Koss v. Norwood

Decision Date29 March 2018
Docket NumberCase No. 17 C 2762
Citation305 F.Supp.3d 897
Parties Alma KOSS et al., Plaintiffs, v. Felicia F. NORWOOD and James T. Dimas, Defendants.
CourtU.S. District Court — Northern District of Illinois

Robert Hugh Farley, Jr., Robert H. Farley, Jr., Ltd., Naperville, IL, Barbara J. Duffy, Pro Hac Vice, Jonathon David Bashford, Pro Hac Vice, Ryan Patrick McBride, Pro Hac Vice, Lane Powell PC, Seattle, WA, for Plaintiffs.

Brian Franklin Kolp, Michael D. Arnold, Office of the Illinois Attorney General, Chicago, IL, for Defendants.

Joan B. Gottschall, United States District Judge


In this putative statewide class action, plaintiffs Alma Koss, Wanda Wente, Mary Small, and Lessie Harris1 bring claims for prospective injunctive and declaratory relief against the Secretary of the Illinois Department of Human Services ("DHS") and the Director of the Illinois Department of Healthcare and Family Services ("HFS") under 42 U.S.C. § 1983 ; the Medicaid Act, 42 U.S.C. §§ 1396a et seq. , and its implementing regulations; Title II of the Americans with Disabilities Act ("ADA"), 42 U.S.C. § 12132 ; the Rehabilitation Act, 29 U.S.C. § 794(a) ; and the Due Process Clause of the Fourteenth Amendment. Plaintiffs' claims arise from delays in processing and administering their applications to be determined eligible for long-term Medicaid benefits used to pay for the cost of their care in nursing facilities ("NFs") or Supportive Living Facilities ("SLFs"). Compl. ¶ 2, ECF No. 1. The court has three motions before it. Defendants move under Federal Rule of Civil Procedure 12(b)(6) to dismiss the complaint for failure to state a claim upon which relief can be granted. Plaintiffs move for a preliminary injunction and to certify their proposed classes. See Fed. R. Civ. P. 23(a) and (b)(1) and (2). For the following reasons, the court grants the motions in part and denies them in part. The court enters a preliminary injunction requiring defendants to presume that applicants for long-term care Medicaid benefits be presumptively eligible after the expiration of the deadlines to decide their applications set forth in governing federal regulations. See 42 C.F.R. § 435.912.

A. The Medicaid Act

Enacted in 1965 as an amendment to the Social Security Act of 1935, Medicaid is a joint federal-state program that provides medical assistance to low income individuals. See 42 U.S.C. §§ 1396 et seq. Under the program, "the Federal Government provides financial assistance to States so that they may furnish medical care to needy individuals."

Planned Parenthood of Ind., Inc. v. Comm'r of Ind. State Dep't Health , 699 F.3d 962, 969 (7th Cir. 2012) (quoting Wilder v. Va. Hosp. Ass'n , 496 U.S. 498, 502, 110 S.Ct. 2510, 110 L.Ed.2d 455 (1990) ); see also Steimel v. Wernert , 823 F.3d 902, 907 (7th Cir. 2016). Although the federal government does not require states to participate in the Medicaid program, once they do, they "must comply with federal statutes and regulations." Bertrand v. Maram , No. 05-CV-0544, 2006 WL 2735494, at *1 (N.D. Ill. Sept. 25, 2006) (citing 42 U.S.C. § 1396a(a)(10) ), aff'd sub nom. Bertrand ex rel. Bertrand v. Maram , 495 F.3d 452 (7th Cir. 2007) ; accord Planned Parenthood of Ind. , 699 F.3d at 962 (quoting Collins v. Hamilton , 349 F.3d 371, 374 (7th Cir. 2003) ); see also , e.g. , 42 C.F.R. §§ 440.210, 440.220 (listing mandatory services a participating state must provide to the "categorically needy" and "medically needy").

"To ensure compliance with federal rules, participating states must submit proposed Medicaid plans and any subsequent amendments to the Centers for Medicare and Medicaid Services ("CMS") for approval." Planned Parenthood of Ind. , 699 F.3d at 969 (citing Douglas v. Indep. Living Ctr. of S. Cal., Inc. , 565 U.S. 606, 610, 132 S.Ct. 1204, 182 L.Ed.2d 101 (2012) ). The Medicaid Act authorizes the federal Secretary of Health and Human Services to withhold funds from any state that does not comply with federal requirements. 42 U.S.C. § 1396c ; Planned Parenthood of Ind. , 699 F.3d at 969 (citations omitted).

Applicants for long-term care Medicaid benefits must first be receiving or be eligible for basic Medicaid benefits. They must also submit additional financial information showing that they meet eligibility criteria. See 89 Ill. Admin. Code §§ 120.61, 120.64(k) ; 120.308 et seq. (West 2018) (governing eligibility); 42 U.S.C. §§ 1396p, 1396r–5.

Plaintiffs invoke three provisions of the Medicaid Act which specify what a state's plan "must" contain. 42 U.S.C. § 1396a(a). The first two concern eligibility determinations. In Count I, plaintiffs cite 42 U.S.C. § 1396a(a)(8), which requires a plan to "provide that all individuals wishing to make application for medical assistance under the plan shall have opportunity to do so, and that such assistance shall be furnished with reasonable promptness to all eligible individuals." Under § 1396a(a)(3), cited in Count II, a plan is required to "provide for granting an opportunity for a fair hearing before the State agency to any individual whose claim for medical assistance under the plan is denied or is not acted upon with reasonable promptness." To flesh those statutory provisions out, plaintiffs rely on 42 C.F.R. § 435.912, a federal regulation interpreting the Medicaid Act:

[ (c) ](3) Except as provided in paragraph (e) of this section, the determination of eligibility for any applicant may not exceed—
(i) Ninety days for applicants who apply for Medicaid on the basis of disability; and
(ii) Forty-five days for all other applicants.
(e) The agency must determine eligibility within the standards except in unusual circumstances, for example—
(1) When the agency cannot reach a decision because the applicant or an examining physician delays or fails to take a required action, or
(2) When there is an administrative or other emergency beyond the agency's control.

42 C.F.R 435.§ 912(c)(3), (e); see also § 435.912(a).

Returning to statutory language, the Medicaid Act provision at issue in Count III concerns not applications for assistance but payments for Medicaid claims. It requires a plan to

provide for claims payment procedures which (A) ensure that 90 per centum of claims for payment (for which no further written information or substantiation is required in order to make payment) made for services covered under the plan and furnished by health care practitioners through individual or group practices or through shared health facilities are paid within 30 days of the date of receipt of such claims and that 99 per centum of such claims are paid within 90 days of the date of receipt of such claims data with respect to the recipient and provider of a service and the nature of the service for which payment is claimed, to ensure the proper and efficient payment of claims and management of the program

42 U.S.C. § 1396a(a)(37).

As with the foregoing provisions of the Medicaid Act, plaintiffs invoke an implementing regulation. The regulation they cite requires payments, with exceptions no party contends apply here, to be made "within 12 months of the date of receipt." 42 C.F.R. § 447.45(d)(4) (West 2018); see also id. § 447.45(d)(1)(3) (setting shorter deadlines for certain categories of claims); § 447.45(d)(5) ("The date of receipt is the date the agency receives the claim, as indicated by its date stamp on the claim.").

B. Factual Background

The complaint alleges, and the evidence introduced with respect to the preliminary injunction motion shows, that receiving long-term care Medicaid benefits in Illinois is a two-step process. First, DHS makes an eligibility determination. A favorable eligibility determination does not start funds flowing to the applicant's NF or SLF, however. For payments to begin, the beneficiary must be processed as "admitted" in an HFS computer system called "MEDI." Decl. of Jane Blankenship ¶ 5, Sept. 1, 2017, ECF No. 47–2. Plaintiffs cite monthly DHS reports showing that thousands of applications remain pending in one of those two states—pending a decision on admission or deemed eligible but not yet admitted—for more than 90 days. See Long Term Care Report for SNF/SLF, ECF No. 9 Ex. A tbls. 1, 2 (as of Apr. 3, 2017).

When the complaint was filed, on April 12, 2017, plaintiffs ranged in age from 68 to 90 years old. Compl. ¶¶ 11–14. Each lived in an NF or SLF which participates in Illinois' Medicaid program. Id. Plaintiff Berta Christman has voluntarily dismissed her claims. ECF No. 20 at 1. The following paragraphs summarize the complaint's allegations regarding the individual plaintiffs except Christman.

Koss first applied for long-term care Medicaid benefits in August 2015. Compl. ¶ 54. She submitted allegedly missing documents the next month, and she had yet to receive a determination on her first application when the complaint was filed. Id. She filed a second application in June 2016. Id. In July 2016, DHS deemed her eligible for basic benefits retroactive to May 2016. Id. As a result, Koss alleges that the SLF at which she has lived since August 2015 has yet to be paid for the care it is providing her, as has her ophthalmologist. Id. Koss' ophthalmologist would not treat her due to the nonpayment, according to the complaint, and Koss became blind as a result. Id.

Wente applied for long-term care Medicaid benefits in October 2016. Compl. ¶ 55. Three times in the next five months DHS asked her to provide additional documents (many of which she alleges she had already provided). Id. She had not received a decision when the complaint was filed. Id. She alleges that she had not been able to pay fully for her the care she is receiving from the NF where she resides or pay for other medical expenses such as ambulance fees and medication copayments. Id.

Small submitted her application for long-term care Medicaid benefits in December 2015 or January 2016. Compl. ¶ 56. DHS asked for more information from Small in April 2016, which s...

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