Crippen v. Kheder

• Decision Date: 15 August 1984
• Docket Number: No. 82-1810,82-1810
• Citation: 741 F.2d 102
• Parties: , Medicare&Medicaid Gu 34,087 Nancy CRIPPEN, individually and on behalf of all others similarly situated, Plaintiffs-Appellants, v. Noble P. KHEDER, individually and in his capacity as Director of the Michigan Department of Social Services, Defendant-Appellee.
• Court: U.S. Court of Appeals — Sixth Circuit

Page 102

741 F.2d 102

6 Soc.Sec.Rep.Ser. 191, Medicare&Medicaid Gu 34,087

Nancy CRIPPEN, individually and on behalf of all others

similarly situated, Plaintiffs-Appellants, v. Noble P. KHEDER, individually and in his capacity as

Director of the Michigan Department of Social

Services, Defendant-Appellee.

No. 82-1810.

United States Court of Appeals, Sixth Circuit.

Argued Nov. 28, 1983.

Decided Aug. 15, 1984.

Nicholas E. Orlyk, Michigan Protection and Advocacy Service, Dolores M. Coulter (argued), Lansing, Mich., for plaintiffs-appellants.

Frank J. Kelley, Atty. Gen. of Mich., Lansing, Mich., Erica Weiss Marsden, Louis J. Caruso, Dept. of Atty. Gen., William Basinger (argued), Lansing, Mich., for defendant-appellee.

Before LIVELY, Chief Judge, and EDWARDS and JONES, Circuit Judges.

NATHANIEL R. JONES, Circuit Judge.

This case is before the Court on the plaintiffs' appeal from the district court's order granting summary judgment for the defendant in this civil action under 42 U.S.C. Sec. 1983 challenging the defendant's medicaid policy and practices as violative of federal constitutional and statutory law.

Medicaid is a program established by Title XIX of the Social Security Act, 42 U.S.C. Sec. 1396, et seq., to furnish medical assistance, rehabilitation and other services to families and individuals whose income and resources are insufficient to pay for necessary medical services. 42 U.S.C. Sec. 1396. The program is jointly funded by the federal government and the participating state, and is administered by a designated state agency, in this case, the Michigan Department of Social Services (hereinafter "the Department").

Persons eligible for participation in the medicaid program fall into two classes. The "categorically needy" are those individuals or families who are eligible for medicaid because they are eligible for Aid to Families with Dependent Children ("AFDC") or Supplemental Security Income ("SSI") benefits. 42 C.F.R. Sec. 435.4 (1983). Also included within this class are individuals who are excluded from AFDC or SSI because of an eligibility requirement that does not apply to medicaid. 42 C.F.R. Sec. 435.122. The "medically needy" are those individuals not receiving AFDC or SSI, but whose income and resources, in comparison to their medical expenses, are within the limits established by the Department of Health and Human Services (hereinafter "HHS"). Id. Coverage of this latter class of persons is optional for a state which participates in the program. 42 U.S.C. Sec. 1396a(a)(10)(C). Michigan has opted to provide coverage for this class. Pursuant to agreement between Michigan and the Secretary of HHS, the Secretary determines medicaid eligibility for those persons receiving SSI and AFDC, and provides Michigan with the information in those applications which is relevant to medicaid eligibility.

Plaintiff, Nancy Crippen, is a 43 year old, mentally retarded individual with a convulsive disorder. She has received Social Security disability benefits since childhood, and, until April of 1981, she was also receiving SSI benefits because she resided in an Adult Foster Care (hereinafter "AFC") facility licensed under Michigan law to provide a supervised living environment and personal care services for disabled adults. Crippen's receipt of SSI benefits automatically qualified her for the medicaid program as a categorically needy person.

In early 1981, the Department revoked the AFC license for the home in which Crippen resides, thus rendering her ineligible for SSI benefits. Not surprisingly the Department later received notice from the federal government that Crippen's SSI benefits would be terminated. On April 6, 1981, the Department notified Crippen via written notice that her medicaid benefits would be terminated effective April 16, 1981, because her SSI benefits had been terminated. The notice informed Crippen that she could reapply for medicaid if she still needed it, and that if she requested a hearing prior to the effective date of termination, her benefits would continue at the same level until a hearing was held. Crippen did not request a hearing, but she did reapply for medicaid on May 13, 1981. Consequently, her medicaid benefits were terminated effective April 30, 1981.

On June 5, 1981, Crippen was found to be eligible for medicaid as a "medically needy" individual, and her coverage in the program was made retroactive to May 1, 1981. On May 4, 1981, plaintiff purchased from her own funds prescribed medications at a cost of $27.91, a cost which medicaid would have covered. Even though her eligibility was made retroactive to May 1, plaintiff could not be reimbursed for this money because Michigan law prohibits payment of medicaid funds directly to recipients.

Crippen filed this action in the district court as a class action under Rule 23(b)(2), Fed.R.Civ.P., seeking declaratory and injunctive relief against the Department's policy of automatically terminating individuals from medicaid solely upon receipt of information that SSI benefits have been terminated without making a prior determination of the individual's eligibility as a medically needy person. Crippen alleged that this policy violated the regulations promulgated under the Social Security Act and the Act itself, and that it deprived members of the class of due process and equal protection under the Fourteenth Amendment.

The district court granted Crippen's motion to certify the case as a class action and defined the class as

... any and all persons who are treated by the state as presumptively ineligible for medicaid solely because their SSI has been terminated, regardless of whether such persons receive the due process notice and opportunity for hearing.

The district court then granted the Department's motion for summary judgment finding that the policy did not violate the Act, regulations, or the Fourteenth Amendment. This appeal ensued.

The standard of review on appeal from a summary judgment order is the same standard initially applied by the district court. Wright and Miller, Federal Practice and Procedure, Sec. 2716. Under that standard, summary judgment is appropriate only where "there is no genuine issue as to any material fact and ... the moving party is entitled to judgment as a matter of law." Rule 56, Fed.R.Civ.P. Accord U.S. v. 9.6 Acres of Land, 456 F.2d 1116 (6th Cir.1972). The appellate court must view the facts in a light most favorable to the non-moving party. Aetna Insurance Co. v. Loveland Gas & Electric Co., 369 F.2d 648 (6th Cir.1966).

As the parties concede, there is no specific regulation or section of the statute which covers this particular dispute. Each side argues, however, that the net effect of the regulations supports its viewpoint. Crippen points first to 42 C.F.R. Sec. 435.930(b) which requires defendant to

[c]ontinue to furnish medicaid regularly to all eligible individuals until they are found to be ineligible...

She also relies upon 42 C.F.R. Sec. 435.916(C) which provides:

(C) Agency action on information about changes.

(1) The agency must promptly redetermine eligibility when it receives information about changes in a recipient's circumstances that may affect his eligibility.

(2) If the agency has information about anticipated changes in a recipient's circumstances, it must redetermine eligibility at the appropriate time based on those changes.

Third, she relies upon 42 C.F.R. Sec. 435.1003(b) which requires the Department to take prompt action to determine eligibility once it has received notice from the Social Security Administration that SSI benefits have been discontinued. Crippen argues that these regulations preclude the Department from automatically terminating recipients from medicaid upon notification that SSI benefits have been discontinued, but require instead that the Department make a prompt ex parte determination whether they qualify as a "medically needy" individual before terminating them from medicaid. Crippen cites in support of her argument Stenson v. Blum, 476 F.Supp. 1331 (S.D.N.Y.1979), aff'd without opinion, 628 F.2d 1345 (2d Cir.), cert. denied, 449 U.S. 885, 101 S.Ct. 239, 66 L.Ed.2d 111 (1980), and Massachusetts Association of Older Americans v. Sharp, 700 F.2d 749 (1st Cir.1983).

In Stenson, supra, the plaintiff was eligible for medicaid benefits as a categorically needy person because of her receipt of SSI benefits. When her SSI benefits were discontinued by HEW, the state terminated her medicaid benefits without notice and without providing an opportunity for a hearing. The plaintiff sought classwide injunctive and declaratory relief to require the state to provide notice and an opportunity to be heard prior to termination of medicaid benefits, and an ex parte determination of eligibility for medicaid benefits independent of her eligibility for SSI benefits, before the termination of benefits. The court analyzed the same regulations relied upon in the case sub judice and held that they imposed an obligation upon the state to reconsider ex parte the plaintiff's eligibility for medicaid independent of her eligibility for SSI benefits upon notification of the termination of SSI benefits. Stenson, supra at 1339-40. Pending this determination, the state was required to continue furnishing medicaid benefits. Id.

In Massachusetts Association of Older Americans v. Sharp, supra, the plaintiffs were a subclass of families whose AFDC benefits were being terminated because of a change in the law which required that states include the income of stepparents in determining a stepchild's eligibility for AFDC. 42 U.S.C. Sec. 602(a)(31). Such income is specifically excluded from...