Blanchard v. Forrest, 95-30168

• Decision Date: 08 January 1996
• Docket Number: No. 95-30168,95-30168
• Citation: 71 F.3d 1163
• Parties: , Medicare & Medicaid Guide P 44,001 Myrtle W. BLANCHARD and Patrice A. Dumas, on behalf of themselves and others similarly situated, Plaintiffs-Appellees, v. Rose FORREST, in her capacity as Secretary of the Louisiana Department of Health and Hospitals, Defendant-Appellant.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 1163

71 F.3d 1163

49 Soc.Sec.Rep.Ser. 609, Medicare & Medicaid Guide

P 44,001

Myrtle W. BLANCHARD and Patrice A. Dumas, on behalf of themselves and others similarly situated Plaintiffs-Appellees, v. Rose FORREST, in her capacity as Secretary of the Louisiana Department of Health and Hospitals, Defendant-Appellant.

No. 95-30168.

United States Court of Appeals Fifth Circuit.

Jan. 8, 1996.

Charles Marshall Delbaum, Christina Maria Ebner, David Holman Williams, New Orleans Legal Assistance Corporation, New Orleans, LA, for plaintiffs-appellees.

Phillip Bruce Waters, Department of Health and Hospitals for the State of Louisiana.

Mary Dozier O'Brien, Baton Rouge, LA, for defendant-appellant.

Appeal from the United States District Court for the Eastern District of Louisiana.

Before REYNALDO G. GARZA, KING and HIGGINBOTHAM, Circuit Judges.

PER CURIAM:

Rose Forrest, as Secretary of the Louisiana Department of Health and Hospitals, appeals from the district court's partial summary judgment for the plaintiffs. Finding no error, we affirm.

I. BACKGROUND

Myrtle W. Blanchard ("Blanchard") and Patrice A. Dumas ("Dumas") brought this class action on behalf of Louisiana Medicaid applicants to challenge certain policies of the Louisiana Department of Health and Hospitals ("LDHH")--the state agency that administers Louisiana's Medicaid plan. Specifically, the plaintiffs argued that LDHH's retroactive coverage policy violates the federal Medicaid statute. That statute requires that Medicaid assistance be made available to an eligible Medicaid applicant for covered medical services furnished to the applicant during the three months preceding the month in which he or she applied for Medicaid, if the applicant had been eligible for Medicaid when the services were furnished. 42 U.S.C. Sec. 1396(a)(34). LDHH's retroactive coverage policy limits Medicaid coverage for medical expenses incurred during the retroactive coverage period, and initially paid out-of-pocket by the applicant, to instances where the medical provider voluntarily refunds the Medicaid applicant's payment, and then submits a claim evidencing the refund to LDHH.

The experiences of the named plaintiffs exemplify the dilemma created by Louisiana's retroactive coverage policy. Blanchard is a 65-year-old insulin-dependent diabetic who has a fixed income of $477 per month in Social Security benefits. In February 1994, she was found eligible for retroactive Medicaid coverage for the period from February 20, 1993 to April 1993. Thereafter, Blanchard requested that the pharmacy from which she had purchased medication refund her payments totaling $197.28 and submit a claim to Medicaid. The pharmacy refused to do so. Similarly, in July 1994, Dumas's minor son was found eligible for Medicaid effective February 1, 1992. Dumas then sought refunds from pharmacies from which she had purchased $40 worth of medications for her son during the retroactive coverage period. The pharmacies denied her requests, and explained to her that such a denial was their standard policy when Medicaid clients had paid for supplies before the clients were found eligible for Medicaid.

On May 8, 1995, the district court granted the plaintiffs' motion for partial summary judgment, ¹ concluding that LDHH's retroactive coverage policy violates 42 U.S.C. Secs. 1396a(a)(10)(B) and (34). ² The district court ordered LDHH to "establish a mechanism to provide coverage for bills for medical care, supplies and services during the retroactive coverage period established by 42 U.S.C. Sec. 1396a(a)(34) where applicants have paid for such care, supplies or services in whole or in part." In its Order and Reasons, the district court noted that LDHH may remedy its violation either by requiring "providers to refund payments received for services provided during the retroactive eligibility period and to then submit their claims to Medicaid, or [by] reimburs[ing] recipients directly for these expenses." Forrest appeals the grant of summary judgment, arguing, along with amicus, the Louisiana State Medical Society, that genuine issues of material fact exist, and that the district court's proposed "required refund and submit" remedy infringes the providers' right, required by federal regulations, to willingly choose Medicaid patients, and violates the Contracts Clauses of the United States and Louisiana Constitutions.

II. STANDARD OF REVIEW

We review a grant of summary judgment de novo, applying the same criteria used by the district court in the first instance. Norman v. Apache Corp., 19 F.3d 1017, 1021 (5th Cir.1994); Conkling v. Turner, 18 F.3d 1285, 1295 (5th Cir.1994). Summary judgment is proper "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue of material fact and that the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c).

III. DISCUSSION

Medicaid, enacted as Title XIX of the Social Security Act (codified at 42 U.S.C. Secs. 1396, 1396a-u (1988)), is a joint federal-state program through which the federal government provides financial assistance to States to aid them in furnishing medical care to certain low-income or medically needy individuals. Wilder v. Virginia Hosp. Ass'n, 496 U.S. 498, 502, 110 S.Ct. 2510, 2513-14, 110 L.Ed.2d 455 (1990). A State's participation in the Medicaid program is voluntary; however, if a State chooses to participate, its Medicaid plan must comply with the federal Medicaid statute and regulations promulgated by the Health Care Financing Administration, the federal agency responsible for overseeing state Medicaid plans. Id.; Abbeville Gen. Hosp. v. Ramsey, 3 F.3d 797, 800 (5th Cir.1993), cert. denied, --- U.S. ----, 114 S.Ct. 1542, 128 L.Ed.2d 194 (1994).

Under federal Medicaid law, a state plan must provide that "the medical assistance made available to any individual ... shall not be less in amount, duration, or scope than the medical assistance made available to any other individual...." 42 U.S.C. Sec. 1396a(a)(10)(B). "Medical assistance" is defined as "payment of part or all of the cost of the [covered] care and services (if provided in or after the third month before the month in which the recipient makes application for assistance ...)...." 42 U.S.C. Sec. 1396d(a). The federal Medicaid statute also mandates that a state Medicaid plan must make available medical assistance for covered medical services furnished to the Medicaid recipient within the three months prior to the month in which the recipient applied for Medicaid ("the retroactive coverage period") if the recipient would have been eligible for Medicaid at the time the medical services were furnished. 42 U.S.C. Sec. 1396a(a)(34). ³ This requirement is commonly referred to as the "retroactive coverage requirement", and the federal regulations implementing it proclaim that it mandates that all state Medicaid plans:

make eligibility for Medicaid effective no later than the third month before the month of application if the individual--

(1) Received Medicaid services, at any time during that period, of a type covered under the plan; and

(2) Would have been eligible for Medicaid at the time he received the services if he had applied (or someone had applied for him), regardless of whether the individual is alive when application for Medicaid is made.

42 C.F.R. Sec. 435.914(a).

LDHH is the state agency which administers Louisiana's state Medicaid plan. LDHH's policy on retroactive coverage, purporting to implement the requirements of 42 U.S.C. Sec. 1396a(a)(34), provides as follows:

When retroactive payment shall not be made (1) for services received in any period prior to the third month preceding that of application.

(2) for services for which payment has already been made [by] a source other than the Division of Family Services (predecessor to the Louisiana Medicaid Program), even though the person was eligible at the time of the service, except when the provider refunds all payment received and accepts the division's payment as payment in full (except in long term care facilities). The refund must be clearly established on the bill the provider submits to state office (now UNISYS).

This policy provides coverage for Medicaid-coverable bills paid privately (by the recipient, not an insurer), in whole or in part, during the retroactive coverage period, only if the medical provider first, before submitting the claim to LDHH's Medicaid program, voluntarily refunds the money paid by the recipient, and then after making the refund, submits the bill to LDHH for payment at Medicaid rates. Because Medicaid rates are usually much lower than the rates providers charge private patients, Medicaid providers in Louisiana have a disincentive to provide voluntary refunds to patients determined to be Medicaid-eligible after the services or supplies were furnished. Even if a recipient has only partially paid the medical provider for a service rendered during the three-month retroactive coverage period, LDHH will not pay the provider the balance unless the provider first voluntarily refunds the recipient's payment. Ironically, a Medicaid applicant who fails or refuses to pay for services rendered during the three month retroactive coverage period, will receive medical assistance from LDHH for that period, because LDHH will pay directly a provider who submits a claim for the full amount.

In sum, federal law requires state Medicaid plans to make available medical assistance during the retroactive coverage period. Under the federal statute and regulations, a Medicaid recipient must meet three requirements to obtain retroactive medical assistance: (1) medical services or supplies covered under the Medicaid plan must have been furnished; (2) during the three months prior to the month in which the recipient filed his Medicaid application; and (3) the recipient must have been eligible for...