770 F.3d 129 (2nd Cir. 2014), 13-771-cv, Community Health Care Ass'n of New York v. Shah

Docket Nº:13-771-cv; 13-991-cv; 13-3332-cv; 13-3454-cv
Citation:770 F.3d 129
Opinion Judge:POOLER, Circuit Judge :
Party Name:COMMUNITY HEALTH CARE ASSOCIATION OF NEW YORK, ANTHONY L. JORDAN HEALTH CENTER, BEDFORD STUYVESANT FAMILY HEALTH CENTER, INC., BROOKLYN PLAZA MEDICAL CENTER, INC., BROWNSVILLE MULTI-SERVICE FAMILY HEALTH CENTER, CHARLES B. WANG COMMUNITY HEALTH CENTER, INC., COMMUNITY HEALTH CENTER OF BUFFALO, INC., COMMUNITY HEALTH CENTER OF RICHMOND, INC., COMMUN
Attorney:MATTHEW S. FREEDUS, Feldesman Tucker Leifer Fidell LLP, Washington D.C. (James L. Feldesman, Feldesman, Tucker Leifer Fidell LLP, Washington D.C.; David A. Koenigsberg, Mens Bonner Komar & Koenigsberg LLP, New York, NY, on the brief), for Plaintiffs--Appellants--Cross--Appellees. ANDREW W. AMEND,...
Judge Panel:Before: POOLER, HALL, and CARNEY, Circuit Judges.
Case Date:October 07, 2014
Court:United States Courts of Appeals, Court of Appeals for the Second Circuit
 
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770 F.3d 129 (2nd Cir. 2014)

COMMUNITY HEALTH CARE ASSOCIATION OF NEW YORK, ANTHONY L. JORDAN HEALTH CENTER, BEDFORD STUYVESANT FAMILY HEALTH CENTER, INC., BROOKLYN PLAZA MEDICAL CENTER, INC., BROWNSVILLE MULTI-SERVICE FAMILY HEALTH CENTER, CHARLES B. WANG COMMUNITY HEALTH CENTER, INC., COMMUNITY HEALTH CENTER OF BUFFALO, INC., COMMUNITY HEALTH CENTER OF RICHMOND, INC., COMMUNITY HEALTHCARE NETWORK, DAMIAN FAMILY CARE CENTERS, INC., EAST HARLEM COUNCIL FOR HUMAN SERVICES, INC., EAST HILL FAMILY MEDICAL, INC., EZRA MEDICAL CENTER, FAMILY HEALTH NETWORK OF CENTRAL NEW YORK, INC., FINGER LAKES MIGRANT HEALTH CARE PROJECT, INC., HERITAGE HEALTH AND HOUSING, INC., HUDSON HEADWATERS HEALTH NETWORK, HUDSON RIVER HEALTHCARE, INC., JOSEPH P. ADDABBO FAMILY HEALTH CENTER, INC., MIDDLETON COMMUNITY HEALTH CENTER, INC., MORRIS HEIGHTS HEALTH CENTER, MOUNT VERNON NEIGHBORHOOD HEALTH CENTER, INC., NORTHERN OSWEGO COUNTY HEALTH SERVICES, INC., NORTHWEST BUFFALO COMMUNITY HEALTH CARE CENTER, OAK ORCHARD COMMUNITY HEALTH CENTER, INC., ODA PRIMARY HEALTH CARE CENTER, INC., OPEN DOOR FAMILY MEDICAL CENTER, INC., ROCHESTER PRIMARY CARE NETWORK, RYAN/CHELSEA-CLINTON COMMUNITY HEALTH CENTER, SCHENECTADY FAMILY HEALTH SERVICES, INC., DBA HOMETOWN HEALTH CENTER, SUNSET PARK HEALTH COUNCIL, INC., SYRACUSE COMMUNITY HEALTH CENTER, INC., GREATER HUDSON VALLEY FAMILY HEALTH CENTER, INC., URBAN HEALTH PLAN, INCORPORATED, WHITNEY M. YOUNG, JR. HEALTH CENTER, WILLIAM F. RYAN COMMUNITY HEALTH CENTER, Plaintiffs--Appellants--Cross-Appellees,

v.

M.D. NIRAV SHAH, in his Official Capacity as Commissioner, New York State Department of Health, State of New York, Defendant--Appellee--Cross-Appellant

Nos. 13-771-cv; 13-991-cv; 13-3332-cv; 13-3454-cv

United States Court of Appeals, Second Circuit

October 7, 2014

Argued: June 3, 2014.

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Appeal from the United States District Court for the Southern District of New York (Andrew L. Carter, Jr., J.). Plaintiffs, certain health-service providers designated under federal law as Federally Qualified Health Centers (" FQHCs" , or " Health Centers" ) and a trade association representing a number of FQHCs assert various challenges under 42 U.S.C. § 1983 to New York's methods of reimbursing them for services they provide under Medicaid. They seek injunctive relief to remedy these supposed shortcomings in New York's method for providing Medicaid reimbursement for their provision of services under 42 U.S.C. § 1396a(bb). The Health Centers' suit, at present, names M.D. Nirav Shah, Commissioner of the New York State Department of Health (" Commissioner" ), as defendant. On cross-motions for summary judgment, the district court for the most part upheld the Commissioner's methods for reimbursing FQHCs for services they provide pursuant to Medicaid, and granted prospective relief to the Health Centers for reimbursement for certain services they provide to patients enrolled with Medicaid Managed Care Organizations (" MCOs" ). Cmty. Healthcare Ass'n of N.Y. v. N.Y. State Dep't of Health, 921 F.Supp.2d 130 (S.D.N.Y. 2013). We agree with the district court that, by and large, there are no disputed issues of material fact, and that summary judgment is therefore appropriate. See Fed.R.Civ.P. 56(a). We further agree with the district court's approach to, and analysis of, the majority of the issues before us. We thus affirm the grant of summary judgment to the Commissioner on most issues involving his methodologies for reimbursing FQHCs, and affirm the grant of summary judgment to the FQHCs on issues involving their reimbursement for services provided to MCO enrollees. However, we find that the district court erred in concluding that there were no disputed issues of material fact with respect to the Commissioner's methodology for calculating its prospective obligation to make a wraparound payment to FQHCs that provide services pursuant to a contract with an MCO, see 42 U.S.C. § 1396a(bb)(5). We therefore vacate in limited part the district court's grant of summary judgment to the Commissioner and remand for the district court to assess, after resolution of these factual disputes, the compatibility of this methodology with 42 U.S.C. § 1396a(bb)(5) .

MATTHEW S. FREEDUS, Feldesman Tucker Leifer Fidell LLP, Washington D.C. (James L. Feldesman, Feldesman, Tucker Leifer Fidell LLP, Washington D.C.; David A. Koenigsberg, Mens Bonner Komar & Koenigsberg LLP, New York, NY, on the brief), for Plaintiffs--Appellants--Cross--Appellees.

ANDREW W. AMEND, Assistant Solicitor General of Counsel (Eric T. Schneiderman, Attorney General of the State of New York; Barbara D. Underwood, Solicitor General; Richard P. Dearing, Deputy Solicitor General, on the brief), New York State Office of the Attorney General, New York, NY, for Defendant--Appellee--Cross- Appellant.

Before: POOLER, HALL, and CARNEY, Circuit Judges.

OPINION

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POOLER, Circuit Judge :

This case requires us to consider challenges to certain aspects of New York's administration of its responsibilities under

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the federal Medicaid Act, 42 U.S.C. § 1396a et seq. (" Medicaid Act" or " Medicaid Statute" ). Plaintiffs, certain health-service providers designated under federal law as Federally Qualified Health Centers and a trade association representing a number of FQHCs (together, " FQHCs" or " Health Centers" ) assert various challenges to New York's methods of reimbursing them for services they provide under Medicaid. They seek injunctive relief under 42 U.S.C. § 1983 to remedy these alleged shortcomings in New York's method for providing Medicaid payments for the services the Health Centers provide. The Health Centers' suit, at present, names M.D. Nirav Shah, Commissioner of the New York State Department of Health, (" Commissioner" ) as defendant.1 On cross-motions for summary judgment, the United States District Court for the Southern District of New York (Andrew L. Carter, Jr., J.), for the most part upheld the Commissioner's methods for reimbursing FQHCs for services they provide pursuant to Medicaid, but granted prospective relief to the Health Centers for reimbursement for certain services they provide to patients enrolled with Medicaid Managed Care Organizations (" MCOs" ). Cmty. Healthcare Ass'n of New York v. New York State Dep't of Health, 921 F.Supp.2d 130 (S.D.N.Y. 2013).

We agree with the district court that, as to the questions presented on appeal--with only one exception--there are no disputed issues of material fact, and that summary judgment was therefore appropriate. See Fed.R.Civ.P. 56(a). We further agree with the district court's approach to, and analysis of, the majority of the issues before us. We thus affirm the grant of summary judgment to the Commissioner on most issues involving his methodologies for reimbursing FQHCs, and affirm the grant of summary judgment to the FQHCs on issues involving their reimbursement for services provided to MCO enrollees. However, we find that the district court erred in concluding that there were no disputed issues of material fact with respect to the Commissioner's methodology for calculating its prospective obligation to make a wraparound payment to FQHCs that provide services pursuant to a contract with an MCO, see 42 U.S.C. § 1396a(bb)(5). We therefore vacate in limited part the district court's grant of summary judgment to the Commissioner and remand for the district court, after resolution of these factual disputes, the compatibility of this methodology with 42 U.S.C. § 1396a(bb)(5).

Affirmed in part, vacated and remanded in part.

BACKGROUND

We are concerned here with two competing objectives: " the mission of publicly-funded health clinics to provide a panoply of medical services to under-served communities, on the one hand," Cal. Ass'n of Rural Health Clinics v. Douglas, 738 F.3d 1007, 1009 (9th Cir. 2013), and the necessity that there be a " measure of discretion [states have] in choosing how to expend Medicaid funds," Cmty. Health Ctr. v. Wilson-Coker, 311 F.3d 132, 134 (2d Cir. 2002), on the other. This measure of discretion, in turn, is premised on the recognition that states receiving Medicaid funds must be permitted to develop Medicaid programs

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that are responsive to the needs of their respective communities, so long as these programs are consistent with federal Medicaid requirements, a statutory arrangement that the Supreme Court has recognized as " designed to advance cooperative federalism." Wis. Dep't of Health and Family Svcs. v. Blumer, 534 U.S. 473, 497, 122 S.Ct. 962, 151 L.Ed.2d 935 (2002). This cooperative arrangement is of a piece with what has long been recognized as " one of the happy incidents of the federal system," namely, " that a single courageous state may . . . serve as a laboratory; and try novel social and economic experiments without risk to the rest of the country." New State Ice Co. v. Liebmann, 285 U.S. 262, 311, 52 S.Ct. 371, 76 L.Ed. 747 (1932) (Brandeis, J., dissenting). New York, as the administrator of the country's largest and most expensive Medicaid program--with an annual budget exceeding $50 billion dollars--is currently engaged in such an experiment. In this pursuit, it has attempted to balance: the needs of low-income patients served by Medicaid and other federal programs; the missions, goals, and constituencies of health-care providers, in particular the community health centers who are plaintiffs in this case; and the possibility of achieving both cost-savings and better health outcomes that can result from contracting with MCOs to provide Medicaid services. With limited reservations, we conclude that federal law permits New York to pursue the path it has chosen.

I. Federally Qualified Health Centers as Medicaid Service Providers

The federal government established the Medicaid program via...

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