Connecticut State Dept. of Social Ser. v. Thompson

Decision Date09 September 2002
Docket NumberNo. CIV.A.3:99 CV 2020 S.,CIV.A.3:99 CV 2020 S.
Citation242 F.Supp.2d 127
CourtU.S. District Court — District of Connecticut

Richard J. Lynch, Maite Barainca, Rosemary Miller McGovern, Attorney General's Office, Hartford, CT, Brad S. Plebani, Judith Stein, Gill W. Deford, Willimantic, CT, Keith B. Gallant, Attorney, Cummings & Lockwood, New Haven, CT, for Plaintiffs.

John B. Hughes, Patrick F. Caruso, U.S. Attorney's Office, New Haven, CT, Hannah A. Stires, Richard Robert Brown, Lisa Bornstein, Martha Hirschfield, U.S. Department of Justice, Washington, DC, for Defendant.


UNDERHILL, District Judge.

The Connecticut Department of Social Services ("DSS"), its Commissioner, Patricia Wilson-Coker (the "Commissioner"), and a statewide class of individuals who are dually eligible for certain Medicare 1 and Medicaid2 benefits to cover home health care expenses,3 allege that the Secretary of the United States Department of Health and Human Services4 ("the Secretary") has failed to comply with certain procedural requirements of the Medicare regulations. Specifically, the plaintiffs allege that the Secretary, through a financial intermediary, United Government Services of Wisconsin ("UGS"), has failed to provide written, timely and accurate initial coverage and reconsideration determinations to beneficiaries in Connecticut who are receiving home health care services covered by Medicaid, and who have sought reimbursement for such expenses from Medicare by filing a request with UGS. Plaintiffs further allege that the Secretary's failure to comply with the Medicare regulations is so severe as to constitute a violation of plaintiffs' procedural due process rights as guaranteed by the Fifth Amendment to the United States Constitution.

The Secretary has timely answered plaintiffs' complaint, and has admitted the majority of plaintiffs' substantive factual allegations. The Secretary argues, however, that plaintiffs are not entitled to judgment in their favor. Specifically, the Secretary argues that this court does not have subject matter jurisdiction over plaintiffs' claims and that plaintiffs have failed to exhaust their administrative remedies prior to instituting this suit. The Secretary also disputes that UGS's procedures for handling plaintiffs' requests are contrary to the various regulations upon which plaintiffs rely. Finally, the Secretary avers that UGS has performed its delegated functions properly, that the Secretary has undertaken lawful supervision of UGS, and that any supervisory action or inaction of UGS by the Secretary is purely within his discretion and is not subject to judicial review.

The parties are in agreement that there are no disputed issues of material fact and that the sole issues in controversy are legal issues capable of resolution by the court on summary judgment. To that end, the parties have filed cross-motions for summary judgment on all issues raised in the Amended Complaint. For the following reasons, the court concludes that plaintiffs are entitled to summary judgment in their favor on all of their claims except their claim that the Secretary has failed to ensure that UGS issues sufficiently timely and accurate notices of initial determination and reconsideration decisions. The Secretary is entitled to summary judgment in his favor on those claims.


DSS is the Connecticut state agency responsible for administering the state's Medicaid program. DSS is required by law to seek reimbursement for health care expenditures it makes for Medicaid beneficiaries from any other entity legally obligated to make such payments, including the Medicare program. Medicaid beneficiaries are thus required by law to assign to DSS any rights that they may have to seek payment for home health care services they have received, including any right the beneficiaries may have to seek payment from the Medicare program. DSS is thus subrogated to Connecticut Medicaid beneficiaries' rights to seek administrative review of a denial of Medicare coverage by a health care service provider.

In furtherance of its duty to seek reimbursement for Medicaid expenditures, including reimbursement from Medicare, DSS has established a "Third Party Liability Program." Specifically, DSS has hired the Center for Medicare Advocacy Inc. ("CMA"), a nonprofit public interest law firm, to seek coverage from Medicare for home health care services for which payment has already been made under Medicaid. In these cases, the health care service provider5 has determined that Medicare coverage is not appropriate, and so payment has been made under Medicaid. CMA pursues the beneficiaries' rights to seek review of the provider's determination of no coverage. The present lawsuit challenges UGS's handling of CMA's pursuit of this right of review. Specifically, CMA challenges UGS's handling of CMA's requests for initial coverage determinations and UGS's requests for reconsideration from adverse initial determinations.

1. The Administrative Process

HHS does not itself directly handle claims for coverage of home health care services under Medicare. Rather, the Secretary acting through the HHS division known as the Health Care Financing Authority ("HCFA"),6 has entered into contracts with private entities (typically private insurance companies), known as fiscal intermediaries, to act as HHS's agent in the initial stages of Medicare coverage determinations. More specifically, initial determinations and reconsideration requests on claims for Part A home health care services are handled by one of four fiscal intermediaries, which HCFA has designated as a "regional home health intermediaries" ("RHHI"). HHAs can submit claims to the RHHI responsible for the region either in which the HHA provided the services to the beneficiary7 or in which the HHAs' corporate headquarters are located.8

If an HHA determines that home health care services provided to a beneficiary are covered by Medicare, it simply submits a claim for payment to the RHHI. The RHHI then determines if the claim submitted by the HHA is covered by Medicare. If, however, the HHA makes a determination that the service is not covered under Medicare, it must notify the beneficiary that the service is not covered. If the beneficiary disagrees with the provider's determination, he or she may submit a request for payment either to the provider or directly to the fiscal intermediary. The provider will then submit a claim at the request of the beneficiary, known as a "demand bill."

Once the fiscal intermediary receives a claim from a HHA, or a request for payment from a beneficiary, it is required to make an initial determination concerning coverage. There is no regulatory time frame within which this initial determination must be made.9 Once made, however, the RHHI must notify both the beneficiary and the provider in writing of its initial determination. This notification is known as a "notice of initial determination." The parties vigorously contest whether the regulations also require the RHHI to provide a copy of the notice of initial determination to a beneficiary's representative.

The RHHI's initial determination is binding unless the beneficiary files a written request for reconsideration. Upon the filing of a request for reconsideration, the RHHI does an independent, de novo review of the claim. The RHHI is required to provide written notice of the disposition of the request for reconsideration both to the beneficiary and to his or her representative. Disposition of a request for reconsideration is binding unless the claim involves more than $100, and the beneficiary requests a hearing before an administrative law judge within sixty days of the reconsideration decision. A beneficiary is then entitled to a hearing before the Department Appeals Board. Finally, for claims in which more than $1,000 is at issue, judicial review in the United States District Courts is available after a final decision of the Department Appeals Board.10 A beneficiary must obtain a final decision at each level of administrative review before obtaining review at the next administrative level.

2. UGS's Practices

Prior to December 1997, UGS provided notice of an initial determination both to the beneficiary and to his or her representative using a document known as the "Notice of Medicare Claim Determination."

After December 1997, UGS began sending a form labeled "Medicare Summary Notice" ("MSN") instead of the Notice of Medicare Claim Determination. In addition, the MSN was sent only to the beneficiary, and not to his or her representative. UGS sent CMA, the representative for the majority of Connecticut dually eligible beneficiaries, magnetic tape cartridges with electronic information about claims processed during the preceding month. UGS also, approximately annually, sent CMA summary spreadsheets containing aggregate information on claims processed by UGS over a longer period of time than the monthly electronic transmissions. UGS entered into an agreement with CMA whereby the sixty-day period for seeking reconsideration of an initial determination was triggered not by the issuance of the MSN, but rather by CMA's receipt of the monthly summary spreadsheets. Specifically, CMA had sixty days from the date it acknowledged receipt of the monthly report to seek reconsideration of any claim whose denial or rejection first appeared on that monthly report.


Plaintiffs assert several bases for subject matter jurisdiction in their Amended Complaint.11 First, plaintiffs assert jurisdiction under 28 U.S.C. § 1331 ("Section 1331"), which bestows upon "the district courts...

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