Koenning v. Suehs

• Decision Date: 18 September 2012
• Docket Number: Civil Action No. V–11–6.
• Citation: 897 F.Supp.2d 528
• Parties: Bradley KOENNING, Brian Martin, and Morgan Ryals, Plaintiffs, v. Thomas SUEHS, in his official capacity as Executive Commissioner, Texas Health and Human Services Commission, Defendant.
• Court: U.S. District Court — Southern District of Texas

897 F.Supp.2d 528

Bradley KOENNING, Brian Martin, and Morgan Ryals, Plaintiffs,

v.Thomas SUEHS, in his official capacity as Executive Commissioner, Texas Health and Human Services Commission, Defendant.

Civil Action No. V–11–6.

United States District Court,

S.D. Texas,

Victoria Division.

Sept. 18, 2012.

Maureen O'Connell, Austin, TX, for Plaintiffs.

Drew L. Harris, Office of the Attorney General, Jonathan Franklin Mitchell, Douglas Dean Geyser, Texas Attorney General, Austin, TX, for Defendant.

MEMORANDUM OPINION AND ORDER

JOHN D. RAINEY, Senior District Judge.

Bradley Koenning (“Koenning”), Brian Martin (“Martin”), and Morgan Ryals (“Ryals”) (collectively “Plaintiffs”) are three disabled young adults who allege that they require custom power wheelchairs with integrated standing features (“mobile standers”) to meet their medical, functional, and mobility needs. Defendant Thomas Suehs, Executive Commissioner of the Texas Health and Human Services Commission, (hereinafter “THHSC”),¹ actingthrough the Texas Medicaid and Healthcare Partnership (TMHP), denied Plaintiffs' requests for mobile standers based solely upon THHSC policy that categorically excludes this item from Medicaid coverage. Plaintiffs allege that THHSC's blanket policy excluding mobile standers contravenes federal Medicaid law and policy, and is therefore unlawful.

Now pending before the Court are Plaintiffs' and THHSC's cross motions for summary judgment (Dkt. Nos. 19 & 21, respectively). The Parties have responded to each other's motions and filed replies, surreplies, and supplemental memoranda. (Dkt. Nos. 24, 26–31.) After considering the issues so exhaustively briefed by the Parties, the record, and the applicable law, the Court is of the opinion that THHSC's motion (Dkt. No. 21) should be DENIED, Plaintiffs' motion (Dkt. No. 19) should be GRANTED in part and DENIED in part, and this case should be REMANDED to TMHP for further action consistent with this Order.

I. Statutory BackgroundA. Federal Medicaid Requirements

Medicaid is a cooperative Federal–State program designed to help states provide medical assistance to financially-needy individuals, with the assistance of federal funding. 42 U.S.C. § 1396 et seq.; Schweiker v. Hogan, 457 U.S. 569, 572, 102 S.Ct. 2597, 73 L.Ed.2d 227 (1982). The federal Medicaid program is administered by a federal agency, Centers for Medicare & Medicaid Services (CMS), and participating States must designate a single state agency to administer their Medicaid program. See generally42 U.S.C. § 1396a.

While state participation in Medicaid is optional, “once a state chooses to join, it must follow the requirements set forth in the Medicaid Act and its implementing regulations.” S.D. v. Hood, 391 F.3d 581, 586 (5th Cir.2004) (quoting Evergreen Presbyterian Ministries, Inc. v. Hood, 235 F.3d 908, 915 (5th Cir.2000)); see also Wilder v. Va. Hosp. Ass'n, 496 U.S. 498, 502, 110 S.Ct. 2510, 110 L.Ed.2d 455 (1990); Harris v. McRae, 448 U.S. 297, 301, 100 S.Ct. 2671, 65 L.Ed.2d 784 (1980). To participate, a state must submit a plan to the Secretary of the Department of Health and Human Services that meets the requirements of 42 U.S.C. § 1396a(a). Wilder, 496 U.S. at 503, 110 S.Ct. 2510. The plan must, among other things, identify the categories of service available to eligible beneficiaries, establish reasonable standards for determining the extent of medical assistance available under the plan, and ensure that each service included in the plan is “sufficient in amount, duration, and scope to reasonably achieve its purpose.” 42 U.S.C. §§ 1396b(a)(1), 1396a(a), 1396a(a)(17); 42 C.F.R. § 440.230(b). Once a state's plan is approved, the federal government subsidizes the state's medical-assistance services. See42 U.S.C. § 1396; Alexander v. Choate, 469 U.S. 287, 289 n. 1, 105 S.Ct. 712, 83 L.Ed.2d 661 (1985).

Participating states must provide medical assistance to the “categorically needy,” which includes financially-needy blind, aged, and disabled individuals; pregnant women; and children. 42 U.S.C. § 1396a(a)(10)(A). States may also choose to furnish medical assistance to the “medically needy,” which consists of individuals who do not qualify under a federal program but still cannot afford adequate medical care. Id. § 1396a(a)(10)(C); Schweiker v. Gray Panthers, 453 U.S. 34, 37, 101 S.Ct. 2633, 69 L.Ed.2d 460 (1981).

Once a state decides which group(s) will receive medical assistance under its plan, the state then determines which services it will provide. 42 U.S.C. § 1396d(a). To receive federal approval, the Medicaid Act mandates that a plan include seven enumerated medical services—inpatient hospital, outpatient hospital, laboratory and x-ray, nursing facility, physician, nurse-midwife, and nurse-practitioner services. Id. §§ 1396a(a)(10), 1396d(a)(1)-(5), (17), (21). A state may also elect to provide optional medical services, such as dental services, prosthetics, and prescription drugs. 42 U.S.C. §§ 1396a(a)(10)(A), 1396d(a). Once the state offers an optional service, it must comply with all federal statutory and regulatory mandates with respect to that service. See Hood, 391 F.3d at 586.

The provision of “home health services”—which are medically-prescribed services provided to a Medicaid recipient at his or her place of residence—is a mandatory requirement for individuals who are entitled to nursing facility services. 42 C.F.R. §§ 440.210(a)(1), 440.70(a). If a recipient receives home health services, the state also must provide “medical supplies, equipment, and appliances suitable for use in the home” as part of the program. Id. §§ 440.70(b)(3), 441.15(a)(3). Durable medical equipment (DME)—which includes, for example, iron lungs, oxygen tents, hospital beds, wheelchairs, and standers—is a required service under the Medicaid Act if the recipient qualifies for home health services. See42 U.S.C. §§ 1396a(a)(10)(D), 1395x(n). Federal law does not presently define the DME benefit; however, CMS has provided official guidance concerning the legal requirements governing Medicaid coverage of DME. Letter from Sally K. Richardson, Director of Centers for Medicaid and State Operations, Sept. 4, 1998, (“DeSario Letter”), available at http:// www. cms. gov/ smdl/ downloads/ SMD 090498. pdf (last visited Sept. 18, 2012).

The Medicaid Act identifies the due process rights of Medicaid applicants and participants, including written notice and the opportunity for a fair hearing when assistance or services are denied. 42 U.S.C. § 1396a(a)(3); 42 C.F.R. § 431.200 et seq. Applicable federal regulations further specify that “the hearing system must 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 any additional standards specified in this subpart.” 42 C.F.R. § 431.205(d).

B. Texas Medicaid Statutes, Rules, and Policies

The Texas Medicaid Program is administered by Defendant THHSC, the designated single state Medicaid agency. Tex. Gov't Code § 531.021(a). THHSC contracts with TMHP to administer certain aspects of the Medicaid program, including the prior authorization process, whereby approval is granted or denied for certain types of medical care, treatment, or equipment. (Perez Decl., Dkt. No. 21, Ex. 2 ¶ 12.)

As proscribed by federal regulations, THHSC cannot delegate its authority to issue rules or policies on program matters to contracted entities such as TMHP. 42 C.F.R. § 431.10(e)(1). Rather, TMHP must act in conformity with all statutory and regulatory requirements governing the Texas Medicaid program when deciding whether certain DME will be approved and subsequently paid for by Medicaid. Id. § 431.10(e)(3). In turn, THHSC must comply with the requirements of the Medicaid Act and implementing regulations when promulgating rules and establishing Medicaid policy. See Hood, 391 F.3d at 586.

Like all states, Texas Medicaid must provide DME to beneficiaries who are eligible for home health services and have a medical need for such equipment. See42 C.F.R. §§ 440.70(b)(3), 441.15(a)(3). As noted in Part I.A, supra, the term “DME” has no federal Medicaid definition. Texas Medicaid, however, defines DME as “[m]achinery or equipment which meets one or both of the following criteria: (A) the projected term of use is more than one year; or (B) reimbursement is made at a cost more than $1,000.” 1 Tex. ADmin. Code § 354.1031(b)(12). By state policy, DME is defined as medical equipment or appliances that are manufactured to withstand repeated use, ordered by a physician for use in the home, and required to correct or ameliorate a client's disability, condition, or illness. 2010 Texas Medicaid Provider Procedures Manual (TMPPM) Dme Handbook § 1.2.2.

Texas Medicaid requires prior authorization of most items of DME, including custom power wheelchairs, as a pre-condition to Medicaid reimbursement. 1 Tex. Admin. Code §§ 354.1035(b)(1) and 354.1039(a). TMHP makes DME prior authorization determinations, and when a request is denied, TMHP must send a written denial notice to the Medicaid beneficiary. Id. § 357.11(b). THHSC provides administrative hearings to Medicaid beneficiaries who are denied items of DME as non-covered, and THHSC regulations governing such hearings require hearing officers to sustain the denial if it is supported by agency policy. Id. § 357.23(e).

C. THHSC's Policy Exclusion of Mobile Standers

By THHSC rule, a custom power wheelchair is an item of DME available through the Medicaid home health benefit and is defined as a “customized, specifically tailored or individualized, powered wheelchair[ ] including appropriate medically justified seating, supports, and equipment not to exceed an amount specified by the department.” 1 Tex. Admin. Code § 354.1039(a)(4)(C)(i)(II). THHSC has no established cost ceiling for custom power wheelchairs. (Zolondek Dep., Dkt. No. 19, Ex. 4 at 32:22–24; Cannizzaro Dep., Id., Ex. 5 at 63:9–12.)

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