Conlan v. Shewry

• Decision Date: 15 August 2005
• Docket Number: No. A106278.,A106278.
• Court: California Court of Appeals Court of Appeals
• Parties: Kevin CONLAN et al., Plaintiffs and Respondents, v. Sandra SHEWRY, as Director, etc., et al., Defendants and Appellants.

32 Cal.Rptr.3d 667

131 Cal.App.4th 1354

Kevin CONLAN et al., Plaintiffs and Respondents, v. Sandra SHEWRY, as Director, etc., et al., Defendants and Appellants.

No. A106278.

Court of Appeal, First District, Division 3.

August 15, 2005.

Sonal Ambegaokar, Barbara K. Frankel, Neighborhood Legal Services of Los Angeles County, Michael D. Keys, Bay Area Legal Aid, San Francisco, Richard A. Rothschild, Robert D. Newman, Catherine Murphy, Kimberly Lewis, Western Center on Law & Poverty, Los Angeles, for respondents.

Barbara Jones, Rochelle Bobroff, Michael Schuster, Washington, DC, AARP as Amicus Curiae on behalf of respondents.

Bill Lockyer, Attorney General, Douglas M. Press, Thomas R. Yanger, Teresa L. Stinson, Elizabeth Edwards, Deputy Attorneys General, San Francisco, CA, for appellants.

POLLAK, J.

Nearly three years ago, this court interpreted state and federal law governing Medi-Cal, California's implementation of Medicaid, to require that beneficiaries receive reimbursement for covered medical expenses incurred during the three-month period before they apply for assistance (the retroactivity period). (Conlan v. Bontá (2002) 102 Cal.App.4th 745, 125 Cal.Rptr.2d 788 (Conlan I).) In order to comply with federal law, we held the State Department of Health Services (DHS or the Department) must provide a means by which those who incur covered expenses during the retroactivity period may either obtain reimbursement directly from the Department or compel their providers to obtain reimbursement on their behalf. (Id. at pp. 753-754, 125 Cal.Rptr.2d 788.) Although acknowledging that "[t]he manner in which the Department chooses to meet its obligations is within the discretion of the Department," the trial court was directed to "issue a writ of mandate pursuant to Code of Civil Procedure section 1085 directing the Department to adopt and implement procedures consistent with this opinion to ensure that Medi-Cal recipients entitled to reimbursement for covered services obtained during the retroactivity period are promptly reimbursed." (Conlan I, supra, at p. 764, 125 Cal.Rptr.2d 788.)

Almost three years have elapsed since Conlan I was decided. During this period, the Legislature has amended the governing statute to incorporate the substance and undoubtedly to facilitate the implementation of that decision. Yet, so far as the record now before this court indicates, to date the Department has not begun to implement the decision. To the contrary, the Department has resisted petitioners' efforts to enforce compliance, pleading poverty and reasserting contentions that were rejected in Conlan I. The trial court, displaying considerable patience over an extended course of hearings ultimately entertained a motion by the Department to approve a proposed plan and a notice that it intended to send to Medi-Cal recipients informing them of the new procedure. The trial court found the Department's plan, as best it could be understood, inadequate in several respects, and entered an order specifying changes in the notice required to comply with the decision in Conlan I. Rather than make those changes or seek immediate writ review, the Department chose to appeal from the nonappealable order, which has resulted in an additional year of delay. In the interest of avoiding further prolongation of these proceedings, we treat the appeal as a petition for a writ of mandate and review each of the rulings to which the Department objects. With two qualifications, we conclude the trial court properly interpreted Conlan I and provided appropriate amplification with respect to specifics that were not addressed in the original appeal.

BACKGROUND

Statutory framework

"Title XIX of the Social Security Act (42 U.S.C. §§ 1396-1396s), commonly known as Medicaid, is a cooperative federal-state program designed to provide medical assistance to individuals with insufficient income and resources to meet the costs of necessary medical care. (42 U.S.C. § 1396.) Medi-Cal is the state implementation of the federal Medicaid program, and is administered by the Department. (Welf. & Inst. Code,¹ §§ 10721, 14000 et seq.; Cal.Code Regs., tit. 22, § 50004.)" (Armando D. v. State Dept. of Health Services (2004) 124 Cal.App.4th 13, 16, 21 Cal.Rptr.3d 66.) States are not required to participate in Medicaid but if a state does participate, it must comply with the federal statutes and regulations governing the programs. (Wilder v. Virginia Hospital Assn. (1990) 496 U.S. 498, 502, 110 S.Ct. 2510, 110 L.Ed.2d 455.)

"Among the many requirements of federal law, states that participate in Medicaid must provide qualifying individuals coverage for services received during the three months prior to applying for benefits if the individual was eligible for benefits during that period. (42 U.S.C. § 1396a(a)(34); 42 C.F.R. § 435.914.) This is called the `retroactivity period.' For a variety of reasons, qualifying individuals often will obtain covered services during that 90-day period. If they pay for those services, they become entitled to prompt reimbursement once they receive their Medi-Cal card and are accepted into the program." (Conlan I, supra, 102 Cal.App.4th at p. 753, 125 Cal.Rptr.2d 788.) Although not explicitly the focus of Conlan I, Medi-Cal beneficiaries are also entitled to reimbursement of expenses incurred during the period between the submission and approval of their applications (the evaluation period). (§ 14019.3, subd. (a)(1).) The "comparability requirement" incorporated in the Medicaid program mandates 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. § 1396a(a)(10)(B).)² This medical assistance includes "payment of part or all of the cost of the [covered] care and services. . . ." (42 U.S.C. § 1396d(a).)

Prior to Conlan I, section 14019.3 provided that Medi-Cal recipients who had paid for medical services for which coverage was available were entitled to reimbursement from their provider after the provider had been reimbursed by the state.³ In the first appeal, the Department acknowledged that no means existed to compel a recalcitrant provider to seek reimbursement, but contended that the federal "vendor payment principle" prevented the Department from directly reimbursing beneficiaries. Conlan I rejected that contention and section 14019.3 subsequently has been amended to explicitly authorize direct payments to beneficiaries.

Procedural history

A. Overview

Some months after the decision in Conlan I became final, petitioners again requested the trial court to issue a writ of mandamus ordering the Department to implement a system to provide prompt reimbursement to those who had incurred expenses for which they were entitled to reimbursement. The Department opposed that application, offering numerous reasons why it could not comply. Rather than simply issuing a writ in the terms specified in the opinion of this court, the trial court entertained the Department's objections and ultimately ordered the Department to submit a proposed plan that DHS considered sufficient to comply with the directive in Conlan I. Without objection, DHS submitted its proposed plan, a motion for its approval, and lengthy argument as to why further or faster compliance was impossible. At the hearing on that motion, the trial court refused to approve the proposed plan, but ordered the Department to submit a proposed notice to Medi-Cal beneficiaries to be sent out as soon as possible to advise those with potential claims of the need to save their receipts. The Department submitted a proposed form of notice predicated on the compliance plan that the court had rejected, accompanied by additional argument as to why it could not comply with the trial court's orders. On March 3, 2004, the trial court issued an order denying without prejudice approval of the Department's proposed notice, and setting out its determination of several issues concerning an acceptable compliance plan "intended to clarify the issues necessary to draft an accurate Notice." The Department purports to appeal from that order.

B. Conlan I

As described more fully in the Conlan I opinion, this litigation arose originally from the denial of three requests for direct reimbursement. One petitioner, Asher Schwarzmer, sought payment directly from the Department after his provider diligently but unsuccessfully sought reimbursement from the Department on Schwarzmer's behalf of payments he had made during the retroactivity and evaluation periods. The second petitioner, Kevin Conlan, sought reimbursement directly from the Department after his provider refused to seek reimbursement of eligible payments made during the evaluation period. The third petitioner, Thomas Stevens, participated in the Health Insurance Premium Payment Medi-Cal Program (HIPP) and sought reimbursement from the Department for prescriptions he had purchased after being accepted into the Medi-Cal program. The Department denied all three petitions, and the petitioners' fair hearing requests were dismissed by administrative law judges (ALJs) on the ground they had no jurisdiction to order direct payment to a Medi-Cal recipient.

Petitioners then petitioned the superior court for writs of mandate under Code of Civil Procedure sections 1094.5 and 1085 seeking to overturn the dismissal of their fair hearing requests and ordering the Department to establish a procedure by which Medi-Cal beneficiaries in similar circumstances can promptly obtain reimbursement of covered expenses incurred during the retroactivity period. The trial court denied the petitions but this court reversed, holding that whether section 14019.3 satisfies the comparability requirement "must be answered pragmatically. The issue is not whether the statute creates an abstract right on the part of the recipient to obtain reimbursement from the...