gray’s attorney, Lawrence Mack, also reviewed Wright-Gray’s medical
file to determine which claims he believed were related to Wright-Gray’s work-related
injury. Mack and the Department exchanged phone calls and emails about which
claims should be considered “related” and ultimately settled on an amount that was
different from the services the Department initially claimed. R. 93-1, Def.’s Exh. G
(Mack Dep.) at 66-67. So the proposed class is not objectively identifiable, but instead
requires exercises in judgment and probably back-and-forth negotiations, thus showing
that Wright-Gray’s proposed class definition is inadequate because it requires
individualized fact-finding and depends on subjective criteria.6
B.
Even if the proposed class were definite and ascertainable, Wright-Gray fails to
meet all of the requirements under Rule 23(a). Specifically, Wright-Gray has not met
the commonality or typicality requirements.
1.
Commonality
Rule 23(a)(2) requires that “there are questions of law or fact common to the
class.” To establish commonality, the class representative must demonstrate that
members of the class “have suffered the same injury.” Dukes, 131 S. Ct. at 2556.
Commonality requires that all of the class members’ claims “depend upon a common
6
The Department makes other arguments against the proposed class definition, but they
are not persuasive and will not be addressed at length. For instance, the Department argues
that the Department has no way of knowing who actually received a Notice of Subrogration,
but this does not defeat certification because the Department could identify to whom the
Notices were sent, and that is a sufficient objective proxy of receipt.
17
contention” that is “of such a nature that it is capable of classwide resolution – which
means that determination of its truth or falsity will resolve an issue that is central to
the validity of each one of the claims in one stroke.” Id. at 2551. In Dukes, the Supreme
Court concluded that what is most relevant to class certification “is not the raising of
common ‘questions’ . . . but, rather the capacity of a classwide proceeding to generate
common answers apt to drive the resolution of the litigation. Dissimilarities within the
proposed class are what have the potential to impede the generation of common
answers.” Id. at 2551 (citation omitted).
Here, Wright-Gray fails to demonstrate that there are questions of law and fact
common to the class. Her remaining claim alleges that Hamos, in her official capacity,
violates federal law by “wrongfully asserting liens and receiving recovery in worker’s
compensation cases when no medical costs are part of the [Medicaid recipients’]
settlements.” R. 1 ¶ 35. Wright-Gray points to certain issues of law that proposed class
members share in common, such as for example, whether the Subrogation Notice used
by the Department constitutes a “lien” under federal Medicaid law. See R. 58 at 9. But
the crux of this case is whether the Department asserts the alleged “liens” against
workers’ compensation awards that do not represent medical expenses. Indeed,
Wright-Gray’s motion for class certification states that she brought this class action
lawsuit based on liens asserted by the Department “upon Illinois residents’ worker’s
compensation settlements that did not include compensation for medical care or
services, or in excess of the amount of said settlement related to medical care and
services.” R. 57 ¶ 1. This contention is not capable of classwide resolution.
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Wright-Gray argues that all class members’ claims relate to the Department’s
“standard practice” of issuing a Subrogation Notice (or, according to her, a “lien”) on
every workers’ compensation settlement and award, regardless of whether a settlement
or award represented compensation for medical expenses. R. 131 at 3. But she fails to
put forth any evidence of the Department’s alleged “standard practice” or policy to send
out a Notice to every single workers’-compensation benefits recipient. Rather, there is
evidence in the record showing that Notices are sometimes sent out after a Medicaid
recipient’s attorney contacts the Department about a particular workers’ compensation
action. Other times, the Notice is sent after a recovery consultant makes a
determination, based on the consultant’s review of the medical file, that the
Department paid for medical services that might be related to the workers’
compensation action. As discussed, it depends on the facts of a particular case, whether
the Department paid for services that it deemed to be “related” to the injuries the
Medicaid recipient sustained at work. The relevant facts for each member will vary
widely. Thus, Wright-Gray fails to satisfy the commonality requirement of Rule 23(a).
2.
Typicality
The typicality requirement “directs the district court to focus on whether the
named representatives’ claims have the same essential characteristics as the claims
of the class at large.” Retired Chicago Police, 7 F.3d at 596–97. A “plaintiff’s claim is
typical if it arises from the same event or practice or course of conduct that gives rise
to the claims of other class members and his or her claims are based on the same legal
theory.” De la Fuente v. Stokely-Van Camp, Inc., 713 F.2d 225, 232 (7th Cir. 1983)
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(internal quotation omitted). The typicality requirement is closely related to the
commonality requirement under Rule 23(a)(2). Rosario v. Livaditis, 963 F.2d 1013,
1018 (7th Cir. 1992).
Even if Wright-Gray had standing to bring this action, her claim would not be
typical of those of the class. Wright-Gray’s proposed class includes people who, like her,
agreed to provide the Department with payment for medical expenses recovered from
their settlements. But the class also includes people who received the Subrogation
Notice, ignored it, and never paid the Department a single dime from their workers’
compensation settlement. These members cannot allege the sort of injury that WrightGray herself alleges. Wright-Gray fails to satisfy the typicality requirement.
Because Wright-Gray has failed to meet the requirements of Rule 23(a)(2) and
(a)(3), the Court need not address the numerosity or adequacy requirements, or
whether “final injunctive relief . . . is appropriate respecting the class as a whole”
under Rule 23(b)(2). If the jurisdictional dismissal is incorrect, the Court would have
denied Wright-Gray’s motion for class certification.
IV.
Finally, the Court turns to the merits of Wright-Gray’s claim, again as an
alternative ground for decision and for the benefit of considering or litigating a
potential appeal. The parties filed cross-motions for summary judgment on the merits.
R. 92, 96. Summary judgment must be granted “if the movant shows that there is no
genuine dispute as to any material fact and the movant is entitled to judgment as a
matter of law.” Fed. R. Civ. P. 56(a). The same standard applies to cross-motions for
20
summary judgment. Int’l Bhd. of Elec. Workers, Local 176 v. Balmoral Racing Club,
Inc., 293 F.3d 402, 404 (7th Cir. 2002). Rule 56 “mandates the entry of summary
judgment, after adequate time for discovery and upon motion, against a party who fails
to make a showing sufficient to establish the existence of an element essential to that
party’s case, and on which that party will bear the burden of proof at trial.” Celotex
Corp. v. Catrett, 477 U.S. 317, 322 (1986). All facts, and any inferences to be drawn
from them, must be viewed in the light most favorable to the non-moving party. Wis.
Cent., Ltd. v. Shannon, 539 F.3d 751, 756 (7th Cir. 2008).
The Medicaid program, established under Title XIX of the Social Security Act,
42 U.S.C. § 1396, et seq., is a joint federal-and-state-funded program that provides
medical assistance to individuals whose income and financial resources are insufficient
to pay the cost of necessary medical services. See Ark. Dep’t of Health & Human Servs.
v. Ahlborn, 547 U.S. 268, 275 (2006). States are not required to participate in the
Medicaid program, but if a state elects to participate, it must comply with federal
statutes and regulations. See 42 U.S.C. § 1396a(a)(10). If a state establishes a Medicaid
plan that meets federal requirements, see 42 U.S.C. § 1396a, the federal government
reimburses a state’s medical assistance costs by paying a Federal Medical Assistance
Percentage. See 42 U.S.C. § 1396b(a)(1); Ahlborn, 547 U.S. at 275 (noting that the
federal government pays between 50% and 83% of the costs the State incurs for patient
care).
Illinois participates in the federal Medicaid program. 305 ILCS 5/5-1 et seq. The
Illinois Department of Healthcare and Family Services is the agency responsible for
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administering Illinois’ Medicaid program, known as the Illinois Medical Assistance
Program. PSOF ¶ 2. As a condition of receiving federal Medicaid funding, states must
include a provision in their Medicaid plans for recouping funds expended on behalf of
Medicaid recipients from liable third parties. 42 U.S.C. § 1396a(a)(25)(A); Ahlborn, 547
U.S. at 275-76. If third-party liability is found after the state has provided medical
services to a beneficiary and “the amount of reimbursement the [s]tate can reasonably
expect to recover exceeds the costs of such recovery,” the state is required to “seek
reimbursement . . . to the extent of such legal liability.” 42 U.S.C. § 1396(a)(25)(B). To
this end, states must require, as a condition of participation in Medicaid, participants
to sign over their rights to seek and collect payment for medical care from a responsible
third party to the state. 42 U.S.C. § 1396k(a)(1)(A); 42 U.S.C. § 1396a(a)(25)(H) (“to the
extent that payment has been made under the [s]tate plan for medical assistance in
any case where a third party has a legal liability to make payment for such assistance,
the [s]tate has in effect laws under which, to the extent that payment has been made
under the [s]tate plan for medical assistance for health care items or services furnished
to an individual, the [s]tate is considered to have acquired the rights of such individual
to payment by any other party for such health care items or services”); see also 42
C.F.R. §§ 433.137-433.154. Thus, once a person chooses to participate in Medicaid, the
state uses this right to support pursuing responsible third parties for reimbursement.
To this end, Illinois’ Medicaid statutes include a subrogation provision, 305 ILCS
5/11-22a, which provides:
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To the extent of the amount of . . . medical assistance provided by the
Department [of Healthcare and Family Services] to or on behalf of a [Medicaid]
recipient . . . the Department shall be subrogated to any right of recovery such
recipient may have under the terms of any private or public health care coverage
or casualty coverage, including coverage under the “Workers’ Compensation
Act,” . . . without the necessity of assignment of claim or other authorization to
secure the right of recovery to the Department.
305 ILCS 5/11-22a. In December 2005, after Wright-Gray filed her first workers’
compensation claim against the Cook County Forest Preserve, the Department sent a
Notice of Subrogation to the Forest Preserve, notifying it that, pursuant to 305 ILCS
5/11-22a, the Department “has become subrogated to [Wright-Gray’s] right of action
to recover medical expenses paid on [her] behalf.” DSOF ¶ 18; R. 98-1 (Def.’s Exh. A).
The Attachment to the Subrogation Notice states that the Department “is not
attempting to place a lien on any settlement the injured person may receive.” DSOF
¶ 19. Lawrence Mack, the attorney who represented Wright-Gray in her workers’
compensation cases, also received a copy of the Subrogation Notice and Attachment.
Id. ¶ 20.
Wright-Gray argues that although the Department cites the subrogation
provision and titles the document as a “Subrogation Notice,” the document actually
imposed a “lien” on the entire amount of her workers’ compensation settlement. R. 109
at 7-9. Wright-Gray argues that this type of “lien” is exactly what the Supreme Court
held was improper under federal Medicaid laws in Arkansas Department of Health &
Human Services v. Ahlborn, 547 U.S. 268 (2006). In Ahlborn, the Supreme Court held
that states could not recover the full amount of their payments for medical expenses
to Medicaid recipients. Id. at 281. Rather, the Court held that a state may only recover
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that portion of the settlement or judgment that is attributable to repayment of medical
services. Id. at 281, 285. The assignment provisions of federal Medicaid law only
provide for a limited assignment from the recipient to the state for payment for medical
items and services from a liable third party. Id. at 278-82. The Court then concluded
that any state statute providing for a greater assignment would be inconsistent with
the Medicaid “anti-lien” statute, 42 U.S.C. § 1396p, which prohibits states from placing
liens against or seeking recovery benefits from a Medicaid beneficiary before her death.
Id. at 282-286. According to the Court, while the assignment provisions create an
exception to the anti-lien statute for recovery of payments that constitute
reimbursement for medical costs paid by Medicaid, any recovery by the state of
settlement funds intended to reimburse the Medicaid beneficiary for pain and
suffering, lost wages, or other non-medical damages would constitute an impermissible
lien on the beneficiary’s property. Id.
The Subrogation Notice used by the Department does not run afoul of the
Supreme Court’s holding in Ahlborn, nor did it impose a “lien” on Wright-Gray’s
workers’ compensation settlement. Under federal and state law, the Department has
a right to pursue recovery of funds it paid on Wright-Gray’s behalf. The Subrogation
Notice informed her employer and workers’ compensation attorney of the Department’s
right, and Wright-Gray fails to demonstrate that the Notice has any other legal or
binding effect on her workers’ compensation settlement. In fact, it is undisputed that
the Department only recovers funds out of a workers’ compensation award when an
insurance company or attorney for the claimant in the workers’ compensation case
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reports that payment for related medical expenses will be part of the workers’
compensation award. DSOF ¶ 22. In fact, in some cases, the insurer or attorney
completely disregards the Notice, and there are no adverse consequences to the
claimant. Id. ¶ 24. In Wright-Gray’s case, her attorney contacted the Department and
communicated with an the Department representative about which of Wright-Gray’s
medical claims paid by the Department were claims related to her workers’
compensation action. Id. ¶¶ 25-26. The parties ultimately agreed that $538.82 was the
amount that the Department should be reimbursed for medical expenses pursuant to
its right of subrogation under 305 ILCS 5/11-22a. Id. ¶¶ 31, 38. Through her attorney,
Wright-Gray agreed that the Department was entitled to recover the medical payments
it made on her behalf, and her attorney reviewed the medical claims to ensure that the
reimbursement was limited accordingly. Wright-Gray’s attempts to characterize the
Notice and ensuing negotiation process as the assertion of a “lien” are unavailing.
Accordingly, even if Wright-Gray’s claim was not moot, her motion for summary
judgment [R. 96] would be denied, and the Department’s motion [R. 92] would be
granted.
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V.
For the reasons stated above, the Department’s motion for summary judgment
[R. 92] is granted in part. Wright-Gray’s motions for class certification [R. 57] and
summary judgment [R. 96] are denied as moot.
ENTERED:
_________________________
Honorable Edmond E. Chang
Date: February 2, 2012
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