ME. ASS'N OF INTERDEPENDENT NEIGHBORHOODS v. Petit, Civ. No. 83-0360-B

• Decision Date: 06 November 1986
• Docket Number: Civ. No. 83-0360-B,85-0174-B.
• Citation: 647 F. Supp. 1312
• Parties: MAINE ASSOCIATION OF INTERDEPENDENT NEIGHBORHOODS, et al., Plaintiffs, v. Michael PETIT, et al., Defendants. Nancy HAGGAN, Plaintiff, v. Michael PETIT, Defendant, v. Otis R. BOWEN, Third-Party Defendant.
• Court: U.S. District Court — District of Maine

647 F. Supp. 1312

MAINE ASSOCIATION OF INTERDEPENDENT NEIGHBORHOODS, et al., Plaintiffs, v. Michael PETIT, et al., Defendants.

Nancy HAGGAN, Plaintiff, v. Michael PETIT, Defendant, v. Otis R. BOWEN, Third-Party Defendant.

Civ. Nos. 83-0360-B, 85-0174-B.

United States District Court, D. Maine.

November 6, 1986.

Linda Christ, Jack Comart, Pine Tree Legal Assistance, Inc., Augusta, Me., Peter Darvin, Pine Tree Legal Assistance, Inc., Portland, Me., for plaintiffs.

Marina E. Thibeau, Carmen L. Coulombe, Dept. of Human Services, Legal Div., Augusta, Me., for defendant Petit.

Lawrence E. Burstein, Asst. Regional Atty., Dept. of Health and Human Services, Boston, Mass., David R. Collins, Asst. U.S. Atty., Portland, Me., for defendant Bowen.

MEMORANDUM OF DECISION AND ORDER ON PLAINTIFF'S MOTION FOR TEMPORARY RESTRAINING ORDER/PRELIMINARY INJUNCTION

GENE CARTER, District Judge.

These cases are before the Court on Plaintiff Haggan's motion for a temporary restraining order or preliminary injunction requiring Defendants Petit and Bowen to compute Plaintiff's Medicaid eligibility from June 1, 1986 without regard to the "$6,000/6%" rule for determining what property is essential to a claimant's means of self-support. For the reasons stated herein, the Court will issue the requested preliminary injunction.

I. Factual and Legal Background

At issue is a rule used by Defendant Bowen, Secretary of the United States Department of Health and Human Services (HHS), and Defendant Petit, Commissioner of the Maine Department of Human Services (DHS), to calculate eligibility for Medicaid benefits under title XIX of the Social Security Act, 42 U.S.C. § 1396a (1982). The rule is currently set out at 42 C.F.R. §§ 416.1220-.1224 (1985). For present purposes, it is enough to say that the rule is used to determine whether a claimant falls within the category of "SSI-related medically needy," potentially eligible for Medicaid under sections 1396a(a)(17) and 1396a(a)(10)(C)(i)(III). In order to be eligible under this category, a claimant must in turn meet certain SSI financial criteria set forth at 42 U.S.C. §§ 1382a, 1382b (1982). In determining whether a claimant meets these criteria, the Commissioner of DHS may not consider "property which, as determined in accordance with and subject to the limitations prescribed by the Secretary of HHS, is so essential to the means of self-support of such individual (and such spouse) as to warrant its exclusion." 42 U.S.C. § 1382b(a)(3) (1982). The rule here at issue excludes business and nonbusiness property as "essential to the means of self-support" only where the claimant's (or spouse's) equity in the property is $6,000 or less and the annual net income from the property is at least 6% of the equity value.

Plaintiff Nancy Haggan suffers from multiple sclerosis; she lives with her husband, Clifford Haggan, and their son at their home, where she is bedridden and requires 24-hour nursing care. In 1983, DHS determined that Mrs. Haggan was eligible for Medicaid as an "SSI-related medically needy" individual, but in 1984 her Medicaid coverage was terminated because her husband owned certain logging equipment worth more than $6,000. Mrs. Haggan submitted a new application for Medicaid coverage in December of 1984, which was denied, again due (as the parties have now stipulated) to Mr. Haggan's ownership of property that did not satisfy the $6000/6% rule.

Plaintiff Haggan brought an action challenging this decision, which action was consolidated with an action brought by Plaintiff Maine Association of Interdependent Neighborhoods, seeking to invalidate the $6000/6% rule as well as other Medicaid rules. Plaintiffs in both actions allege procedural violations of the Administrative Procedure Act, 5 U.S.C. §§ 551-706 (1982), and violations of certain moratorium provisions of section 2373(c) of the Deficit Reduction Act, Pub.L. 98-369 (1984), the Social Security Act, 42 U.S.C. § 1382b(a)(3) (1982), and the reasonableness requirement of the Administrative Procedure Act, 5 U.S.C. § 706 (1982).

Plaintiff Haggan filed a motion for a temporary restraining order or preliminary injunction on September 3, 1986, seeking an order requiring Defendants to compute her Medicaid eligibility without regard to the $6000/6% rule. As grounds for this motion, she submitted affidavits to the effect that her mother, who had been providing her with about $600 per month to help with expenses, would no longer be able to provide that support to the household; as a result, unless she could establish her eligibility for Medicaid, she would be forced to enter a nursing home. Her doctor stated in an affidavit that the effect of such a move on her physical and mental health would be "devastating," and her husband's affidavit and her own statement echoed these predictions.

II. Injunctive Relief

In order to prevail on her motion for a preliminary injunction, Plaintiff Haggan must satisfy four criteria:

"(1) that the plaintiff will suffer irreparable injury if the injunction is not granted; (2) that such injury outweighs any harm which the granting of injunctive relief would inflict on the defendant; (3) that plaintiff has exhibited a likelihood of success on the merits; and (4) that the public interest will not be adversely affected by the granting of the injunction."

Stanton by Stanton v. Brunswick School Dept., 577 F.Supp. 1560, 1567 (D.Me.1984) (quoting UV Industries, Inc. v. Posner, 466 F.Supp. 1251, 1255 (D.Me.1979) (Gignoux, J.)). The Court below considers each of these criteria.

A. Plaintiff's Irreparable Injury

Plaintiff Haggan asserts, with supporting affidavits, that absent the requested injunction she will be forced to leave her family and enter a nursing home, irreparably injuring her physical and mental health. The wrongful denial of governmental benefits may constitute irreparable injury, see Coalition for Basic Human Needs v. King, 654 F.2d 838, 840-41 (1st Cir.1981), particularly where, as here, the denial results in a disruption of the family unit and a consequent threat to the health of the claimant.

Defendant Bowen asserts that Plaintiff is not at risk of irreparable injury because she is eligible for assistance under Maine's Catastrophic Illness Program, set forth in Chapter IV, Section C of the Maine Public Assistance Payment Manual. However, it appears that this program does not reimburse eligible individuals for the costs of home nursing care, whereas Medicaid would cover such costs. Mr. Haggan's affidavit states that Plaintiff's home nursing care costs $560 per week—by far the largest medical expense Plaintiff incurs. The Court is therefore satisfied, on the record on this motion, that Plaintiff's eligibility for Maine's Catastrophic Illness Program does not negate the risk of irreparable injury.

The Court is somewhat more troubled by allegations in Defendants' memoranda that Plaintiff would be ineligible for Medicaid, even absent the use of the $6000/6% rule, because of the Haggans' control of certain bank accounts and life insurance policies whose value exceeds Medicaid guidelines. If this were true, Plaintiff has not shown that she will be irreparably injured absent the requested relief. But all this information was available at the time Plaintiff's last application was finally denied on March 18, 1985, and all parties have since stipulated that "Nancy Haggan's application for Medicaid benefits was denied due to the application of the `$6000/6%' rule." Stipulated Record at 5. Moreover, Defendant Bowen raises the bank account and insurance policy issue only to support the proposition that no case or controversy exists between him and Defendant Petit; neither Defendant presses the argument as a ground for denying the requested preliminary injunction. Because this Court is not itself in a position to recalculate Plaintiff's Medicaid eligibility, and because Defendants do not press the argument or present any calculations themselves, the Court concludes that Plaintiff has met her burden on the issue of irreparable injury.

B. Balancing the Harms to Plaintiff and Defendants

Plaintiff asserts that there is little risk of harm to Defendants because any payment to Plaintiff of Medicaid benefits later found to have been erroneous may be recovered pursuant to 42 U.S.C. § 1396p(a)(1)(A) (1982). Neither Defendant asserts that he would be harmed in any way by the issuance of the requested preliminary injunction. And this is not a case involving any threat to the orderly development of administrative policies or regulations. Cf. McDonough v. United States Department of Labor, 646 F.Supp. 478, 482 (D.Me.1986) (denying plaintiffs' request to enjoin administrative proceeding that might result in termination of plaintiffs' benefits). The Court concludes that whatever minimal risk of harm to Defendants may exist is substantially outweighed by the risk of harm to Plaintiff Haggan.

C. Likelihood of Plaintiff's Success on the Merits

Because Plaintiff Haggan has requested that Defendants be enjoined from computing her Medicaid eligibility "from June 1, 1986" using the $6000/6% rule, the relief she requests is essentially prospective in nature. That is, she here seeks not a recomputation of her past eligibility, but rather, a computation of her eligibility for the current (June 1, 1986 through November 30, 1986) and future six-months eligibility periods. The Court therefore need not reach Defendant Bowen's argument that sovereign immunity shields him from any order for retroactive relief. The Court has reviewed Plaintiff's procedural and substantive challenges to the $6000/6% rule and both Defendants' responses thereto, and the Court concludes that on her claim for prospective relief, Plaintiff has shown a strong likelihood of success on the merits against both Defendants. The Court will address in turn Plaintiff's challenges to the rule at the federal and state levels.

1. Plaintiff's Challenge to the Federal...