914 F.2d 593 (4th Cir. 1990), 89-3355, Mowbray v. Kozlowski

Docket Nº:89-3355, 89-3381.
Citation:914 F.2d 593
Party Name:Lusby MOWBRAY; Sadie Mowbray, individually and on behalf of all other similarly situated; Robert F. Gallimore, Sr.; Gertie M. Carter; Hubert Clouse; George W. Short; Martha Vane; Annie L. Young, Plaintiffs-Appellees, and Mae Hottinger; Dolan Hottinger, Plaintiffs, v. Bruce U. KOZLOWSKI, individually and in his official capacity as Director of the V
Case Date:September 21, 1990
Court:United States Courts of Appeals, Court of Appeals for the Fourth Circuit
 
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914 F.2d 593 (4th Cir. 1990)

Lusby MOWBRAY; Sadie Mowbray, individually and on behalf of

all other similarly situated; Robert F. Gallimore, Sr.;

Gertie M. Carter; Hubert Clouse; George W. Short; Martha

Vane; Annie L. Young, Plaintiffs-Appellees,

and

Mae Hottinger; Dolan Hottinger, Plaintiffs,

v.

Bruce U. KOZLOWSKI, individually and in his official

capacity as Director of the Virginia Department of

Medical Assistance, Defendant-Appellant,

and

Louis W. Sullivan, Secretary of Health and Human Services,

Defendant.

Lusby MOWBRAY; Sadie Mowbray, individually and on behalf of

all others similarly situated; Robert F. Gallimore, Sr.;

Gertie M. Carter; Hubert Clouse; George W. Short; Martha

Vane; Annie L. Young, Plaintiffs-Appellees,

and

Mae Hottinger; Dolan Hottinger, Plaintiffs,

v.

Louis W. SULLIVAN, Secretary of Health and Human Services,

Defendant-Appellant,

and

Bruce U. Kozlowski, individually and in his official

capacity as Director of the Virginia Department of

Medical Assistance, Defendant.

Nos. 89-3355, 89-3381.

United States Court of Appeals, Fourth Circuit

September 21, 1990

Argued May 9, 1990.

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David Ruvane Smith, Office of the Gen. Counsel, U.S. Dept. of Health and Human Services, Washington, D.C., Virginia Rose Manhard, Asst. Atty. Gen., Richmond, Va., argued (John Perry Alderman, U.S. Atty., Roanoke, Va., Mary Sue Terry, Atty. Gen., R. Claire Guthrie, Deputy Atty. Gen., Roger L. Chaffe, Sr. Asst. Atty. Gen., Pamela M. Reed, Asst. Atty. Gen., Richmond, Va., on brief), for defendants-appellants.

Jeanne Finberg, National Senior Citizens Law Center, Los Angeles, Cal., argued (Gill Deford, National Senior Citizens Law Center, Los Angeles, Cal., Margaret T. Schenck, Client Centered Legal Services of Southwest Virginia, Inc., Castlewood, Va., Robert J. Golcheski, Virginia Legal Aid Soc., Inc., Lynchburg, Va., John E. Whitfield, Blue Ridge Legal Services, Inc., Harrisonburg, Va., Claire E. Curry, Charlottesville-Albemarle Legal Aid Soc., Inc., James W. Spear, Central Virginia Legal Aid Soc., Inc., Richmond, Va., on brief), for plaintiffs-appellees.

Before ERVIN, Chief Judge, and CHAPMAN and WILKINSON, Circuit Judges.

WILKINSON, Circuit Judge:

The question before us is whether certain Virginia criteria for Medicaid eligibility violate the federal Medicaid statute. The answer requires us to reconcile two seemingly contradictory provisions of the Medicaid program. Section 209(b) of the Supplemental Security Income Program, 42 U.S.C. Sec. 1396a(f), permits Virginia and certain other states to employ Medicaid eligibility criteria that are more restrictive than the corresponding federal eligibility criteria. The issue here is whether Virginia's relatively restrictive criteria violate Sec. 303(e) of the Medicare Catastrophic Coverage Act, 42 U.S.C. Sec. 1396a(r)(2), which provides that a state's Medicaid eligibility criteria "may be less restrictive, and shall be no more restrictive" than the federal criteria. The district court determined that Sec. 303(e) repeals that portion of Sec. 209(b) that allows state Medicaid criteria to be more restrictive than the federal criteria, and held that Virginia's more restrictive eligibility guidelines violated Sec. 303(e). In so holding, the court rejected the Secretary of Health and Human Service's interpretation of the Medicaid statute.

After carefully reviewing the Medicaid scheme, we conclude that Sec. 303(e) does not partially repeal Sec. 209(b), and thus that Virginia's relatively more restrictive Medicaid eligibility criteria do not violate Sec. 303(e). We do so for two reasons. First, Congress has not spoken with the clarity that Pennhurst v. Halderman, 451 U.S. 1, 17, 101 S.Ct. 1531, 1539, 67 L.Ed.2d 694 (1981), requires before the federal government can change the conditions on a grant of federal monies to the states. Second, the Secretary offers a reasonable interpretation of the two provisions in issue which harmonizes them and which, in light of the ambiguity in the statutory scheme, warrants our deference.

We therefore reverse the judgment of the district court.

I.

Plaintiffs are a class of blind, disabled, or aged persons who would qualify for Medicaid under the federal methodologies located in the Supplemental Security Income Program ("SSI"), 42 U.S.C. Secs. 1381 et seq., but whose ownership of land contiguous to their homes renders them ineligible for Medicaid under Virginia's relatively more restrictive eligibility criteria. The federal program excludes a claimant's home site and all contiguous property from

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the computation of resources for Medicaid eligibility purposes, 42 U.S.C. Sec. 1382b(a)(1), while Virginia's program only allows for the home site and $5000 worth of contiguous property to be excluded. Va.Code Sec. 32.1-325(A)(3).

Plaintiffs brought this Sec. 1983 class action on February 10, 1989, against the Secretary of the Department of Health and Human Services and Bruce Kozlowski, the Director of the Virginia Department of Medical Assistance. They sought a declaration that Virginia's relatively restrictive Medicaid eligibility criteria violate section 303(e) of the Medicare Catastrophic Coverage Act of 1988, 42 U.S.C. Sec. 1396a(r)(2), which provides that a state's methodology for determining Medicaid eligibility "may be less restrictive, and shall be no more restrictive, than the methodology [used in the federal SSI program]." In addition, plaintiffs sought to enjoin Virginia from employing its relatively restrictive Medicaid criteria.

On October 25, 1989, the district court ruled that Virginia's Medicaid eligibility guidelines violated Sec. 303(e) to the extent that they used income and resource methodologies that were more restrictive than the methodologies used in the SSI program, and entered a permanent injunction prohibiting Virginia from enforcing them. Mowbray v. Kozlowski, 724 F.Supp. 404 (W.D.Va.1989). The district court rejected the state's argument that its eligibility criteria were justified by Sec. 209(b) of SSI, 42 U.S.C. Sec. 1396a(f), which, "notwithstanding any other provision" of the Medicaid statute, allows the Medicaid criteria of certain states to be more restrictive than the federal criteria. It held, to the contrary, that Sec. 303(e) repealed that part of Sec. 209(b) that allows those states to employ more restrictive criteria.

On October 25, 1989, the district court denied Virginia's request for a stay of the district court's judgment pending appeal, but this court granted a stay on January 24, 1990.

The Secretary and the Director now appeal.

II.

Resolution of this case requires us to review at the outset the relevant provisions of the Medicaid statute.

The Medicaid program, enacted in 1965 as Title XIX of the Social Security Act, 42 U.S.C. Secs. 1396 et seq., is a cooperative federal-state public assistance program that makes federal funds available to states electing to furnish medical services to certain impoverished individuals. "States choosing to participate in the program are required to follow federal guidelines," Morris v. Morrow, 783 F.2d 454, 456 (4th Cir.1986), and "must comply with requirements imposed both by the Act itself and the Secretary of Health and Human Services." Schweiker v. Gray Panthers, 453 U.S. 34, 37, 101 S.Ct. 2633, 2637, 69 L.Ed.2d 460 (1981).

Medicaid benefits were historically available to two groups: the categorically needy and the medically needy. The categorically needy included those persons who already qualified for benefits under four other federal assistance programs: Old Age Assistance, 42 U.S.C. Secs. 301 et seq. (1970 ed.), Aid to Families With Dependent Children, 42 U.S.C. Secs. 601 et seq. (1970 ed.), Aid to the Blind, 42 U.S.C. Secs. 1201 et seq. (1970 ed.), and Aid to the Permanently and Totally Disabled, 42 U.S.C. Secs. 1351, et seq. (1970 ed.). See Gray Panthers, 453 U.S. at 37, 101 S.Ct. at 2637. The medically needy included those whose income and assets were too high to qualify for a categorical program, but who otherwise met the criteria for the categorically needy. Morris, 783 F.2d at 456. The medically needy were "relatively more affluent aged, blind or disabled persons [who] bec[a]me eligible for Medicaid only if their income and assets were insufficient to meet the cost of necessary medical or remedial health care and services." Id. Medicaid required states to provide coverage for the categorically needy, but not for the medically needy. Gray Panthers, 453 U.S. at 37, 101 S.Ct. at 2637.

In 1972, Congress enacted the Supplemental Security Income Program ("SSI"),

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42 U.S.C. Secs. 1381 et seq. This program repealed prior assistance programs for the aged, blind, and disabled, and federalized welfare eligibility standards for these categorically needy persons. Gray Panthers, 453 U.S. at 38, 101 S.Ct. at 2637. 1 In general, the new SSI eligibility standards were more generous than some of the previously established state criteria. Id. As a result, the more generous federal standards "threatened to swell the Medicaid rolls and place a large financial burden on those states." Morris, 783 F.2d at 456. States participating in the Medicaid program thus faced a choice between increasing...

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