Goldman v. Sec'y of the Exec. Office of Health & Human Servs.

• Decision Date: 22 July 2022
• Docket Number: 21-P-318
• Parties: Ronald GOLDMAN & others v. SECRETARY OF the EXECUTIVE OFFICE OF HEALTH AND HUMAN SERVICES.
• Court: Appeals Court of Massachusetts

101 Mass.App.Ct. 427

193 N.E.3d 485

Ronald GOLDMAN & others¹

v.SECRETARY OF the EXECUTIVE OFFICE OF HEALTH AND HUMAN SERVICES.

No. 21-P-318

Appeals Court of Massachusetts, Suffolk.

Argued April 1, 2022

Decided July 22, 2022

Andrew Delaney, of New Jersey, & Peter W. Adler, for the plaintiffs.

Samuel Furgang, Assistant Attorney General, for the defendant.

Present: Sullivan, Massing, & Shin, JJ.

SHIN, J.

The plaintiffs filed a taxpayer action under G. L. c. 29, § 63, seeking to enjoin the Executive Office of Health and Human Services, which administers the Massachusetts Medicaid program (MassHealth),² from using Medicaid funds to reimburse medical providers who perform neonatal male circumcisions. In their complaint the plaintiffs allege that, although most neonatal circumcisions are not medically necessary but instead are done at the election of parents for cultural or religious reasons, MassHealth pays for the procedure as a matter of course, without making determinations of medical necessity in individual cases.³ The plaintiffs claim that this practice violates § 30(A) of the Federal Medicaid Act, codified at 42 U.S.C. § 1396a(a)(30)(A) -- which requires State Medicaid plans "to safeguard against unnecessary utilization of ... care and services" -- and the provision in 130 Code Mass. Regs. § 450.204 (2017) that MassHealth "does not pay a provider for services that are not medically necessary."

MassHealth moved to dismiss the complaint under Mass. R. Civ. P. 12 (b) (6), 365 Mass. 754 (1974), on the ground that the claims were not cognizable in a taxpayer action under G. L. c. 29, § 63.⁴ In a thoughtful memorandum of decision, a Superior Court judge dismissed that part of the complaint premised on § 30(A) of the Medicaid Act, concluding that the United States Supreme Court's decision in Armstrong v. Exceptional Child Ctr., Inc., 575 U.S. 320, 135 S.Ct. 1378, 191 L.Ed.2d 471 (2015), precluded the plaintiffs from privately enforcing § 30(A) through a State-provided enforcement mechanism. The judge declined, however, to dismiss that part of the complaint premised on 130 Code Mass. Regs. § 450.204. Characterizing § 450.204 as a limitation on the agency's "legal right" to expend Medicaid funds, the judge concluded that MassHealth's alleged violation of that regulation was an appropriate basis for suit under G. L. c. 29, § 63.

The propriety of the judge's ruling on the motion to dismiss is now before us on a report for appellate determination under Mass. R. Civ. P. 64 (a), as amended, 423 Mass. 1403 (1996). For the reasons that follow, we conclude that the complaint states no actionable claim under G. L. c. 29, § 63, and should be dismissed in its entirety.

Statutory and regulatory overview. Medicaid is a joint Federal-State program designed to provide medical care to persons "whose income and resources are insufficient to meet the costs of necessary medical services." Armstrong, 575 U.S. at 323, 135 S.Ct. 1378, quoting 42 U.S.C. § 1396-1. The program is administered at the Federal level by the Centers for Medicare and Medicaid Services (CMS), a division of the United States Department of Health and Human Services. See Douglas v. Independent Living Ctr. of S. Cal., Inc., 565 U.S. 606, 610, 132 S.Ct. 1204, 182 L.Ed.2d 101 (2012). To qualify for Federal funding, participating States must submit for approval by CMS a "plan that details the nature and scope of the State's Medicaid program." Id. The plan must, among numerous other requirements, specify the services that will be covered by the State's program and the methods for setting payment rates for each such service. See 42 U.S.C. § 1396a(a)(10) ; 42 C.F.R. §§ 440.210, 440.220, 440.225, 447.201. CMS then "reviews the State's plan and [any] amendments to determine whether they comply with the statutory and regulatory requirements governing the Medicaid program." Douglas, supra. CMS also conducts periodic audits "to determine whether -- (1) [t]he [State] program is being operated in a cost-efficient manner; and (2) [f]unds are being properly expended for the purposes for which they were appropriated under Federal and State law and regulations." 42 C.F.R. § 430.33(a). See 42 U.S.C. § 1396c (CMS "shall make no further payments" to State administering plan in manner that "fail[s] to comply substantially" with Federal requirements).

There is no dispute that CMS has approved the Massachusetts plan and several amendments thereto. As required by 42 U.S.C. §§ 1396a(a)(10)(A) and 1396d(a)(5)(A), the Massachusetts plan provides for coverage of physicians’ services, which are identified by the numeric codes set out in the American Medical Association's Current Procedural Terminology (CPT) code book. See 130 Code Mass. Regs. §§ 433.405, 433.452 (2017). MassHealth "pays for all medicine and surgery CPT codes in effect at the time of service, except for those codes listed in Section 602 of Subchapter 6 of the Physician Manual"⁵ and "subject to all conditions and limitations described in MassHealth regulations at 130 [Code Mass. Regs. §§] 433.000 and 450.000." 130 Code Mass. Regs. § 433.452.

Section 602 of Subchapter 6 of the Physician Manual contains a list of more than 800 CPT codes that MassHealth has designated as "[n]onpayable." The CPT codes corresponding to neonatal circumcision, 54150 and 54160, are not on that list. In addition, MassHealth has designated certain CPT codes as requiring "individual consideration"⁶ or "prior authorization"⁷ as a prerequisite for payment. Those CPT codes are listed in § 603 of Subchapter 6 of the Physician Manual and do not include CPT codes 54150 and 54160.

Discussion. We review a decision on a motion to dismiss under Mass. R. Civ. P. 12 (b) (6) de novo, accepting as true the factual allegations in the complaint. See Dartmouth v. Greater New Bedford Regional Vocational Tech. High Sch. Dist., 461 Mass. 366, 373-374, 961 N.E.2d 83 (2012) ; Ginther v. Commissioner of Ins., 427 Mass. 319, 322, 693 N.E.2d 153 (1998). Our task is to determine whether those factual allegations "are sufficient, as a matter of law, to state a recognized cause of action or claim, and whether such allegations plausibly suggest an entitlement to relief." Dartmouth, supra at 374, 961 N.E.2d 83.

1. Section 30(A). The first question raised by the judge's report is whether the plaintiffs may privately enforce § 30(A) of the Medicaid Act -- in particular, the requirement that the State plan "safeguard

against unnecessary utilization of ... care and services" -- through a taxpayer action under G. L. c. 29, § 63.⁸ We agree with the judge that Armstrong precludes the plaintiffs from doing so.

In Armstrong, 575 U.S. at 328, 135 S.Ct. 1378, the United States Supreme Court held that a private suit to enforce § 30(A) cannot proceed against a State in equity, reasoning that "[t]wo aspects of § 30(A) establish Congress's intent to foreclose equitable relief" (quotation and citation omitted). First, the Court observed that Congress supplied a "sole remedy" for a State's failure to comply with the requirements of the Medicaid Act -- "the withholding of Medicaid funds by the Secretary of Health and Human Services." Id., citing 42 U.S.C. § 1396c. Second, the Court highlighted the "judicially unadministrable nature of § 30(A)’s text," remarking that "[i]t is difficult to imagine a requirement broader and less specific than § 30(A)’s mandate that state plans provide for payments that are ‘consistent with efficiency, economy, and quality of care,’ all the while ‘safeguard[ing] against unnecessary utilization of ... care and services.’ " Armstrong, supra, quoting 42 U.S.C. § 1396a(a)(30)(A). The Court concluded that, by "[e]xplicitly conferring enforcement of this judgment-laden standard upon the Secretary alone," Congress intended " ‘to make the agency remedy that it provided exclusive,’ thereby achieving ‘the expertise, uniformity, widespread consultation, and resulting administrative guidance that can accompany agency decisionmaking,’ and avoiding ‘the comparative risk of inconsistent interpretations and misincentives that can arise out of an occasional inappropriate application of the statute in a private action.’ " Armstrong, supra at 328-329, 135 S.Ct. 1378, quoting Gonzaga Univ. v. Doe, 536 U.S. 273, 292, 122 S.Ct. 2268, 153 L.Ed.2d 309 (2002) (Breyer, J., concurring in judgment).

The plaintiffs raise a number of arguments why Armstrong does not control the outcome here, all of which are unavailing. Principally, the plaintiffs contend that Armstrong applies only to actions in Federal court and does not bear on whether they have a right to enforce § 30(A) in the Massachusetts courts under G. L. c. 29, § 63. We disagree. Armstrong’s holding was unqualified: "the Medicaid Act precludes private enforcement of § 30(A) in the courts." Armstrong, 575 U.S. at 329, 135 S.Ct. 1378. In concluding that parties cannot circumvent Congress's intent to preclude private remedies by invoking a court's equitable powers, the United States Supreme Court observed that "[c]ourts of equity can no more disregard statutory and constitutional requirements and provisions than can courts of law." Id. at 327-328, 135 S.Ct. 1378, quoting Immigration & Naturalization Serv. v. Pangilinan, 486 U.S. 875, 883, 108 S.Ct. 2210, 100 L.Ed.2d 882 (1988). This principle is well settled in Massachusetts. See Freeman v. Chaplic, 388 Mass. 398, 406 n.15, 446 N.E.2d 1369 (1983) ("a grant of equitable powers does not permit a court to disregard statutory requirements"); Rossi Bros., Inc. v. Commissioner of Banks, 283 Mass. 114, 119, 186 N.E. 234 (1933) ("It is a maxim that equity follows the law as declared by a statute"). Thus, the equitable cause of action provided by G. L. c. 29, § 63, does not permit private enforcement of § 30(A) in contravention of Congress's intent to foreclose such relief. See Santa Rosa Memorial Hosp., Inc. v. Kent, 25 Cal. App. 5th 811, 821, 236 Cal.Rptr.3d 199 (2018) ("All of the reasoning in Armstrong...