Rodriguez by and through Corella v. Chen

• Decision Date: 06 February 1996
• Docket Number: No. CIV. 95-130 TUC RMB.,CIV. 95-130 TUC RMB.
• Citation: 985 F.Supp. 1189
• Parties: Carlos RODRIGUEZ, a minor person, by and through Norma R. CORELLA, his mother and guardian ad litem, individually and on behalf of a class of persons similarly situated, Plaintiffs, Howard Cahill and Adeline Cahill, Plaintiffs-in-Intervention, v. Mabel CHEN, M.D. Director of the Arizona Health Care Cost Containment System, Defendant.
• Court: U.S. District Court — District of Arizona

Page 1189

985 F.Supp. 1189

Carlos RODRIGUEZ, a minor person, by and through Norma R. CORELLA, his mother and guardian ad litem, individually and on behalf of a class of persons similarly situated, Plaintiffs Howard Cahill and Adeline Cahill, Plaintiffs-in-Intervention, v. Mabel CHEN, M.D. Director of the Arizona Health Care Cost Containment System, Defendant.

No. CIV. 95-130 TUC RMB.

United States District Court, D. Arizona.

February 6, 1996.

Sally Hart, Tucson, AZ, for Plaintiffs.

Logan T. Johnson, III, Phoenix, AR, for Defendant.

ORDER

BILBY, Senior District Judge.

I. INTRODUCTION

This case arises under the United States Constitution, the federal Medicaid statute, Title XIX of the Social Security Act, 42 U.S.C. § 1396 and the Arizona AHCCCS statute, A.R.S. § 36-2903.01. Plaintiffs Carlos Rodriguez, Howard Cahill and Adeline Cahill bring this suit as a prospective class action against Mabel Chen in her capacity as Director of the Arizona Health Care Cost Containment System ("AHCCCS").

Plaintiffs seek to compel the AHCCCS Program to stop its practice of giving low income persons inadequate notices regarding the denial or termination of their eligibility. The relief sought is a declaratory judgment holding that Defendant's failure to include certain information in AHCCCS termination and denial notices violates the United States Constitution, and the federal Medicaid statute and regulations and Arizona's AHCCCS statute and regulations. Plaintiffs also seeks a permanent injunction mandating that the State of Arizona include this information in all notices to AHCCCS applicants who are denied or terminated from the program.

In the parties' August 7, 1995 Joint Proposed Case Management Plan, they agreed that Plaintiffs' claims raise questions of law with no material questions of fact at issue. Accordingly, before the Court are cross-motions for summary judgment and Plaintiffs' motion for class certification.

After a review of the pleadings submitted, relevant law and entertaining oral argument, the Court concludes that the AHCCCS written notice system is constitutionally deficient. The Notice does not provide sufficient information so that an applicant may evaluate the accuracy of the action or adequately contest an unfavorable decision. Additionally, the Court finds class certification unwarranted in this case.

II. THE AHCCCS PROGRAM

Congress established the Medicaid program under Title XIX of the Social Security Act, 42 U.S.C. § 1396 et seq. This Act authorizes a state's participation in a cooperative federal-state Medicaid program to provide medical assistance to low-income persons. To be eligible for federal financial assistance, states such as Arizona must administer their programs in accordance with federal guidelines. 42 U.S.C. § 1396a. Arizona adopted its plan through the waiver program known as AHCCCS, A.R.S. § 36-2901 et seq. The due process clause of the fourteenth amendment prohibits the AHCCCS program from denying a beneficiary his property right in AHCCCS health care services without adequate notice and the right to a fair hearing. Medicaid regulations mandate that the notice contain:

(a) a statement of what action the State, skilled nursing facility, or nursing facility intends to take;

(b) The reasons for the intended action;

(c) The specific regulations that support, or the change in Federal or State law that requires the action.

42 C.F.R. 431.210.

Additionally, Arizona AHCCCS statutes require notice and grievance procedures for adverse decisions. A.R.S. § 36-2903.01. These procedures are detailed by AHCCCS regulation:

B. The notice shall include all of the following information that applies to the action being taken for each applicant.

1. The approval and classification as either indigent, medically needy, or eligible low-income child or the denial of eligibility.

2. The denial or discontinuance, the reason as action has been taken, and the law or regulation that requires the action.

3. The advanced notice proposing discontinuance, the reason the discontinuance is being proposed, the law or rule that requires the action and the applicant's right to provide proof of eligibility to avoid discontinuance prior to the date of discontinuance.

4. The right to request a hearing and the time limits within which a hearing must be requested.

5. The procedure for requesting a hearing.

6. The expiration date of the certification period.

7. The effective date of the action.

8. The signature of the eligibility worker.

R9-22-316, Arizona Administrative Code, Title 9, Chapter 22 (1993).

III. FACTUAL BACKGROUND

A. Carlos Rodriguez

Carlos Rodriguez is a 14 year-old boy who resides with his family in Tucson, Arizona. Until August 1, 1995, Carlos was eligible for medical assistance benefits under the AHCCCS program based on his family's financial situation.

On July 26, 1994 AHCCCS mailed a notice to Carlos' mother, Norma R. Corella, stating that Carlos was no longer eligible for AHCCCS benefits effective August 1, 1994. That notice which set out the basis for termination from AHCCCS stated:

MEDICAL ASSISTANCE HAS BEEN TERMINATED FOR THE PERSON(S) LISTED BELOW BECAUSE CARLOS RODRIGUEZ IS NOW IN A NEW CATEGORY FOR HIS AGE AND NO LONGER IS ELIGIBLE DUE TO HOUSEHOLD EXCESS INCOME.

* * *

THIS ACTION IS BASED ON MANUAL SECTION DES 3-27-500

And at the bottom of the page:

MEDICAL ASSISTANCE TERMINATION NOTICE

FROM LARA, JULIO

TO CONTACT ME, CALL 620-6616. CALL 623-9461 FOR FREE LEGAL ADVICE SI TIENE PREGUNTAS ACERCA DE ESTE AVISO, LLAME AT 542-9935 EN PHOENIX, O GRATIS AL 1800-352-8401.

At deposition, Norma Corella testified that her notice did not include the following standard language typically included on all such notices:

YOU MAY REQUEST A FAIR HEARING ON THE REVERSE OF THIS NOTICE.

PLEASE NOTE: REGARDLESS OF THE ACTION TAKEN ABOVE. THE FIRST TIME A PERSON IS ENROLLED IN A HEALTH PLAN, MEDICAL COVERAGE IS GUARANTEED FOR UP TO SIX MONTHS. IF YOU HAVE BEEN ENROLLED LESS THAN SIX MONTHS, CONTACT THE AHCCCS ADMINISTRATION IN PHOENIX AT 264-0422, OR TOLL FREE 1-800-962-6690 FOR THE EXACT DATE YOUR COVERAGE WILL STOP. YOU MAY BE ELIGIBLE FOR MEDICAL ASSISTANCE UNDER COUNTY REQUIREMENTS. TO APPLY, CONTACT THE COUNTY ELIGIBILITY OFFICE IN YOUR AREA.

ONCE MEDICAL ASSISTANCE IS TERMINATED, THE DIVISION OF CHILD SUPPORT ENFORCEMENT (DCSE) WILL CONTINUE TO PROVIDE CHILD/MEDICAL SUPPORT SERVICES. IF YOU DO NOT WANT THESE SERVICES TO CONTINUE OR IF YOU HAVE NEW INFORMATION REGARDING YOUR CHILD/MEDICAL SUPPORT CASE, PLEASE NOTIFY DCSE IN WRITING AT P.O. BOX 40458, PHOENIX, ARIZONA 85067.

It is not clear whether the above information was included in the second termination notice Corella received. It is undisputed, however, that the instructions regarding how to appeal were included on the back of each notice received.

Neither Carlos nor his mother were able to understand the information printed on the Notice as to why his AHCCCS benefits had been terminated. A phone call to her case worker was not anymore helpful. She was told that Carlos's benefits were terminated due to excess income, but she was not given specific figures. She was told that her remedy was to appeal. Corella Deposition at 15-16.

Present counsel on behalf of Carlos, filed a grievance which raised the notice deficiencies but did not raise the failure of AHCCCS to serve notice ten days in advance of termination. The Administrative Law Judge ruled against Carlos on March 15, 1995. On that same day, however, the DES Hearing Specialist advised the judge that Rodriguez had not been given ten days notice. Consequently, no action was taken and the judge remanded the case to AHCCCS for issuance of a new notice. Carlos' eligibility was subsequently terminated June 1, 1995. Again, his mother filed an administrative appeal. On January 11, 1996, the AHCCCS Appeals Board affirmed the June 1, 1995 termination for Carlos.

B. Howard Cahill and Adeline Cahill

Howard Cahill and Adeline Cahill are a married couple over 65 years of age. They are eligible for Medicare benefits. Their sole income is monthly Social Security payment in the amount of $917. During the month of October, 1994, the Cahills applied to AHCCCS for assistance in paying their Medicare premiums, copayments and deductibles through the Qualified Medicare Beneficiary ("QMB") and Specified Low-Income Medicare Benefits ("SLMB") programs.

On November 17, 1994, the Cahills received notices from AHCCCS advising them that they were not eligible for QMB benefits effective November 1, 1994. The explanation of the basis for denial of the Cahills' applications was identical on both notices:

YOUR APPLICATION FOR MEDICARE PREMIUM, COINSURANCE AND DEDUCTIBLE EXPENSES UNDER THE QUALIFIED MEDICARE BENEFICIARY (QMB) PROGRAM HAS BEEN DENIED EFFECTIVE 11/01/94 FOR THE FOLLOWING REASON(S):

NET INCOME EXCEEDS MAXIMUM ALLOWABLE

THE REGULATIONS/QMB POLICY AND PROCEDURE MANUAL SECTION(S) WHICH REQUIRE THESE ACTIONS ARE:

207/1405, S1013, S1015, A1010, A1012, A, 42 CFR. 435.601, 42 CFR 435.602, 42 CFR 435.622

The Cahills also did not understand from the information given as to why their applications for QMB and SLMB benefits had been denied. They did not appeal because although the notices were dated October 28, 1994, they were not received by the Cahills until November 17, 1994. Since the notices stated that any request for a hearing must be made by November 18, 1994, the Cahills decided not to appeal.

The notice addressed only the QMB program and did not mention the SLMB program. Both Cahills were later found to be eligible for benefits. Adeline Cahill has now been determined eligible under the SLMB program after both a new application and an appeal of AHCCCS's second determination. Mrs. Cahill's benefits were made retroactive to March, 1995. It was only after she requested an explanation and appealed the limited retroactive effect given her SLMB benefits, was she given benefits retroactive...