A. H. R. v. Wash. State Health Care Auth.

• Decision Date: 07 January 2016
• Docket Number: CASE NO. C15-5701JLR
• Citation: 469 F.Supp.3d 1018
• Parties: A. H. R., et al., Plaintiffs, v. WASHINGTON STATE HEALTH CARE AUTHORITY, et al., Defendants.
• Court: U.S. District Court — Western District of Washington

469 F.Supp.3d 1018

A. H. R., et al., Plaintiffs,

v.WASHINGTON STATE HEALTH CARE AUTHORITY, et al., Defendants.

CASE NO. C15-5701JLR

United States District Court, W.D. Washington, at Seattle.

Signed January 7, 2016

Melinda MacMillan, Scott Crain, Northwest Justice Project, Seattle, WA, for Plaintiffs.

Nissa Ann Iversen, Washington State Attorney General, William T. Stephens, Attorney General's Office Social & Health Services, Olympia, WA, for Defendants.

ORDER REGARDING MOTION FOR PRELIMINARY INJUNCTION AND RELATED MOTIONS

JAMES L. ROBART, United States District Judge

I. INTRODUCTION

Plaintiffs A.H.R., S.K., K.A.S., Z.O.S.,¹ and K.V. are a group of infants and toddlers who, because of their complex medical needs, require skilled nursing services around the clock. Defendant Washington State Health Care Authority ("HCA"),² which is the state agency responsible for administering Washington State's Medicaid program, does not dispute that Plaintiffs are entitled in-home, private duty nursing care through the Medicaid program.³ (See PI Resp. (Dkt. # 32) at 1 ("The issue here is not whether [Plaintiffs] are entitled to medically necessary nursing services from the Medicaid Program. They are.").) Despite this acknowledgement, HCA has failed to fully provide these services to Plaintiffs. The present suit arises from these circumstances.

Before the court are three motions: (1) Plaintiffs' motion for a preliminary injunction (PI Mot. (Dkt. # 6)); (2) HCA's motion to compel joinder of three managed care organizations ("MCOs") or, in the alternative, for partial dismissal for failure to join these allegedly indispensable parties under Federal Rule of Civil Procedure 19 (Rule 19 Mot. (Dkt. # 24)); and (3) HCA's motion to continue the noting date for Plaintiffs' motion for a preliminary injunction (Mot. to Continue (Dkt. # 28)). The court has considered the motions, all related submissions from the parties, the balance of the record, and the applicable law. In addition, the court heard the oral argument of counsel on January 5, 2016. Being fully advised, the court GRANTS Plaintiffs' motion for a preliminary injunction as more fully described below,⁴ DENIES HCA's Rule 19 motion, and GRANTS HCA's motion to continue.

II. FACTUAL BACKGROUND & FINDINGS OF FACT

A. Statutory Framework

Medicaid is "[one] element of a comprehensive plan to provide universal health insurance coverage" and is designed "to meet the health care needs of the entire nonelderly population with income below 133 percent of the poverty level." Nat'l Fed'n of Indep. Bus. v. Sebelius , 567 U.S. 519, 132 S. Ct. 2566, 2606, 183 L.Ed.2d 450 (2012). Medicaid is a cooperative federal-state program that is jointly financed and administered by the states according to federal guidelines. 42 U.S.C. §§ 1396 et. seq. ; 42 C.F.R. § 430.0. "Within broad Federal rules, each State decides eligible groups, types and range of services, payment levels for services, and administrative and operating procedures." 42 C.F.R. § 430.0. To receive federal funding, however, a state must comply with federal Medicaid law. See Armstrong v. Exceptional Child Ctr., Inc. , 575 U.S. 320, 135 S. Ct. 1378, 1382, 191 L.Ed.2d 471 (2015) ("Medicaid offers the States a bargain: Congress provides federal funds in exchange for the State's agreement to spend them in accordance with congressionally imposed conditions.").

Each state must submit to the federal government a "State Plan for Medical Assistance," which describes how the state will administer Medicaid and assuring compliance with federal law. See id. The Centers for Medicare and Medicaid Services ("CMS") must approve the State Plan and any amendments. See 42 C.F.R. §§ 430.10, 430.14 ; Pharm. Research & Mfrs. of Am. v. Walsh , 538 U.S. 644, 650, 123 S.Ct. 1855, 155 L.Ed.2d 889 (2003). CMS has the authority to withhold all or a portion of a state's Medicaid funding if it concludes that the state is out of compliance with federal Medicaid requirements. See 42 U.S.C. § 1396c ; 42 C.F.R. §§ 430.1, 430.35(a), 430.40(a), 430.42(a), 447.304(c) ; Nat'l Fed'n of Indep. Bus. , 132 S. Ct. at 2604.

Federal law requires that each State Plan "provide for the establishment or designation of a single State agency to administer or to supervise the administration of" the Plan. See 42 U.S.C. § 1396a(a)(5) ; see also 42 C.F.R. § 431.10(b)(1) ; Watson v. Weeks , 436 F.3d 1152, 1161 (9th Cir. 2006). The chosen agency may not delegate to others its "authority to supervise the plan or to develop or issue policies, rules, and regulations or program matter." 42 C.F.R. § 431.10(e)(1). The Washington State Legislature has designated HCA as the agency responsible for administering Medicaid in Washington and obtaining federal approval for the State Plan.⁵ See RCW 41.05.021(1)(m)(i) ; RCW 74.09.530(1)(a).

Medicaid clients receive their medical care either through a "fee-for-service" system or a "managed care" system. G. v. State of Hawaii , 703 F. Supp. 2d 1078, 1084 (D. Haw. 2010). Under the fee-for-service model, "the state contracts directly with and pays healthcare providers ... for services they provide to Medicaid beneficiaries." Id. Under managed care, the state enters into contracts with MCOs which then provide the required Medicaid services to Medicaid beneficiaries "through their own employees or by contracting with independent providers." Id. There are approximately 246 children in the State's Medicaid program currently receiving private duty nursing services. (Kreiger Decl. ¶ 7.) Of these, 182 children are in the fee-for-service program and approximately 64 children are served through an MCO. (Id. )

Under the managed care model in Washington, HCA provides a monthly premium to an MCO for each enrolled Medicaid client and, in return, the MCO provides the required medical care to the Medicaid client. WAC 182-538-067(1) ; WAC 182-538-070(1) ; see also St. John Med. Ctr. v. State , 110 Wash.App. 51, 38 P.3d 383, 386 (2002) ("In 1993, [the State] began to contract with managed care organizations or providers for managed care services to Medicaid recipients at a set rate per plan participant."). Each MCO is required to provide HCA adequate assurances that the MCO has the capacity to maintain a sufficient number, mix, and geographic distribution of health care providers to meet the needs of their Medicaid clients and the network and quality standards of HCA. See 42 U.S.C. § 1396u-2(b)(5) ; WAC 182-538-067(1)(c). Medicaid clients who are dissatisfied with the services provided by their MCO can initiate an internal grievance and appeal process within the MCO, and then, if needed, appeal to HCA. See 42 U.S.C. § 1396u-2(b)(4) ; 42 C.F.R. § 438.402 ; WAC 182-538-110.

One aspect of the Medicaid program is known as the Early and Periodic Screening, Diagnostic, and Treatment ("EPSDT") program. See 42 U.S.C. § 1396a(a)(43) ; Katie A., ex rel. Ludin v. L.A. Cty. , 481 F.3d 1150, 1154 (9th Cir. 2007). As a general proposition, under the EPSDT program, the State must provide all forms of medical assistance to Medicaid clients under the age of 21. See 42 U.S.C. § 1396d(r)(5) (defining services); Katie A., ex rel. Ludin , 481 F.3d at 1154. "The EPSDT obligation is thus extremely broad." Katie A., ex rel. Ludin , 481 F.3d at 1154. States must provide all of the services listed in 42 U.S.C. § 1396d(a) to eligible children when such services are found to be medically necessary. Id.

The list of services in § 1396d(a) includes "private duty nursing services." See 42 U.S.C. § 1396d(a)(8). Indeed, HCA admits that "in-home nursing care for Medicaid clients under age 21 is a mandatory service." (PI Resp. at 9.) EPSDT is also listed as a required service in HCA's contracts with the MCOs. (Cody Decl. ¶¶ 6-7.) There is no dispute that HCA has determined that Plaintiffs are eligible for Medicaid benefits and HCA or one of HCA's MCOs has authorized each Plaintiff to receive in-home, private duty nursing care for at least 16 hours per day. (See PI Resp. at 10; see also Kreiger Decl. ¶¶ 11-12, 15, 20; Edlund Decl. (Dkt. # 35) ¶ 5.)

B. Plaintiffs' Factual Circumstances

Despite the fact that HCA has determined that each Plaintiff is eligible for and HCA (or one of its MCOs) has authorized the provision of in-home, private duty nursing care for at least 16 hours per day for each Plaintiff, none of the Plaintiffs are receiving this amount of nursing care in their homes. All of the Plaintiffs were referred to a home health agency that provides private duty nursing services for children in Washington State, including Medicaid enrolled children. (Smith Decl. (Dkt. # 17) ¶ 7.) The agency was unable to recruit nurses to provide the 16 hours per day of private duty nursing to which each Plaintiff is entitled. (Id. ) The agency is unable to find qualified nurses who are willing to work for the rates available for Medicaid-enrolled children. (Id. ¶ 3.) The Medicaid pay rate for private duty nursing has not increased since July 2007. (Austin Decl. (Dkt. # 14) ¶ 4.)⁶

A.H.R. is a Medicaid client enrolled with an MCO, and he has been authorized to receive 16 hours per day of in-home nursing care. (Valderrama Decl. (Dkt. # 30) ¶ 2; Kreiger Decl. ¶ 12.) A.H.R., who is less than one year old, resides in a group home for medically fragile children because at the time of his discharge from Seattle Children's Hospital on August 28, 2015, his family could not secure private duty, skilled nursing care to meet his needs at their home. (Gallagher Decl. (Dkt. # 8) ¶¶ 7-11; see also Valderrama Decl. ¶ 5.) A.H.R. receives the level of skilled nursing care in the group home that his physicians have ordered (Valderrama Decl. ¶ 5), but to do so he is forced to live separate from his family (Gallagher Decl. ¶ 9). In the opinion of A.H.R.’s doctor, "[t]he healthiest place for a child like A.H.R. is at home with his family." (Id. ¶ 10.) Further, A.H.R. has a hearing impairment and requires consistent one-to-one attention to develop his...