Catanzano v. Wing

• Decision Date: 07 December 2001
• Docket Number: PLAINTIFFS-APPELLANTS,Docket No. 99-9197,INTERVENOR-PLAINTIFFS-APPELLANTS,THIRD-PARTY-DEFENDANTS-APPELLEES
• Citation: 277 F.3d 99
• Parties: (2nd Cir. 2001) MICHELE CATANZANO, FRANCINE CATANZANO, SAM CATANZANO, SARAH TRAFTON, ON BEHALF OF HERSELF AND ALL PERSONS SIMILARLY SITUATED,, JANNIE WILSON, MARY JANE SMITH AND CHARLES SMITH,, v. BRIAN J. WING, AS ACTING COMMISSIONER OF THE NEW YORK STATE DEPARTMENT OF SOCIAL SERVICES AND BARBARA A. DEBUONO, AS COMMISSIONER OF THE NEW YORK STATE DEPARTMENT OF HEALTH,
• Court: U.S. Court of Appeals — Second Circuit

Page 99

277 F.3d 99 (2nd Cir. 2001)

MICHELE CATANZANO, FRANCINE CATANZANO, SAM CATANZANO, SARAH TRAFTON, ON BEHALF OF HERSELF AND ALL PERSONS SIMILARLY SITUATED, PLAINTIFFS-APPELLANTS, JANNIE WILSON, MARY JANE SMITH AND CHARLES SMITH, INTERVENOR-PLAINTIFFS-APPELLANTS, v. BRIAN J. WING, AS ACTING COMMISSIONER OF THE NEW YORK STATE DEPARTMENT OF SOCIAL SERVICES AND BARBARA A. DEBUONO, AS COMMISSIONER OF THE NEW YORK STATE DEPARTMENT OF HEALTH, THIRD-PARTY-DEFENDANTS-APPELLEES.

Docket No. 99-9197

UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT

Argued November 22, 2000

Decided December 7, 2001

Appeal from the judgment of the United States District Court for the Western District of New York (David G. Larimer, Judge) entered September 2, 1999, pursuant to a decision and order denying Plaintiffs-Appellants' motion for entry of final judgment as to some claims, voluntary dismissal of some claims, and summary judgment with respect to various claims.

VACATED AND REMANDED.

[Copyrighted Material Omitted] Ellen M. Yacknin, Greater Upstate Law Project, Rochester, NY (Bryan D. Hetherington, Public Interest Law Office of Rochester, on the brief), for Plaintiffs-Appellants and Intervenor-Plaintiffs-Appellants.

Patrick Barnett-Mulligan, Assistant Solicitor General, Attorney General's Office, State of New York, Albany, NY (Eliot Spitzer, Attorney General of the State of New York, Nancy A. Spiegel, Assistant Solicitor General, Peter H. Schiff, Senior Counsel, on the brief), for Third-Party-Defendants-Appellees.

Before: Calabresi, F.I. Parker, Circuit Judges, and Trager^*, District Judge.

Parker, Circuit Judge

In 1989, Michele Catanzano brought suit in the United States District Court for the Western District of New York (David G Larimer, Judge) to compel the Monroe County, New York Department of Social Services and Department of Health to provide her with notice, a hearing, and the continuation of her home health services ("aid-continuing") after a Certified Home Health Agency ("CHHA") authorized by the State of New York to provide Medicaid-funded home health services to Ms. Catanzano reduced her home health services without affording such procedures. Twelve years later, after the intervention of several parties, certification of a class of similarly situated Medicaid recipients, an injunction and Implementation Plan, and two appeals to this Court, the litigation continues.

The case is now before this Court on the appeal by Plaintiffs-Appellants Michele Catanzano, Francine Catanzano, Sam Catanzano, Sarah Trafton, and the class they represent, as well as Intervenor-Plaintiffs-Appellants Jannie Wilson, Mary Jane Smith and Charles Smith (collectively, "Plaintiffs") from the judgment entered September 2, 1999, upon a September 1, 1999, decision and order of the district court denying Plaintiffs' "Motion for Entry of Final Judgment as to Some Claims, Voluntary Dismissal of Some Claims, and Summary Judgment as to One Claim," and entering a permanent injunction against Third-Party- Defendants-Appellees Brian J. Wing, as Acting Commissioner of the New York State Department of Social Services, and Barbara A. DeBuono, as Commissioner of Health of the New York State Department of Health (collectively, "Defendants"). Plaintiffs challenge the district court's sua sponte entry of final judgment with respect to two of their claims, which concern (a) the constitutional and legal adequacy of court-ordered notices of fiscal assessment decisions ("Notice Adequacy Claim"), and (b) the process due when a treatment action is taken by a CHHA that conforms with the orders of the recipient's treating physician ("Physician's Order Claim"). They ask this Court either: (1) to vacate the district court's entry of final judgment and order that the injunction be made preliminary with respect to these claims; (2) to dismiss the appeal as moot and vacate the adverse parts of the judgment of the district court; or (3) to reverse the district court with respect to these claims. With respect to Plaintiffs' Notice Adequacy Claim, we conclude that the expiration of New York's "fiscal assessment" amendments to its Social Services Law rendered this claim moot. We therefore vacate the district court's entry of final judgment with respect to that claim, and order that the claim be dismissed without prejudice. With respect to Plaintiffs' Physician's Order Claim, we conclude that the district court abused its discretion in denying Plaintiffs' motion to dismiss without prejudice. We therefore vacate the district court's entry of final judgment with respect to that claim and remand to the district court with the instruction that the claim be dismissed without prejudice.

I. BACKGROUND

The long and complex history of this litigation has been set forth in detail in numerous prior opinions of this Court and of the district court. See, e.g., Catanzano v. Wing, 103 F.3d 223, 225-28 (2d Cir. 1996) ("Catanzano V")¹; Catanzano v. Dowling, 847 F. Supp. 1070, 1074-75 (W.D.N.Y. 1994) ("Catanzano II"), aff'd, 60 F.3d 113 (2d Cir. 1995) ("Catanzano III"). Familiarity with the facts and with the prior decisions of the district court and of this Court is therefore assumed, and the following discussion is restricted to facts relevant to the issues currently on appeal.

New York's health care system provides, as part of its participation in the Medicaid program, that home health services be furnished to financially needy patients by a CHHA. See N.Y. Pub. Health Law ("N.Y.P.H.L.") § 3616 (McKinney 2000); see also 42 U.S.C. § 1396d(a)(7) (1992). CHHAs provide home health services, i.e., services provided in the home of a "preventive, therapeutic, rehabilitative, health guidance and/or supportive nature," including, inter alia, nursing services. N.Y.P.H.L. § 3602(3)(McKinney 1985); accord N.Y. Comp. Codes R. & Regs. ("N.Y.C.R.R.") tit. 18, §§ 505.23(a)(3), 505.23(b)(1)(2000); 42 C.F.R. § 440.70, pt. 484 (2000).

In 1989, Michele Catanzano brought a class action pursuant to 42 U.S.C. § 1983 in the district court against the directors of the Monroe County, New York Department of Social Services and the Monroe County, New York Department of Health (collectively, "County Defendants") after her CHHA reduced her home health services in contravention of her doctor's orders, without providing her with notice or with the opportunity to contest the reduction in a hearing, and without continuing her aid until a hearing could be provided. In her complaint, Catanzano alleged, inter alia, that such actions, without accompanying procedural protections, violated the due process clause of the Fourteenth Amendment to the United States Constitution, the federal Medicaid Act, 42 U.S.C. § 1396 et seq., the Medicaid regulations, 42 C.F.R. §§ 431.200-431.250, and the New York Social Services Law ("N.Y.S.S.L.") and corresponding regulations. The district court preliminarily enjoined the reduction, Catanzano v. Richardson, No. 89- CV-1127L (W.D.N.Y. Oct. 17, 1989), aff'd, 902 F.2d 1556 (2d Cir. 1990) ("Catanzano I"), and certified a plaintiff class comprised of Monroe County Medicaid recipients "who receive home health care, and who now or in the future receive less home health care than that level of care ordered by their treating physician," Catanzano II, 847 F. Supp. at 1074.

In 1991 and 1992, the State of New York amended its Social Services Law, instituting a procedure whereby CHHAs performed a four-step fiscal assessment to determine whether home health services should be provided. N.Y.S.S.L. § 367-j (McKinney 1992) (expired 1999), Id. § 367-o (McKinney 1992)(expired 1997), 365-a(2)(d)(McKinney 1992); N.Y.C.R.R. tit. 18, § 505.23 (2000). These amendments, or "fiscal assessment laws," did not provide for notice, a hearing, or aid-continuing when a CHHA or local social services district conducted a fiscal assessment and determined that a change in service was warranted. Plaintiffs moved to amend their complaint so as to challenge the fiscal assessment laws and add the Commissioners of New York's Department of Health and Department of Social Services (collectively, "Defendants" or "State Defendants")², to modify the class, and for a preliminary injunction against the implementation of the amendments without rights to notice, a hearing, and aid-continuing. The motions were granted, and on March 31, 1994, the district court modified the class to comprise

[a]ll New York State recipients and applicants of Medicaid-funded home health care who receive less home health care than most recently ordered by their treating physician or who have had their home health care suspended, denied, terminated or reduced without prior notice, right to a fair hearing and aid-continuing as mandated by 42 C.F.R. 431.200-431.250.

Catanzano II, 847 F. Supp. at 1079. The district court concluded that under the fiscal assessment laws "a CHHA could unilaterally reduce home health care services without affording the patient any notification or any hearing," and that such a circumstance "contravenes the clear directive of federal law and basic due process rights delineated in Goldberg v. Kelly, [397 U.S. 254 (1970),] that prior to any adverse action, the patient must receive a notice indicating the action to be taken, the reasons for the action and the regulations that support such action." Catanzano II, 847 F. Supp. at 1084. The district court therefore preliminarily enjoined the State and County defendants from, inter alia, "suspending, terminating or reducing" home health services received by class members "as a result of conducting a fiscal assessment or otherwise" without providing notice, hearing, and aid-continuing procedures as mandated by Medicaid regulations, and from implementing the fiscal assessment laws until such procedures have been established. Id. at 1086.

When the parties could not agree on implementation of the district court's order, the court modified the injunction and directed Defendants to adopt...