STATE OF CONN., DEPT. OF INCOME MAIN. v. Schweiker

• Decision Date: 17 February 1983
• Docket Number: Civ. No. H-82-146.
• Citation: 557 F. Supp. 1077
• Parties: STATE OF CONNECTICUT, DEPARTMENT OF INCOME MAINTENANCE v. Richard S. SCHWEIKER, Secretary, and the United States Department of Health and Human Services.
• Court: U.S. District Court — District of Connecticut

557 F. Supp. 1077

STATE OF CONNECTICUT, DEPARTMENT OF INCOME MAINTENANCE v. Richard S. SCHWEIKER, Secretary, and the United States Department of Health and Human Services.

Civ. No. H-82-146.

United States District Court, D. Connecticut.

February 17, 1983.

Edmund C. Walsh, Asst. Atty. Gen., Hartford, Conn., Charles A. Miller, Carolyn F. Corwin, Covington & Burling, Washington, D.C., for plaintiff.

Linda Lager, Asst. U.S. Atty., New Haven, Conn., for defendants.

RULING ON CROSS-MOTIONS FOR SUMMARY JUDGMENT

BLUMENFELD, Senior District Judge.

I. PROCEDURAL HISTORY

In this suit, the State of Connecticut challenges the final administrative decision by the Department of Health and Human Services (HHS) that Connecticut's expenditures to the privately owned Middletown Haven Rest Home are not eligible for federal reimbursement under the Medicaid program, Title XIX of the Social Security Act (codified as amended at 42 U.S.C. §§ 1396-1396m (1976 & Supp. IV 1980) and 42 U.S. C.A. §§ 1396-1396n (West 1974 & Supp. 1981)).

HHS¹ advanced funds quarterly to Connecticut for expenses for patient care at Middletown Haven Rest Home. The advances covered the period from the home's opening in January 1977 through September 1979. This advance of funds was pursuant to 42 U.S.C. § 1396b(d)(2) (1976), as Connecticut had identified Middletown Haven as an "intermediate care facility" (ICF) eligible for reimbursement under 42 U.S.C. § 1396d(a)(15) (1976). In 1980, following an audit of Middletown Haven covering the above time period, the Health Care Financing Administration (HCFA) of HHS decided that the expenses at Middletown Haven had in fact not qualified for reimbursement because Middletown Haven, though an ICF, was also an "institution for mental diseases" (IMD), 42 U.S.C. §§ 1396d(a)(15), 1396d(a)(B) (1976). HCFA thus disallowed the federal reimbursement. Connecticut appealed this decision to the HHS Departmental Grant Appeals Board. The board sustained HFCA in Decision No. 231, dated November 30, 1981 (hereinafter, Decision 231). Having made this decision, HHS is required to offset the disallowed payments from future quarterly advances. 42 U.S.C. § 1396b(d)(2) (1976).² Connecticut appeals this final administrative decision.

II. JURISDICTION

A threshold matter is this court's jurisdiction.³ The Board's decision is a "final agency action for which there is no other adequate remedy in a court." Administrative Procedure Act (APA) § 704, 5 U.S.C. § 704 (1976). Accordingly, judicial review is available unless the particular statutes concerning the Board's action "preclude judicial review." APA § 701(a), 5 U.S.C. § 701(a) (1976). Judicial review is not deemed forbidden unless the statute clearly forbids review. Abbott Laboratories v. Gardner, 387 U.S. 136, 140-41, 87 S.Ct. 1507, 1511, 18 L.Ed.2d 681 (1967). Here, 42 U.S.C.A. § 1316(d) (West Supp. 1981) requires the Secretary to review disallowances but is silent on further review in the courts. Accordingly, review seems permitted by the doctrine of Abbott Laboratories. Further, the court in County of Alameda v. Weinberger, 520 F.2d 344, 347-49 (9th Cir.1975) (Hufstedler, J., joined by Browning and Koelsch, JJ.), in considering the text, legislative history, and policy of section 1316(d), found no indication that Congress intended to preclude judicial review.⁴

Review of actions under section 1316(d) lies in the district court, which has subject matter jurisdiction by 28 U.S.C. § 1331 (Supp. IV 1980) (amending 28 U.S.C. § 1331 (1976)). See Alameda, 520 F.2d at 347, 349 (implicitly assuming that review under section 1316(d) lies in district court, and upholding such review). See also K. Davis, Administrative Law Treatise § 23.03-1 at 373 (Supp.1982) (provision in APA section 703 for review in "court of competent jurisdiction" means, in absence of contrary statute, review in district court, which has general jurisdiction under 28 U.S.C. §§ 1331, 1337).⁵

III. THE PRESENT MOTIONS

In its complaint, Connecticut challenges HHS' action in various ways. First, the finding that Middletown Haven Rest Home was an IMD is allegedly contrary to statute, ¶¶ 19-21, contrary to regulations, ¶¶ 23-24, and based on arbitrary criteria (of which Connecticut had insufficient notice) for classifying facilities as IMDs, ¶ 26. Next, Connecticut attacks the alleged retroactive nature of the disallowance. ¶ 28. Finally, Connecticut challenges the Board's action as not supported by substantial evidence. ¶ 30.

Connecticut and HHS have both moved for summary judgment. There is some confusion over whether Connecticut's claim concerning substantial evidence is before the court on these motions. See Defendant's Brief at 22 n. 10; Plaintiff's Reply Brief at 16 n. 1; Defendant's Reply Brief at 2 n. *; Plaintiff's Supplemental Brief at 6 n. *.⁶ However, the issue of statutory construction, which is definitely before the court on these motions, is sufficient to decide the motions.

IV. STATUTORY CONSTRUCTION: THE VARIOUS POSITIONS

This case depends on the meaning of "institution for mental diseases" (IMD) in the Medicaid statute. The reason is that Middletown Haven qualifies for federal payments as an "intermediate care facility" (ICF) unless it is also an IMD.

The Medicaid statute provides for the federal government to share with states the costs of "intermediate care facility services (other than such services in an institution for tuberculosis or mental diseases)." 42 U.S.C. § 1396d(a)(15) (1976). An "intermediate care facility" (ICF) is

an institution which (1) is licensed under State law to provide, on a regular basis, health-related care and services to individuals who do not require the degree of care and treatment which a hospital or skilled nursing facility is designed to provide, but who because of their mental or physical condition require care and services (above the level of room and board) which can be made available to them only through institutional facilities, and also meets the Secretary's care, safety, and sanitation standards ....

42 U.S.C. § 1396d(c) (Supp. IV 1980) (amending 42 U.S.C. § 1396d(c) (1976)). The statute repeats that the federal payments do not include "any such payments with respect to care or services for any individual who has not attained 65 years of age and who is a patient in an institution for tuberculosis or mental diseases." 42 U.S.C. § 1396d(a)(B) (1976). Thus, though ICFs in general are eligible for federal payments, ICFs which are also IMDs are ineligible.

The Grant Appeals Board, while it accepted Middletown Haven's ICF status, disallowed funds on the ground that Middletown Haven was also an IMD. Decision 231 at 35-39. In determining whether Middletown Haven was an IMD, the Board followed HHS regulations which define an IMD as a facility with the "overall character" of being "primarily for the care and treatment of individuals with mental diseases."⁷Id. at 39. The Board found this definition satisfied by a combination of facts. The most important fact was that a large majority of the patients were "mental" patients. Id. at 36-37. Other facts included Middletown Haven's license to care for persons with psychiatric conditions, Middletown Haven's having advertized itself as a facility specializing in the care of persons with mental diseases, and the presence of three staff psychiatrists who made weekly consultations. Id. at 36.

The Board's decision can be upheld only if its classification of Middletown Haven was based on appropriate factors. Accordingly, HHS maintains in this court that an ICF is an IMD if it exists primarily to care for mental patients. Defendant's Brief at 9-10. Connecticut, in contrast, asserts that an "IMD" means a "state mental hospital or its private equivalent." Plaintiff's Brief at 17. Connecticut is substantially correct. An IMD means a mental hospital, which in turn means, at the least, a facility providing total care to mental patients.⁸

V. STATUTORY CONSTRUCTION: ANALYSIS

A. The Ambiguity of the Term "IMD"

The phrase "institution for mental diseases" used in sections 1396d(a)(15) and 1396d(a)(B) is not self-explanatory. "Institution" suggests a total care situation, probably for a long time.⁹ Consider, for example, the meaning of "to institutionalize" someone. "Institution" also suggests a large, impersonal establishment. Contrast the more neutral term "facility," used often elsewhere in the statute. Still, "institution" might simply be used in a neutral sense, as a synonym for "facility"; or it might, for example, denote a fairly high but not total level of care. Further, the phrase "for mental diseases" might require only that patients have mental diseases, or it might require also that some level of psychiatric treatment be given.

To discover the meaning of "IMD," first the statute's text and then its legislative history will be examined.

B. Clues from the Statute's Text

The statute's text is only slightly helpful in resolving the ambiguous meaning of "IMD." Three sections are relevant: sections 1396d(a), 1396d(c), and 1396a. 42 U.S. C.A. §§ 1396a, 1396d (West 1974 & Supp. 1981).

Section 1396d(a). By excluding services in an IMD from the general cost sharing of ICF services, section 1396d(a)(15), quoted supra p. 6, implies that ICFs may also be IMDs, but does not clarify under what circumstances this would happen. Parallel IMD exclusions in parts (1) and (4) of section 1396d(a), dealing with inpatient hospital services and skilled nursing facility services respectively, imply that these other facilities too can be IMDs, but again do not clarify just how this would happen. The same message comes from part (14), which explicitly covers "inpatient hospital services, skilled nursing facility services, and intermediate care facility services for individuals 65 years of age or over in an institution for tuberculosis or mental diseases."

Section 1396d(c). Section 1396d(c), quoted supra p. 1080, defines an ICF as providing care...