Chambers v. Ohio Dept. of Human Services

• Decision Date: 27 May 1998
• Docket Number: No. 96-3046,96-3046
• Parties: , Medicare & Medicaid Guide P 46,329 Robert CHAMBERS, et al., Plaintiffs-Appellees, v. OHIO DEPARTMENT OF HUMAN SERVICES, et al., Defendants-Appellants.
• Court: U.S. Court of Appeals — Sixth Circuit

Page 793

145 F.3d 793

57 Soc.Sec.Rep.Ser. 220, Medicare & Medicaid Guide

P 46,329

Robert CHAMBERS, et al., Plaintiffs-Appellees, v. OHIO DEPARTMENT OF HUMAN SERVICES, et al., Defendants-Appellants.

No. 96-3046.

United States Court of Appeals Sixth Circuit.

Argued May 2, 1997.

Decided May 27, 1998.

Jeffrey S. Sutton (argued and briefed), State Solicitor, Columbus, OH, Karen L. Lazorishak (briefed), James M. McGovern (briefed), Office of the Attorney General of Ohio, Columbus, OH, for Appellants.

Dennis L. Pergram (argued and briefed), Martin, Pergram & Browning, Worthington, OH, Clay P. Graham (briefed), Graham, McClelland, McCann & Ransbottom, Zanesville, OH, for Appellees.

Douglas A. Baker (briefed), Baker, Baker & Sweterlitsch, Columbus, OH, Geoffrey E. Webster (briefed), Columbus, OH, Charles A. Miller (argued), Covington & Burling, Washington, DC, Carol Rolf (argued), Roth, Rolf & Goffman, Cleveland, OH, for Amici Curiae.

Before: WELLFORD, MOORE, and COLE, Circuit Judges.

OPINION

R. GUY COLE, JR., Circuit Judge.

Defendant-Appellant Arnold Tompkins, Director of the Ohio Department of Human Services (ODHS), appeals the district court's grant of partial summary judgment and injunctive relief in favor of class-action plaintiffs-appellees, in which the district court ordered ODHS to change its Medicaid eligibility policy and provide notice to class members regarding eligibility for Medicaid benefits. For the reasons that follow, we REVERSE the judgment of the district court and REMAND for further proceedings consistent with this opinion.

I.

Robert Chambers and his wife Jean Chambers, along with Lauren Holland and his wife Sarah Holland (collectively, "appellees"), filed this class action in the Court of Common Pleas, Franklin County, Ohio, on behalf of themselves and others similarly situated, against ODHS and its director, Arnold Tompkins, in his official capacity. ODHS is the state administrative agency responsible for implementing the federal statute at issue in this case, the Medicare Catastrophic Coverage Act of 1988, 42 U.S.C. § 1396r-5 (MCCA). The class-action complaint alleged that ODHS misinterpreted and misapplied certain provisions of the MCCA in determining eligibility for Medicaid benefits. More specifically, appellees contended that ODHS improperly determined Medicaid eligibility by applying an "income-first" rule as opposed to a "resource-first" rule for the transfer of assets between spouses when one spouse is institutionalized in a nursing home.

Whether ODHS utilizes the income-first rule or the resource-first rule is critical in the determination of Medicaid eligibility. Under an income-first approach, a nursing home resident must transfer income before he or she may transfer resources--or assets--to the noninstitutionalized or "community" spouse, if it is determined under the formula provided by the MCCA that the community spouse is entitled to additional monies for support. Because the institutionalized spouse first transfers his or her income to the community spouse under the income-first rule, it is less likely that the institutionalized spouse will be able to transfer resources to the community spouse, leaving the institutionalized spouse with a greater amount of resources in his or her own name. An institutionalized spouse possessing resources in excess of $1500 is ineligible for Medicaid benefits. Thus, the income-first rule renders an institutionalized spouse less likely to qualify for Medicaid assistance and obligated to pay nursing home and other medical expenses with his or her own assets. In applying the MCCA, ODHS opted to use the income-first rule in Ohio from approximately 1990 until January 1996.

In addition to arguing that ODHS improperly interpreted the MCCA by applying the income-first rule, appellees further claimed that ODHS failed to meet Medicaid obligations to notify applicants and their spouses of the procedures and requirements for obtaining Medicaid benefits.

ODHS removed the case to the district court and, in addition, sought dismissal or summary judgment; appellees filed a motion for partial summary judgment. On March 31, 1995, the district court certified plaintiffs as a class, ¹ and on July 13, 1995, ruled on the various motions before it ("July Order"). In its July Order, the district court dismissed ODHS on the basis of Eleventh Amendment immunity, but permitted Tompkins to remain as a defendant. ² In addition, the district court granted appellees' motion for partial summary judgment, concluding that the "plain meaning" of the relevant provisions of the MCCA mandated a resource-first approach in determining a nursing home resident's eligibility for Medicaid benefits; thus, ODHS misapplied the statute by using the income-first rule. Finally, the district court determined that the Medicaid application forms used by ODHS did not properly notify applicants of the methods used by ODHS to compute eligibility for benefits. The district court therefore required ODHS to submit to the court a proposed notice to Medicaid applicants that informs them of their rights under the MCCA.

Thereafter, ODHS submitted to the court proposed revisions of its rules regarding methods to compute eligibility, as well as proposed revised Medicaid application forms, in order to conform with the district court's ruling. ODHS further issued proposed new administrative rules indicating that a resource-first approach, as ordered by the district court, would be used in Ohio effective January 1, 1996. Appellees contested ODHS's proposed revisions, however, arguing that the revisions were inadequate under federal law and failed to comply fully with the court's order. In October 1995, appellees filed several motions for further relief, seeking an order compelling ODHS to include language in its application forms for Medicaid benefits that specifically set forth the resource-first rule and an order compelling ODHS to identify and notify the class of the court's July Order. On December 14, 1995, the district court granted appellees' motions and issued an injunction ("December Injunction") requiring ODHS to identify and notify the following classes of individuals of their potential eligibility for Medicaid benefits and to inform them that state law may provide a remedy for any past erroneous denials of eligibility or benefits:

(1) Nursing home residents and their spouses who have applied for Medicaid benefits but are not presently receiving benefits because their application was denied due to excess resources;

(2) Nursing home residents and their spouses who have received a resource assessment but who have not applied for Medicaid benefits;

(3) Nursing home residents and their spouses who are presently receiving Medicaid benefits but were denied benefits previously due to excess resources;

(4) Nursing home residents and their spouses who are presently receiving Medicaid benefits but did not apply for Medicaid until after the nursing home resident spent his/her resources down to $1,500; and

(5) Nursing home residents and their spouses who have not applied for Medicaid benefits or requested a resource assessment.

ODHS contends that the notice required by the injunction will incur costs in excess of two million dollars, while processing the resulting claims will incur costs ranging from three hundred million to one billion dollars.

On January 5, 1996, ODHS filed in the district court an emergency motion for a partial stay of the court's December Injunction and also filed a notice of appeal to this court with respect to the July Order and the December Injunction. ³ The district court denied ODHS's request for a stay; however, upon ODHS's motion to this court, we granted a stay of the district court's December Injunction pending this appeal.

II.

At the outset, we must consider the scope of our jurisdiction in this matter. Appellees argue that we do not have jurisdiction to consider the district court's July Order because ODHS failed to file a timely notice of interlocutory appeal. Appellees thus claim that ODHS waived interlocutory appeal of the issue decided by the July Order: whether the MCCA mandates a resource-first approach. Appellees argue that our consideration is jurisdictionally limited to the order from which ODHS filed a notice of appeal, that is, the December Injunction which ordered ODHS to provide notice of the July Order to the class. Appellees thus contend that we are without jurisdiction to consider the district court's determination that the MCCA mandates a resource-first approach. We disagree.

Appellees do not dispute our jurisdiction to consider ODHS's timely appeal from the district court's December 14, 1995 interlocutory order; because the district court issued an injunction at that time, the order was immediately appealable pursuant to 28 U.S.C. § 1292(a)(1). ⁴ Appellees contend that the July 13, 1995 interlocutory order, although not technically termed an injunction, had the effect of an injunction because it required ODHS to revise its rules and application forms. Appellees thus claim that because the July Order was an injunction, that order was immediately appealable and ODHS waived its right to appeal by failing to file a timely notice of appeal. Even if we assume that the July Order was an injunction, we must consider whether ODHS waived interlocutory appeal of that order.

It is clear that parties are not required to file an interlocutory appeal; rather, a party may forgo an interlocutory appeal and present the issue to this court after final judgment. See Retired Chicago Police Ass'n v. City of Chicago, 7 F.3d 584, 608 (7th Cir.1993); 11A Wright & Miller, Federal Practice and Procedure § 2962 (1973 & Supp.1997) (stating that § 1292(a)(1) "merely permits interlocutory appeal; a party does not waive any rights [of appeal of interlocutory orders at the time of final judgment] by failing to seek immediate review"); see also F.W. Kerr Chem. Co. v....