Watson v. Weeks

• Decision Date: 08 February 2006
• Docket Number: No. 04-35704.,04-35704.
• Court: U.S. Court of Appeals — Ninth Circuit
• Parties: William W. WATSON, Jr.; Charles E. Papst, Jr., by and through his next friend, Nida Morris; Robert Woodford, by and through his next friend, Anita Geistlinger; Heidi Halter, by and through her next friend Hayley Adams; Amar Juslen, by and through his next friend, Raul Juslen; Irma Radtke, by and through her next friend, Hans Radtke; Shelli A. Cameron; and Oregon Advocacy Center, Plaintiffs-Appellants, v. Gary WEEKS, in his official capacity as Director, Oregon Department of Human Services; Lynn Read, in her official capacity as Acting Administrator of the Office of Medical Assistance Program; and James Toews, in his official capacity as Acting Administrator, Seniors and People with Disabilities, Defendants-Appellees.

436 F.3d 1152

William W. WATSON, Jr.; Charles E. Papst, Jr., by and through his next friend, Nida Morris; Robert Woodford, by and through his next friend, Anita Geistlinger; Heidi Halter, by and through her next friend Hayley Adams; Amar Juslen, by and through his next friend, Raul Juslen; Irma Radtke, by and through her next friend, Hans Radtke; Shelli A. Cameron; and Oregon Advocacy Center, Plaintiffs-Appellants, v. Gary WEEKS, in his official capacity as Director, Oregon Department of Human Services; Lynn Read, in her official capacity as Acting Administrator of the Office of Medical Assistance

Program; and James Toews, in his official capacity as Acting Administrator, Seniors and People with Disabilities, Defendants-Appellees.

No. 04-35704.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted December 13, 2005.

Filed February 8, 2006.

Lauren K. Saunders, National Senior Citizens Law Center, Washington, D.C., for the appellants.

Janet A. Metcalf, Assistant Attorney General, Salem, OR, for the appellees.

Bruce Vignery, AARP Foundation Litigation, Washington, D.C., and Jane Perkins, National Health Law Program, Chapel Hill, NC, for amici curiae.

Appeal from the United States District Court for the District of Oregon; Ancer Haggerty, District Judge, Presiding. D.C. No. CV-03-00227-HA.

Before: HUG, GRABER, and CLIFTON, Circuit Judges.

HUG, Circuit Judge:

Seven Medicaid-eligible Oregon residents and the Oregon Advocacy Center (collectively the "Plaintiffs") appeal the district court's order dismissing their action against Oregon state health officials, seeking declaratory and injunctive relief. Their appeal presents an issue of first impression for this circuit: whether certain provisions of the Medicaid Act, 42 U.S.C. §§ 1396a(a)(10) and 1396a(a)(17), create individual rights enforceable under 42 U.S.C. § 1983 ("section 1983").

The seven individual plaintiffs, who are seniors and disabled individuals, had received home and community-based services as an alternative to Medicaid institutional nursing facility services. They lost their Medicaid eligibility, however, when the Oregon Department of Human Services (the "Department") scaled back the state's Medicaid program in the face of a budget crisis. Plaintiffs sued officials in the Department under section 1983 in federal district court. The individual plaintiffs alleged that they required the level of care that entitles them to nursing facility services under the Medicaid Act. They further alleged that the Department's actions violated both section 1396a(a)(10), which requires states to provide nursing facility services to eligible individuals, and section 1396a(a)(17), which requires states to use reasonable standards in setting Medicaid eligibility.

The district court granted the Department's motion to dismiss the complaint under Federal Rule of Civil Procedure ("FRCP") 12(b)(6), concluding that the Medicaid Act provisions in question do not create individual rights enforceable through section 1983. In dismissing the case, the court also denied Plaintiffs leave to amend their complaint.

Plaintiffs appeal the dismissal of their complaint and the denial of leave to amend. We have jurisdiction under 28 U.S.C. § 1291, and we hold that section 1396a(a)(10) creates an individual right enforceable under section 1983. We also hold that section 1396a(a)(17) does not create such an individual right. We do not reach the question of the district court's denial of leave to amend. The district court is thus affirmed in part, and reversed in part. We remand for further proceedings consistent with this opinion.

I BACKGROUND

A. The Medicaid Framework

Medicaid is a cooperative Federal-State program with the "purpose of enabling each State, as far as practicable under the conditions in such State, to furnish (1) medical assistance on behalf of ... individuals, whose income and resources are insufficient to meet the costs of necessary medical services." 42 U.S.C. § 1396. States choosing to participate in the program, such as Oregon, must develop a medical assistance plan meeting the approval of the federal Secretary of Health and Human Services (the "Secretary"). See id. A participating state receives federal reimbursement for "medical assistance" that it renders under its approved plan. See id.

The "medical assistance" provided by a state plan must include certain minimum services to "all individuals" who are financially eligible. See 42 U.S.C. § 1396a(a)(10)(A) (identifying the seven subsections of 42 U.S.C. § 1396d(a) that describe the minimum services). Among the services that must be provided are "nursing facility services (other than services in an institution for mental diseases) for individuals 21 years of age or older." 42 U.S.C. § 1396d(a)(4)(A). The Medicaid Act defines a "nursing facility" as an institution primarily engaged in providing skilled nursing care, rehabilitation services, or regular health-related care and services (above the level of room and board) available only in institutions. See 42 U.S.C. § 1396d(c) (referring to 42 U.S.C. § 1396r(a) for definition); 42 U.S.C. § 1396r(a)(1).

A state plan must also provide "reasonable standards ... for determining eligibility for and the extent of medical assistance under the plan," 42 U.S.C. § 1396a(a)(17), and must include necessary safeguards to assure that eligibility for services is provided "in a manner consistent with simplicity of administration and the best interests of the recipients." 42 U.S.C. § 1396a(a)(19).

A related provision of Medicaid is the Home and Community Based Services ("community-based services") waiver program. A community-based services waiver permits a state plan to include as "medical assistance" certain home and community-based services rendered to individuals who otherwise would require nursing facility care that could be reimbursable under the state plan. See 42 U.S.C. § 1396n(c)(1). A waiver program must include a method for assessing whether possible service recipients need inpatient hospital services, nursing facility services, or services in an intermediate care facility for the mentally ill. 42 U.S.C. § 1396n(c)(2)(B). The implementing regulations for § 1396n(c)(1) provide that a state may terminate its waiver at any time upon notice to the recipients and Secretary. See 42 C.F.R. § 441.307. A waiver may also be modified at any time, subject to the Secretary's approval. See 42 C.F.R. § 441.355.

B. Oregon's Community-Based Services Waiver

Oregon initiated its community-based services waiver program in 1981. The waiver included the Client Assessment and Planning System, whereby the state classified eligible individuals into service priority levels based on medical need; the levels number from one to eighteen, with level one reflecting the most urgent medical need.¹ Oregon uses a single set of criteria for determining eligibility, whether services are in nursing facilities or community based.² The original waiver provided care to all individuals assessed at levels one through seventeen. The Department also made community-based services available to any person eligible for institutional nursing care, leading to a large reduction in the services that had to be provided at nursing facilities.

More recently, however, Oregon has eliminated coverage for some service levels, purely to cut state spending. On January 27, 2003, due to budget difficulties, the Department submitted a proposed waiver modification to eliminate eligibility for individuals in service levels fifteen to seventeen. The Secretary approved the modification. On February 24, 2003, the Department successfully requested another modification: the elimination of eligibility for individuals in levels ten to fourteen. The Oregon legislature subsequently restored funding through August 31, 2003, for service levels ten and eleven, and restored levels ten through thirteen for the 2003-2005 budget. Current Oregon regulations reflect these limitations, providing that only those individuals in levels one through thirteen are eligible for services.³

Under Oregon's cutbacks, individuals who are deemed ineligible for nursing facility or community-based services cannot challenge the state's decision to eliminate eligibility of a service level, but may challenge only their placement into their particular service level. Oregon estimated that elimination of levels fifteen through seventeen affected 4,000 individuals in community-based settings and 85 individuals in nursing facilities. The elimination of levels ten through fourteen was projected to terminate services for 6,100 individuals in community-based settings and 300 individuals in nursing facilities.

II COURT PROCEEDINGS

On February 20, 2003, Plaintiffs filed a complaint against the Department in federal district court for the District of Oregon.⁴ On March 24, 2003, before the Department had responded, Plaintiffs filed a First Amended Complaint. The amended complaint set forth five claims for relief; Plaintiffs are appealing only the district court's dismissal of the first three of these claims. The first claim alleged that the Department's withdrawal of eligibility violated inter alia, 42 U.S.C. § 1396a(a)(10), which requires that state Medicaid plans provide nursing facility services to eligible individuals. The second claim alleged that the Department's actions violated, inter alia, 42 U.S.C. § 1396a(a)(17)'s "reasonable standards" requirement. The third claim alleged that the Department violated 42 U.S.C. § 1396a(a)(17) by assessing Plaintiffs' medical need for nursing facility services using agents who lacked the necessary professional qualifications and training and who employed subjective and inaccurate judgments.

On April 22, 2003, the Department moved to dismiss the claims under FRCP 12(b)(6). On November 24, 2003, the magistrate judge filed a report that recommended granting the motion. On December 10, 2003, Plaintiffs filed...