Conn. Dept. of Social Services v. Leavitt, Docket No. 03-6052.

• Decision Date: 28 October 2005
• Docket Number: Docket No. 03-6052.
• Citation: 428 F.3d 138
• Court: U.S. Court of Appeals — Second Circuit
• Parties: CONNECTICUT DEPARTMENT OF SOCIAL SERVICES, Patricia Wilson-Coker, Commissioner of Social Services, and Philip Myrun and Confesora Santiago, on behalf of themselves and all others similarly situated, Plaintiffs-Appellees, v. Michael O. LEAVITT, Secretary of the Department of Health and Human Services,<SMALL><SUP>*</SUP></SMALL> Defendant-Appellant.

428 F.3d 138

CONNECTICUT DEPARTMENT OF SOCIAL SERVICES, Patricia Wilson-Coker, Commissioner of Social Services, and Philip Myrun and Confesora Santiago, on behalf of themselves and all others similarly situated, Plaintiffs-Appellees, v. Michael O. LEAVITT, Secretary of the Department of Health and Human Services,^* Defendant-Appellant.

Docket No. 03-6052.

United States Court of Appeals, Second Circuit.

Argued November 5, 2004.

Decided October 28, 2005.

COPYRIGHT MATERIAL OMITTED

Alisa B. Klein, Attorney, Appellate Staff, Civil Division, Department of Justice, Washington, DC (John A. Danaher, III, United States Attorney for the District of Connecticut; Peter D. Keisler, Assistant Attorney General; and Mark B. Stern, Attorney, Appellate Staff, Civil Division, on the brief; Alex M. Azar II, General Counsel, Sheree R. Kanner, Associate General Counsel, Henry R. Goldberg, Deputy Associate General Counsel, and Donald H. Romano, Senior Attorney, U.S. Department of Health and Human Services, of counsel), for Defendant-Appellant.

Gill Deford, Center for Medicare Advocacy, Inc., Willimantic, Connecticut (Judith A. Stein, Brad S. Plebani, Willimantic, Connecticut; Patricia Nemore, Washington, DC; and Keith Bradoc Gallant, Cummings & Lockwood, LLC, New Haven, Connecticut, on the brief), for Plaintiffs-Appellees Myrun and Santiago.

Maite Barainca, Assistant Attorney General, Hartford, Connecticut, (Richard Blumenthal, Attorney General for the State of Connecticut, Thomas J. Ring and Richard J. Lynch, Assistant Attorneys General, on the brief), for Plaintiffs-Appellees Connecticut Department of Social Services and Wilson-Coker.

Before: WALKER, Chief Judge, FEINBERG and WESLEY, Circuit Judges.

JOHN M. WALKER, Jr., Chief Judge.

This case is, at bottom, a dispute between the State of Connecticut and the federal government over how to determine which of them shall pay certain health-care costs. In particular, the issue is whether Medicaid or Medicare will pay for certain health-care services provided to patients in their homes ("home health-care services").

In 1999, the Connecticut Department of Social Services and its director, together with a class of Connecticut residents eligible for both Medicaid and Medicare, sued the Secretary of Health and Human Services in the United States District Court for the District of Connecticut (Stefan R. Underhill, Judge) to change the way certain Medicare claims for home health-care services are handled on behalf of the Secretary. Three years later, in 2002, on cross-motions for summary judgment, the district court largely ruled in the plaintiffs' favor,¹ while granting summary judgment in the Secretary's favor on some claims. See Conn. State Dep't of Soc. Servs. v. Thompson ["Conn. DSS"], 242 F.Supp.2d 127, 132 (D.Conn.2002). By order entered February 20, 2003, and judgment entered February 27, 2003, the district court directed the Secretary to implement certain claims-processing practices sought by the plaintiffs. See Conn. DSS v. Thompson, 2003 WL 21087882 (D.Conn. Jan.8, 2003) (order entered February 20, 2003). Following this appeal by the Secretary, we reverse the district court's judgment.

I. BACKGROUND

Medicaid is a health insurance program, jointly funded by the state and federal governments, that pays for health care for America's poor. See Medicaid Act (Title XIX of the Social Security Act), 42 U.S.C. § 1396 et seq. The federal and state governments share the cost of Medicaid roughly equally, but state governments administer the program. The Connecticut Department of Social Services ("Connecticut" or "the state"), one of the plaintiffs in this case, administers Connecticut's Medicaid program.

Medicare is the federal government's health-insurance program for the elderly. See Medicare Act (Title XVIII of the Social Security Act), 42 U.S.C. § 1395 et seq. Medicare has two parts, Parts A and B.² This dispute concerns payment for home health-care services, which are covered under Medicare Part A and provided by institutions called home health-care agencies ("HHAs" or "providers"). The state does not participate in the Medicare program.

Because elderly Americans are covered by Medicare, and poor Americans are covered by Medicaid, the elderly poor are covered by both programs. These beneficiaries are known as "dual eligibles." Sometimes both Medicaid and Medicare cover home health-care services provided to a dual eligible. See 42 U.S.C. § 1395d(a)(3) (Medicare coverage of home health-care services), § 1396a(a)(10)(D) (Medicaid coverage of same). When this occurs, federal law dictates that Medicare, not Medicaid, bear the cost, because Medicaid is designed to be a payer of last resort. See id. § 1396a(a)(25) (requiring Medicaid programs to seek reimbursement, if doing so is cost-effective, from liable third parties). But sometimes a state Medicaid agency mistakenly pays for Medicare-covered home health-care services. Because the state pays half of Medicaid costs and none of Medicare costs, the state has an interest in securing Medicare coverage, after the fact, for that part of the cost of Medicare-covered home health-care services provided to dual eligibles that Medicaid erroneously paid in the first place. When Medicare covers services already paid for by Medicaid, Medicare pays the provider for the services, and then Medicaid can seek reimbursement from the provider for Medicaid's initial erroneous payment. Indeed, the state has a legal obligation to seek such reimbursement. Id.

Medicare is overseen, at the federal level, by the Center for Medicare and Medicaid Services ("CMS"),³ a division of the Department of Health and Human Services ("HHS"). CMS does not, however, directly pay Medicare claims. Instead, CMS contracts out claim processing to entities known as "fiscal intermediaries."⁴ Connecticut therefore must deal with a fiscal intermediary to secure Medicare coverage for home health-care services previously paid for by Medicaid. Although a number of fiscal intermediaries process claims for Medicare beneficiaries in Connecticut, this lawsuit involves only one such intermediary, United Government Services ("UGS").

Connecticut is unhappy with how UGS responds, if at all, to the state's efforts to secure Medicare coverage of home health-care services provided to dual eligibles when the state's Medicaid program has previously paid for the services. To remedy UGS's perceived failings, Connecticut brought this federal suit against the Secretary of HHS, who oversees CMS, which in turn oversees UGS and is ultimately responsible for UGS's actions.

The other plaintiffs in this suit are the dual eligibles themselves, certified as a class by the district court. See Conn. DSS, 242 F.Supp.2d at 131 n. 3. The dual eligibles care whether Medicare or Medicaid pays for their home health-care services because if Medicaid pays and is not reimbursed, Connecticut may levy against their estates for the cost of services provided while they were living. See 42 U.S.C. § 1396p (providing for recovery by Medicaid agencies from beneficiaries); see also Conn. Gen.Stat. § 17b-93(a); State v. Marks, 239 Conn. 471, 686 A.2d 969, 971-72 (1996). The dual eligibles are represented in this suit by the Center for Medicare Advocacy ("the Center"), a public-interest law firm that has also been hired by Connecticut to seek from UGS Medicare-coverage determinations for home health-care services provided to dual eligibles.

On cross-motions for summary judgment, the district court granted summary judgment on most claims in the plaintiffs' favor, holding that in many respects, UGS's practices violate federal laws and regulations as well as the Fifth Amendment's Due Process Clause. Conn. DSS, 242 F.Supp.2d at 127. The Secretary has appealed. The district court also granted summary judgment in the Secretary's favor on certain of the plaintiffs' claims, which do not concern us because the plaintiffs have not cross-appealed the denial of those claims. Our jurisdiction is under 28 U.S.C. § 1291.⁵ As to the claims on appeal, we reverse the district court and remand for entry of judgment in favor of the defendant.

II. DISCUSSION

We review de novo the district court's grant of summary judgment to Connecticut and the dual eligibles. See, e.g., Green Mountain R.R. Corp. v. Vermont, 404 F.3d 638, 639 (2d Cir.2005). The parties conceded below that the material facts were undisputed and that the only controverted questions were matters of law. See Conn. DSS, 242 F.Supp.2d at 131.

The plaintiffs' complaint alleged broadly that the Secretary violated the Medicare statutes and regulations as well as the Fifth Amendment's Due Process Clause by "fail[ing] to require [UGS] to provide timely, written, and accurate initial determinations [and reconsideration decisions] on Medicare claims for home health care services in Connecticut." More specifically, the plaintiffs asked the district court to enjoin the Secretary from:

i. failing to enforce the requirement that written decisions be sent to the beneficiary and his or her representative which articulate clearly the reasons for resolution of the claim;

ii. failing to enforce the requirement that an initial determination on a "clean claim" be made within 30 days of submission of the claim . . . and that all initial determinations be issued within a reasonable period of time after submission of the claim;

iii. failing to monitor [UGS] on a regular basis to ensure that its initial determinations reflect a consistently accurate interpretation and application of the Medicare statute, regulations, and guidelines; [and]

iv. failing to evaluate and assess the performance of [UGS] on a regular basis . . . .

The district court construed the plaintiffs' complaint as raising four challenges to the Secretary's and UGS's practices: 1) that UGS wrongly refused to issue "notices of initial determination" on claims submitted by beneficiaries; 2) that UGS's explanations of its...