CHERRY BY CHERRY v. Magnant, IP 90-C-1348.

• Citation: 832 F. Supp. 1271
• Decision Date: 22 September 1993
• Docket Number: No. IP 90-C-1348.,IP 90-C-1348.
• Parties: Paul CHERRY, by his next friend David CHERRY, and Lorene Newkirk, by her next friend Carl Newkirk, Vivian Spaulding, by her next friend Paul Spaulding, on behalf of themselves and all others similarly situated, Plaintiffs, v. Suzanne MAGNANT, in her official capacity as Administrator of the Indiana Department of Public Welfare, Defendant.
• Court: United States District Courts. 7th Circuit. United States District Court (Southern District of Indiana)

832 F. Supp. 1271

Paul CHERRY, by his next friend David CHERRY, and Lorene Newkirk, by her next friend Carl Newkirk, Vivian Spaulding, by her next friend Paul Spaulding, on behalf of themselves and all others similarly situated, Plaintiffs, v. Suzanne MAGNANT, in her official capacity as Administrator of the Indiana Department of Public Welfare, Defendant.

No. IP 90-C-1348.

United States District Court, S.D. Indiana, Indianapolis Division.

September 22, 1993.

Dennis K. Frick, Legal Services Organization of Indiana, Inc., Indianapolis, IN, for plaintiffs.

Gordon E. White, Jr., Office of the Indiana Atty. Gen., Harold R. Bickham, Office of the U.S. Atty., Indianapolis, IN, for defendant.

ENTRY

BARKER, District Judge.

I. BACKGROUND

The plaintiffs in this class action suit represent Indiana residents who have lived in a nursing home since before September 30, 1989, and have been found ineligible for assistance from the Medicaid program because of resources owned by spouses who live at home.¹ For example, the most recent class representative, Vivian Spaulding, age 79, was a married Medicaid applicant who resided at the Lawrence Manor Nursing Home in Indianapolis, Indiana.² She has continuously resided in a nursing home for the past eight years; her husband resided elsewhere. Mr. Spaulding's holding of approximately $6,000 in a personal savings account, absent an injunction from this court,³ would disqualify Mrs. Spaulding for Medicaid assistance unless he reduced his assets below $2250.

The Medicaid Program

The Medicaid program⁴ was established in 1965, as Title XIX of the Social Security Act, as a way for the states and the federal government to provide cooperatively medical assistance to the "needy." Title XIX of the Social Security Act, 79 Stat. 343, as amended, 42 U.S.C. § 1396 et seq; See Harris v. McRae, 448 U.S. 297, 301, 100 S.Ct. 2671, 2679, 65 L.Ed.2d 784 (1980) (the Medicaid program "provides federal financial assistance to states that choose to reimburse certain costs of medical treatment for needy persons"). The Medicaid program originally required participating states to provide medical assistance to individuals who received cash payments under four joint federal/state welfare programs administered by the states: Old Age Assistance, 42 U.S.C. § 301 et seq. (1970 ed.); Aid to Families with Dependent Children, § 601 et seq.; Aid to the Blind, § 1201 et seq.; and Aid to the Permanently and Totally Disabled, § 1351 et seq. In 1972 Congress replaced three of the four programs with a new federal program, the Supplemental Social Security Income ("SSI").⁵

In many states, the establishment of the SSI program increased the number of individuals previously ineligible for assistance under the state programs. Fearing that these states would organize a mass exodus from the Medicaid program rather than expand their Medicaid coverage, Congress enacted 42 U.S.C. § 1396a(f), which has become commonly known as the § 209(b) option. Schweiker v. Gray Panthers, 453 U.S. 34, 38, 101 S.Ct. 2633, 2637, 69 L.Ed.2d 460 (1981); see Pub.L. No. 92-603 § 209(b), 42 U.S.C. § 1396a(f). Under § 209(b), a state can elect to provide Medicaid assistance only to "those individuals who met the eligibility requirements for the state administered programs on January 1, 1972, rather than determining Medicaid eligibility according to the standards of the new SSI program."⁶Mattingly v. Heckler, 784 F.2d 258, 262 n. 3 (7th Cir. 1986) (citing Norman v. St. Clair, 610 F.2d 1228, 1231 (5th Cir.1980), cert. denied, 453 U.S. 922, 101 S.Ct. 3159, 69 L.Ed.2d 1005 (1981)), see Schweiker v. Gray Panthers, 453 U.S. at 38-39, 101 S.Ct. at 2637-38; Roloff v. Sullivan, 975 F.2d 333, 336 (7th Cir.1992).

Indiana has chosen to participate in the Medicaid program under the § 209(b) option but has chosen not to serve the "medically needy."⁷ Indiana, therefore, obligated itself only to serve the "categorically needy" — families with dependent children eligible for public assistance under the Aid to Families with Dependent Children program, the aged, the blind, and the disabled eligible for benefits under the Supplemental Security Income program. See 42 U.S.C. § 1396a(a)(10)(A); Harris, 448 U.S. at 301, n. 1, 100 S.Ct. at 2679, n. 1.

When originally enacted, there was no issue as to whether § 209(b) authorized a state to use criteria more restrictive than that used in the SSI program (as long as the state's plan was no more restrictive than the plan it had in effect on January 1, 1972). See Roloff v. Sullivan, 975 F.2d at 340 ("The Supreme Court has consistently characterized Section 209(b) as a means whereby states can restrict Medicaid coverage.") (citing Gray Panthers, 453 U.S. at 38, 101 S.Ct. at 2637). However, when Congress passed § 303(e)(5) of the 1988 Medicare Catastrophic Coverage Act, Pub.L. No. 100-360, codified at 42 U.S.C. § 1396a(r)(2), which provides that a state's methodology for determining Medicaid eligibility "may be less restrictive, and shall be no more restrictive, than the methodology used in the SSI program," it appeared to some that § 303(e) effectively repealed § 209(b) and that under § 303(e)(5), a state no longer had the authority to apply more restrictive criteria, only less restrictive criteria. See Mowbray v. Kozlowski, 724 F.Supp. 404, 412 (W.D.Va.1989) ("Mowbray I"), reversed 914 F.2d 593, 599 (4th Cir.1990).

The Motions for Summary Judgment

The plaintiff class has filed a motion for summary judgment, claiming that Indiana's methodology for determining Medicaid eligibility for a married person who entered an institution for medical treatment before September 30, 1989, is more restrictive than the methodology used under the SSI program and therefore violates 42 U.S.C. § 1396a(r)(2) (known alternatively as § 303(e)(5)). See 470 IAC 9.1-13-17(a)(2), as amended at 13 Ind. Reg. 878 (Feb. 1, 1990); see also Indiana Medicaid Manual, § 2210(a)(2).⁸ The plaintiff class claims this community resource rule, by which all resources, owned by either the community or institutional spouse, are included in determining whether a married, institutionalized applicant's resources are less than or equal to $2,250, is more restrictive than 20 C.F.R. 416.1802(a)(2),⁹ an SSI rule, and therefore invalid.

In response, the defendant moves for summary judgment, claiming that a § 209(b) Medicaid state may apply eligibility criteria more restrictive than the SSI criteria, as long as the § 209(b) state's criteria are not more restrictive than the criteria it employed on or before January 1, 1972. The defendant asserts that based on the legislative history, statutory language, and the apparent purposes of 42 U.S.C. §§ 1396a(r)(2) and 1396a(f), Congress did not intend for § 303(e) to repeal § 209(b).

In reply to the defendant's response, the plaintiff class reasserts its previous arguments, contending that an opinion from the Fourth Circuit, Mowbray v. Kozlowski, 914 F.2d 593 (4th Cir.1990) ("Mowbray II"), squarely addressed this issue but decided incorrectly that § 303(e)(5) did not repeal § 209(b). Plaintiffs also maintain that even if Indiana's community resource rule is not invalid under § 303(e)(5), Indiana's "deeming rule" violates the Equal Protection Clause of the United States Constitution and § 504 of the Rehabilitation Act of 1973. The plaintiffs also move for oral argument on their summary judgment motion.

The Secretary of Health and Human Services ("Secretary") has filed an amicus curie response to the plaintiff class's motion¹⁰, offering her interpretation of the interplay between the two statutes. The Secretary asserts that Congress did not intend for § 303(e)(5) to supersede or repeal § 209(b), but rather, § 303(e)(5) "merely accorded § 209(b) states the additional flexibility to adopt eligibility criteria more liberal than SSI's, if they so chose."

The motions for summary judgment are fully briefed, and the parties agree that there are no material issues of fact in dispute to preclude summary judgment.

II. DISCUSSION

Summary Judgment Standard

Under Rule 56(c) of the Federal Rules of Civil Procedure, 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 as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.Proc. 56(c). In passing on a motion for summary judgment, the judge's role is not to evaluate the weight of the evidence or determine the truth of the matter, but it is instead to decide whether there is a genuine issue for trial. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249, 106 S.Ct. 2505, 2510, 91 L.Ed.2d 202 (1986). The burden rests squarely on the party moving for summary judgment to show "that there is an absence of evidence to support the nonmoving party's case." Celotex Corp. v. Catrett, 477 U.S. 317, 325, 106 S.Ct. 2548, 2554, 91 L.Ed.2d 265 (1986). If doubts remain as to the existence of a material fact, then those doubts should be resolved in favor of the nonmoving party and summary judgment denied. See Wolf v. City of Fitchburg, 870 F.2d 1327, 1330 (7th Cir.1989).

Sections 209(b) and 303(e)(5)

The Seventh Circuit recently recognized the conflicting interplay between these two statutes and, albeit in a footnote and arguably as dicta, has suggested that § 303(e) does not repeal § 209(b):

There is an obvious tension between § 303(e)(5) and Section 209(b). Mowbray v. Kozlowski, 914 F.2d 593, 599 (4th Cir.1990). We need not address that tension, because plaintiffs explicitly decline to argue that the MCCA effectively repealed Section 209(b). Plaintiffs concede, despite language apparently to the contrary in Section 1396a(r)(2), that a state under Section 209(b) may apply more restrictive methodologies if those methodologies were employed in 1972. Given this concession, the only relevant change made by the MCCA is that

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