Martínez v. U.S. Dep't of Health & Human Servs., CIVIL ACTION NO. 18-01206-WGY

• Decision Date: 03 August 2020
• Docket Number: CIVIL ACTION NO. 18-01206-WGY
• Citation: 478 F.Supp.3d 155
• Parties: Sixta Gladys PEÑA MARTÍNEZ, Nélida Santiago Álvarez, María Luisa Aguilar Galíndez, Gamaly Vélez Santiago, Victor Ramón Ilarraza Acevedo, Maritza Rosado Concepción, Rosa Maria Ilarraza Rosado, Ramón Luis Rivera Rivera, and Yomara Valderrama Santiago, Plaintiffs, v. U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES; Alex Azar, in his official capacity as Secretary of Health and Human Services; Sonny Perdue, in his official capacity as Secretary of Agriculture; U.S. Department of Agriculture; Andrew Saul, in his official capacity as Commissioner of Social Security; and the Social Security Administration, Defendants.
• Court: U.S. District Court — District of Puerto Rico

478 F.Supp.3d 155

Sixta Gladys PEÑA MARTÍNEZ, Nélida Santiago Álvarez, María Luisa Aguilar Galíndez, Gamaly Vélez Santiago, Victor Ramón Ilarraza Acevedo, Maritza Rosado Concepción, Rosa Maria Ilarraza Rosado, Ramón Luis Rivera Rivera, and Yomara Valderrama Santiago, Plaintiffs,

v.U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES; Alex Azar, in his official capacity as Secretary of Health and Human Services; Sonny Perdue, in his official capacity as Secretary of Agriculture; U.S. Department of Agriculture; Andrew Saul, in his official capacity as Commissioner of Social Security;^* and the Social Security Administration, Defendants.

CIVIL ACTION NO. 18-01206-WGY

United States District Court, D. Puerto Rico.

Filed August 3, 2020

Daniel A. Salinas-Serrano, Derek Shaffer, Pro Hac Vice, Quinn Emanuel Urquhart & Sullivan, LLP, Washington, DC, Efren Rivera-Ramos, Rio Piedras, PR, Eugenio C. Romero-De-Juan, Eugenio C. Romero Law Office, Rafael Escalera-Rodriguez, Alana M. Vizcarrondo-Santana, Reichard & Escalera, San Juan, PR, Kathleen M. Sullivan, Pro Hac Vice, Quinn Emanuel Urquhart & Sullivan, LLP, New York, NY, for Plaintiffs Sixta Gladys Pena-Martinez, Nelida Santiago-Alvarez, Mr. Juan Ramon Velez Marrero, Maria Luisa Aguilar Galindez, Ms, Gamaly Velez Santiago, Ms, Mr. Victor Ramon Ilarraza Acevedo, Maritza Rosado Concepcion, Ms, Rosa Maria Ilarraza Rosado, Ms, Mr. Ramon Luis Rivera Rivera, Yomara Valderrama Santiago, Ms.

Jose R. Gonzalez-Irizarry, McConnell Valdes, LLC, San Juan, PR, for Plaintiff Puerto Rico Food Marketing, Industry and Distribution Chamber (MIDA).

Fernando E. Agrait-Betancourt, Fernando E. Agrait Law Office, San Juan, PR, for Defendant Puerto Rico Manufacturers Association.

Daniel Riess, U.S. Department of Justice, Washington, DC, for Defendants U.S. Department of Health and Human Services, Alex M. Azar, Sonny Perdue, U.S. Department of Agriculture, Commissioner of Social Security, Social Security Administration, U.S. Attorney's Office, United States of America.

FINDINGS OF FACT, RULINGS OF LAW, AND ORDER

YOUNG, D.J.^*

I. INTRODUCTION

The federal safety net is flimsier and more porous in Puerto Rico than in the rest of the nation. Three basic federal programs created for the financially neediest Americans are off limits to residents of Puerto Rico: Supplemental Security Income ("SSI"), which provides extra income for the elderly, blind, or disabled; the Supplemental Nutrition Assistance Program ("SNAP"), formerly known as food stamps; and the Medicare Part D Low-Income Subsidy ("LIS," also called "Extra Help"), which helps cover the cost of a prescription drug plan. Instead of these three welfare programs Congress funds substitute initiatives on the island, but they are less generous by far. To be blunt, the federal government discriminates against Americans who live in Puerto Rico. The question in this case is whether that discrimination is constitutional.

The nine plaintiffs ("Plaintiffs") are all U.S. citizens who reside in Puerto Rico -- by the way, Congress granted citizenship to residents of the island over 100 years ago.¹ All of them are poor enough to qualify for at least one of the benefits programs listed above, and would otherwise be eligible, except for one problem: they live in Puerto Rico. They have brought this case against several government defendants (collectively, "the Government") claiming that excluding the Plaintiffs from those welfare programs solely because they live in Puerto Rico violates the equal protection component of the Fifth Amendment's Due Process Clause.

At bottom, this case is about "our American ideal of fairness." Bolling v. Sharpe, 347 U.S. 497, 499, 74 S.Ct. 693, 98 L.Ed. 884 (1954). Fairness can sometimes be a notion too elusive or vague to furnish a satisfying legal rule. Yet that ideal, clothed in the constitutional garb of equal protection and due process, is also the supreme law of the land. That does not mean judges decide cases crudely based on their personal sense of right and wrong. Rather, unless the law burdens a fundamental right or classifies people along suspect lines, the crucial question where the law treats people unequally is whether that discriminatory policy could be rational, the bare minimum we must expect from our government when it singles some of us out for worse treatment.

The Government argues that there is a rational basis for excluding residents of Puerto Rico from these welfare programs. In fact, it claims there are three good rationales: (1) residents of Puerto Rico are generally exempt from paying the personal federal income tax; (2) the cost of extending these programs to Puerto Rico would be very high; and (3) fully granting these benefits in Puerto Rico might disrupt the island's economy. The Government also notes that these three reasons were accepted by the Supreme Court forty years ago when, in a pair of short decisions issued in 1978 and 1980, it rejected similar suits challenging the exclusion of Puerto Rico from certain welfare programs.²

This Court, guided in large part by a recent decision of the U.S. Court of Appeals for the First Circuit,³ disagrees with the Government. As the First Circuit explained and this Court will amplify below, the two Supreme Court precedents cited by the Government do not control this case, and none of the Government's proposed theories supplies a rational basis for these discriminatory policies against Puerto Ricans. The income tax rationale is inadequate because the beneficiaries of these programs are, by definition, poor people who generally do not pay income tax no matter where they live. Nor can the high cost of providing benefits to Puerto Rico residents be a standalone reason to exclude them. Facing budgetary constraints, Congress could have spread out benefit reductions equally or it could have excluded any slice of the population -- so why pick residents of Puerto Rico? Wanting to cut costs cannot explain who gets cut.

That leaves the economic disruption theory. The Government argues that, because of Puerto Rico's high poverty and unemployment rates, extending these benefit programs may have an especially adverse impact on labor incentives on the island. The Plaintiffs assert that this economic disruption theory is scientifically baseless, and that pumping more money into Puerto Rico would in fact boost the economy. That may be, but the Court cannot say on this record that the theory is so empirically shaky as to be irrational per se. Nevertheless, the economic disruption theory cannot rationally explain the categorical exclusion of residents of Puerto Rico from these particular programs. That is so, in part, because these programs all provide uniform benefits nationwide no matter the local poverty rate or other economic variations. Moreover, the exclusions encompass a huge segment of financially needy people (such as the elderly and people with disabilities) for whom no "incentive" is apt to place a job within reach. In the case of SNAP, positing an economic disruption motivation for the exclusion leads to even deeper irrationality: by taking Puerto Rico out of the national SNAP program, Congress has applied SNAP's key labor-incentivizing strategies throughout the rest of the country but not in Puerto Rico.

With these rationales faltering, nothing remains to justify the discriminatory policy. As the Court will explain in detail below, denying needy U.S. citizens equal access to the SSI, SNAP, and LIS safety nets simply because they reside in Puerto Rico is unconstitutional, a breach of "our American ideal of fairness." Bolling, 347 U.S. at 499, 74 S.Ct. 693. Further, the Court determines that declaratory and injunctive relief is appropriate Commonwealth-wide. Accordingly, the Government is enjoined from enforcing the unconstitutional exclusion of otherwise eligible residents of Puerto Rico from the SSI, SNAP, and LIS programs throughout the Commonwealth of Puerto Rico.

II. FINDINGS OF FACT

A. Procedural History

The Plaintiffs filed their complaint on April 13, 2018. Compl. 1, ECF No. 1. After a hearing held on March 27, 2019, this Court denied the Government's motion to dismiss, ECF No. 55, and on April 15, 2019 issued a Memorandum of Decision. Peña Martínez v. Azar, 376 F. Supp. 3d 191 (D.P.R. 2019). In late 2019, both parties moved for summary judgment. Pls.’ Mot. Summ. J. Inc. Mem. L. ("Pls.’ Mot."), ECF No. 72; Defs.’ Combined Cross-Mot. Summ. J. & Opp'n Pls.’ Mot. Summ. J. Inc. Mem. L. ("Defs.’ Mem."), ECF No. 78; Pls.’ Combined Reply Supp. Pls.’ Mot. Summ. J. & Opp'n Defs.’ Cross-Mot. Summ. J. ("Pls.’ Reply"), ECF No. 83; Reply Mem. Supp. Defs.’ Cross-Mot. Summ. J. ("Defs.’ Reply"), ECF No. 85.

While those motions for summary judgment were pending, the First Circuit decided a case of direct and obvious relevance, United States v. Vaello-Madero, 956 F.3d 12 (1st Cir. 2020). The parties had the chance to address the impact of Vaello-Madero on this case. Notice Suppl. Authority, ECF No. 88; Defs.’ Response Pls.’ Notice Suppl. Authority, ECF No. 89. With the parties’ consent, the Court then heard oral argument on the motions for summary judgment as a case stated on June 4, 2020.⁴ See Tr. Case-Stated Hr'g, ECF No. 94. The Court took the matter under advisement and requested further briefing regarding the nature and scope of a potential remedy. Id. at 34-35; Pls.’ Suppl. Br. Scope Remedy ("Pls.’ Remedies Br."), ECF No. 95; Defs.’ Mem. L. Remedies ("Defs.’ Remedies Br."), ECF No. 96.

B. Case-Specific Findings

The parties have stipulated to the basic facts of this case: how the three welfare programs operate, the Plaintiffs’ histories and ineligibility for those programs, and the likely cost of extending the programs to Puerto Rico residents. See Joint Stipulations Fact ("Joint Stip."), ECF No. 67. They do not dispute anything important about Puerto Rico's population or its tax status. In the few instances where the parties debate factual matters (principally regarding how extending these...