Banks v. SECRETARY OF INDIANA FAMILY & SOC. SERV.

• Decision Date: 02 April 1992
• Docket Number: No. S91-340M.,S91-340M.
• Citation: 790 F. Supp. 1427
• Parties: Marie BANKS, Plaintiff, v. SECRETARY OF THE INDIANA FAMILY AND SOCIAL SERVICES ADMINISTRATION, et al., Defendants.
• Court: U.S. District Court — Northern District of Indiana

790 F. Supp. 1427

Marie BANKS, Plaintiff, v. SECRETARY OF THE INDIANA FAMILY AND SOCIAL SERVICES ADMINISTRATION, et al., Defendants.

No. S91-340M.

United States District Court, N.D. Indiana, South Bend Division.

April 2, 1992.

Kent Hull, Legal Services Program of Northern Indiana, Inc., South Bend, Ind., for plaintiff.

Wendy Stone Messer, Deputy Atty. Gen., Indianapolis, Ind., Clifford D. Johnson, Asst. U.S. Atty., South Bend, Ind., Barbara F. Altman, Dept. of Health and Human Services, Chicago, Ill., for defendants.

MEMORANDUM AND ORDER

MILLER, District Judge.

Marie Banks contends that Indiana's Medicaid procedures offend the Due Process Clause because they do not allow Medicaid recipients notice and an opportunity to contest denials of reimbursement of claims filed by their health care providers. Several motions in this cause are now before the court. The Secretary of the United States Department of Health and Human Services — the "federal defendant" — moves to dismiss pursuant to Fed.R.Civ.P. 12(b)(1) for lack of subject matter jurisdiction and 12(b)(6) for failure to state a claim upon which relief can be granted. The Secretary of the Indiana Family and Social Services Administration — the "state defendant" — moves to dismiss for failure to state a claim and for mootness.

Ms. Banks has filed a motion for conditional class certification pursuant to Fed. R.Civ.P. 23. She has also moved for an order striking the attachments to the federal defendant's reply brief in support of his motion to dismiss. In addition, Joan J. Smith has moved to intervene as a party plaintiff.

For the reasons that follow, the court concludes that the intervention motion should be granted, the motion for class certification should be denied, the motion to strike should be denied, and the state and federal defendants' motions to dismiss should be granted.

I.

Marie Banks is the widow of Arthur Banks, a Medicaid recipient who received medical treatment from Radiology, Inc. before his death. Radiology submitted a Medicaid claim but the Indiana Department of Public Welfare (now Indiana Family and Social Services Administration), the state agency responsible for administering the Medicaid program, refused to reimburse Radiology. After Mr. Banks' death, Radiology won a small claims judgment against Mrs. Banks for unpaid medical bills in the amount of $567.00, plus costs, but the judgment was later vacated.

Mrs. Banks brought this action, claiming that Indiana's Medicaid program failed to provide her with written notice of its denial of Radiology's claims for payment or notify her of any right to contest its denial. She claims that the state defendant violated her right to receive Medicaid benefits secured by the United States Constitution, statutes, and federal rules. Mrs. Banks claims that the federal defendant violated the Due Process Clause of the United States Constitution, as well as federal statutes and rules, in failing to require the state defendant to comply with the law. Mrs. Banks seeks a declaratory judgment and mandatory injunctive relief against the state and federal defendants.

Joan J. Smith seeks intervention as a plaintiff and class representative pursuant to Fed.R.Civ.P. 24(b)(2), contending that her claim has a question of law in common with Mrs. Banks' claim. Mrs. Smith contends that she was hospitalized in St. Joseph's Medical Center during a period in which she was eligible for Medicaid. She alleges that the Medical Center submitted its claim, but Medicaid denied the claim, without notice to Mrs. Smith, as untimely submitted. A collection agency has filed suit against Mrs. Smith and her husband for $4,378.66 based on the Medical Center's bill, and Mrs. Smith has paid approximately $150.00 on the bill.

II.

Fed.R.Civ.P. 23(c)(1) provides that, "As soon as practicable after the commencement of an action brought as a class action, the court shall determine by order whether it is to be so maintained." The Seventh Circuit views this provision as requiring district courts to consider and decide issues of class certification before determining dismissal motions under Rule 12(b)(6). Rutan v. Republican Party of Illinois, 868 F.2d 943, 947 (7th Cir.1989), aff'd in part, rev'd in part on other grounds, 497 U.S. 62, 110 S.Ct. 2729, 111 L.Ed.2d 52 (1990); Hickey v. Duffy, 827 F.2d 234, 237 (7th Cir.1987); Lorance v. AT & T Technologies, Inc., 827 F.2d 163, 165 n. 1 (7th Cir. 1987), aff'd, 490 U.S. 900, 109 S.Ct. 2261, 104 L.Ed.2d 961 (1989). The court has explained the reasons for this requirement:

The decision on certification should be made quickly. Both sides have an interest in prompt certification. To the extent the district courts thought certification unnecessary once they had ruled for the defendants, they were mistaken. Vickers v. Trainor, 546 F.2d 739, 747 (7th Cir.1976). A deferred ruling converts the class action to an opportunity for one-way intervention, which Rule 23 is designed to avoid.... The defendants have an interest in obtaining the preclusive effect of a certification, which prevent members of the class from bringing the same suit later on. The plaintiffs, who may appeal the denial of relief, also have an interest in knowing whether the stakes on appeal include the interests of the whole class.

Watkins v. Blinzinger, 789 F.2d 474, 475-476 n. 3 (7th Cir.1986), cert. denied, 481 U.S. 1038, 107 S.Ct. 1976, 95 L.Ed.2d 816 (1987).

The curious procedural circumstances of this case make it awkward to determine the motion for class certification before addressing the motion to dismiss. To begin with, the defendants have opposed the certification motion, indicating a lack of interest in obtaining the preclusive effects of a dismissal motion following certification. Further, one defendant has raised a jurisdictional issue, and matters affecting the court's jurisdiction over a case also affect the court's jurisdiction over the motion for class certification. One defendant's dismissal motion was fully briefed, and the other's filed, before the plaintiff filed her class certification motion. Finally, several of the arguments raised with respect to class certification intertwine extensively with the arguments on the dismissal motions.

Nonetheless, the court cannot conclude that it is not yet practicable to determine the class certification motion at the outset. Courts may determine a certification motion and the case's merits simultaneously. Jimenez v. Weinberger, 523 F.2d 689, 698-699 (7th Cir.1975) (Stevens, J.), cert. denied, 427 U.S. 912, 96 S.Ct. 3200, 49 L.Ed.2d 1204 (1976). The record before the court is ample for determination of both. Accordingly, the court turns first to the issue of class certification.

A.

Mrs. Banks seeks certification under Fed.R.Civ.P. 23(b)(2). Such certification requires that a class representative satisfy the four requirements of Rule 23(a) and at least one subsection of Rule 23(b). Blake v. Arnett, 663 F.2d 906, 912 (9th Cir.1981). As to the latter, Mrs. Banks contends that the defendants have acted or refused to act on grounds generally applicable to the class, making non-monetary relief with respect to the class as a whole appropriate; the defendants do not appear to dispute this point. Rule 23(a) requires plaintiff to show that (1) the class is so numerous that joinder of all members is impracticable, (2) questions of law or fact are common to the class, (3) the representative parties' claims are typical of the claims of the class, and (4) the representative parties will protect the class' interests fairly and adequately. The state defendant challenges Mrs. Banks' showing on three of these requirements.

1.

The state defendant principally argues Mrs. Banks' inadequacy as a class representative. Mrs. Banks' claim, the state defendant contends, is moot. The affidavit of Mike Aronson, a staff attorney for the state defendant,¹ demonstrates that Medicaid reimbursed Radiology on October 10, 1991 and that the small claims judgment against Mrs. Banks was vacated five days later. Mr. Aronson also states that Radiology would have been reimbursed sooner had it submitted the correct forms any time after providing services to Mr. Banks.

The state defendant claims that a case or controversy, which must exist at every stage of the proceedings, Jones v. Sullivan, 938 F.2d 801, 805 (7th Cir.1991), does not exist as to Mrs. Banks because of the October 1991 transactions. The state defendant argues that because Mrs. Banks cannot establish a case or controversy, she cannot seek relief on behalf of herself or any other member of the class. Davis v. Ball Memorial Hosp. Ass'n, Inc., 753 F.2d 1410, 1420 (7th Cir.1985). If the claims expire before the class is certified, the claims are moot, Jones v. Sullivan, 938 F.2d at 805, and the small claims judgment against Mrs. Banks was vacated before the class was certified.

Mrs. Banks claims that the action is not moot because she has not obtained all the relief she sought in bringing suit. The types of relief Mrs. Banks seeks against the state defendant include:

(1) Prohibiting the State Defendant from failing to provide written notice of, and opportunity to file administrative appeals contesting, the State Defendant's refusal to pay providers to members of the Plaintiff class.

(2) Prohibiting the State Defendant from following 470 I.A.C. 5-1-3 (1991 Cum.Supp.) to the extent that provision conflicts with the requirements of (1) above.

(3) Requiring the State Defendant to issue notice to her of its refusal to pay Radiology, Inc. for the services received by Mr. Banks, and to provide opportunity for hearing to contest that determination.

(4) Requiring the State Defendant to issue appropriate notice and to provide opportunity for hearing to all class members, similar to that required in (3) above.

Complaint, p. 12. Mrs. Banks submits that the state defendant's challenged policies still exist, notwithstanding the fact that the small...