Beeker v. Olszewski

• Decision Date: 13 February 2006
• Docket Number: No. 05-10089-BC.,05-10089-BC.
• Citation: 415 F.Supp.2d 734
• Parties: Jeanette BEEKER, Charles Lewis, Henry Lewis, and Cindy Baliko, Plaintiffs, v. Janet OLSZEWSKI and Marianne Udow, Defendants.
• Court: U.S. District Court — Eastern District of Michigan

415 F.Supp.2d 734

Jeanette BEEKER, Charles Lewis, Henry Lewis, and Cindy Baliko, Plaintiffs, v. Janet OLSZEWSKI and Marianne Udow, Defendants.

No. 05-10089-BC.

United States District Court, E.D. Michigan, Northern Division.

February 13, 2006.

COPYRIGHT MATERIAL OMITTED

Jacqueline Doig, Saginaw, MI, for Plaintiffs.

Morris J. Klau, Michigan Department of Attorney General, Detroit, MI, Jeffrey R. Clark, Cummings, McClorey, Livonia, MI, for Defendants.

ORDER GRANTING IN PART AND DENYING IN PART CROSS MOTIONS FOR SUMMARY JUDGMENT, ENJOINING DEFENDANTS FROM ENFORCING PROVISION OF STATE MEDICAID PLAN, AND DENYING MOTION TO CERTIFY CLASS

LAWSON, District Judge.

The plaintiffs in this case challenge the policy and practice of the State of Michigan of allowing pharmacists to refuse to fill prescriptions for Medicaid recipients who are unable to pay co-payments and have delinquent balances for unpaid co-payments from past prescriptions. They also contend that the State has failed to provide Medicaid recipients with required information about their right to receive services when they cannot pay. The case is before the Court on cross motions for summary judgment filed by the parties. The Court heard oral arguments on the motions on January 22, 2006. The Court now finds that the State's policy violates federal law presently in effect. The Court expresses no view of the impact of the recently-enacted Deficit Reduction Act of 2005. The Court will enjoin the State from authorizing and notifying pharmacists to engage in such practices. However, the plaintiffs also seek an order preventing the State from charging any co-payments to Medicaid recipients until it provides the required information regarding the right to receive services when a recipient cannot pay. The defendants seek a dismissal of the count of the complaint asking for such relief. The Court finds that no such relief can be ordered. The Court, therefore, will grant in part and deny in part each party's motion for summary judgment.

I.

The plaintiffs are current Medicaid recipients who live in Michigan. The defendants are Janet Olszewski and Marianne Udow, directors of the Michigan Department of Community Health (DCH) and Department of Human Services (DHS) respectively. Ms. Olszewski is responsible for administering the Michigan Medicaid program. Ms. Udow is responsible for providing information about the Medicaid program to applicants and recipients. They are being sued in their official capacities under section 1983.

The named plaintiffs are all taking several medications for serious conditions such as bipolar disorder, seizures, asthma, HIV, meningitis, and schizophrenia. The parties disagree about the services Medicaid providers are required to provide to Medicaid patients who cannot afford to pay authorized co-payments for their prescriptions and the information the state Medicaid agency is required to provide to Medicaid recipients and applicants.

Federal law currently in effect states:

The State plan shall require that no provider participating under the State plan may deny care or services to an individual eligible for such care or services under the plan on account of such individual's inability to pay a deduction, cost sharing, or similar charge. The requirements of this subsection shall not extinguish the liability of the individual to whom the care or services were furnished for payment of the deduction, cost sharing, or similar charge.

42 U.S.C. § 1396o(e). The plaintiffs contend that this provision means Medicaid providers may not refuse to fill prescriptions when a recipient cannot pay, and providers may not refuse services as a self-help means of collecting past co-payments the recipient could not afford. The defendants, however, interpret the provision to mean that providers may refuse to fill prescriptions when a recipient cannot pay if that recipient has "bad debt," that is, unpaid co-payments from previously-filled prescriptions. The defendants have amended the state Medicaid plan to reflect their interpretation of federal law and have advised Medicaid providers that they may refuse to provide services in such situations.

In July 2004, DCH amended the state Medicaid plan to add the following section, entitled "Free Choice of Provider":

[T]he Medicaid agency assures that an individual eligible under the plan may obtain Medicaid services from any institution, agency, pharmacy, person or organization that is qualified to perform the services, including an organization that provides these services or arranges for their availability on a prepayment basis. Providers who elect not to provide services based on a history of bad debt, including unpaid co-payments, shall give beneficiaries appropriate verbal notice and a reasonable opportunity for payment.

Compl., Ex. B. In addition, the state Medicaid Provider Manual states in several places that:

Providers may not refuse to render service if a beneficiary is unable to pay the co-payment amount at the time the service is provided. However, the uncollected co-payment is considered a bad debt which allows the provider to refuse to provide future services according to Michigan's State Plan. Providers who elect not to provide services based on a history of bad debt, including unpaid co-payments, must give beneficiaries appropriate verbal notice and a reasonable opportunity for payment.

Compl., Ex. E.

The plaintiffs also believe the defendants have failed to comply with federal laws requiring state agencies to provide certain information to Medicaid patients. A federal regulation states as follows:

Availability of program information.

(a) The agency must furnish the following information in written form, and orally as appropriate, to all applicants and to all other individuals who request it:

(1) The eligibility requirements.

(2) Available Medicaid services.

(3) The rights and responsibilities of applicants and recipients.

(b) The agency must publish in quantity and make available bulletins or pamphlets that explain the rules governing eligibility and appeals in simple and understandable terms.

42 C.F.R. § 435.905. The pamphlets and booklets available for Medicaid recipients do not tell recipients that they can obtain prescriptions even when they are unable to make the co-payments. One pamphlet, publication 201, tells recipients that they "have the right to know if a co-payment is required," but it does not explain how to go about obtaining that information. Compl., Ex. Q. Another pamphlet, publication 1111-15, tells recipients, "You may have a co-payment for some services. Your provider will tell you when you must pay the co-payment." Compl., Ex. R.

The plaintiffs contend that none of them were ever informed of their rights and responsibilities with regard to Medicaid co-payments until they contacted the Center for Civil Justice. They were given various pamphlets by the state agency, none of which explains a Medicaid recipient's rights when he or she is unable to make a co-payment.

The defendants argue that the plaintiffs do not have standing to advance their claims. Therefore, it is necessary to set forth in some detail the allegations the named plaintiffs have stated concerning the difficulties the plaintiffs have encountered in obtaining their medications.

According to the complaint, in February 2005, Jeanette Beeker learned from the Center for Civil Justice that providers may not deny her services because of her inability to make co-payments. She says she was never informed of this by DHS or DCH. Prior to that, Ms. Beeker did not attempt to get her prescriptions filled when she could not make the co-payments. The complaint states that in February 2005, a pharmacist at Kroger filled a prescription for Ms. Beeker when she could not make the co-payment. The complaint alleges that the Kroger pharmacist told Beeker that he would not fill future prescriptions unless she could make the co-payment. Since then, Beeker has always been able to make the required co-payments, but she has not managed to pay off the "bad debt" from the co-payment she was unable to make. She contends that she fears that she may be denied services if she is ever unable to make the payment in the future. However, at the time the complaint was filed, Beeker had never been denied services based on "bad debt" from unpaid co-payments, although she had been threatened with such denial. The plaintiffs' allege in their motion for summary judgment Beeker has since been denied pharmacy services due to unpaid bad debt, and Beeker so testified at her deposition. Beeker testified that she was told she could avoid the co-pay one time only.

In late 2004, Charles Lewis learned from the Center for Civil Justice that providers must fill his prescriptions even if he cannot make the co-payment. He says he was not aware of this previously because neither DHS nor DCH had ever notified him about his rights. In December 2004, Charles Lewis was hospitalized. After being released, he attempted to fill several prescriptions at Hurley Medical Center but could not make the co-payments. Hurley Medical Center refused to fill the prescriptions. Charles Lewis then went to Rite-Aid, which also refused to fill his prescription because he could not make the co-payments. The next day, Charles Lewis dropped off his prescriptions at Walgreens, where the pharmacist agreed to fill them even though he could not make the co-payments. When he returned to pick up the medication, a different person was on duty and would not give Charles Lewis his prescription unless he paid. He eventually received the prescriptions when the pharmacist agreed to pay the co-pay out of his own pocket. Charles Lewis was told that Walgreens would not fill prescriptions for him in the future unless he could pay the co-payment himself.

In January 2005, Charles Lewis was hospitalized again. When he was released, a case manager from Wellness Networks, a nonprofit...