Bailey v. Roob

• Citation: 567 F.3d 930
• Decision Date: 08 June 2009
• Docket Number: No. 08-3592.,08-3592.
• Parties: Lamont G. BAILEY, et al., Plaintiff-Appellants, v. E. Mitchell ROOB, Jr., et al., Defendants-Appellees.
• Court: United States Courts of Appeals. United States Court of Appeals (7th Circuit)

567 F.3d 930

Lamont G. BAILEY, et al., Plaintiff-Appellants, v. E. Mitchell ROOB, Jr., et al., Defendants-Appellees.

No. 08-3592.

United States Court of Appeals, Seventh Circuit.

Argued March 31, 2009.

Decided June 8, 2009.

Gavin M. Rose (argued), Attorney, ACLU of Indiana, Indianapolis, IN, for Plaintiff-Appellants.

Clifton B. Cislak, David L. Steiner (argued), Office of the Attorney General, Indianapolis, IN, for Defendants-Appellees.

Before FLAUM, MANION, and ROVNER, Circuit Judges.

FLAUM, Circuit Judge.

Years ago, a group of plaintiffs and the Indiana Medicaid program's administrators agreed to certain terms for the handling of applications to the disability program in Indiana: most relevant for present purposes was a concession that the program would compile a complete twelve-month medical history before reaching a decision on the application. Now, several members of the affected class want to hold the program administrators in civil contempt for violating that portion of the consent decree. They claim that in too many cases the program is relying on summary forms rather than compiling an applicant's complete medical history.

The district court rejected the motion because the plaintiffs had not demonstrated by clear and convincing evidence that the defendants were in violation of the terms of the consent decree. Appellants now challenge that ruling, citing three errors. First, they claim the district court improperly tasked them with demonstrating that the plaintiffs had not been reasonably diligent in following the demands of the consent decree. Second, they argue that the district court should have held that the evidence proffered below was a clear and convincing demonstration that the program administrators were violating the decree. Third, they argue that the district court erred as a matter of law by holding that 20 C.F.R. § 416.912(d), a provision of the regulations for the Supplemental Security Income disability program incorporated by reference into the consent decree, did not require a full collection of medical records.

For the following reasons, we affirm the district court's ruling.

I. Background

The Medicaid for the Disabled program in Indiana provides medical coverage and benefits to individuals who suffer from a qualifying disability. The present case grew out of a class action lawsuit filed against the Indiana Medicaid disability plan in the 1990s. That lawsuit was settled by a consent decree requiring the administrators of the plan to collect certain evidence before making a decision on an application for disability benefits. The consent decree required the Indiana plan to obtain and evaluate evidence used for Medicaid eligibility in the same way that the Code of Federal Regulations requires the Supplemental Security Income administrators to obtain and evaluate evidence. Specifically, the decree provided that, "the State of Indiana must obtain and evaluate evidence in determining Medicaid eligibility in the same way that Supplemental Security Income disability determinations are made under 20 C.F.R. 416.901 through 416.988."

In fact, the consent decree simply incorporated 20 C.F.R. § 416.901-416.988 as regulations for how the Indiana Medicaid program should go about collecting and evaluating applications. As the district court summarized it, the consent decree required the Indiana Medicaid program to do three things: First, obtain complete histories from a Medicaid applicant's treatment providers, covering at least the twelve months prior to the application, before making any determination about Medicaid eligibility; second, obtain additional medical information from an applicant's treating physician or other medical source when necessary; third, ensure that medical records are complete and detailed enough to allow for a proper determination regarding eligibility.

The Indiana Medicaid for the Disabled program is supposed to follow a defined set of procedures when making eligibility determinations. Applicants for Medicaid for the Disabled first meet with an assigned caseworker. The caseworker helps an applicant fill out Form 251B, in which an applicant lists her medical conditions and any information about treatments she's received in the last twelve months, including her treating physicians. The caseworker is responsible for collecting an applicant's medical history based on the information provided in Form 251B. If the caseworker is unable to collect this information, he is supposed to note that in the applicant's file. After the caseworker has processed them, applications are forwarded to the Medicaid Medical Review Team (MMRT). The MMRT is responsible for gathering any information that the caseworker has not tracked down.

The Indiana Medicaid plan uses a Form 251A to collect information from a physician about an applicant's medical history. The Form 251A includes a section asking for information about the patient's treatments, diagnostic tests, and medications going back for at least twelve months, a "Medical Evidence" section asking for information on the patient's physical systems, and a "Diagnosis/Prognosis" section asking for the doctor's opinion regarding the applicant's reported impairment.

On April 13, 1999, plaintiffs filed a petition to hold the defendants in civil contempt for violating the terms of the consent decree. The parties settled by entering into a second consent decree that included the same terms as the original and allowed anyone who had been denied Medicaid benefits in the preceding three years to reapply for benefits.

Seven years later, on September 26, 2006, plaintiffs filed a second petition to hold defendants in civil contempt, alleging that the Indiana Medicaid program was again in violation of the consent decree. In response to a discovery request, the Medicaid administrators agreed to produce a representative sample of disability benefit applications. That sample consisted of twenty-six files in all, representing every application from Marion County, Indiana with an applicant whose last name began with "C" and whose application was denied between September 1, 2006 and October 1, 2006.¹ The parties judged twelve of these applications to be complete under any standard, but appellants contend that the remaining fourteen are incomplete and demonstrate the Indiana Medicaid program's violation of the consent decree.

Appellants contend that in some cases Indiana is improperly using this form as a proxy for the "complete medical history" required in 20 C.F.R. § 416.912. Appellees contend that the consent decree does not always require them to obtain copies of a physician's medical records and that Form 251A is a "complete" medical history within the meaning of the decree.

The district court conducted its own review of the files. It concluded that five of the fourteen allegedly incomplete files were complete under any standard. With respect to the remaining nine, the district court found that "[f]our of these nine applications are clearly less complete than the other five," and that the other five files contained only the summary Form 251A, but did not find the administrators of Indiana Medicaid in contempt for violating the consent decree. The crux of the district court opinion is that the appellants had not met the burden for a civil contempt petition: Neither side presented adequate evidence on what constituted a "complete" medical history, and thus neither the four arguably incomplete applications nor the five applications containing only the Form 251A was clear and convincing evidence that the appellees violated the consent decree. The district court invited the appellants to re-file their motion, asking them to produce "[e]xpert testimony, or information on how the agency charged with responsibility for compliance with the Decree interprets the definition Plaintiffs offer" and "factual explication of what precisely the Medicaid system instructs physicians to do and take account of in completing Form 251A." The appellants instead appealed the district court's denial of their motion to this court.

II. Discussion

We review the district court's decision not to hold the state in civil contempt deferentially. "It is well established that the decision by a district court to enter a finding of civil contempt is discretionary and we review it only to determine if there was an abuse of discretion or its entry was clearly erroneous." Feltner v. Title Search Co., 283 F.3d 838, 841 (7th Cir.2002). The case law on contempt sanctions divides them into two categories: coercive and remedial. See Jones v. Lincoln Elec. Co., 188 F.3d 709, 738 (7th Cir.1999). Coercive sanctions induce a party's compliance with a court order in the future, while remedial sanctions compensate an injured party for an opponent's past non-compliance. Id. The contempt petition here is coercive; the appellants were seeking to enjoin the Indiana Medicaid program to contract with an outside auditor to review its decisions every three months, and to record each and every instance in which a caseworker requests medical information from an applicant's medical care provider.

Appellants argue that the district court made three errors. First, it improperly placed upon them the burden of demonstrating that Indiana had not been reasonably diligent in carrying out the consent decree's requirements. They contend that reasonable diligence is an affirmative defense on which Indiana bears the burden of proof. Second, they argue that the district court abused its discretion by not imposing civil contempt sanctions because of the four applications that the district court characterized as less than complete. Third, they argue that the district court improperly declined to hold that the consent decree requires that Indiana obtain actual copies of a treating physician's medical records and thus that the five applications with only a Form 251A are evidence of Indiana's violation of a court order....