Bryson v. Shumway

Citation308 F.3d 79
Decision Date15 October 2002
Docket NumberNo. 02-1059.,02-1059.
PartiesBonnie BRYSON and Claire Shepardson, on behalf of themselves and all others similarly situated, Plaintiffs, Appellees, v. Donald SHUMWAY, in his capacity as Commissioner of New Hampshire Department of Health and Human Services, Susan Fox, in her capacity as Director of New Hampshire Division of Developmental Services, Defendants, Appellants.
CourtUnited States Courts of Appeals. United States Court of Appeals (1st Circuit)

Sheila Zakre, with whom Amy Messer and Disabilities Rights Center, Inc. were on brief, for appellees.

Daniel J. Mullen, Associate Attorney General, with whom Philip T. McLaughlin, Attorney General, and Suzanne M. Gorman, Senior Assistant Attorney General, were on brief, for appellants.

Before BOUDIN, Chief Judge, BOWNES, Senior Circuit Judge, and LYNCH, Circuit Judge.

LYNCH, Circuit Judge.

Plaintiffs suffer from acquired brain disorders and have the option to receive medical care for that condition under the Medicaid program. They would prefer to receive those services in a home care setting through a model program New Hampshire has established under a Medicaid waiver approved by the Secretary of Health and Human Services. 42 U.S.C. § 1396n(c) (2000). The difficulty is that there are more people who want to be in the model program than there is room in the program.

The patients sued, on behalf of a class, relying on Medicaid statutory language, id. § 1396n(c)(10), and arguing that if New Hampshire set up a model program at all, Congress required that the waiver program have at least as many slots as the number of applicants, up to a limit of 200. They also argued that New Hampshire did not fill even the available slots within a reasonable time. Finally, they argued that the notices given to those on the waiting list were inadequate.

The district court agreed that New Hampshire was mandated by the Medicaid statute to create more slots in its model program and also that notice was inadequate. It did not address the second issue. We reverse the district court's ruling on the first issue and remand the other two issues, vacating the notice ruling and the injunction.

I.

Bonnie Bryson and Claire Shepardson have acquired brain disorders (ABDs), which manifest before age sixty, are neither congenital nor caused by birth trauma, and present "a severe and life-long disabling condition which significantly impairs a person's ability to function in society." N.H.Code Admin. R. Ann. He-M 522.02(a) (2002). Bryson, Shepardson, and the plaintiff class they represent are being treated in a variety of settings, from nursing homes to psychiatric hospitals to private homes.1

Medicaid is an optional plan under which the federal government, through the states, partially funds medical assistance to needy individuals. See § 1396; Wilder v. Va. Hosp. Ass'n, 496 U.S. 498, 502, 110 S.Ct. 2510, 110 L.Ed.2d 455 (1990). Not everyone is eligible for Medicaid-funded treatment; to be eligible, an individual must have limited resources and must fit into an eligibility category. For disabled adults, the most common route to eligibility is receiving Supplemental Security Income (SSI) on the basis of disability. See § 1396a(a)(10)(A)(i)(II). Some states, including New Hampshire, also elect to cover some medically needy individuals who are not poor enough to be covered by SSI. J. Perkins, Medicaid: Past Successes and Future Challenges, 12 Health Matrix 7, 12 n. 21 (2002); see § 1396a(a)(10)(C).

In 1993, New Hampshire2 requested federal approval to provide home and community-based services for individuals with ABDs under the Medicaid waiver provisions. Section 1915(c) of the Social Security Act, 42 U.S.C. § 1396n(c), permits states to include in their Medicaid plans non-medical services, such as case management, habilitation services, and respite care. Id. § 1396n(c)(4)(B). States must apply for a waiver and be approved in order to include such services in their Medicaid plans. Id. § 1396n(c)(1). Programs approved under this subsection are waived from many Medicaid strictures, id. § 1396n(c)(3), such as the requirements that programs be in place statewide, see id. § 1396a(a)(1), and that medical assistance be made available to all individuals equally, see id. § 1396a(a)(10)(B). Waivers are initially approved for three years and may be re-approved for five-year periods. Id. § 1396n(c)(1). The waiver program is designed to allow states to experiment with methods of care, or to provide care on a targeted basis, without adhering to the strict mandates of the Medicaid system.

There are three primary types of home and community-based waivers. The first type, at issue here, concerns the treatment of individuals who would otherwise be treated in an institutional setting such as a hospital or nursing home. See id. § 1396n(c); 42 C.F.R. §§ 440.180, 441.300-.302 (2002). The second type is for individuals over sixty-five who would otherwise be in a nursing home. See § 1396n(d). The third type targets children under age five who have AIDS or are born dependent on drugs. See id. § 1396n(e). There are currently about 240 home and community-based waiver programs nationwide. J. Perkins & R.T. Boyle, Addressing Long Waits for Home and Community-Based Care Through Medicaid and the ADA, 45 St. Louis U. L.J. 117, 126 (2001).

To participate in the waiver program, states must apply to the federal Centers for Medicaid and Medicare Services (CMS). 42 C.F.R. § 430.25(e). The Administrator of CMS has the authority to approve or deny requests, but must consult with the Secretary of Health and Human Services (HHS) before denying a request. Id. § 430.25(f)(2)(ii).

In theory, the waiver plans are expenditure-neutral; the average estimated per capita expenditure under the waiver plans must not be more than the average estimated expenditure absent the waiver program. § 1396n(c)(2)(D). In practice, the waiver programs may be costly to the states, because even though the individuals served by the waiver plan are no longer being served by nursing homes or other care facilities, other patients may take those nursing home spots. Many patients not currently being served under Medicaid may also apply for the waiver program. See Perkins & Boyle, supra, at 119. The states thus have a financial incentive to keep their waiver programs small, or at least, to begin with small programs and grow them incrementally.

New Hampshire applied for a model waiver, which differs from regular waivers primarily in that model waivers, by HHS regulation, may not serve more than 200 individuals at any one time. 42 C.F.R. § 441.305(b)(1). New Hampshire's model waiver request, however, proposed to serve a far smaller number of individuals than the 200 person maximum. The original waiver request proposed that 15 individuals be served in the first year (19931994), 26 in the second year, and 37 in the third year. In 1996, New Hampshire requested and HHS approved an amendment to the waiver to accommodate 74 individuals in the third year of the program instead of 37. The State also requested a renewal of the waiver for five more years, from 1996 through 2001; HHS approved this request in 1997. New Hampshire initially requested funding for only 74 slots for each of the five years of the waiver renewal, but in 1998 it requested, and HHS approved, an amendment to the renewal, such that the program would serve 77 individuals in the fifth year, 81 in the sixth year, 85 in the seventh year, and 89 in the eighth year. In August 2001, New Hampshire requested an extension for the waiver, which HHS granted through January 2002. New Hampshire has since applied for and was granted a five-year renewal of the waiver program, with an increasing number of slots from 117 up to 130 over the five-year period.

There have always been more applicants for home and community-based ABD services in New Hampshire than there have been available slots. The waiting list has ranged from 25 people in the first year to a height of 87 in the 1997-1998 year.

It is undisputed that up until recently, some of the approved waiver slots have not been filled. The parties differ as to how many slots have historically gone unused, for how long and for what reasons; furthermore, there is no agreement as to whether there continues to be any unused waiver slots.

Bryson, Shepardson, and the plaintiff class have applied for community-based services under the New Hampshire Home and Community Based Waiver for Persons with Acquired Brain Disorders. They have not received these services; New Hampshire instead has placed them on a waiting list, where they remain.

II.

On December 2, 1999, Bryson and Shepardson sued the two New Hampshire state officials, on behalf of themselves and all others similarly situated, seeking injunctive and declaratory relief pursuant to 42 U.S.C. § 1983. The suit challenged the defendants' failure to provide home and community-based services under the model waiver program to the plaintiff class afflicted with ABD.

The complaint pled seven distinct counts; only two counts are relevant to this appeal.3 The first, Count II of the complaint, alleged that under federal law, Medicaid services must be furnished with "reasonable promptness" under § 1396a(a)(8) and that the New Hampshire defendants were in violation of this provision. The second, Count VII of the complaint, alleged that federal law requires that the plaintiffs receive notice and the opportunity for a hearing when they have been placed on a waiting list, id. § 1396a(a)(3), and that New Hampshire has not provided such notice.

On October 23, 2001, the District Court for the District of New Hampshire granted the plaintiffs' motion for summary judgment as to Count VII, the notice allegation. Bryson v. Shumway, 177 F.Supp.2d 78, 81 (D.N.H.2001). The court found that § 1396a(a)(3), which requires an opportunity for a fair hearing when a "claim for medical assistance ... is...

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