Fishman v. Daines

• Decision Date: 04 March 2016
• Docket Number: No 09–cv–5248 (JFB)(ARL),09–cv–5248 (JFB)(ARL)
• Citation: 164 F.Supp.3d 409
• Parties: Neil Fishman, by his Legal Guardian, Selma Fishman, and Suruj Sirikeshun, Individually and on Behalf of All Others Similarly Situated, Plaintiffs, v. Richard F. Daines, M.D., as Commissioner of the New York State Department of Health, and John Paolucci, as Deputy Commissioner of the Office of Temporary and Disability Assistance of the New York State Department of Family Assistance, Defendants.
• Court: U.S. District Court — Eastern District of New York

164 F.Supp.3d 409

Neil Fishman, by his Legal Guardian, Selma Fishman, and Suruj Sirikeshun, Individually and on Behalf of All Others Similarly Situated, Plaintiffs,

v.Richard F. Daines, M.D., as Commissioner of the New York State Department of Health, and John Paolucci, as Deputy Commissioner of the Office of Temporary and Disability Assistance of the New York State Department of Family Assistance, Defendants.

No 09–cv–5248 (JFB)(ARL)

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

Signed March 4, 2016

Plaintiffs are represented by Peter Vollmer, Law Office of Peter Vollmer, P.C., 19 Hawthorne Road, Sea Cliff, NY 11579.

Defendants are represented by Susan M. Connolly, New York State Office of the Attorney General, 300 Motor Parkway, Suite 230, Hauppauge, NY 11788.

MEMORANDUM AND ORDER

JOSEPH F. BIANCO, United States District Judge

Plaintiffs Neil Fishman (through his legal guardian, hereinafter “Fishman”) and Suruj Sirikeshun bring this class action against the Commissioner of the New York State Department of Health, who was formerly Richard Daines, and then Nirav R. Shah, and is now Howard Zucker, and against the Commissioner of the Office of Temporary and Disability Assistance of the New York State Department of Family Assistance (OTDA), who was formerly John Paolucci, and then Kristin Proud, and is now Samuel Roberts.

By Memorandum and Order dated September 16, 2014, the Court denied plaintiff's motion for a preliminary injunction requiring defendants to mail a “default notice” to members of the plaintiff class before their Medicaid appeals are abandoned because they missed a scheduled hearing. The Court found that plaintiffs failed to make a clear showing that they were likely to succeed on the merits of their due process or statutory claims. Plaintiffs appealed this decision, and by Summary Order dated October 15, 2015, the Second Circuit reversed this Court's denial of the preliminary injunction and remanded the case for further proceedings.

For the reasons discussed below, the Court grants plaintiffs' motion for a preliminary injunction. Plaintiffs have made a clear showing that they are likely to succeed on the merits of their statutory claim. As previously held by this Court and confirmed by the Second Circuit, 42 U.S.C. § 1396a(a)(3) creates a right to a fair hearing before Medicaid benefits are revoked, which is enforceable through § 1983. 42 C.F.R. § 431.223's requirement that a Medicaid fair hearing request not be dismissed without good cause may be reasonably understood to be part of the right to an opportunity for a Medicaid fair hearing. Further, the State Medicaid Manual—which provides in a directive that participating states must inquire by written notice as to whether Medicaid appellants want their defaulted hearings rescheduled and may only dismiss them if no reply is received—is entitled to Skidmore deference. To the extent that defendants argue that the multiple pre-hearing notices are sufficient to satisfy the statutory “fair hearing” requirement and render a post-default notice unnecessary, the Court disagrees based upon the Skidmore deference that should be afforded to the State Medicaid Manual. In other words, Section 1396a(a)(3), as informed by the relevant federal regulation and agency interpretation of the regulation (through the State Medicaid Manual), requires what due process does not—namely, that the State, before dismissing an appeal as abandoned when the Medicaid appellant failed to appear at the hearing, must ascertain through a post-default notice whether the appellant wishes any further action on his request for a hearing. In sum, plaintiffs have demonstrated a likelihood of success on the merits, and therefore, plaintiffs' motion for a preliminary injunction, enjoining defendants from dismissing administrative appeals of defaulting Medicaid appellants who are not given at least 10 days to respond to a written notice from defendants inquiring whether they would like their hearings rescheduled, is granted.

I. Background

A. Factual and Legal Background

The background facts of this case, including an overview of the Medicaid system and appeals process, are set forth more fully in this Court's opinion denying, in large part, defendants' motion to dismiss, see Fishman v. Daines, 743 F.Supp.2d 127 (E.D.N.Y.2010), as well as the Court's opinion denying the preliminary injunction, see Fishman v. Daines, No. 09–cv–5248 (JFB)(ARL), 2014 WL 4638962 (E.D.N.Y. Sept. 16, 2014). In short, this case involves the procedures by which defendants determine that a Medicaid appeal is abandoned. After defendants conclude that a claimant is no longer entitled to Medicaid benefits, they inform the claimant by letter, and advise him that he may request a fair hearing. See Fishman, 2014 WL 4638962, at *1. If the request is timely, the claimant may continue to receive “aid-continuing” Medicaid coverage pending the outcome of the hearing, and defendants send two additional letters: first, they send an acknowledgement that a fair hearing has been requested, and then they send notice that the fair hearing has been scheduled, which includes logistical details and instructions for requesting adjournments. Id .

If a claimant does not attend his fair hearing, whether because he did not receive notice or for any other reason, he is considered to have defaulted his hearing, and risks having his appeal abandoned. 18 N.Y.C.R.R. § 358–5.5(a). It is possible to restore a defaulted hearing to the calendar, but the timing of the request to do so affects the continuing provision of Medicaid coverage. Id. § 358–5.5(c). Plaintiffs contend that many class members lost aid-continuing coverage, at least temporarily, because they did not realize that they missed their fair hearing. The default notice requested by plaintiffs would inquire as to whether the defaulting Medicaid appellant wanted his or her hearing rescheduled and would give the appellant at least 10 days to respond to the notice before dismissal of the administrative appeal.

B. Procedural Background

After the Court issued its opinion on the motion to dismiss in 2010, the parties reached a comprehensive stipulation, which the Court ordered effective on April 6, 2011. Among other things, the stipulation certified the case as a class action, on behalf of “[a]ll past, present, and future applicants and recipients of Medical Assistance ... in New York State who: (a) requested or will request an administrative fair hearing ... (b) failed or will fail to appear in-person ... and (c) suffered or will suffer dismissal of their administrative appeal without defendants' prior written inquiry.”¹ (Dkt. No. 69 ¶ 1.) The stipulation also required defendants to begin issuing letters to prospective class members who defaulted their fair hearings. (Id. ¶ 3(b).) The letters asked class members if their hearing request was abandoned, and advised them that if they intended to reschedule their hearing, they must provide good cause for having defaulted. (Id. ) The letter also required the class members to respond within ten days of the letter's mailing date, or else their hearing request would be deemed abandoned. (Id. ) The letters were issued for approximately two years, between the date the Court so-ordered the stipulation on April 6, 2011, and the date it was vacated on September 16, 2013.

The stipulation also included a provision exempting prospective class members from the requirements of 18 N.Y.C.R.R. § 3585.5. (Id. ¶ 3(f).) At that time, § 358–5.5 required defaulting Medicaid appellants to request that their hearing be rescheduled within 15 days of default, and to show good cause, or to establish within 45 days that they had not received the initial notice of the hearing. 2014 WL 4638962, at *3. Under the terms of the stipulation, the class members were not bound by the 15– and 45–day timelines, but instead by the single timeline of ten days from the mailing date of the default notice. Section 358–5.5 did not, and still does not, address the issuance of a written default notice.

The 15– and 45–day requirements were eliminated when § 358–5.5 was amended, effective October 23, 2012. Medicaid appellants now have one year to request that their hearings be rescheduled, but are also subject to a new timeline. They must request that their hearing be rescheduled within 60 days of the date of default, or they will be unable to recover retroactive benefits for any period of lost coverage after they defaulted. See 18 N.Y.C.R.R. § 3585.5(c)(1). If their request to reschedule the hearing is made 60 days or more after the default, they will only receive medical coverage prospectively, from the date of their request. Id . § 358–5.5(c)(2).

After § 358–5.5 was amended, plaintiffs moved to alter the stipulation so that the plaintiff class could benefit from the longer one-year timeline, and from the provision addressing retroactive and prospective coverage, which was not addressed by the terms of the stipulation. Defendants opposed the motion. Ultimately, the Court vacated the stipulation, pursuant to Fed. R. Civ. P. 60(b)(5), concluding that it was not equitable to bind defendants to both the stipulation and the amended regulation at the same time, because defendants had negotiated the stipulation with the former regulation in mind. If defendants were required to extend the new regulation to the prospective class members, the Court held that they should receive the opportunity to litigate the necessity of a written default notice in light of the new regulation.

On September 16, 2014, this Court denied plaintiff's motion for a preliminary injunction, which would have prohibited defendants from dismissing the administrative appeals of defaulting Medicaid appellants who were not given at least ten days to respond to a post-hearing notice. This Court concluded that plaintiffs failed to make a clear showing that they were likely to succeed on their due process or statutory claims. Plaintiffs appealed that...