Hamby v. Neel

Decision Date17 May 2004
Docket NumberNo. 01-5930.,No. 01-5653.,01-5653.,01-5930.
Citation368 F.3d 549
PartiesLarnce HAMBY, Plaintiff-Appellee, Betty Ooten, Intervenor Plaintiff-Appellee, Nora Hyslope, Intervenor Plaintiff-Appellee, v. C. Warren NEEL, Commissioner, Tennessee Department of Finance and Administration; Mark Reynolds, Deputy Commissioner, Bureau of TennCare, Defendants-Appellants.
CourtU.S. Court of Appeals — Sixth Circuit

Sue A. Sheldon (argued and briefed), Office of the Attorney General, Nashville, TN, for Defendant-Appellant in No. 01-5653.

Linda A. Ross, Asst. Attorney Gen., Sue A. Sheldon (argued and briefed), Office of the Attorney General, Nashville, TN, for Defendant-Appellant in No. 01-5930.

Before BATCHELDER, MOORE, and CLAY, Circuit Judges.

CLAY, J., delivered the opinion of the court, in which MOORE, J., joined. BATCHELDER, J. (pp. 564-69), delivered a separate dissenting opinion.


CLAY, Circuit Judge.

This is a consolidated appeal. In Case No. 01-5653, Defendants, C. Warren Neel, the Commissioner of the Tennessee Department of Finance and Administration, and Mark Reynolds, the Deputy Commissioner of the Bureau of Tennessee's Medicaid Demonstration Project ("TennCare"), appeal from the district court's order entered on April 27, 2001, granting summary judgment in favor of Plaintiffs, Larnce Hamby, Betty Ooten, and Nora Hyslope. In Case No. 01-5930, Defendants appeal from the district court's order entered June 8, 2001, denying Defendants' motion to stay the district court's April 17, 2001 order. For the reasons set forth below, we AFFIRM the district court's orders.

Procedural History

Plaintiffs brought this action under 42 U.S.C. § 1983 and the Fourteenth Amendment of the United States Constitution, challenging the TennCare program's handling of their applications for coverage under the program when Plaintiffs were denied coverage.

Plaintiff Hamby commenced this action in October of 1998. Plaintiffs Ooten and Hyslope requested and were granted permission to intervene in the action in 1998 and 2000, respectively. Thereafter, Plaintiffs and Defendants filed cross-motions for partial summary judgment. On April 13, 2001, the district court issued an order granting Plaintiffs' motion for partial summary judgment, thereby awarding TennCare benefits to Plaintiffs from the date of their original applications, and denying Defendants' motion for partial summary judgment. The district court modified its order on April 27, 2001 and May 10, 2001, changing a sentence in the order and providing a correct citation to a regulation.

Defendants timely filed a notice of appeal on May 11, 2001 (Case No. 01-5653). Pending appeal, Defendants filed a motion to stay the district court's April 27, 2001 order. By order entered on June 8, 2001, the district court denied the motion to stay. On July 2, 2001, Defendants moved this Court for a stay pending appeal. This Court denied the motion to stay on August 9, 2001, insofar as the motion sought a stay of an injunction requiring Defendants to approve benefits under the TennCare program to Plaintiffs as of the date of their first applications. However, this Court granted a stay pending appeal of all other aspects of the district court's April 17, 2001 order.

On July 5, 2001, Defendants timely filed a notice of appeal from the district court's June 8, 2001 order (Case No. 01-5930). This Court consolidated the two appeals on July 26, 2001, and conducted oral argument on January 31, 2003. Thereafter, on February 24, 2003, Plaintiffs filed a motion to dismiss the appeals for lack of jurisdiction. By order issued on April 11, 2003, this Court denied the motion to dismiss.

A. TennCare Enrollment and Eligibility

The Tennessee Department of Health ("TDH") administers the TennCare program for the State of Tennessee. Tenn.Code Ann. § 71-5-104. The TennCare program is a federal waiver plan under the Medicaid Act approved by the Secretary of Health and Human Services under 42 U.S.C. § 1315. The waiver eliminated certain requirements for eligibility for medical benefits under the Medicaid Act.

Under the TennCare program, Tennessee provides medical assistance to eligible persons through managed care organizations rather than through traditional fee-for-service arrangements with providers. TennCare coverage is extended to three groups of individuals: (1) existing Medicaid beneficiaries and those who meet Medicaid's financial and/or medical eligibility requirements; (2) the uninsured; and (3) the uninsurable. Tenn. Comp. R. & Regs. 1200-13-12-.02(2)(a) 2 and 3. The TennCare regulations define uninsured persons as:

[A]ny person[s] who as of March 1, 1993 ... did not have coverage under an individual health insurance policy or who did not have (either directly or through a family member) coverage under, or access to, employer-sponsored health insurance or to another government plan, and continues to lack this access....

TENN. COMP. R. & REGS. 1200-13-12-.01(36). Persons eligible for TennCare coverage as uninsureds can enroll during periods of open enrollment. Tenn. Comp. R. & Regs. 1200-13-13-.03(1)(d). The open enrollment period continues until the program reaches 85% of the maximum enrollment cap for that year. TENN. COMP. R. & REGS. 1200-13-13-.03(1)(d).

The TennCare regulations define uninsurable persons as "[A]ny person[s] who are unable, because of an existing medical condition, to purchase health insurance, but who meets the guidelines of the [program]." Tenn. Comp. R. & Regs. 1200-13-12.-.02(35). Persons eligible for TennCare coverage as uninsurables can enroll at any time. TENN. COMP. R. & REGS. 1200-13-12-.03(1)(b) 2.

To enroll in the TennCare program, an applicant must answer a series of written questions and submit the completed forms to the TennCare Bureau. The same application is used for both uninsured and uninsurable applicants. Applicants are not required to reflect on the application whether they are seeking medical insurance as an uninsured or uninsurable person.

The TennCare regulations state that enrollment in the program is complete when the "person eligible for enrollment has selected a managed care plan from those available in the area where the person resides, the application has been approved by the Bureau of TennCare, and when any applicable premiums have been paid." Tenn. Comp. R. & Regs. 1200-13-12-.03(1). The regulations further provide that "[e]nrollment shall be deemed complete retroactive to the date of the original application, if that application is approved." Tenn. Comp. R. & Regs. 1200-13-12-.01(1). This is consistent with the Medicaid regulations and waiver that require approval of medicaid coverage up to three months from the date of the approved application.

However, if an application is denied, the TennCare regulations require that written notice to the applicant include the following:

1. An explanation of the reasons for the Bureau's actions, including a brief statement of the factual basis and the rule or contract provision relied upon by the Bureau;

2. An explanation of the circumstances under which the TennCare applicant can request an appeal; and

3. An explanation of the TennCare applicant's right to submit documents or other information in support of a request for appeal.

TENN. COMP. R. & REGS. 1200-13-12-.11(3)(b). Furthermore, an applicant may appeal the denial of TennCare coverage within 30 days after the date of the notice of denial. TENN. COMP. R. & REGS. 1200-13-12-.11(3)(a).

B. Plaintiff Hamby's Application Process

In 1995, Hamby, then sixty-one years old, was treated for skin cancer and testicular cancer. Hamby applied for TennCare coverage in December of 1995. Because Hamby had not yet received a response from the TennCare Bureau regarding his December 1995 application, Hamby completed and mailed a second application to the Bureau in February of 1996.

On his applications, Hamby stated that he had not been turned down for a health insurance policy other than Medicaid or Medicare. The TennCare Bureau denied both of Hamby's applications. The TennCare Bureau sent Hamby a written notice, dated March 20, 1996, which provided in part:


Your [February 1996] application was received after the end of an open enrollment period.

. . . .

If you or someone in your family has lost or cannot get health insurance because of a medical condition, fill in the attached appeal form and return it to us. You and your family members may qualify for TennCare because you are uninsurable. Uninsurable people can enroll in TennCare at any time.

. . . .

There are three ways to qualify for TennCare. We only checked one way. You may also be eligible if you are uninsurable (you lose or cannot get health insurance because of a medical condition you have) or if you qualify for Medicaid.

. . . . REMEMBER! Even if you are not eligible for TennCare or Medicaid... you can apply later if the facts about you change.

(J.A. at 211-12.)

In June of 1996, Hamby sent a third application to the TennCare Bureau, in which he indicated that he had been denied health insurance. Hamby's third application was received by the TennCare Bureau on June 12, 1996. The TennCare Bureau later informed Hamby that he was enrolled in the program effective June 12, 1996.

In June of 1997, Hamby filed an appeal and declaratory ruling requesting that his enrollment relate back to the date of his original application in December of 1995. On June 12, 1998, the Administrative Law Judge ("the ALJ") issued an order finding Hamby eligible for TennCare coverage based on his second application submitted in February of 1996. The ALJ reasoned that the Commissioner was required to open TennCare enrollment during the...

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