Equal Access for El Paso, Inc. v. Hawkins

Decision Date30 March 2006
Docket NumberNo. EP-03-CA-440-PRM.,EP-03-CA-440-PRM.
Citation428 F.Supp.2d 585
PartiesEQUAL ACCESS FOR EL PASO, INC. et al., Plaintiffs, v. Albert HAWKINS, Commissioner of the Texas Health and Human Services Commission, Defendant.
CourtU.S. District Court — Western District of Texas

Thomas H. Watkins, Elizabeth G. Bloch, Brown McCarrollz LLP, Austin, TX, David W. Hilgers, Hilgers & Watkins, Kitty Schild, Maria Aurelia Salas-Mendoza, Jose R. Rodriguez, Andres Eduardo Almanzan, Mounce, Green, Myers, Safi, Miguel Angel Torres, El Paso, TX, for Plaintiffs.

Nancy K. Juren, Office of Attorney General, General Litigation Division Capitol Station, Austin, TX, for Defendant.

ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT'S AMENDED MOTION TO DISMISS AND CERTIFICATION FOR INTERLOCUTORY APPEAL

MARTINEZ, District Judge.

                TABLE OF CONTENTS
                  I.  FACTUAL AND PROCEDURAL BACKGROUND ........................................593
                      A. The Medicaid Act ......................................................593
                      B. The Administration of Medicaid in Texas ...............................593
                      C. The Parties ...........................................................594
                      D. Plaintiffs' Claims ....................................................594
                 II.  DEFENDANT'S RULE 12(b)(1) MOTION 596
                      A. Article III Standing and Prudential Considerations ....................596
                      B. Recipient Plaintiffs' Standing to Sue .................................598
                      C. Provider Plaintiffs' Standing to Sue ..................................604
                      D. Equal Access's Standing to Sue ........................................606
                      E. Plaintiffs' Standing to Assert Their Supremacy Clause Claim ...........607
                 III. DEFENDANT'S RULE 12(b)(6) MOTION .........................................609
                      A. Analytical Standard ...................................................609
                      B. The Equal Access Provision ............................................611
                      C. The Quality of Care Provision .........................................614
                      D. The Comparability Provision ...........................................616
                      E. The Equity Provision ..................................................618
                      F. The Statewideness Provision ...........................................619
                      G. The Reasonable Promptness Provision ...................................620
                      H. The Actuarial Soundness Provision .....................................622
                      I. Cognizable Supremacy Clause Claim .....................................623
                      J. Cognizable Equal Protection Clause Claim ..............................624
                      K. Declaratory Judgment Relief ...........................................625
                 IV. PRINCIPLES OF JUDICIAL ADMINISTRATION—THE FREW CLASS........626
                  V. CERTIFICATION FOR INTERLOCUTORY APPEAL ....................................627
                 VI. CONCLUSION ................................................................627
                

On this day, the Court considered the following: (1) Defendant Albert Hawkins' ("Defendant") "Amended Motion to Dismiss," filed on May 18, 2005; (2) Plaintiffs Equal Access for El Paso, Inc.; El Paso County Hospital District d/b/a R.E. Thomason General Hospital; El Paso First Health Plans, Inc.; Dr. Jose Luna, Jr.; Monica Rivero, individually and as next friend of Kevin Rivero; Patricia Duarte Melendez, individually and as next friend of Orandie Jahssar Melendez-Duarte and Osnar Joshua Melendez; Jessilyn Nagel, as next friend of Heidi and McKenna Armstrong; and Ruth Gallegos's, individually and as next friend of Amber Villegas, (collectively "Plaintiffs") "Joint Response to Defendant Albert Hawkins's Amended Motion to Dismiss" ("Amended Motion to Dismiss"), filed on June 14, 2005; and (3) Defendant's "Reply on Amended Motion to Dismiss," filed on July 6, 2005 in the above-captioned cause. The Court also considered the oral arguments of counsel submitted at a status conference held on February 14, 2005.

After due consideration, the Court is of the opinion that Defendant's Amended Motion to Dismiss should be granted in part and denied in part for the reasons set forth below. The Court is also of the opinion that the above-captioned cause should be certified for interlocutory appeal to the Court of Appeals for the Fifth Circuit.

I. FACTUAL AND PROCEDURAL BACKGROUND

This case concerns alleged violations of the Medicaid Act, 42 U.S.C. § 1396, et seq. Specifically, Plaintiffs—comprised of (1) Medicaid recipients in El Paso County, Texas ("El Paso"); (2) Medicaid providers in El Paso; and (3) an association purporting to represent the interests of Medicaid recipients and providers in El Paso—are alleging that low Medicaid payment rates have impeded the access of El Paso Medicaid recipients to the medical services guaranteed by the Medicaid Act.

A. The Medicaid Act

"In the Social Security Amendments of 1965, Congress established Title XIX, commonly referred to as the `Medicaid Act.'" Evergreen Presbyterian Ministries Inc. v. Hood, 235 F.3d 908, 914 (5th Cir.2000) (citing Pub.L. No. 89-97, 79 Stat. 286 (1965)). The Medicaid Act established a medical assistance program ("Medicaid") cooperatively funded by federal and state governments, which is designed to ensure the provision of medical services to disabled individuals and families with dependent children. Pls.' First Am. Compl., at 7, ¶ 19.

A state's participation in Medicaid is voluntary, but a participating state must adhere to the requirements of the Medicaid Act in order to receive federal funding. Evergreen, 235 F.3d at 915. One such requirement is that a state must submit a state plan to the Health Care Financing Administration for approval. Id. "A state plan is a `comprehensive written statement' submitted by the state describing the nature and scope of the state's Medicaid program." Id. (citing 42 C.F.R. § 430.10). "The Medicaid Act sets out a laundry list of . . . items that must be contained within a valid state plan." Id. at 915 (citing 42 U.S.C. § 1396a(a) (2000)). Plaintiffs' claims include alleged violations of six of these requirements for a state Medicaid plan contained within the Medicaid Act. Texas has chosen to participate in Medicaid and has designated the Texas Health and Human Services Commission ("HHSC"), over whom Defendant Albert Hawkins is the commissioner, to administer the state's Medicaid plan. Id.

B. The Administration of Medicaid in Texas

HHSC pays Medicaid providers through two programs: (1) a traditional "fee-forservice" program; and (2) payments to managed care providers based on capitation rates. Pis.' First Am. Compl., at 3, ¶¶ 13-4. Under the fee-for-service program, health care professionals are reimbursed based on fee schedules established by HHSC, schedules that break down medical procedures into discreet codes, which in turn are each assigned a monetary value. Id. at 3, ¶ 3. In addition to the fee-for-service program, HHSC administers payments to certain managed care providers, such as health maintenance organizations ("HMOs"), through capitation rates,1 which are fixed amounts paid to participating providers on a per-member, per-month basis. Border Rate Report, at 3-4.

C. The Parties

Plaintiffs, who are suing Defendant in his official capacity as Commissioner of HHSC, are comprised of three distinct classes. The first class consists of a collection of Medicaid recipients residing in El Paso, Texas (collectively "Recipient Plaintiffs"). Recipient Plaintiffs are suing as individuals on their own behalf and on behalf of their respective children.

The second class consists of a doctor providing services to Medicaid recipients, an HMO, and a county hospital district (collectively "Provider Plaintiffs"). Provider Plaintiff Jose Luna, Jr., M.D. is suing on his own behalf and on behalf of his Medicaid recipient patients. Provider Plaintiff El Paso First Health Plans, Inc. ("El Paso First") is an HMO that is suing on its own behalf and on behalf of its Medicaid recipient enrollees. Provider Plaintiff El Paso Hospital District d/b/a R.E. Thomason General Hospital ("Thomason") owns and operates R.E. Thomason Hospital, an urban hospital, El Paso First Plans, Inc., and Thomason Cares Inc., a health organization that provides physician services. Thomason also employs health care professionals. Thomason is suing on its own behalf and on behalf of its Medicaid recipient patients.

The third class consists solely of Equal Access for El Paso, Inc. ("Equal Access"), a non-profit corporation "composed of individuals interested in the provision of health care in El Paso." Pls.' First Am. Comp'., at 5, ¶ 10. Equal Access is suing on behalf of its members, many of whom it alleges are "Medicaid recipients and other health care professionals and other providers who are directly and adversely impacted by HHSC's actions." Id.

D. Plaintiffs' Claims

Plaintiffs filed suit against Defendant in federal court on October 23, 2003 and subsequently amended their complaint on June 24, 2004. Generally, Plaintiffs allege that HHSC's setting of deficient Medicaid reimbursement and capitation rates2 has prevented Medicaid recipients in El Paso from obtaining adequate access to medical services, in violation of certain provisions of the Medicaid Act, the Supremacy Clause, and the Equal Protection Clause. The alleged lack of access to adequate medical services is a result of the fact that inadequate Medicaid payment rates, when combined with El Paso's unique payor mix,3 have created an incentive (1) for physicians to practice in communities other than El Paso and (2) for physicians practicing in El Paso County to seek out patients covered by employer-sponsored insurance. Pls.' First Am. Compl., at 14, ¶ 42.

Specifically, Plaintiffs' amended complaint sets forth eight claims, alleging six...

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