Dozier et al v. Haveman et al
Filing
38
OPINION and ORDER Granting 3 Emergency MOTION for Preliminary Injunction - Signed by District Judge Laurie J. Michelson. (JJoh)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION
MAYA DOZIER,
KRICKETT LUCKHARDT, and
MICHELLE MACKAY
Plaintiffs,
Case No. 14-12455
Honorable Laurie J. Michelson
Magistrate Judge Michael J. Hluchaniuk
v.
JAMES K. HAVEMAN, in his official
capacity as Director of the Michigan
Department of Community Health; and
MAURA D. CORRIGAN, in her official
Capacity as Director of the Michigan
Department of Human Services
Defendants.
OPINION AND ORDER GRANTING PLAINTIFFS’ MOTION FOR PRELIMINARY
INJUNCTION [3]
This case arises out of the State of Michigan’s winding down of the Plan First! Family
Planning Program, a Medicaid program that covered family-planning services, and the ramping
up of the Healthy Michigan Plan, a Medicaid program that provides more comprehensive
healthcare benefits. Plaintiffs Maya Dozier, Michelle Mackay, and Krickett Luckhardt allege that
the Michigan Department of Community Health and the Michigan Department of Human
Services (“the Departments”) violated federal law by terminating the Plan First! program without
first determining whether each Plan First! enrollee was eligible for another Medicaid program
such as Healthy Michigan. Plaintiffs further allege that the notices the Departments sent to Plan
First! enrollees informing them of the program’s termination and its effect on their Medicaid
eligibility lacked details required by the Medicaid Act, its implementing regulations, and the Due
Process Clause. Plaintiffs believe that the notices should have provided a detailed explanation for
the Plan First! enrollee’s ineligibility for other Medicaid programs such as Healthy Michigan.
This, Plaintiffs assert, would have allowed the enrollee to make an informed decision about
whether to appeal the Departments’ Medicaid eligibility determination.
Having granted Plaintiffs’ motion for class certification (Dkt. 2), the Court now turns to
Plaintiffs’ motion for a preliminary injunction (Dkt. 3). The Court finds that Plaintiffs are likely
to succeed on their claims that the Department’s notice of termination of their Medicaid benefits
was inadequate under the relevant provision of the Medicaid Act and implementing regulations
and that they are likely to succeed on their claim that the Department was obligated under the
Act to conduct an ex parte redetermination of eligibility. Because Plaintiffs are likely to succeed
on their claims under the Medicaid statute, the Court does not reach their constitutional claims.
The Court also finds that Plaintiffs are likely to suffer irreparable harm if they are denied
Medicaid benefits in the absence of the injunction, that the balance of the equities favors
injunctive relief, and that an injunction serves the public interest. As such, Plaintiffs’ motion for
preliminary injunction will be GRANTED as set forth below.
I. BACKGROUND
This lawsuit involves the Medicaid Act and related regulations, two Medicaid waiver
programs, allegations regarding the phase out of one of those waiver programs, and five named
Plaintiffs who purport to represent the class of individuals negatively affected by the phase out.
The Court discusses each component in turn.
A. Statutory Background
Congress created the Medicaid program in 1965 by adding Title XIX to the Social
Security Act “for the purpose of providing federal assistance to States that choose to reimburse
certain costs of medical treatment for needy persons.” Harris v. McRae, 448 U.S. 297, 301
2
(1980). The program provides assistance to “families with dependent children and of the aged,
blind, or disabled individuals” who cannot afford medical care. 42 U.S.C. § 1396-1. The United
States Department of Health and Human Services (“HHS”) has the authority to promulgate
federal regulations to implement the Medicaid statute. 42 U.S.C. § 1302(a). HHS exercises this
authority through a unit called the Center for Medicare and Medicaid Services (“CMS”). At the
state level, Michigan authorizes its Medicaid program under Michigan Compiled Law § 400.105,
which delegates the administration of the program to the Department of Community Health
(“DCH”) and the Director of DCH. Through an interdepartmental agreement, the Michigan
Department of Human Services (“DHS”) determines Medicaid eligibility. “Although
participation in the [Medicaid] program is voluntary, participating States must comply with
certain requirements imposed by the Act and regulations promulgated by the Secretary of Health
and Human Services.” Westside Mothers v. Olszewski, 454 F.3d 532, 535 (6th Cir. 2006). For
example, state plans “must provide coverage for the ‘categorically needy’ and, at the state’s
option, may also cover the ‘medically needy.’” Pharm. Research and Mfrs. Of Am. v. Walsh, 538
U.S. 644, 650–51 (2003).
The required “categorically needy” group includes “individuals eligible for cash benefits
under the Aid to Families with Dependent Children (AFDC) program, the aged, blind, or
disabled individuals who qualify for supplemental security income (SSI) benefits, and other lowincome groups such as pregnant women and children entitled to poverty-related coverage.”
Walsh, 538 U.S. at 651 n.4. The optional category of “medically needy” includes “individuals
who meet the nonfinancial eligibility requirements for inclusion in one of the groups covered
under Medicaid, but whose income or resources exceed the financial eligibility requirements for
categorically needy eligibility.” Id. at 651 n.5.
3
States may choose to offer coverage to additional populations via a Medicaid waiver
program. See Portland Adventists Medical Ctr. v. Thompson, 399 F. 3d 1091, 1096 (9th Cir.
2005) (“In the demonstration project statute, Congress expressly tied § 1115 waivers to approved
state Medicaid plans . . . . [B]ecause expansion population patients are capable of receiving Title
XIX assistance, they must be regarded as ‘eligible’ for it.” (citing Jewish Hosp., Inc. v. Sec’y of
Health & Human Servs., 19 F.3d 270, 274 (6th Cir.1994)).
B. Michigan’s Waiver Programs
1. Plan First!
Plan First!, the Medicaid waiver program at issue in this case, was geared toward
providing family planning services for women ages 19 to 44 who were not pregnant, had income
below 185% of the federal poverty level, and who would not otherwise be eligible for Medicaid
coverage. (Dkt. 1-6, HHS Approval of Plan First! Waiver [hereinafter Plan First! Approval] at
PageID 100.) DCH submitted a waiver request for the program in October 2004, which the
Secretary granted on March 1, 2006. (Plan First! Approval at PageID 100, 104.) In order to help
Michigan effectuate the program, the Secretary waived the following statutory requirements:
1396a(a)(10)(B) [Comparability Requirement];
1396a(a)(43) [Early and Periodic Screening, Diagnostic, and Treatment];
1396a(a)(34) [Retroactive Coverage];
1396a(a)(15) [Prospective Payment System for Federally Qualified Health
Centers and Rural Health Clinics].
(Plan First! Approval at 2.) Otherwise, “[a]ll Medicaid requirements appl[ied] . . . .” (Id.)
The program was initially authorized for a five-year period, but CMS granted extensions
in three month increments starting from April 1, 2011 through June 30, 2013 (Dkt. 18-5, Asman
Aff. at ¶ 3.) Finally, DCH obtained a year-long extension to continue coverage through June 30,
2014. (Dkt. 1-7, Plan First! Extension at PageID 114.) Plan First! provided eligible women with
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a number of services pertaining to reproductive health and family planning, such as education
and counseling, physical examinations, pap smears, contraceptive management, and other
necessary medications. (Plan First! Approval at PageID 114.) However, the program did not
cover sterilization reversals, infertility treatment, or abortions. (Id.)
2. Healthy Michigan Plan
The Affordable Care Act (“ACA”) amended the Medicaid statute to expand coverage for
certain adults under the age of 65, who were not pregnant, with income below 133% of the
federal poverty level, and who would not otherwise be entitled to or enrolled in another Medicaid
category. 42 U.S.C. § 1396a(a)(10)(i)(VIII). (Compl. ¶ 113.) Michigan implemented this
expanded coverage through another waiver program or “alternative benefits package,” the
Healthy Michigan Plan (“HMP”). Mich. Comp. Laws § 400.105d. Accordingly, the program is
available to adults under the age of 65, who are not pregnant, with income below 133% of the
federal poverty level, who would not otherwise be entitled to or enrolled in another Medicaid
category. 42 U.S.C. § 1396a(a)(10)(i)(VIII). Coverage under HMP is more expansive than Plan
First! coverage, and it includes family planning services, meaning “any medically approved
means of voluntarily preventing or delaying pregnancy, including diagnostic evaluation, drugs,
and supplies. Infertility is not a covered benefit.” (Dkt. 1-5, HMP Approval, at PageID 59.)
C. Plan First! Phaseout
As noted above, Plan First! was scheduled to expire on June 30, 2014; thus, coverage
would end on July 1, 2014. DCH declined to seek further extension of Plan First! coverage
because of “the expanded coverage available under the ACA, which include[d] family planning
services to HMP recipients” and the fact that “the majority of the Plan First! population
potentially would be eligible for this more comprehensive health coverage . . . . [and those who
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would not be eligible for HMP] were required under the ACA’s individual mandate to sign up
for minimum essential coverage by the end of open enrollment on March 31, 2014.” (Dkt. 18,
Defs.’ Resp. Br. at 4; see also Dkt. 18-5, Asman Aff., at ¶ 3.) HMP applications could first be
submitted on April 1, 2014 (Asman Aff., at ¶ 6–8.)
Accordingly, DCH submitted a “Phase Out Plan for Plan First! Waiver” to CMS on
March 10, 2014. (Defs.’ Resp. Br. at 5.) An initial letter informing beneficiaries of the
termination of the program, approved by CMS, was mailed to Plan First! enrollees on March 18,
2014. (Id. at 6.) CMS approved the phase out plan on April 2, 2014. (Id. at 6.) Then, on June 7,
2014, Defendants mailed a notice to certain individuals enrolled in Plan First! advising that
coverage under the program was ending and that they had been determined ineligible for
Medicaid . It is this phase out procedure that is the subject of the Complaint.
Plaintiffs allege that “Defendants failed to determine [their] Medicaid eligibility under all
eligibility categories, including . . . [HMP] before terminating their eligibility for [Plan First!].”
(Comp. ¶ 1.) Plaintiffs also allege that Defendants gave them “vague and inconsistent notices
dated June 7, 2014, indicating that their Plan First! Medicaid was ending and that they were
denied Medicaid after a review of their eligibility for only some, but not all, Medicaid
categories.” (Id. at ¶ 3.) Based on these allegations, Plaintiffs assert the following three counts:
Failure to Conduct a Pre-Termination Review (Count I), Failure to Provide Constitutionally
Adequate Pre-Termination Notice (Count II), and Failure to Provide a Meaningful Opportunity
to be Heard (Count III). Plaintiffs argue that Counts I and III arise from the Medicaid statute and
implementing regulations, and seek to enforce them through 42 U.S.C. § 1983. They seek to
enforce these rights on behalf of a class consisting of Plan First! recipients who are eligible for
Medicaid under other categories, received notice that their benefits would cease without an
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evaluation of their eligibility under other categories, and have not been provided with
constitutionally adequate pre-termination notice and a meaningful opportunity for a hearing
concerning ongoing coverage. (Compl. at ¶ 26.)
Plaintiffs filed the Complaint (Dkt. 5-1), along with motions to certify the class (Dkt. 2)
and preliminary injunction (Dkt. 3), on June 23, 2014. On June 30, 2014, this Court issued a
stipulated order extending Plan First! coverage pending a ruling on the present motions. The
extension applies to “women enrolled on April 1, 2014, and any women who may have been
enrolled in Plan First! after April 1, 2014, unless they become ineligible for Plan First! for
reasons other than qualifying for comprehensive Medicaid coverage, but excluding those women
who are already enrolled in the Healthy Michigan Plan or other comprehensive Medicaid
Program.” (Dkt. 17 at 1–2.) Defendants were to also provide notice to such women “that their
Plan First! Medicaid coverage will continue pursuant to this order.” (Id.) Over the following
months, the parties engaged in extensive settlement discussions. Ultimately, the parties were not
able to reach a settlement agreement and so the Motion for Preliminary Injunction is now before
the Court.
II. ANALYSIS
A. Burford Abstention
Defendants ask the Court to decline to exercise its jurisdiction over this dispute pursuant
to Burford v. Sun Oil Co., 319 U.S. 315, 318, 63 S. Ct. 1098, 87 L. Ed. 1424 (1943). (Defs.’
Resp. Br. at 16.) The Burford doctrine directs that where “timely and adequate state court review
is available,” federal courts sitting in equity should decline jurisdiction in two circumstances:
(1) when there are ‘difficult questions of state law bearing on policy problems of
substantial public import whose importance transcends the result in the case then
at bar’; or (2) where the ‘exercise of federal review of the question in a case and
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in similar cases would be disruptive of state efforts to establish a coherent policy
with respect to a matter of substantial public concern.’
Energy Ass’n v. Public Serv. Comm’n, 481 F.3d 414, 421 (6th Cir. 2007) (quoting New Orleans
Public Serv., Inc. v. Council of New Orleans, 491 U.S. 350, 361 (1943)). The Supreme Court has
stressed that “abstention from the exercise of federal jurisdiction is the exception, not the rule,”
Colo. River Water Conservation Dist. v. United States, 424 U.S. 800, 813, 96 S. Ct. 1236, 47 L.
Ed. 483 (1976), and that “the power to dismiss recognized in Burford represents an extraordinary
and narrow exception to the duty of the District Court to adjudicate a controversy properly
before it,” Quackenbush v. Allstate Ins. Co., 517 U.S. 706, 728, 116 S. Ct. 1712, 135 L. Ed. 2d 1
(1996).
The Court finds that Burford abstention is unwarranted in this case, not least because
Defendants have not presented evidence that this case involves difficult questions of Michigan
state law or that there are any current state proceedings, whether in the courts or otherwise, that
would be disrupted by an order from this Court. It is true that this case involves Michigan state
agencies, the Michigan Medicaid program, and the procedures through which the Michigan state
agencies administer Michigan Medicaid benefits. And the Court acknowledges that the
resolution of the pending motions may impact the Michigan state budget. But similar
considerations have been rejected by courts considering Burford abstention.
For example, in Parents League for Effective Autism Services v. Jones-Kelley, 565 F.
Supp. 2d 905, 908 (S.D. Ohio 2008), plaintiffs sought to temporarily enjoin an Ohio
administrative rule that, if implemented, would curtail Medicaid coverage for autism treatment.
The state argued that the court should abstain from deciding issues relating to Ohio’s Medicaid
program due to Burford because a court order “could have significant budgetary impacts.” Id. at
914. The court rejected this argument, noting that other district courts had declined to abstain in
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cases involving Medicaid because the claims “were not of an essentially local concern, but
involved rather federal funds and federal regulation in an area in which the federal government
has taken a keen interest” and because federal Medicaid laws are “routinely interpreted by
federal courts and no specialized knowledge of state law is required.” Id. at 914 (citing Moore v.
Medows, No. 07-CV-631, 2007 U.S. Dist. LEXIS 47087, at *7 (N.D. Ga. 2007), rev’d on other
grounds, 324 F. App’x 773 (11th Cir. 2009); Meachem v. Wing, 77 F. Supp. 2d 431, 443
(S.D.N.Y. 1999)). As to the budgetary concern, the court noted that
even though the State may have a substantial interest in the management of its
budget, there is no risk of an inconsistent application of state law or policy
presented by the case at bar. The regulations which must be interpreted to resolve
this matter are federal; the uniformity of application or interpretation of these
regulations is a federal concern.
Id. (citing Ohio State Pharmaceutical Ass’n v. Creasy, 587 F. Supp. 698 (S.D. Ohio 1984)).
Similarly, this case requires the Court to examine the federal Medicaid and constitutional
requirements applicable to the winding down of a Medicaid waiver program. These concerns
implicate important federal interests, as evidenced by the fact that Medicaid is subject to federal
oversight and a regulatory scheme established by the federal government. And the uniformity of
interpretation of these regulations is a federal concern. Exercising jurisdiction over this case is
therefore appropriate.
B. Preliminary Injunction
“A preliminary injunction is an extraordinary remedy never awarded as of right.” Winter
v. NRDC, Inc., 555 U.S. 7, 24 (2008) (citation omitted). This Court must weigh four factors to
decide whether to issue a preliminary injunction:
(1) whether the plaintiff has established a substantial likelihood or probability of
success on the merits; (2) whether there is a threat of irreparable harm to the
plaintiff; (3) whether issuance of the injunction would cause substantial harm to
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others; and (4) whether the public interest would be served by granting injunctive
relief.
Entm’t Prods., Inc. v. Shelby County, Tenn., 588 F.3d 372, 377 (6th Cir. 2009); see also Fed. R.
Civ. P. 65.
1. Likelihood of Success on the Merits
Count I
In
Count
I,
Plaintiffs
claim
that
Defendants
violated
their
rights
under
42 U.S.C. § 1396a(a)(8) by engaging in a “pattern and practice of terminating Plaintiffs[’] Plan
First! Medicaid coverage, effective, July 1, 2014, without first determining their eligibility under
all other Medicaid categories . . . .” (Compl. at ¶ 144.) Defendants respond that they are not
required to conduct pre-termination eligibility reviews where an entire program is ending; that
Plaintiffs, as beneficiaries of an optional waiver program, are not entitled to the same pretermination review as beneficiaries of “comprehensive Medicaid coverage”; and, that Plaintiffs’
authorities are factually distinguishable. (Defs.’ Resp. Br. at 9–10.) The Court finds that because
the Medicaid statute and regulations require a pre-termination review of eligibility, and the case
law does not suggest that this requirement is relaxed or eliminated in the context of waiver
programs, Plaintiffs have demonstrated a likelihood of succeeding on Count I.
The Court rejects Defendants’ assertion that the Medicaid regulations apply differently to
Plan First! because it is an optional waiver program rather than a comprehensive or mandatory
program. “Although participation in the Medicaid program is entirely optional, once a State
elects to participate, it must comply with the requirements of Title XIX.” Harris v. McRae, 448
U.S. 297, 301 (1980). And “once a state elects to participate in an optional program, it becomes
bound by the regulations which govern it. This includes regulations governing procedures by
which a state may terminate programs which it has established.” Eder v. Beal, 609 F.2d 695, 702
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(3d Cir. 1979) (citations omitted). These principles also apply to waiver programs. See NewtonNations v. Betlach, 660 F.3d 370, 383 n.5 (9th Cir. 2011) (applying due process requirements
under § 1396a to a demonstration project); Planned Parenthood Ariz., Inc. v. Betlach, 899 F.
Supp. 2d 868, 875-876 (D. Ariz. 2012) (applying free choice of providers provision under
§ 1396a to a demonstration project); Susan J. v. Reilly, 254 F.R.D. 439 (M.D. Ala. 2008)
(applying reasonable promptness under § 1396a(a)(8) to a waiver project); Boulet v. Cellucci,
107 F. Supp. 2d 61,76 (D. Mass. 2000) (applying reasonable promptness under § 1396a(a)(8) to
a waiver project); McMillan v. McCrimon, 807 F. Supp. 475, 481–82 (C.D. Ill. 1992) (“The fact
that the HSP [a waiver program] is an optional service does not exempt it from the requirements
of section 1396a(a)(8).”).
To assist states in carrying out waiver programs with specific goals, the Secretary may
waive compliance with the requirements of 42 U.S.C. §§ 302, 654, 1202, 1352, 1382, or 1396a
to the extent necessary. 42 U.S.C. § 1315(a)(1). This occurred with respect to Plan First!: the
Secretary waived compliance with 1396a(a)(10)(B) [Comparability Requirement]; 1396a(a)(43)
[Early and Periodic Screening, Diagnostic, and Treatment]; 1396a(a)(34) [Retroactive
Coverage]; and 1396a(a)(15) [Prospective Payment System for Federally Qualified Health
Centers and Rural Health Clinics]. (Dkt. 1-6, at 2.) But Plaintiffs do not seek to enforce any of
these statutory provisions. Rather, they seek to enforce 42 U.S.C. § 1396(a)(3) and
§ 1396a(a)(8). And the letter from CMS expressly provides that “[a]ll” other Medicaid
requirements applied to the program. (Id.) Moreover, the Court has found no authority that
would render 42 U.S.C. § 1396(a)(3) and § 1396a(a)(8) inapplicable to waiver programs in the
absence of a compliance waiver by the Secretary.
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Given that § 1396(a)(3) and § 1396a(a)(8) applied to Plan First!, the question becomes
whether Defendants complied with those statutory provisions in terminating that waiver
program. Section 1396a(a)(8) provides:
A State plan for medical assistance must[:] provide that all individuals wishing to
make application for medical assistance under the plan shall have opportunity to
do so, and that such assistance shall be furnished with reasonable promptness to
all eligible individuals;
One of § 1396a(a)(8)’s implementing regulations, 42 C.F.R. § 435.930(b), further provides: “The
agency must[:] Continue to furnish Medicaid regularly to all eligible individuals until they are
found to be ineligible.” Another, 42 C.F.R. § 435.916(d)(ii)(2), provides: “If the agency has
information about anticipated changes in a beneficiary’s circumstances that may affect his or her
eligibility, it must redetermine eligibility at the appropriate time based on such changes.”
The Sixth Circuit interpreted these provisions in Crippen v. Kheder, 741 F.2d 102 (6th
Cir. 1984). There, a class of mentally handicapped individuals challenged the Michigan Health
and Human Services’ (“HHS”) practice of terminating the Medicaid benefits of those who were
no longer “categorically needy” because they had lost social-security benefits. Id. at 104.
Plaintiffs asserted that this policy violated 42 U.S.C. § 1396a(a)(8) and its implementing
regulations at 42 C.F.R. § 435.930(b) and § 435.916(c) (now § 435.916(d)(2)(ii)) because HHS
failed to consider whether the individuals were eligible as “medically needy.” Id. HHS argued
that it could not conduct a redetermination of the plaintiffs’ eligibility because they had not
submitted a written application for Medicaid; instead, as social-security recipients, they had been
automatically qualified for Medicaid as categorically needy. Id. at 105–106. Thus, HHS argued,
“once the department received notice that Crippen was no longer receiving SSI benefits, she was
‘found to be ineligible’ for [M]edicaid and her benefits could be properly terminated.” Id. at 106.
The Court disagreed with this contention: “an application for SSI serves as an application for
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[M]edicaid as well . . . .” Id. at 106. It further reasoned that the operation of the regulation
requiring a written application did not “appear to require Crippen to submit a new application.”
Id. at 106. Having disposed of HHS’ claim that they lacked sufficient information to complete a
review, the Court turned to § 1396a(a)(8) and its implementing regulations and concluded:
The regulations require . . . that, upon receipt of notice that an individual has been
terminated from the SSI program, the Department must promptly determine ex
parte the individual’s eligibility for [M]edicaid independent of his eligibility for
SSI benefits. While this determination is being made, the state must continue to
furnish benefits to such individuals.
Id. at 107. The Court acknowledged that HHS’ actions did “possess a certain degree of
superficial logic,” because “[w]here the only basis for a recipient’s eligibility for assistance has
been eliminated it logically follows that eligibility must cease.” Id. at 106. But this was not the
end of the analysis, for “[t]he regulations at issue . . . provide alternative bases for [M]edicaid
eligibility.” Id. And “[t]he most that was determined by the Department was that one of those
bases . . . had been eliminated.” Id.
More recently, in Crawley v. Amande, No. 08-14040, 2009 U.S. Dist. LEXIS 40794
(E.D. Mich. May 14, 2009), DCH officials terminated the plaintiffs from Medicaid because they
were no longer categorically needy but did not first determine their eligibility under disabilityrelated categories. Citing 42 U.S.C. § 1396a(a)(8) and 42 C.F.R. § 435.930(b), the court found
that the “appropriate course of conduct after determining that Plaintiffs were no longer eligible
for [Family Independence Program]-related categories was to conduct an automatic review of
other Medicaid categories, without the re-application for Medicaid assistance.” Id. at 63. The
court further instructed that “this duty should be afforded to individuals who qualified for
Medicaid under any eligibility category.” Id. at *69 (citing Mass. Ass’n of Older Americans v.
Sharp, 700 F.2d 749, 753 (1st Cir. 1983)).
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Defendants say that this case is different from Crippen and Crawley because it does not
involve a change in a “beneficiary’s circumstances,” but instead a program-wide change in
circumstances, namely the ending of Plan First!. (See Defs.’ Resp. Br. at 9–10.) A similar issue
arose in Massachusetts Association of Older Americans v. Sharp, 700 F.2d 749, 753 (1st Cir.
1983). In Sharp, an amendment to the Aid to Families with Dependent Children (AFDC) Act
required that states include income of stepparents in determining a stepchild’s eligibility for
AFDC. As a result, certain AFDC families with stepchildren (who had previously been
automatically eligible for Medicaid) had their AFDC benefits terminated which resulted in the
termination of their Medicaid coverage. Id. at 750. Thus, while the beneficiaries’ circumstances
had not necessarily changed, a change in policy caused their benefits to cease. The First Circuit
nonetheless held that Massachusetts needed to redetermine Medicaid eligibility for those in the
dependent-child program, explaining that the regulations requiring an ex parte determination
“apply to individuals who qualified under Medicaid under any eligibility category” and that the
reason for the disqualification (amendment to AFDC Act) was “expressly made irrelevant to
Medicaid eligibility.” Id. at 753.
Sharp’s reasoning is persuasive here. As discussed, nothing in the Plan First! waiver
indicates that HHS intended to exclude Plan First! participants from the application of
regulations setting forth “requirements for processing applications, determining eligibility, and
furnishing Medicaid.” 42 C.F.R. § 435.900. Further, individuals qualify for the Healthy
Michigan Plan and Plan First! based on similar requirements (low income and ineligibility for
other Medicaid programs). There is good reason to think that many, perhaps most, former Plan
First! enrollees would be eligible for Healthy Michigan. Thus, as in Sharp, the fact that a
particular beneficiary’s circumstances may not have changed does not render the ex parte review
14
requirement inapplicable. In other words, the fact that the entire Plan First! Program is
terminating – similar to the AFDC Act amendment – does not excuse the State from
redetermining its participants’ eligibility for other Medicaid categories.
Defendants also argue that some individuals did not fill out a full Medicaid application
but rather an application specific to Plan First! and, thus, some redeterminations will only yield a
conclusion that the Defendants need more information from the beneficiary. But that potential
result does not render the procedure inapplicable. In similar situations, courts have required the
agency terminating benefits to request additional information from potential disenrollees before
terminating their coverage. See Rosen v. Goetz, 410 F.3d 919, 929 (6th Cir. 2005) (“[Plaintiffs]
challenge the State’s requirement that potential disenrollees fill out information forms in order to
retain eligibility in another Medicaid category. But what else is the state to do?”). Indeed, in
Rosen, the Sixth Circuit approved a procedure of requesting information, sending an additional
request if the form was not returned, and sending a termination notice if there was no response to
either request. Id.; see also Crawley, 2009 U.S. Dist. LEXIS 40794 at *79 (“The Court is
cognizant that the determination based on disability, under the usual circumstances, will require
additional medical verification. However, the Defendants’ obligation to conduct a pretermination
review is not limited by the type of application that a recipient initially filed.”).
In sum, based on the statute, implementing regulations, and relevant case law, the Court
finds that Defendants had a duty to conduct a redetermination of eligibility for individuals
enrolled in the Plan First! waiver program before terminating benefits under the program.
Although Defendants partially complied with this duty (Dozier’s notice, for example, informed
her that she would remain eligible for Medicaid with a $395.00 monthly deductible (Dkt. 3-11,
Dozier Determination Notice, at 1)), there is no indication that the Departments evaluated all of
15
the class members for the Healthy Michigan Plan. At the very least, then, Plaintiffs have
demonstrated a substantial likelihood of success on their claim that Defendants had a duty to
evaluate each Plan First! participant’s eligibility for the Healthy Michigan Plan prior to that
program’s termination.
Counts II and III.
In Counts II and III, Plaintiffs assert that the termination notices they received were
inadequate under the Due Process clause of the Fourteenth Amendment and their rights under 42
U.S.C. § 1396a(a)(3). (Compl. at ¶¶ 146, 148.) The Court agrees that the notices were inadequate
under the statute and implementing regulations and therefore declines to reach the constitutional
question. See Boatman v. Hammons, 164 F.3d 286, 289 (6th Cir. 1998); Crawley, 2009 U.S.
Dist. LEXIS 40794, at *80.
At the outset, the Court emphasizes the difference between a notice that certain Medicaid
services will no longer be covered and a notice that a redetermination has been conducted and
that an individual’s Medicaid benefits are ending as a result of that redetermination. A notice that
merely serves to indicate that certain services will no longer be available to any Medicaid
recipient need not give individualized reasons for the termination of benefits. Thus, for example,
in Benton v. Rhodes, the Sixth Circuit approved Ohio’s procedure of including a card in its
monthly mailing to Medicaid recipients that indicated that certain optional services such as
private duty nurses and speech therapy would no longer be covered due to budget cuts. 586 F.2d
1, 1 (6th Cir. 1978). The Court held that the notice “adequately advised the recipients of the
reasons for the reduction of the optional services, namely, the lack of sufficient funds
appropriated by the state legislature.” Id. at 2.
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Similarly, in Wood v. Betlach, 922 F.Supp. 2d 836 (D. Ariz. 2013), the court considered a
notice informing participants of a new rule that would increase co-payments for some Medicaid
recipients. The notice explained that “[y]ou will have higher copayments (co-pays) for AHCCCs
medical services beginning October 1, 2010 because you are getting AHCCCS services in the
AHCCCS Care or Medical Expense Deduction (MED) programs.” Id. at 852. The notice, the
court held, provided “sufficient information for a recipient to know whether he or she can be
subjected to the new rule. . . the programs to which the copayments apply . . . the categories of
individuals and types of services that are exempt . . . [and] the reason for the action and its
statutory basis.” Id. at 853. The court cautioned plaintiffs that “the notices were not issued to
inform recipients of the reasons for their prior coverage determinations, but to inform them of a
discrete statutory change in benefits that relates to them as members of one of the two identified
AHCCCS programs.” Id. at 854.
But unlike the notices at issue in Benton and Wood, the notices that the Defendants sent
on June 7, 2014, do not merely inform the recipient that certain Medicaid benefits will no longer
be provided. Indeed, Defendants themselves say that the notices “inform the recipient of the
intended action–termination of Plan First! benefits. . . . [and] provide the reason for the intended
action, i.e., the Plan First! program is ending and your case is being closed or denied because of
lack of eligibility.” (Defs.’ Resp. Br. at 14 (emphasis added).)
Where, as here, a notice serves to inform the beneficiary that she has been determined
ineligible for benefits, this Court agrees with another in this District that the notice must include
“(1) a statement of the actions being taken, (2) reasons for the intended actions, (3) specific
regulations that support or require the intended action, and (4) an explanation of the right to a
hearing, and under what circumstances Medicaid benefits will continue during the pendency of
17
the requested hearing.” Crawley, 2009 U.S. Dist. LEXIS 40794 at *75 (citing 42 C.F.R. §
431.210).
The June 7, 2014 notices did not satisfy all four of these requirements. The notices
informed recipients that the Plan First! program was ending. (E.g. Luckhardt Determination
Notice at 1.) They provided some explanation of why the recipient was ineligible for Medicaid;
for example, Luckhardt was informed that she was not eligible because she was not “under 21,
pregnant, or a caretaker of a minor child in your home” or “over 65 (aged), blind, or disabled.”
(Id.) But the notices did not include any eligibility information on the Healthy Michigan Plan—
the very plan that, along with the Affordable Care Act, led the Departments to conclude that Plan
First! could be terminated. Indeed, given that enrollees in Plan First! qualified for that program
based on income levels below 185% of the federal poverty level, the Departments had every
reason to think that many Plan First! enrollees would have also met the Healthy Michigan
standard of 133% of the poverty level. Given these facts, the notices failed to provide “a
determination on all relevant grounds, thereby undermining any opportunity for a fair hearing.”
Crawley, 2009 U.S. Dist. LEXIS 40794 at *77.
The notice here also falls short of the notice procedures that have been approved in
similar situations. See, e.g., Rosen v. Goetz, 410 F.3d 919, 924 (6th Cir. 2005) (approving
Tennessee’s multi-step notice procedure following the elimination of three Medicaid eligibility
categories due to a budget shortfall.); Soskin v. Reinertson, 353 F.3d 1242, 1258 (10th Cir. 2004)
(approving a multi-step, multi-notice procedure following Colorado’s elimination of optional
Medicaid coverage for legal aliens).
Plaintiffs also say that the notices were misleading regarding their rights to a hearing
because, at one point, the notice stated that no hearing was required but, at another, that Plaintiffs
18
had a right to a hearing “if you believe that the decision is wrong.” (E.g. Luckhardt
Determination at 1, 3.) The Court agrees. As noted above, the notices here contained information
regarding both the end of a program and an individual eligibility redetermination. Defendants are
correct that no hearing is required for an across the board change in a program, see Benton, 586
F.2d at 2, but factual issues regarding an individual’s eligibility for Medicaid are a different
matter. In such a case, § 1396a(a)(3) and its “attendant regulations require the state agency to
notify applicants of the right to obtain a hearing and the method of obtaining one when . . . any
action is taken which affects the applicant’s claim.” Crawley, 2009 U.S. Dist. LEXIS 40794 at
*77.
Plaintiffs have thus established a likelihood of success on the merits that the notice was
inadequate under the statute and implementing regulations. The notice did not contain
information regarding all eligibility categories (specifically HMP), which was necessary
pursuant to 42 C.F.R. § 431.210. Moreover, while this is not central to the Court’s holding,
Defendants did not request additional information from potential disenrollees before mailing the
termination notice that might have allowed them to enroll these individuals in HMP.
2. Irreparable Injury
The Supreme Court’s “frequently reiterated standard requires plaintiffs seeking
preliminary relief to demonstrate that irreparable injury is likely in the absence of an injunction.”
Winter v. NRDC, Inc., 555 U.S. 7, 22 (2008) (emphasis in original) (collecting cases). Plaintiffs
argue that in the absence of injunctive relief, they will be left without healthcare coverage and
therefore be unable to access medically necessary services. (Pl.’s Br. at 17.) For example, former
Plan First! enrollees may be unable to afford birth control pills (Luckhardt Decl. at ¶ 12) or pay
19
for annual gynecological exams (Dozier Decl. at ¶ 13; Mackay Decl. at ¶ 13). The Court finds
that Plaintiffs have made a sufficient showing of irreparable injury.
District courts in the Sixth Circuit examining preliminary injunctions in the Medicaid
context “have held that delay or denial of Medicaid benefits can amount to irreparable harm.”
Markva v. Haveman, 168 F. Supp. 2d 695, 717 (E.D. Mich. 2001). In Markva, for example, the
plaintiffs challenged a Medicaid eligibility household income calculation that allowed parent
caretakers, but not other relative caretakers, to exclude expenses for a minor resident child. Id. at
699. One grandparent caretaker required “blood work associated with her past thyroid cancer”
and the other had been diagnosed with hypertension. Id. Without Medicaid coverage, the
plaintiffs would have been unable to obtain treatment for these conditions. After reviewing case
law, the Markva court concluded that “denial or delay in benefits which effectively prevents
plaintiffs from obtaining needed medical care constitutes irreparable harm. In other words, risk
of further injury to health warrants injunctive relief.” Id. at 719.
In Crawley v. Amande, No. 08-14040, 2009 U.S. Dist. LEXIS 40794, at *80–83 (E.D.
Mich. May 14, 2009), the court held that plaintiffs whose Medicaid benefits were terminated
after their eligibility under the Family Independence Program lapsed had made a sufficient
showing of irreparable harm. The court discussed Goldberg v. Kelly, 397 U.S. 254, 261, 90 S. Ct.
1011, 25 L. Ed. 2d 287 (1970), stressing the “vital necessity that Medicaid programs provide”
and noting that “a controversy over eligibility [for welfare benefits] may deprive an eligible
recipient of the very means by which to live while he waits.” Id. at *81–82 (citing Goldberg, 397
U.S. at 261). The court concluded that the “unwarranted lapse in Medicaid coverage has led to
severe restrictions in medically necessary healthcare which [plaintiffs] otherwise are unable to
afford.” Id. at 82. Therefore, plaintiffs had demonstrated irreparable harm.
20
In a more recent case, Wilborn v. Martin, 965 F. Supp. 2d 834, 847 (M.D. Tenn. 2013),
the court granted a preliminary injunction to release plaintiff, a quadriplegic, from a nursing
home to in-home care, further directing that plaintiff would be covered by Tennessee’s Medicaid
program. Id. at 836. Forcing plaintiff to remain in the nursing home, the court concluded, would
have deprived him of necessary twenty-four hour monitoring. The court concluded that “[t]he
loss of necessary Medicaid services constitutes irreparable harm.” Id. at 847 (collecting cases).
The First Circuit came to the same conclusion in Massachusetts Ass’n of Older
Americans v. Sharp, 700 F.2d 749 (1st Cir. 1983). As discussed, several plaintiffs had been
terminated from the “categorically needy” eligibility category of Medicaid. Those plaintiffs
presented affidavits showing that without Medicaid coverage, they had been “financially unable
to obtain necessary medical treatment.” Id. at 753. The court concluded that “[t]ermination of
benefits that causes individuals to forego such necessary medical care is clearly irreparable
injury.” Id. (citing Becker v. Toia, 439 F. Supp. 324, 336 (S.D.N.Y. 1977); Bass v. Richardson,
338 F. Supp. 478, 489 (S.D.N.Y. 1971)).
The foregoing authorities strongly suggest that Plaintiffs would suffer irreparable harm in
this case absent preliminary relief. Yet Defendants do not comment on the foregoing authorities.
They instead argue that because Plaintiffs have the right to an administrative hearing, they
cannot establish irreparable harm. (See Def.’s Prelim. Inj. Resp. Br. at 16–17.) A similar
argument was presented, and rejected, in Crawley, 2009 U.S. Dist. LEXIS 40794, at *83. There,
participants had received a notice that they were being terminated from Medicaid due to the
lapse of their eligibility under the Family Independence Program. Id. at *73. Defendants argued
that plaintiffs could not demonstrate irreparable harm because plaintiffs “did not take advantage
of the appeals process which would have extended their benefits for the duration of the appeal.”
21
Id. at 82. In rejecting this contention, the court explained, “[p]laintiffs cannot be expected to take
full advantage of an appeals process where the commencing notice only covers a single basis for
Medicaid ineligibility. As such, the Plaintiffs were unaware that they could even bring evidence
demonstrating that they qualified for Medicaid under another category. Id.
In this case, the Court has already found that the notices distributed to the class did not
include any information on the HMP eligibility requirements that might have allowed recipients
to exercise their right to a hearing in a meaningful manner. The Court has further concluded that
the notices were ambiguous as to whether the recipient even had a right to a hearing. Thus, the
existence of a hearing right does not preclude Plaintiffs from demonstrating that irreparable harm
is likely in the absence of injunctive relief.1
3. Balance of the Equities
The Court finds that the third preliminary injunction factor also favors Plaintiffs. The
Court acknowledges that the Defendants have expended funds to reinstate Plan First! benefits.
Defendants assert that “DHS has already expended more than $500,000 to reinstate Plan First!
program benefits” and that if an injunction is granted “it will cost an additional almost $100,000
per week to maintain the program.” (Def.’s Prelim. Inj. Resp. Br. at 17.)
But on the record before the Court, it appears that at least some of these expenses can be
reimbursed by the federal government. Specifically, 42 C.F.R. § 431.250 provides that federal
financial participation is available for “Payments made . . . for services provided within the scope
of the Federal Medicaid program and made under a court order.” 42 C.F.R. § 431.250(b)(2); see
also Chisholm v. Kliebert, No. 97-3274, 2013 U.S. Dist. LEXIS 114812, at *36–37 (E.D. La.
1
In addition, Plaintiffs correctly note that they are not required to exhaust their
administrative remedies before bringing suit pursuant to § 1983. (Pl.’s Prelim. Inj. Reply Br. at
10 (citing Patsy v. Bd. of Regents of Fla., 457 U.S. 496, 516 (1982); Heck v. Humphrey, 512 U.S.
477, 483 (1994)).)
22
Aug. 13, 2013) (rejecting the Louisiana Department of Health and Human Services’ argument
that it would have to exert “inordinate amounts of time and resources” to implement a court
order requiring it to enroll certain therapists as Medicaid providers and provide certain Medicaid
services to a class of individuals diagnosed with autism or Pervasive Developmental Disorders
without any guarantee that CMS would approve the changes, because, under 42 C.F.R.
§ 431.250(b)(2), “LDHH may obtain federal financial participation for ABA services provided to
class members without CMS approval by virtue of the Court’s order.”);
The Court fully appreciates that injunctive relief will place a burden on the state.
Crawley, 2009 U.S. Dist. LEXIS 40794, at *84. But “[w]hile the problem of additional expense
must be kept in mind, it does not justify denying Plaintiffs a right to meaningful notice and
continued receipt of Medicaid benefits to which they are entitled pending a final determination”
of their eligibility under HMP. Id.; see also Markva, 168 F. Supp. at 719 (“[T]he Court has found
that the defendants’ present procedure violates federal law and the defendants must expense the
resources necessary to comply with the statutory mandate or risk losing a greater amount of
federal funding.”).
4. Public Interest
A preliminary injunction will also serve the public interest. First, the public interest is
served where “individuals who [are] rightfully entitled to Medicaid benefits actually receive[]
those benefits without unwarranted interruption or unnecessary delay.” Crawley, 2009 U.S. Dist.
LEXIS 40794, at *88. Indeed, at oral argument, Defendants stated that it was their desire to
enroll all of those who are eligible for Healthy Michigan into that program. The injunction in this
case will aid Defendants in their long-term goals for the Healthy Michigan Program. This is to
say the injunction will require the State to determine whether members of the class are
23
“deserving of the benefits” offered by HMP, and, if they are, to enroll them in that program. See
Markva, 168 F. Supp. at 720.
Second, and relatedly, the public interest is served where government agencies follow
required procedures for the administration of government assistance. (See Pl.’s Prelim. Inj. Reply
Br. at 19.) Indeed, Defendants acknowledge that “[t]he public and the Departments share an
interest in the orderly administration of public benefits.” (Def.’s Prelim. Inj. Resp. Br. at 17.)
And in this case, Congress and the Department of Health and Human Services have provided
guidance on how the Defendants are to perform such administration. The injunction will aid
Defendants in complying with these directives.
III. CONCLUSION
Plaintiffs have shown that they are likely to succeed on the merits of their claims under
the Medicaid statute and its implementing regulations. They have demonstrated that, absent an
injunction, class members are likely to suffer irreparable injury. The balance of the equities also
tips in favor of Plaintiffs. And an injunction will serve the public interest. All four preliminary
injunction factors thus favor awarding Plaintiffs and the class they represent preliminary relief.
Accordingly,
IT IS ORDERED that Plaintiff’s Motion for Preliminary Injunction is GRANTED.
It is HEREBY ORDERED that Defendants James K. Haveman and Maura D. Corrigan,
their agents, and those acting in concert with Defendants, are PRELIMINARILY ENJOINED
from terminating any class member’s Plan First! benefits until the Department of Community
Health and/or the Department of Health and Human Services (“the Departments”) provide each
class member notice of their Medicaid eligibility under 42 U.S.C. § 1396a(a)(3) and its
implementing regulations, 42 C.F.R. §§ 431.210–214, as those provisions have been interpreted
24
in this opinion. The notice must (1) explain to the class member that the Plan First! program
ended on June 30, 2014 and benefits under that program have only been temporarily restored via
this litigation and will expire when the class member is placed in a new Medicaid eligibility
category, is determined ineligible for any other Medicaid eligibility category, or this injunction is
lifted (2) inform the member that the Departments have performed an ex parte review of the
member’s eligibility for the Healthy Michigan Plan based on all information reasonably available
to the Departments, (3) provide a member-specific reason (e.g., Modified Adjusted Gross
Income too high) for why the member was not found eligible for Healthy Michigan or else state
that the member is eligible for Healthy Michigan, and (4) unambiguously state that the member
has a right to challenge the eligibility determination through an administrative process which
includes the right to an administrative hearing. To satisfy these notice requirements, the
Departments must perform an ex parte review of the member’s eligibility for the Healthy
Michigan program based on all information reasonably available to or reasonably requested by
the Departments. If the Departments do not possess sufficient information to perform such a
review, they must submit at least one written request to the individual member requesting the
necessary information.
IT IS SO ORDERED.
s/Laurie J. Michelson
LAURIE J. MICHELSON
UNITED STATES DISTRICT JUDGE
Dated: October 29, 2014
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CERTIFICATE OF SERVICE
The undersigned certifies that a copy of the foregoing document was served on the
attorneys and/or parties of record by electronic means or U.S. Mail on October 29, 2014.
s/Jane Johnson
Case Manager to
Honorable Laurie J. Michelson
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