469 U.S. 287 (1985), 83-727, Alexander v. Choate

Docket Nº:No. 83-727
Citation:469 U.S. 287, 105 S.Ct. 712, 83 L.Ed.2d 661, 53 U.S.L.W. 4072
Party Name:Alexander v. Choate
Case Date:January 09, 1985
Court:United States Supreme Court

Page 287

469 U.S. 287 (1985)

105 S.Ct. 712, 83 L.Ed.2d 661, 53 U.S.L.W. 4072




No. 83-727

United States Supreme Court

Jan. 9, 1985

Argued October 1, 1984




Faced with Medicaid costs beyond its budget, Tennessee proposed to reduce from 20 to 14 the number of annual inpatient hospital days that state Medicaid would pay hospitals on behalf of a Medicaid recipient. Before the reduction took effect, respondent Medicaid recipients brought a class action in Federal District Court for declaratory and injunctive relief. Respondents alleged that the proposed 14-day limitation would have a disproportionate effect on the handicapped, and hence was discriminatory in violation of § 504 of the Rehabilitation Act of 1973 -- which provides that no otherwise qualified handicapped person shall, solely by reason of his handicap, be subjected to discrimination under any program receiving federal financial assistance -- and its implementing regulations, and moreover that any annual limitation on inpatient coverage would disadvantage the handicapped disproportionately in violation of § 504. The District Court dismissed the complaint on the ground that the 14-day limitation was not the type of discrimination that § 504 was intended to proscribe. The Court of Appeals held that respondent had established a prima facie case of a § 504 violation, because both the 14-day and any annual limitation on inpatient coverage would disproportionately affect the handicapped.

Held: Assuming that § 504 or its implementing regulations reach some claims of disparate impact discrimination, the effect of Tennessee's reduction in annual inpatient hospital coverage is not among them. Pp. 292-309.

(a) The 14-day limitation is neutral on its face, is not alleged to rest on a discriminatory motive, and does not deny the handicapped meaningful access to or exclude them from the particular package of Medicaid services Tennessee has chosen to provide. The State has made the same benefit equally accessible to both handicapped and nonhandicapped persons, and is not required to assure the handicapped "adequate health care" by providing them with more coverage than the nonhandicapped. Nothing in the Rehabilitation Act's legislative history supports the conclusion that the Act requires the States to view certain illnesses, i.e., those particularly affecting the handicapped, as more important than others and more worthy of cure through government subsidization. Section 504 does not require the State to alter its definition of the benefit

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it will be providing as 14 days of inpatient coverage simply to meet the reality that the handicapped have greater medical needs. While § 504 seeks to assure even-handed treatment and the opportunity for handicapped individuals to participate in and benefit from programs receiving federal financial assistance, the Act does not guarantee the handicapped equal results from the provision of state Medicaid. Pp. 302-306.

(b) In addition, the State is not obligated to modify its Medicaid program by abandoning reliance on annual durational limitations on inpatient coverage. Section 504 does not require the State to redefine its Medicaid program, and nothing in its legislative history suggests that Congress desired to make major inroads on the States' longstanding discretion to choose the proper mix of amount, scope, and durational limitations on services covered by Medicaid. Moreover, § 504 does not require that federal grantees make a broad-based distributive decision always in the way most favorable, or least disadvantageous, to the handicapped. To do so would impose a virtually [105 S.Ct. 714] unworkable requirement on state Medicaid administrators. Pp. 306-309.

715 F.2d 1036, reversed.

MARSHALL, J., delivered the opinion for a unanimous Court.

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MARSHALL, J., lead opinion

Justice Marshall delivered the opinion of the Court.

In 1980, Tennessee proposed reducing the number of annual days of inpatient hospital care covered by its state Medicaid program. The question presented is whether the effect upon the handicapped that this reduction will have is cognizable under § 504 of the Rehabilitation Act of 1973 or its implementing regulations. We hold that it is not.


Faced in 1980-1981 with projected state Medicaid1 costs of $42 million more than the State's Medicaid budget of $388 million, the directors of the Tennessee Medicaid program decided to institute a variety of cost-saving measures. Among these changes was a reduction from 20 to 14 in the number of inpatient hospital days per fiscal year that Tennessee Medicaid would pay hospitals on behalf of a Medicaid recipient. Before the new measures took effect, respondents, Tennessee Medicaid recipients, brought a class action for declaratory and injunctive relief in which they alleged, inter alia, that the proposed 14-day limitation on inpatient coverage would have a discriminatory effect on the handicapped.2 Statistical evidence, which petitioners do not

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dispute, indicated that in the 1979-1980 fiscal year, 27.4% of all handicapped users of hospital services who received Medicaid required more than 14 days of care, while only 7.8% of nonhandicapped users required more than 14 days of inpatient care.

Based on this evidence, respondents asserted that the reduction would violate § 504 of the Rehabilitation Act of 1973, 87 Stat. 394, as amended, 29 U.S.C. § 794, and its implementing regulations. Section 504 provides:

No otherwise qualified handicapped individual . . . shall, solely by reason of his handicap, be excluded from the participation in, be denied the benefits of, or be subjected to discrimination under any program or activity receiving Federal financial assistance. . . .

29 U.S.C. § 794.

Respondents' position was twofold. First, they argued that the change from 20 to 14 days of coverage would have a disproportionate effect on the handicapped and hence was discriminatory.3 The second, and major, thrust of respondents' attack [105 S.Ct. 715] was directed at the use of any annual limitation on the number of inpatient days covered, for respondents acknowledged that, given the special needs of the handicapped for medical care, any such limitation was likely to disadvantage the handicapped disproportionately. Respondents noted, however, that federal law does not require States to impose any annual durational limitation on inpatient coverage,

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and that the Medicaid programs of only 10 States impose such restrictions.4 Respondents therefore suggested that Tennessee follow these other States and do away with any limitation on the number of annual inpatient days covered. Instead, argued respondents, the State could limit the number of days of hospital coverage on a per-stay basis, with the number of covered days to vary depending on the recipient's illness (for example, fixing the number of days covered for an appendectomy); the period to be covered for each illness could then be set at a level that would keep Tennessee's Medicaid program as a whole within its budget.5 The State's refusal to adopt the plan was said to result in the imposition of gratuitous costs on the handicapped and thus to constitute discrimination under § 504.

A divided panel of the Court of Appeals for the Sixth Circuit held that respondents had indeed established a prima facie case of a § 504 violation. Jennings v. Alexander, 715 F.2d 1036 (1983). The majority apparently concluded that any action by a federal grantee that disparately affects the handicapped states a cause of action under § 504 and its implementing regulations. Because both the 14-day rule and any annual limitation on inpatient coverage disparately

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affected the handicapped, the panel found that a prima facie case had been made out, and the case was remanded6 to give Tennessee an opportunity for rebuttal. According to the panel majority, the State on remand could either demonstrate the unavailability of alternative plans that would achieve the State's legitimate cost-saving goals with a less disproportionate impact on the handicapped, or the State could offer "a substantial justification for the adoption of the plan with the greater discriminatory impact." Id. at 1045. We granted certiorari to consider whether the type of impact at issue in this case is cognizable under § 504 or its implementing regulations, 465 U.S. 1021 (1984), and we now reverse.


The first question the parties urge on the Court is whether proof of discriminatory animus is always required to establish a violation of § 504 and its implementing regulations, or whether federal law also reaches action by a recipient of federal funding that discriminates against the handicapped by effect rather than by design. The State of Tennessee argues that § 504 reaches only purposeful discrimination against the handicapped. As support for this position, the State relies heavily on our recent decision in Guardians Assn. v. Civil Service Comm'n of New York City, 463 U.S. 582 (1983).

[105 S.Ct. 716] In Guardians, we confronted the question whether Title VI of the Civil Rights Act of 1964, 42 U.S.C. § 2000d et seq., which prohibits discrimination against racial and ethnic minorities in programs receiving federal aid, reaches both

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intentional and disparate impact discrimination.7 No opinion commanded a majority in Guardians, and Members of the Court offered widely varying interpretations of Title VI. Nonetheless, a two-pronged holding on the nature of the discrimination proscribed by Title VI emerged in that case. First, the Court held that Title VI itself directly reached only instances of intentional discrimination.8 Second, the Court held that actions having an unjustifiable disparate impact on minorities could be redressed through agency regulations designed to implement...

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