Burgess v. Affleck, 82-1425

• Decision Date: 28 July 1982
• Docket Number: No. 82-1425,82-1425
• Citation: 683 F.2d 596
• Parties: Angelina BURGESS, Therese Kirouac, Ian Dowell, Janet Ducharme, Annie Foote, Margaret Monteiro, Lora Martino, On their own behalf and on behalf of all others similarly situated, Plaintiffs, Appellants, v. John J. AFFLECK, Individually and in his capacity as Director of the Rhode Island Department of Social and Rehabilitative Services, Defendant, Appellee.
• Court: U.S. Court of Appeals — First Circuit

Page 596

683 F.2d 596

Angelina BURGESS, Therese Kirouac, Ian Dowell, Janet Ducharme, Annie Foote, Margaret Monteiro, Lora Martino, On their own behalf and on behalf of all others similarly situated Plaintiffs Appellants, v. John J. AFFLECK, Individually and in his capacity as Director of the Rhode Island Department of Social and Rehabilitative Services, Defendant, Appellee.

No. 82-1425.

United States Court of Appeals First Circuit.

Argued June 9, 1982.

Decided July 28, 1982.

Barry Best, Providence, R. I., with whom James H. Hardy, Rhode Island Legal Services, Providence, R. I., was on supplemental memorandum in support of motion for injunction pending appeal, for plaintiffs, appellants.

Robert J. Fallon, Chief Legal Counsel, Dept. of Social and Rehabilitative Services, Cranston, R. I., with whom Dennis J. Roberts, II, Atty. Gen., and Brian Van Couyghen, Sp. Asst. Atty. Gen., Providence, R. I., were on memorandum of law in opposition to motion for injunction pending appeal, for defendant, appellee.

Before COFFIN, Chief Judge, CAMPBELL and BOWNES, Circuit Judges.

LEVIN H. CAMPBELL, Circuit Judge.

Plaintiffs are Rhode Island Medicaid recipients who have brought procedural challenges to certain cuts in benefits made by the state of Rhode Island following a reduction in federal funds. The district court granted a preliminary injunction with respect to reductions not here at issue, ¹ but it denied such relief with respect to cuts in ambulance, optometry, and podiatry services, ² on the ground that plaintiffs had failed to demonstrate a likelihood of success on the merits. Plaintiffs' motions for an injunction pending appeal were denied by both the district court and this court. While we affirm the denial of the preliminary injunction as within the district court's discretion, see, e.g., Massachusetts Coalition of Citizens with Disabilities v. Civil Defense Agency, 649 F.2d 71, 74 (1st Cir. 1981), we also note our stricter view of the federal requirements concerning the composition of the state's Medical Care Advisory Committee ("MCAC").

Background

"Medicaid" is the cooperative federal-state medical assistance program established by Title XIX of the Social Security Act, 42 U.S.C. §§ 1396 et seq. Federal funds are made available to states with medical assistance plans meeting federal statutory and regulatory requirements. See 42 U.S.C. §§ 1396, 1396a; 42 C.F.R. Subchapter C, Parts 430-456. Changes in the program, including a reduction in federal funding, were made in the Omnibus Budget Reconciliation Act of 1981 ("OBRA"), Pub.L.No.97-35, 95 Stat. 357, which was signed into law on August 13, 1981. Federal funds for the 1981-1982 fiscal year were generally reduced by three percent. See OBRA § 2161(a), 95 Stat. 803. Because Rhode Island adopted a qualified hospital cost review program, its funds were reduced by only two percent. See id. This resulted in a loss to the state of approximately $2,000,000 in federal funds.

Rhode Island's preparation for the anticipated OBRA medicaid cuts began well before the statute was enacted. A memorandum within the Department of Social and Rehabilitative Services ("SRS") dated July 28, 1981 set forth a "worst case" scenario and several options for various reductions in state medicaid expenditures to make up for the loss of federal funds. Federal regulations Up until this point, Rhode Island's MCAC-a committee established under a federal regulation ⁴ to advise the state on medicaid issues-had not been consulted about any of the proposed changes or other alternatives. On January 28, letters were sent to all MCAC members advising them of a meeting to be held on February 4. At that time, a representative of SRS met with the committee, explained the proposed changes, and heard comments and suggestions. A public hearing pursuant to the Rhode Island Administrative Procedures Act, R.I.Gen.Laws §§ 42-35-1 et seq., was held on February 18. Another MCAC meeting was held on March 4, at which time changes in the proposed regulations were discussed. See note 13, infra. The final rules were filed on March 10, with an effective date of April 1. ⁵

implementing the OBRA medicaid changes ³ were published on September 30, 1981. 46 Fed.Reg. 47,976, 47,996. It was not until this time, therefore, that SRS officials knew the precise nature and extent of the changes wrought by OBRA. Policy development within SRS evidently continued into December, at which time Rhode Island's hospital cost review program was approved, resulting in a decrease in its federal funding reduction, see supra. On December 22, the department's proposed medicaid reductions were forwarded to the governor. After various meetings, the governor approved the proposals on January 13, 1982. On January 25, the SRS published a notice of the proposed changes.

Consultation with the MCAC

Plaintiffs contend that the state failed to involve the MCAC sufficiently early in the process of determining what changes should be made as a result of OBRA. Their argument is based on 42 C.F.R. § 431.12(e), which provides that the state MCAC "must have opportunity for participation in policy development and program administration." They complain chiefly that the committee was not involved at the time when various alternative policy proposals were considered, and, for that reason, was presented only with the opportunity to make minor comments on rules that were essentially already in final form. Defendant responds that the actual effects of OBRA were not known until December, when the state cost review program was approved, which finalized the amount of funds that would be lost. Further, defendant urges that nothing could be done without the governor's approval, and the MCAC was contacted shortly after that. Finally, defendant points out that certain reductions in the proposed cutbacks were made in response to input from the MCAC. See note 13, infra.

The district court concluded that plaintiffs had failed to demonstrate a likelihood of success on the merits of this issue, because the MCAC "met on two occasions and did discuss the proposed changes." It thought the scope of the discussions was "pretty much up to" the MCAC itself, so that the meetings which occurred met the requirements of section 431.12(e).

Under the regulation, the MCAC should have the opportunity to consider and discuss the available alternative policies, not merely the chance to make minor suggestions concerning a single policy already adopted by the state. See Jennings v. Alexander, (1981-1 Transfer Binder) Medicare & Medicaid Guide (CCH) P 30,735, at 9163-64 (M.D.Tenn. Sept. 3, 1980); Ho v. Chang, (1977 Transfer Binder) Medicare & Medicaid Guide (CCH) P 28,433, at 9526 (D. Hawaii Apr. 27, 1977). Judged by this yardstick, we believe that the MCAC's involvement here was of borderline sufficiency; it would have been more in keeping with the Nonetheless, we do not believe the district court abused its discretion in concluding that the committee's involvement was not so attenuated as to warrant enjoining the cuts. The committee's role is advisory only. It has no power to veto proposed changes or to require the state to adopt its suggestions. The cases in which changes have been enjoined have all involved more egregious failures to consult with the MCAC than is present here. In Jennings v. Alexander, supra, for example, the collective advice of the committee was never sought either before or after changes were proposed. Only letters were sent to the individual members of the committee; it never met as a group. In Morabito v. Blum, 528 F.Supp. 252 (1981-2 Transfer Binder) Medicare & Medicaid Guide (CCH) P 31,621 (S.D.N.Y. Nov. 25, 1981), the MCAC was not consulted either before or after the change in question. In Dunn v. Ginsburg, (1981-1 Transfer Binder) Medicare & Medicaid Guide (CCH) P 30,802 (S.D.W.Va. July 23, 1980), and Becker v. Toia, 439 F.Supp. 324 (S.D.N.Y.1977), proper MCAC's were not even in existence. Here, on the other hand, the committee met and did propose changes, which were accepted. There was not such a total failure to consult as would justify prohibiting implementation of the cutbacks. ⁶ Cf. Seniors United For Action v. Ray, 529 F.Supp. 55 (N.D.Iowa 1981), aff'd, 675 F.2d 186 (8th Cir. 1982).

spirit of the regulation had the MCAC been involved at a somewhat earlier stage.

Composition of the MCAC

Under the federal regulations, set out at the end of this opinion, the MCAC "must include,"

Members of consumers' groups, including Medicaid recipients, and consumer organizations such as labor unions, cooperatives, consumer-sponsored prepaid group practice plans and others.

42 C.F.R. § 431.12(d)(2). The committee must also include "physicians and other representatives of the health professions who are familiar with the medical needs of low-income population groups," id. § 431.12(d)(1), and the director of the state welfare or health department, whichever is not in charge of the state medicaid agency, id. § 431.12(d)(3). Committee members are appointed by the head of the state medicaid agency or a higher state authority. Id. § 431.12(c). There are no further explicit requirements as to the size of the committee or the relative percentages of members from each represented group.

The Rhode Island MCAC consists of 14 persons, including two medicaid recipients; the Director and Executive Director of the state Department of Elderly Affairs and Consumers' Council, respectively; and the Medical Directors-both doctors-of the Rhode Island Group Health Association and the Providence Ambulatory Health Care Foundation. The other members are the Deputy Director of the state Department of Health and seven representatives of various health care provider groups.

The district court ruled that plaintiffs did not have a likelihood of success on the merits of their challenges to the MCAC's makeup because "the regulations can fairly be construed to mean that there is a broad...