Friedman v. Berger

Decision Date08 December 1976
Docket NumberD,No. 84,84
Citation547 F.2d 724
PartiesRuth FRIEDMAN et al., Plaintiffs-Appellants, v. Stephen BERGER, Individually and as Commissioner of the New York State Department of Social Services, et al., Defendants-Appellees. ocket 76-7187.
CourtU.S. Court of Appeals — Second Circuit

John C. Gray, Jr., Brooklyn, N. Y. (Lloyd Constantine, and Brooklyn Legal Services Corp., Brooklyn, N. Y., of counsel), for plaintiffs-appellants.

Robert S. Hammer, Asst. Atty. Gen. of N. Y., New York City (Louis J. Lefkowitz, Atty. Gen., and Samuel A. Hirshowitz, First Asst. Atty. Gen., New York City, of counsel), for defendants-appellees.

Before FRIENDLY, HAYS and MULLIGAN, Circuit Judges.

FRIENDLY, Circuit Judge.

This appeal raises the question how much personal income can be retained by individuals who are receiving assistance under the New York State Medicaid program 1 while in a hospital or nursing home for extended care and in particular whether a New York State Medicaid regulation restricting the amount of retained income to $28.50 per month is valid under the federal Social Security Act and pertinent regulations.

Plaintiffs are recipients of New York State Medicaid who are aged, blind, or chronically ill, have been in hospitals or nursing homes for one month or longer, and qualify as "medically needy"; this designation 2 means that their annual income is too low to meet their medical expenses including the enormous cost of institutional care but too high to qualify them for the federal cash grant program providing "Supplemental Security Income" (SSI) for the aged, blind, and disabled. 3 By federal law the provision of Medicaid assistance to such persons is a matter of state option, 42 U.S.C. § 1396a(a) (10)(C), but must conform to federal requirements. Aged, blind, and disabled patients whose personal incomes are low enough to qualify under the SSI program are considered "categorically needy" 4 and must be included within any state Medicaid plan, 42 U.S.C. § 1396a(a)(10)(A).

At issue is how much personal income of "medically needy" Medicaid recipients such as plaintiffs can be required to be applied toward the cost of institutional care as a condition of their receiving Medicaid. The New York regulation under challenge is 18 New York Code of Rules and Regulations (NYCRR) § 360.5(e), which provides that a Medicaid recipient who is "receiving chronic care in a medical institution or intermediate care facility" and has no dependents can retain only $28.50 per month of his income for personal expenses. "(A)ll resources in excess . . . shall be utilized to meet the cost of medical assistance for that applicant or recipient . . . ." 5 In Social Security idiom, the regulation requires institutionalized Medicaid recipients such as plaintiffs to "spend down" to all but $28.50 per month of their income. Putting constitutional arguments aside, plaintiffs urge that this regulation is deficient for two reasons: first, that the Social Security Act provides medically needy Medicaid recipients with an express guarantee of at least $45 retained income per month; and second, that, even if this not be so, the Social Security Act requires that the medically needy be aided under standards "comparable" to those applied to categorically needy Medicaid recipients who are allegedly permitted to retain more than $28.50 personal income under the New York State program.

Plaintiffs are appealing here from a decision of Judge Wyatt in the District Court for the Southern District of New York, 409 F.Supp. 1225, denying their motion to certify as a class all Medicaid recipients in chronic care institutions with personal incomes in excess of $45 and a preliminary injunction against enforcement of 18 NYCRR § 360.5(e) and directing dismissal of the complaint. Jurisdiction is adequately based on 28 U.S.C. § 1343(3) because of plaintiffs' dormant constitutional claim. 6 We affirm the dismissal of the complaint, though on somewhat different reasoning; in light of this we do not reach the question of class certification.

I

(3) Explanation of plaintiffs' first claim requires a foray into statutory provisions and HEW regulations of labyrinthine complexity. 7 Under Title XIX of the Social Security Act, the Medicaid legislation, a state which wishes to participate in Medicaid must submit a plan for providing such assistance that conforms with federal law. 42 U.S.C. § 1396a(a)(17) requires that:

A State plan for medical assistance must

(17) include reasonable standards . . . for determining eligibility for and the extent of medical assistance under the plan which . . . (B) provide for taking into account only such income and resources . . . (in the case of any applicant or recipient who would, except for income and resources, be eligible . . . to have paid with respect to him supplemental security income benefits under subchapter XVI of this chapter (the SSI program) as would not be disregarded (or set aside for future needs) in determining his eligibility for such aid, assistance or benefits . . .. (Emphasis added).

In other words, for persons such as plaintiffs, who would be eligible to receive SSI benefits because of their age, blindness or disability were it not for their income, state standards must provide that income which is disregarded in determining SSI eligibility also be disregarded in determining eligibility for and the extent of medical assistance under Medicaid. This statutory requirement is supplemented by HEW regulation, 45 C.F.R. § 248.3(c)(3)(ii)(A). 8

Unfortunately for the plaintiffs, however, when one turns to the portion of the Social Security Act governing disregards under the SSI program, Title XVI, one discovers that only $20 per month is subject to such disregard.42 U.S.C. § 1382(e)(1) reads as follows:

Limitation on eligibility of certain individuals.

(e)(1)(A) Except as provided in subparagraph (B), no person shall be an eligible individual . . . for purposes of this subchapter (Title XVI) with respect to any month if throughout such month he is an inmate of a public institution.

(B) In any case where an eligible individual . . . is, throughout any month, in a hospital, extended care facility, nursing home, or intermediate care facility receiving payments (with respect to such individual . . .) under a State plan approved under subchapter XIX (Medicaid) of this chapter, the benefit under this subchapter (XVI) for such individual for such month shall be payable

(i) at a rate not in excess of $300 per year (reduced by the amount of any income not excluded pursuant to section 1382a(b) of this title ) in the case of an individual who does not have an eligible spouse; . . .. (Emphasis added).

42 U.S.C. § 1382a(b) in turn provides that:

In determining the income of an individual (for purposes of Title XVI) . . . there shall be excluded

(2)(A) The first $240 per year (or proportionately smaller amounts for shorter periods) of income (whether earned or unearned) other than income which is paid on the basis of the need of the eligible individual; . . ..

As these sections show, for SSI purposes only the first $240 income per year, or $20 per month is disregarded in establishing statutory eligibility for SSI payments. Any income above that amount is not disregarded, and reduces accordingly the size of the SSI payment. Though institutionalized SSI recipients also receive a $25 benefit payment each month as their aid under the SSI program, such program benefits have no relation to the "income and resources" whose "disregard" under the SSI program is used as a benchmark in § 1396a(a)(17) of the Medicaid legislation; indeed, as the language of the latter section makes clear, the very purpose of the disregard of income and resources in Title XVI is to establish the proper size of SSI benefits.

What this means, of course, is that medically needy Medicaid recipients in New York State already receive the full equivalent of the SSI eligibility disregard. The New York State regulation makes clear that no one receiving chronic care in a medical institution under the state Medicaid program shall be required to "spend down" lower than $28.50 per month, considerably above the $20 minimum mandated by §§ 1396a(a)(17), 1382(e)(1)(A) and (B), and 1382a(b), and 45 C.F.R. § 248.3(c)(3)(ii)(A). Though 42 U.S.C. § 1396a(a)(17) forbids taking into account in the Medicaid program any "income and resources" which would be disregarded in SSI eligibility determinations ($20 per month), and 45 C.F.R. § 248.3(c)(3)(ii)(A) requires use of "the highest of . . . (t)he disregards applied in title XVI," neither provision forbids taking into account income equivalent to the SSI benefits themselves ($25 per month).

II

Plaintiffs' alternative claim is that the New York State regulation violates a "comparability" requirement of the Social Security Act because it purportedly limits the retained income of "medically needy" institutionalized Medicaid recipients such as plaintiffs more stringently than it does the retained income of "categorically needy" institutionalized Medicaid recipients. This alleged discrimination is likewise the basis of plaintiffs' equal protection claim.

The comparability requirement is derived from two sources. The first is 42 U.S.C. § 1396a(a)(17):

A State plan for medical assistance must

(17) include reasonable standards (which shall be comparable for all groups . . .) for determining eligibility for and the extent of medical assistance under the plan . . ..

Plaintiffs' theory presumably is that if more of a medically needy non-SSI recipient's income is taken under the Medicaid program, he receives pro tanto less subsidization and thus less "medical assistance" than does a categorically needy SSI recipient. The second source for a comparability requirement is 45 C.F.R. § 248.3(c)(1)(ii)(B)(2 ), requiring that for the medically needy the state plan shall provide "income levels for maintenance" equal to...

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