Cruz v. Zucker

• Decision Date: 05 July 2016
• Docket Number: 14-cv-4456 (JSR)
• Citation: 195 F.Supp.3d 554
• Parties: Angie CRUZ, I.H., Ar'es Kpaka, and Riya Christie, on behalf of themselves and all others similarly situated, Plaintiffs, v. Howard ZUCKER, as Commissioner of the Department of Health [of the State of New York], Defendant.
• Court: U.S. District Court — Southern District of New York

195 F.Supp.3d 554

Angie CRUZ, I.H., Ar'es Kpaka, and Riya Christie, on behalf of themselves and all others similarly situated, Plaintiffs,

v.Howard ZUCKER, as Commissioner of the Department of Health [of the State of New York], Defendant.

14-cv-4456 (JSR)

United States District Court, S.D. New York.

Signed July 5, 2016

Adriene L. Holder, Judith A. Goldiner, Kimberly Forte, Sumani Vani Lanka, The Legal Aid Society, Mary Jane Eaton, Wesley Railey Powell, Norman Paul Ostrove, Lee Larson Hulsebus, Christopher James McNamara, Willkie Farr & Gallagher LLP, Mik Kinkead, Sylvia Rivera Law Project, New York, NY, Belkys Raquel Garcia, Legal Aid Society, Bronx, NY, for Plaintiffs.

John Peter Gasior, Peter W. Beauchamp, Zoey Chenitz, Office of The Attorney General of The State of New York, New York, NY, for Defendant.

OPINION AND ORDER

JED S. RAKOFF, United States District Judge.

JED S. RAKOFF, U.S.D.J.

Plaintiffs claim that New York wrongly denies Medicaid coverage for treatment of gender dysphoria

in two material respects. First, they challenge N.Y. Comp. Codes R. & Regs. tit. 18, § 505.2(l ), which provides coverage for gender reassignment surgery and hormone therapy but excludes coverage for individuals under eighteen (the "Age Exclusion").¹ Second, plaintiffs also claim that § 505.2(l ) wrongfully imposes a blanket ban on coverage of cosmetic procedures related to gender dysphoria, including medically necessary cosmetic procedures (the "Cosmetic Exclusion").

The details of this case are discussed in greater detail in Cruz v. Zucker, 116 F.Supp.3d 334, 337–41 (S.D.N.Y.2015), familiarity with which is here presumed. The Court now has four motions before it. First, defendant asks the Court to reconsider its decision on his motion to dismiss. Specifically, he wants the Court to revisit its conclusion that § 505.2(l ) imposes a blanket ban on cosmetic procedures. Second, the defendant asks the Court to decertify the plaintiff class. Finally, both parties move for summary judgment. For the following reasons, the Court denies defendant's motions except for parts of his motion for summary judgment, and grants plaintiffs' motion for summary judgment in part.

First, defendant moves for reconsideration of this Court's decision on his motion to dismiss. Specifically, defendant argues that § 505.2(l )does allow cosmetic procedures when they are medically necessary. He bases his argument on guidance released by the New York Department of Health ("DOH") in June 2015 (the "June Guidance"). See New York Department of Health Medicaid Program, Medicaid Update Vol. 31 No. 6 (June 2015). The June Guidance explicitly supersedes earlier DOH guidance, published in March 2015, (the "March Guidance") which stated that "payment will not be made for [a list of cosmetic surgeries that can be used to treat gender dysphoria

.]" See New York Department of Health Medicaid Program, Medicaid Update Vol. 31 No. 3 (March 2015). Although the June Guidance still states that "[p]ayment will not be made for any procedures that are performed solely for the purpose of improving an individual's appearance," it implicitly allows coverage of some cosmetic procedures when "justification of medical necessity is provided and prior authorization is received." New York Department of Health Medicaid Program, Medicaid Update Vol. 31 No. 6 at 7 (June 2015). Specifically, the June Guidance recasts the March Guidance's list of prohibited cosmetic surgeries as "procedures [that] will be presumed to be performed solely for the purpose of improving appearance and will not be covered, unless justification of medical necessity is provided and prior authorization is received." Id. Defendants argue that the June Guidance should effectively end plaintiffs' facial attack on the Cosmetic Exclusion because, if the June Guidance were a proper interpretation of § 505.2(l ), it would show that § 505.2(l ) allows coverage for medically necessary cosmetic surgeries.

Defendants also argue that the June Guidance affects the Court's consideration of the ripeness of plaintiffs' claims. "A claim is not ripe for adjudication if it rests upon contingent future events that may not occur as anticipated," such as the denial of coverage for medically necessary cosmetic surgeries. Texas v. United States, 523 U.S. 296, 300, 118 S.Ct. 1257, 140 L.Ed.2d 406 (1998) (internal quotation marks omitted). However, the Second Circuit does not require "a futile gesture as a prerequisite for adjudication in federal court." Desiderio v. Nat'l Ass'n of Sec. Dealers, Inc., 191 F.3d 198, 202 (2d Cir.1999) (quoting Williams v. Lambert, 46 F.3d 1275, 1280 (2d Cir.1995) ). Although plaintiffs did not plead that they had requested and been denied cosmetic surgeries, the Court held that their claims were nonetheless ripe because the plain language of § 505.2(l ) bars coverage of cosmetic surgeries and so requests for such surgeries pursuant to § 505.2(l ) would be futile. In reaching this conclusion the Court relied, in part, on the March Guidance. See Opinion dated July 29 at 28, ECF No. 52. But, according to the June Guidance, plaintiffs' request for cosmetic surgeries under § 505.2(l ) would not necessarily be futile, and defendants' ripeness arguments would rest on a stronger foundation.

In response to these various points, plaintiffs first argue that the Court should not take the June Guidance into account because it was released after the Court made its decision denying defendant's motion to dismiss. However, there is no rule requiring that, on a motion for reconsideration, the Court must limit itself to facts or evidence existing at the time of its initial decision. "[T]he major grounds justifying reconsideration are ‘an intervening change of controlling law, the availability of new evidence, or the need to correct a clear error or prevent manifest injustice.’ " Virgin Atl. Airways, Ltd. v. Nat'l Mediation Bd., 956 F.2d 1245, 1255 (2d Cir.1992) (quoting 18 C. Wright, A. Miller & E. Cooper, Federal Practice & Procedure§ 4478 at 790). The Court will therefore consider the June Guidance to ensure that its past decision was not clear error or manifest injustice.

The June Guidance is significant because, in many circumstances, a court is bound to give deference to an agency's interpretation of its own ambiguous regulation. See Barnhart v. Walton, 535 U.S. 212, 221, 122 S.Ct. 1265, 152 L.Ed.2d 330 (2002) (upholding deference to agency interpretation of regulations even when agency recently enacted the regulations in response to litigation); Auer v. Robbins, 519 U.S. 452, 461–63, 117 S.Ct. 905, 137 L.Ed.2d 79 (1997) (deferring to agency interpretation submitted in amicus brief). Defendant argues that the Court should defer to the June Guidance as the authoritative interpretation of § 505.2(l ) because both were promulgated by DOH.

However, deference to an agency's interpretation of its own regulation is not always warranted. For one thing, "Auer deference is warranted only when the language of the regulation is ambiguous." Christensen v. Harris Cty., 529 U.S. 576, 588, 120 S.Ct. 1655, 146 L.Ed.2d 621 (2000). Moreover, "[d]eference is undoubtedly inappropriate ... when the agency's interpretation is plainly erroneous or inconsistent with the regulation." Christopher v. SmithKline Beecham Corp., 567 U.S. 142, 132 S.Ct. 2156, 2166, 183 L.Ed.2d 153 (2012) (internal quotation marks omitted). The Second Circuit has explained that an interpretation is " ‘plainly erroneous' ... where the plain language of the regulation itself or some other indication of the agency's intent at the time of promulgation compels a different result." Florez ex rel. Wallace v. Callahan, 156 F.3d 438, 442 (2d Cir.1998).

Here, the Court will give no deference to the June Guidance because the plain language of § 505.2(l ) unambiguously forecloses its interpretation. The Court already held as much in its earlier decision on defendant's motion to dismiss. See Opinion dated July 29, 2015, at 28, ECF No. 28 (" Section 505.2(l ), by its plain terms, excludes coverage for the procedures deemed ‘cosmetic.’ "). However, because the Court did cite the March Guidance in its earlier analysis, it now holds that the March Guidance was not essential to its decision, for which the text of § 505.2(l ) provides a sufficient foundation.

Section 505.2(l ) consists of five relevant subsections. Subsections (1), (2), and (3) provide coverage for medically necessary hormone therapy and gender reassignment surgery

for Medicaid recipients over 18. 18 N.Y.C.R.R. § 505.2(l )(1)–(3). Subsection (4) specifically excludes a list of services and procedures from coverage, including "cosmetic surgery, services, and procedures" and provides a non-exhaustive list of explicitly excluded cosmetic procedures. 18 N.Y.C.R.R. § 505.2(l )(4)(v). Subsection (5) defines "cosmetic surgery, services, and procedures" to mean "anything solely directed at improving an individual's appearance." 18 N.Y.C.R.R. § 505.2(l ) (5). Defendant argues that Subsection (5) should be construed not as an elaboration of the items excluded by (4), but as an allowance for provision of coverage for cosmetic procedures that would otherwise be excluded outright by (4). See Memorandum of Law in Support of Defendant's Motion to Dismiss the Amended Class Action Complaint at 22-23, ECF No. 30. However, no provision of § 505.2(l ) states that coverage will be provided for cosmetic procedures of any kind. Defendant's argument would be on surer footing—and § 505.2(l ) would be at least ambiguous—if § 505.2(l ) contained a catch-all provision establishing coverage for all medically necessary treatments of gender dysphoria

. It does not. Instead, § 505.2(l ) carefully provides for only two treatments for gender dysphoria, hormone therapy and gender reassignment surgery, and states outright that "[p]ayment will not be made for ... breast augmentation, ... electrolysis, ... [or] facial bone reconstruction, reduction, or sculpturing"—procedu...