DEL. DIV. OF HEALTH & SOC. SERV. v. US DEPT. HHS
| Decision Date | 09 July 1987 |
| Docket Number | No. Civ. A. 86-233 CMW.,Civ. A. 86-233 CMW. |
| Citation | 665 F. Supp. 1104 |
| Parties | DELAWARE DIVISION OF HEALTH AND SOCIAL SERVICES, Plaintiff, v. UNITED STATES DEPARTMENT OF HEALTH AND HUMAN SERVICES, Otis Bowen, M.D., the Secretary of the United States Department of Health and Human Services and the Administrator of Health Care Financing Administration, Defendants. |
| Court | U.S. District Court — District of Delaware |
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Ann Marie Johnson, Deputy Atty.Gen., Dept. of Justice, Wilmington, Del., for plaintiff.
William C. Carpenter, Jr., U.S. Atty., and Charlene D. Davis, Asst. U.S. Atty., Wilmington, Del. (Beverly Dennis, III, Chief Counsel, Region III, and James S. Feight, Jr., Asst. Regional Counsel, Dept. of Health and Human Services, Philadelphia, Pa., of counsel), for defendants.
The question presented is whether the State of Delaware operates its nursing homes in compliance with the federal Social Security Act. The principal contention of the appellee, the Secretary of the United States Health and Human Services Department ("HHS"), is that the appellant, the Delaware Department of Health and Social Services ("Delaware"), failed to adequately inspect Delaware's nursing homes to ensure that all of its patients are, in fact, entitled to federal Medicaid payments.
In 1984, HHS denied Medicaid payments to Delaware for neglecting to inspect two nursing homes even though every patient in both facilities was reviewed, except for four residents. The State appealed the decision to the HHS Grant Appeals Board, which upheld the Secretary's determination. In reversing, this Court finds that the Appeals Board arbitrarily and capriciously interpreted the Social Security Act. Second, the Court determines that the regulations promulgated by the Secretary of HHS are impermissibly restrictive. Third, the Court holds that the Grant Appeals Board arbitrarily and capriciously upheld the Secretary's denial of Medicaid funds to Delaware.
Whether the sweeping Great Society programs enacted to care for this nation's elderly succeeded, either in historic terms, or in comparative relation to other nations' programs, remains an unanswered question. But whatever the achievements or shortcomings of the New Deal agenda, this Court is not the first to observe that America's system of caring for its aging, indigent population is literally the most complex in the world. The centerpiece of this system is the Social Security Act, and the current controversy involves a State challenge to a federal interpretation of that convoluted statute.
At the most fundamental level, this case concerns four elderly Americans. John McColley, age 76, is a mentally retarded man who suffers from bronchiectasis and other chronic diseases; the State of Delaware cares for him at a Seaford, Delaware nursing home. Ortel Hedwig is an 85 year old woman afflicted with degenerative osteoarthritis and the pains of an artificial hip joint; Ms. Hedwig lives in the Jeanne Jugan State Facility located in Newark, Delaware. Also residing at the Newark facility is Edith Lovell ?€” an 87 year old woman ailing from hypertension, osteoarthritis and a fractured wrist and ankle ?€” and Joseph Schauber, age 70, who suffers from a pancreatic disorder, paralysis of the left side of his face, and a frontal lobotomy performed 20 years ago. Record at 5, Attachment B.
HHS contends that because Delaware failed to inspect these four patients the federal government need not reimburse the State for any Medicaid funds going to all patients at the Newark and Seaford facilities. HHS constructs an intricate argument made more incomprehensible because federal transfers to the indigent are so complex that the law is a daily fact for those entitled to Medicaid. Regulations, procedures, routines, inspections, and forms circumscribe the daily existence of nursing home residents. To even proceed to discuss the facts of this case requires an explanation of the applicable law.
Title XIX of the Social Security Act established a cooperative federal-state program called "Medicaid" to provide payment for medical services, including nursing care, to individuals. The Social Security Act, 42 U.S.C. ?? 1396 et seq. (1982). Although States are not obligated to establish a Medicaid program, if a State chooses to do so, the federal government will reimburse that State for a percentage of the medical costs incurred by qualified recipients.
Rights engender reciprocal obligations and duties. In return for federal Medicaid payments, each State must make a "showing satisfactory to the Secretary of HHS" that for each calendar quarter that the State receives federal Medicaid payment, the State has an effective program of inspection and review to ensure that patients are entitled to Medicaid payments and require the care they are receiving. 42 U.S.C. ? 1396b(g)(1)(A-D) (1982). The Social Security Act also mandates that the State review the medical care provided to each Medicaid recipient, in each State facility, at least annually. 42 C.F.R. 456.652(a)(4) (1986). These reviews are to be performed by independent State inspection teams of doctors. Even if not every patient in every State facility is inspected, the State's quarterly showing may be satisfactory if one or another statutory exception is satisfied. See 42 U.S.C. ? 1396b(g)(4)(B) (1982); 42 C.F.R. ? 456.653(a-b) (1986). If a State cannot make a satisfactory showing, federal Medicaid reimbursement for that quarter is decreased according to a statutory formula. 42 U.S.C. ? 1396b(g)(1) (1982). But even if a State's quarterly showing is "facially satisfactory," the Social Security Act requires the Secretary of HHS to validate the State's showing by reviewing the state's reports. 42 U.S.C. ?? 1396b(g)(2), 1396b(g)(3) (1982). See Wisconsin v. Bowen, 797 F.2d 391, 393 (7th Cir.1986), cert. denied, ___ U.S. ___, 107 S.Ct. 926, 93 L.Ed.2d 978 (1987) ().
This controversy began when the Secretary of HHS reviewed Delaware's Medicaid facilities' inspection reports for the first quarter of calendar year 1984. The surveys disclosed that four recipients were not reviewed even though all the other patients in each of 40 facilities were inspected. HHS does not dispute that only four patients were missed and the agency concluded in a June 13, 1984 report that "Delaware has an effective statewide surveillance and utilization control program for ... nursing homes." Utilization Control Report; Record at 2, Attachment E.1
The problem of patient inspection occurred at the Seaford Health Care Center and the Jeanne Jugan Residence in Newark. At Seaford, during an October 1983 review, John McColley was not reviewed because his...
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