Harris v. Olszewski

• Decision Date: 21 March 2006
• Docket Number: No. 05-1047.,No. 04-2479.,04-2479.,05-1047.
• Citation: 442 F.3d 456
• Parties: Dorothy HARRIS, Legal Guardian of Willie M. Washington; Suzanne K. Balikci, Legal Guardian of Jennie Lillian Schankowski; and Mary Ruffin, Legal Guardian of Issac Ruffin, on behalf of themselves and all other similarly situated individuals [certified class action], Plaintiffs-Appellees, v. Janet OLSZEWSKI, Director of the Michigan Department of Community Health, Defendant-Appellant. L.F., Legal Guardian of J.H., individually and on behalf of all other similarly situated individuals [certified class action], Plaintiffs-Appellees, v. Janet Olszewski, Director of the Michigan Department of Community Health and Paul Reinhart, Director of Michigan's Medical Services Administration, Defendants-Appellants.
• Court: U.S. Court of Appeals — Sixth Circuit

442 F.3d 456

Dorothy HARRIS, Legal Guardian of Willie M. Washington; Suzanne K. Balikci, Legal Guardian of Jennie Lillian Schankowski; and Mary Ruffin, Legal Guardian of Issac Ruffin, on behalf of themselves and all other similarly situated individuals [certified class action], Plaintiffs-Appellees, v. Janet OLSZEWSKI, Director of the Michigan Department of Community Health, Defendant-Appellant.

L.F., Legal Guardian of J.H., individually and on behalf of all other similarly situated individuals [certified class action], Plaintiffs-Appellees, v. Janet Olszewski, Director of the Michigan Department of Community Health and Paul Reinhart, Director of Michigan's Medical Services Administration, Defendants-Appellants.

No. 04-2479.

No. 05-1047.

United States Court of Appeals, Sixth Circuit.

Argued: September 22, 2005.

Decided and Filed: March 21, 2006.

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ARGUED:

William R. Morris, Michigan Department of Attorney General, Lansing, Michigan, for Appellants. Stephen M. Ryan, Stephen M. Ryan P.L.L.C., Bingham Farms, Michigan, Michael C. Levine, Fraser, Trebilcock, Davis & Dunlap, Lansing, Michigan, for Appellees.

ON BRIEF:

William R. Morris, Michigan Department of Attorney General, Lansing, Michigan, for Appellants. Stephen M. Ryan, Stephen M. Ryan P.L.L.C., Bingham Farms, Michigan, Michael C. Levine, Fraser, Trebilcock, Davis & Dunlap, Lansing, Michigan, for Appellees. Joshua Waldman, United States Department of Justice, Washington, D.C., for Amicus Curiae.

Before: SILER and SUTTON, Circuit Judges; SHARP, District Judge.^*

OPINION

SUTTON, Circuit Judge.

In these consolidated appeals, Michigan's Department of Community Health (the "department" or "State") urges us to reverse the district court's entry of summary judgment against it in two cases brought under 42 U.S.C. § 1983 on behalf of a class of Michigan residents. The district court enjoined the department from enforcing a single-supplier contract for all incontinence products to Michigan's Medicaid recipients. On appeal, the department challenges the district court's holdings that: (1) Medicaid's freedom-of-choice provision, 42 U.S.C. § 1396a(a)(23)(A), confers a private right on individuals enforceable under § 1983 and (2) the State's single-source contract violates the freedom-of-choice provision because incontinence products are not "medical devices" as that term is used in the relevant statute, § 1396n(a)(1)(B). We agree that Medicaid's freedom-of-choice provision creates a private right that may be enforced under § 1983. But we disagree that the phrase "medical devices" is unambiguous and that the agency's interpretation—that medical devices may include incontinence products—is ineligible for Chevron deference. We thus reverse the judgment of the district court.

I.

A cooperative federal-state program, Medicaid authorizes the Federal Government to provide funds to participating States to administer medical assistance to individuals "whose income and resources are insufficient to meet the costs of necessary medical services." 42 U.S.C. § 1396. The State of Michigan participates in Medicaid and administers its program through the department.

At stake in these appeals is Michigan's method of supplying certain incontinence products through its Medicaid program. The relevant incontinence products include adult, child, and youth diapers and briefs as well as disposable incontinence shields, liners and underpads as well as incontinence catheters, accessories, syringes, skin barriers and enema units.

In 1997, the department and Binsons Home Medical Care signed a contract providing that Binsons would be the sole provider of incontinence products for some of Michigan's Medicaid recipients.

In 2004, after undergoing a competitive-bidding process, the department entered into a new contract designating J & B Medical as the single-source provider of incontinence products to all of Michigan's Medicaid recipients.

On June 28, 2004, Dorothy Harris filed a complaint in the United States District Court for the Eastern District of Michigan, seeking certification of a class consisting of all individuals who, like her, are eligible for Medicaid benefits in Michigan and may require use of incontinence products. Harris sought declaratory and injunctive relief under § 1983 and claimed that the department's single-source-provider contract violated Medicaid's freedom-of-choice provision. On July 1, 2004, another beneficiary, L.F., filed a similar complaint, after which the court consolidated the two cases.

On November 1, 2004, the district court granted summary judgment for the plaintiffs. As pertinent here, the court held that Medicaid's freedom-of-choice provision "creates private rights" enforceable under § 1983. D. Ct. Op. at 9-17. It then held that the freedom-of-choice provision, 42 U.S.C. § 1396a(a)(23)(A), requires States to allow eligible individuals to obtain "medical assistance" from any qualified provider. Although the Medicaid statute contains an exception to the freedom-of-choice provision for providers of "medical devices," 42 U.S.C. § 1396n(a)(1)(B), the court held that this phrase does not include incontinence products. The department timely appealed.

II.

Section 1983 creates a cause of action against any person who, under color of state law, deprives "any citizen of the United States . . . of any rights, privileges, or immunities secured by the Constitution and laws." 42 U.S.C. § 1983. Although § 1983 authorizes lawsuits to enforce federal statutory rights, Maine v. Thiboutot, 448 U.S. 1, 4, 100 S.Ct. 2502, 65 L.Ed.2d 555 (1980), it "does not provide an avenue for relief every time a state actor violates a federal law," City of Rancho Palos Verdes v. Abrams, 544 U.S. 113, 125 S.Ct. 1453, 1458, 161 L.Ed.2d 316 (2005). Consistent with the terms of § 1983, a claimant must demonstrate that the underlying statute creates enforceable "rights" because "it is rights" after all, "not the broader or vaguer `benefits' or `interests,' that may be enforced under" the statute. Gonzaga Univ. v. Doe, 536 U.S. 273, 283, 122 S.Ct. 2268, 153 L.Ed.2d 309 (2002).

In ascertaining "whether Congress intended to create a federal right" in the freedom-of-choice provision, id., the Court has directed us to look at three factors, see Blessing v. Freestone, 520 U.S. 329, 340-41, 117 S.Ct. 1353, 137 L.Ed.2d 569 (1997); see also Westside Mothers v. Haveman, 289 F.3d 852, 862-63 (6th Cir. 2002). "First, Congress must have intended that the provision in question benefit the plaintiff." Blessing, 520 U.S. at 340, 117 S.Ct. 1353. In answering this initial inquiry, courts look for a statutory right or "individual entitlement," Gonzaga, 536 U.S. at 287, 122 S.Ct. 2268, that is "unambiguously conferred," id. at 283, 122 S.Ct. 2268, by the use of "rights-creating language," id. at 284 n. 3, 122 S.Ct. 2268. An "aggregate focus" unconcerned "with whether the needs of any particular person have been satisfied," id. at 288, 122 S.Ct. 2268 (internal quotation marks omitted), is insufficient; the statute must be "phrased in terms of the persons benefited," id. at 284, 122 S.Ct. 2268, and use "individually focused terminology," id. at 287, 122 S.Ct. 2268. "Second, the plaintiff must demonstrate that the right assertedly protected by the statute is not so vague and amorphous that its enforcement would strain judicial competence." Blessing, 520 U.S. at 340-41, 117 S.Ct. 1353 (internal quotation marks omitted). "Third, the statute must unambiguously impose a binding obligation on the States. In other words, the provision giving rise to the asserted right must be couched in mandatory, rather than precatory, terms." Id. at 341, 117 S.Ct. 1353.

These three inquiries do not end the matter, however. "Even after" a plaintiff demonstrates "that the federal statute creates an individually enforceable right in the class of beneficiaries to which he belongs[,] . . . there is only a rebuttable presumption that the right is enforceable under § 1983." City of Rancho Palos Verdes, 125 S.Ct. at 1458 (internal quotation marks omitted). "The defendant may defeat this presumption by demonstrating that Congress did not intend that remedy for a newly created right" by pointing to "evidence of such congressional intent [that] may be found directly in the statute creating the right, or inferred from the statute's creation of a comprehensive enforcement scheme that is incompatible with individual enforcement under § 1983." Id. (internal quotation marks omitted); see also Wilder v. Va. Hosp. Ass'n, 496 U.S. 498, 508, 110 S.Ct. 2510, 110 L.Ed.2d 455 (1990).

Gauged by this test, Medicaid's freedom-of-choice provision creates enforceable rights that a Medicaid beneficiary may vindicate through § 1983. "A State plan for medical assistance," the provision says,

must . . . provide that [ ] any individual eligible for medical assistance (including drugs) may obtain such assistance from any institution, agency, community pharmacy, or person, qualified to perform the service or services required (including an organization which provides such services, or arranges for their availability, on a prepayment basis), who undertakes to provide him such services.

42 U.S.C. § 1396a(a)(23) (emphasis added).

First, in giving "any individual eligible for medical assistance" a free choice over the provider of that assistance, the statute uses the kind of "individually focused terminology" that "unambiguously confer[s]" an "individual entitlement" under the law. Gonzaga, 536 U.S. at 283, 287, 122 S.Ct. 2268. And by saying that "[a] State plan . . . must . . . provide" this free choice, the statute uses the kind of "rights-creating," id., "mandatory language," see Westside Mothers, 289 F.3d at 863, that the Supreme Court and our court have held establishes a private right of action. It is also clear that the right is vested "in the class of beneficiaries to which [plaintiffs] belong[ ]," City...