Fishman v. Daines

• Decision Date: 15 October 2010
• Docket Number: No. 09–CV–5248 (JFB)(ARL).,09–CV–5248 (JFB)(ARL).
• Citation: 743 F.Supp.2d 127
• Parties: Neil FISHMAN, et al., Plaintiffs,v.Richard F. DAINES, M.D., et al., Defendants.
• Court: U.S. District Court — Eastern District of New York

743 F.Supp.2d 127

Neil FISHMAN, et al., Plaintiffs,

v.Richard F. DAINES, M.D., et al., Defendants.

No. 09–CV–5248 (JFB)(ARL).

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

Oct. 15, 2010.

Peter Vollmer, Sea Cliff, NY, for plaintiffs.Andrew Cuomo, Attorney General of the State of New York, by Susan M. Connolly, Happauge, NY, for defendants.

MEMORANDUM AND ORDER

JOSEPH F. BIANCO, District Judge:

Plaintiffs Neil Fishman (“Fishman”) and Suruj Sirikeshun (“Sirikeshun”) bring this putative class action against defendants Richard Daines (“Daines”) and John Paolucci (“Paolucci”). Defendant Daines is the Commissioner of the New York State Department of Health. Defendant Paolucci is the Deputy Commissioner of the Office of Temporary Family and Disability Assistance (“OTDA”) of the New York State Department of Family Assistance.

This case concerns the procedures by which defendants deem a Medicaid appellant's claim to be abandoned. By way of background, when a person's request for Medicaid benefits is denied or when a current Medicaid recipient's benefits are reduced or terminated, federal law entitles the person to a “fair hearing.” In New York State, defendants are responsible for administering these hearings. Under the current state regulations, defendants do not provide a Medicaid appellant who misses a scheduled hearing with any notice of their default. Instead, the appellant's claim is considered abandoned and is accordingly dismissed unless the appellant contacts OTDA within a specified time frame and meets other requirements. In short, the current system in New York State, which plaintiffs refer to as the “automatic default and dismissal policy,” places the onus on the Medicaid appellant to determine that he missed a hearing and to contact OTDA to attempt to re-schedule a hearing.

Additionally, plaintiffs contend that, although defendants instruct Medicaid appellants to use a phone line to request fair hearing adjournments, it is often difficult or impossible to get through on this line.

Plaintiffs contend that the automatic default and dismissal policy and the phone line violate, inter alia, their Fourteenth Amendment due process rights, their right to a fair hearing under the Medicaid statute and its implementing regulations, and their rights under New York State Law and the New York State Constitution. They seek declaratory and injunctive relief on behalf of themselves and all others similarly situated. Defendants have moved to dismiss. For the reasons that follow, the Court grants the motion in part and denies it in part.

As a threshold matter, defendants contend that the Eleventh Amendment bars plaintiffs' claims. The Court disagrees with respect to plaintiffs' federal claims. Specifically, it is undisputed that the challenged policies remain in effect. Additionally, plaintiffs seek declaratory and injunctive relief to obtain, among other things, the re-scheduling of the hearings they missed. As such, plaintiffs' federal-law claims fit squarely within the Ex parte Young doctrine, which allows a plaintiff to sue state officials—such as defendants—in their official capacities for prospective relief from ongoing violations of federal law. The Eleventh Amendment does, however, bar plaintiffs' state-law claims because a federal court may not issue declaratory or injunctive relief against state officials based on state-law violations.

The Court also determines that the mootness doctrine does not bar the named plaintiffs' claims. Although both Sirikeshun and Fishman are currently receiving some Medicaid benefits, it is undisputed that they were without Medicaid benefits for a time as a result of having been deemed to have defaulted their fair hearings. Thus, there is still a live dispute between the parties as to whether the plaintiffs should have been receiving Medicaid for a given period. Furthermore, the Court can still grant plaintiffs effectual, prospective relief by ordering defendants to give plaintiffs a re-hearing on plaintiffs' Medicaid appeals. Granting this relief would not run afoul of the Eleventh Amendment because it would not automatically entitle plaintiffs to money damages and because the alleged violations of federal law are on-going.

Defendants also argue that the complaint should be dismissed because there is no private right of action under the provisions of the Medicaid statute on which plaintiffs rely. The Court disagrees and finds, as numerous other courts have similarly concluded, that 42 U.S.C. § 1396a(a)(3) gives plaintiffs a right to a fair hearing that is enforceable through 42 U.S.C. § 1983. Furthermore, plaintiffs may rely on the implementing regulations and the State Medicaid Manual, a document published by the federal Department of Health and Human Services, to define the scope of this right. The Court need not determine whether another statute plaintiffs rely on, 42 U.S.C. § 1396a(a)(1), confers a private right of action because the factual basis of plaintiffs' claim (and the relief sought) under that statute is essentially duplicative their § 1396a(a)(3) claim.

The Court also rejects defendants' argument that plaintiffs have not stated a plausible claim for relief with respect to the automatic default and dismissal policy. The allegations in the complaint raise a plausible claim that the policy deprives plaintiffs of their due process rights under the Fourteenth Amendment and their fair hearing rights under § 1396a(a)(3). As to plaintiffs' allegations regarding the phone line, the Court finds that these allegations are also sufficient to survive a motion to dismiss.

I. Background

A. Factual Background

For purposes of this motion to dismiss, the Court has taken the facts described below from the plaintiff's Complaint (“Compl.”). These facts are not findings of fact by the Court but rather are assumed to be true for the purpose of deciding this motion and are construed in a light most favorable to plaintiff, the non-moving party. See LaFaro v. N.Y. Cardiothoracic Group, 570 F.3d 471, 475 (2d Cir.2009).

1. The Parties

The named plaintiffs in this putative class action are Neil Fishman and Suruj Sirikeshun.

The defendants are Richard F. Daines, the Commissioner of the New York State Health Department (“State DOH”), and John Paolucci, the Deputy Commissioner of Operations and Support for the Office of Temporary and Disability Assistance of the New York State Department of Family Assistance (“State OTDA”). (Compl. ¶¶ 19–20.)

2. Overview of the Medicaid System

Medicaid is a cooperative federal-state program which assists the poor in “ ‘meet[ing] the costs of necessary medical services.’ ” (Compl. ¶ 21 (quoting 42 U.S.C. § 1396).) A state does not have to participate in Medicaid. If it chooses to participate, however, it must comply with all the requirements of the Medicaid Act and all implementing regulations promulgated by the Department of Health and Human Services (“HHS”), the federal agency that administers Medicaid. ( See id. ¶ 22.) Among other things, the State must submit a “Medicaid State Plan” to the federal government for approval. ( Id. ¶ 24.)

New York State has chosen to participate in the Medicaid program. ( Id. ¶ 23.) The State Department of Health is responsible for submitting New York's Medicaid State Plan to the federal government, establishing Medicaid eligibility standards, promulgating applicable regulations, maintaining a system of administrative hearings, and issuing final decisions in administrative appeals. ( Id. ¶ 28.) The State OTDA also assists in overseeing the Medicaid program by, among other things, hearing administrative appeals and making findings and recommendations to the State DOH. ( Id. ¶ 29.) Fifty-eight social service districts administer Medicaid at the local level. ( Id. ¶ 27.) The local social service districts determine whether or not a person is eligible for Medicaid and, thus, may decide to deny or terminate coverage if certain criteria are met. ( See, e.g., Compl. ¶¶ 50–51.)

3. The Medicaid Appeals Process and the Fair–Hearing Requirement

a. Federal Law and Regulations

Under federal law, when a person's claim for Medicaid assistance is denied or not acted upon with reasonable promptness, the state must “ ‘provide ... an opportunity for a fair hearing before the State agency....’ ” ( Id. ¶ 31 (quoting 42 U.S.C. § 1396a(a)(3)).) The Court will refer to this hearing process as a “Medicaid appeal.” Federal regulations require that the state's hearing system “ ‘meet the due process standards set forth in Goldberg v. Kelly, 397 U.S. 254, 90 S.Ct. 1011, 25 L.Ed.2d 287 (1970)’ and the additional standards specified in 42 C.F.R. Part 431.” ( Id. ¶ 32 (quoting 42 C.F.R. § 431.205(d)).)

Among other things, the applicable federal regulations allow a state to dismiss a Medicaid appeal if the appellant “ ‘fails to appear at a scheduled hearing without good cause.’ ” ( Id. ¶ 33 (citing 42 C.F.R. § 431.223).) The State Medicaid Manual (“the Manual”), a document published by HHS's Centers for Medicare and Medicaid Services, suggests that this standard is met only when the state agency notifies the appellant that he missed the hearing and the appellant fails to respond. Specifically, the Manual states that a Medicaid appeal should be considered abandoned when (1) a claimant or his representative fails to appear and (2) “ ‘if within a reasonable time (of not less than 10 days) after the mailing of an inquiry as to whether he wishes any further action on his request for a hearing[,] no reply is received.’ ” ( Id. ¶ 35) (quoting State Medicaid Manual § 2902.3(B).) Plaintiffs contend that the statute, the implementing regulations, and the Manual preclude defendants from dismissing Medicaid appeals based on an appellant's failure to appear unless the appellant is given notice of his default and fails to respond to that notice.

b. New York Regulations

In contrast to the procedure in the Manual, New York's regulations currently contain no...