Davis v. Shah

• Decision Date: 24 March 2016
• Docket Number: Docket No. 14–543–cv.
• Citation: 821 F.3d 231
• Parties: Harry DAVIS, Rita–Marie Geary, Patty Poole, Roberta Wallach, on behalf of themselves and others similarly situated, Plaintiffs–Appellees, v. Nirav SHAH, individually and in his official capacity as Commissioner of the New York State Department of Health, Defendant–Appellant.
• Court: U.S. Court of Appeals — Second Circuit

821 F.3d 231

Harry DAVIS, Rita–Marie Geary, Patty Poole, Roberta Wallach, on behalf of themselves and others similarly situated, Plaintiffs–Appellees

v.Nirav SHAH, individually and in his official capacity as Commissioner of the New York State Department of Health, Defendant–Appellant.

Docket No. 14–543–cv.

United States Court of Appeals, Second Circuit.

Argued: Jan. 5, 2015.

Decided: March 24, 2016.

Victor Paladino, Assistant Solicitor General (Barbara D. Underwood, Solicitor General, and Andrea Oser, Deputy Solicitor General, on the brief), for Eric T. Schneiderman, Attorney General of the State of New York, Albany, NY, for Defendant–Appellant.

Geoffrey A. Hale (Bryan D. Hetherington and Jonathan Feldman, Empire Justice Center, and Martha Jane Perkins, National Health Law Program, on the brief), Empire Justice Center, Rochester, NY, for Plaintiffs–Appellees.

Molly J. Moran, Acting Assistant Attorney General (Mark L. Gross and Robert A. Koch, Attorneys, on the brief), Department of Justice, Civil Rights Division, Washington, D.C., for Amicus Curiae United States Department of Justice in Support of Plaintiffs–Appellees.

Benjamin C. Mizer, Principal Deputy Assistant Attorney General (Alisa B. Klein and Lindsey Powell, Attorneys, on the brief), Department of Justice, Civil Division, Washington, D.C., for Amicus Curiae United States Department of Health and Human Services, Centers for Medicare and Medicaid Services, in Support of Neither Party.

Before: LYNCH and CHIN, Circuit Judges, and KORMAN, District Judge.^*

GERARD E. LYNCH, Circuit Judge:

Plaintiffs-appellees Harry Davis, Rita–Marie Geary, Patty Poole, and Roberta Wallach (“plaintiffs”) brought this class action against defendant-appellant Nirav Shah, Commissioner of the New York State Department of Health (the “Commissioner”), challenging New York's coverage restrictions on certain medical services provided under its Medicaid plan. Plaintiffs argue that New York's 2011 plan amendments, which restrict coverage of orthopedic footwear and compression stockings to patients with certain enumerated medical conditions, violate the Medicaid Act's reasonable standards, home health services, due process, and comparability provisions, as well as the anti-discrimination provision and integration mandate of Title II of the Americans with Disabilities Act (“ADA”) and § 504 of the Rehabilitation Act. The United States District Court for the Western District of New York (Charles J. Siragusa, Judge ) granted summary judgment to defendant on plaintiffs' home health services claim and the hearing aspect of their due process claim, and granted summary judgment to plaintiffs on all their remaining claims. The court subsequently entered a permanent injunction barring New York from enforcing its coverage restrictions against any beneficiaries under its plan.

We affirm in part and vacate in part. Because neither the Medicaid Act nor the Supremacy Clause confers a private cause of action to enforce the reasonable standards provision, we vacate the district court's grant of summary judgment to plaintiffs on that claim. We also decline to reach plaintiffs' unequal treatment claim under the ADA and Rehabilitation Act as largely duplicative of their integration mandate claim. With respect to the remaining claims, however, we affirm the summary judgment rulings of the district court. Because orthopedic footwear and compression stockings constitute optional “prosthetics” rather than mandatory “home health services” under the Medicaid Act, defendant is entitled to summary judgment on plaintiffs' home health services claim. Because the due process provision required New York to provide plaintiffs with written notice—though not evidentiary hearings—prior to terminating their benefits, defendant is entitled to summary judgment on the hearing element and plaintiffs are entitled to summary judgment on the notice element of plaintiffs' due process claim. Because New York's coverage restrictions deny some categorically needy individuals access to the same scope of medically necessary services made available to others, plaintiffs are entitled to summary judgment on their comparability provision claim. Because New York's restrictions violate the integration mandate of the ADA and Rehabilitation Act, plaintiffs are entitled to summary judgment on their anti-discrimination claims under those statutes.

Finally, because the injunction granted by the district court is broader than is warranted by our liability conclusions, we vacate that injunction and remand for further consideration of the appropriate relief.

BACKGROUND

I. The Federal Medicaid Program

Enacted in 1965 as Title XIX of the Social Security Act, 42 U.S.C. § 1396 et seq., the Medicaid Act is a cooperative federal-state program designed to provide medical assistance to persons whose resources are insufficient to meet the costs of their necessary medical care. Himes v. Shalala, 999 F.2d 684, 686 (2d Cir.1993). On the federal level, the program is administered by the Centers for Medicare and Medicaid Services (“CMS”), a division of the United States Department of Health and Human Services (“HHS”). Although no state is required to participate in Medicaid, states that choose to do so must formulate a plan of administration that complies with both the Medicaid Act and regulations promulgated by HHS. 42 U.S.C. § 1396a ; Lewis v. Thompson, 252 F.3d 567, 569 (2d Cir.2001). Once CMS approves the state plan as complying with all statutory and regulatory requirements, the federal government will subsidize a significant portion of the state's expenditures in administering the program. 42 U.S.C. §§ 1396a(b), 1396b ; Rodriguez v. City of New York, 197 F.3d 611, 613 (2d Cir.1999).

A state's Medicaid plan defines both the categories of individuals eligible for benefits and the categories of services that are covered for those different groups. See 42 U.S.C. § 1396a(a) ; Pharm. Research & Mfrs. of Am. v. Walsh, 538 U.S. 644, 650, 123 S.Ct. 1855, 155 L.Ed.2d 889 (2003). With regard to beneficiaries, the Medicaid Act requires any state participating in Medicaid to provide medical assistance to the “categorically needy.” Roach v. Morse, 440 F.3d 53, 59 (2d Cir.2006). That group includes aged, blind, or disabled individuals who qualify for supplemental security income; individuals eligible for the Aid to Families with Dependent Children program; and other low-income groups, such as pregnant women and children, entitled to poverty-related benefits. See 42 U.S.C. § 1396a(a)(10)(A)(i) ; Walsh, 538 U.S. at 651 n. 4, 123 S.Ct. 1855. A state may also, at its option, provide medical assistance to the “medically needy.” Roach, 440 F.3d at 59. That group includes individuals whose income or resources exceed the financial threshold for categorical coverage, but who otherwise meet the eligibility requirements that define the categorically needy. See 42 U.S.C. § 1396a(a)(10)(C) ; 42 C.F.R. § 435.301 ; Walsh, 538 U.S. at 651 n. 5, 123 S.Ct. 1855. Unlike the categorically needy, who can cover the costs of neither their basic needs nor necessary medical care, the “medically needy” have sufficient resources to cover their basic needs but not their necessary medical care. Roach, 440 F.3d at 59.

With regard to services provided under a state plan, the Medicaid Act similarly specifies certain categories of mandatory and optional medical care. 42 U.S.C. § 1396a(a)(10)(A) ; id. § 1396d(a) ; Rodriguez, 197 F.3d at 613. A state is required to provide some benefits to all categorically needy individuals, including, among others, nursing facility services for persons over 21 and “home health care services.” 42 U.S.C. § 1396a(a)(10)(A) ; id. §§ 1396d(a)(4), (7). While a state need not provide either service to the medically needy, any state that elects to provide nursing facilities services to those beneficiaries must also provide home health services. Id. § 1396a(a)(10)(D) ; 42 C.F.R. § 440.220(a)(3). Furthermore, the Medicaid Act identifies a number of purely optional services that a state may provide to either the categorically needy or to both the categorically and medically needy. Optional services include, among other things, “prosthetic devices.” 42 U.S.C. § 1396a(a)(10)(A) ; id. § 1396d(a)(12) ; see also 42 C.F.R. 440.120(c) ; id. § 440.225.

The Medicaid Act imposes several requirements on the administration of both required and optional services under a state plan. Under the so-called “reasonable standards” provision, the Act provides that a participating state must “include reasonable standards ... for determining eligibility for and the extent of medical assistance under the plan which ... are consistent with the objectives” of the Medicaid program. 42 U.S.C. § 1396a(a)(17). Under the so-called “comparability” provision, the Act requires that the medical assistance available to any categorically needy individual “shall not be less in amount, duration, or scope than the medical assistance made available to any other such individual,” nor “less in amount, duration, or scope than the medical assistance made available to [non-categorically needy] individuals.” 42 U.S.C. § 1396a(a)(10)(B) ; see also 42 C.F.R. § 440.240 ; Rodriguez, 197 F.3d at 615. Finally, under the due process provision, a state plan participating in Medicaid must “provide for granting an opportunity for a fair hearing before the State agency to any individual whose claim for medical assistance under the plan is denied.” 42 U.S.C. § 1396a(a)(3). That requirement entails both written notice of any intended actions affecting a beneficiary's claim and an evidentiary hearing to contest denials of service. See 42 C.F.R. §§ 431.206(b), (c) ; id. § 431.210.

II. New York's 2011 Medicaid Amendments

The State of New York has participated in the federal Medicaid program since 1966. See N.Y. Soc. Serv. Law § 363 ; DeJesus v. Perales, 770 F.2d 316, 319 (2d Cir.1985). The terms of New York's Medicaid plan, which is administered by the ...