Markva v. Haveman

• Decision Date: 11 October 2001
• Docket Number: No. 00-CV-10437-BC.,00-CV-10437-BC.
• Citation: 168 F.Supp.2d 695
• Parties: Richard MARKVA, Deanna Markva, Beverly Langsdon, and Peggy Otler, on behalf of themselves and others similarly situated, Plaintiffs, v. James K. HAVEMAN, Jr., in his official capacity as Director, Michigan Department of Mental Health, and Douglas E. Howard, in his official capacity as Director, Michigan Family Independence Agency, Defendants.
• Court: U.S. District Court — Eastern District of Michigan

168 F.Supp.2d 695

Richard MARKVA, Deanna Markva, Beverly Langsdon, and Peggy Otler, on behalf of themselves and others similarly situated, Plaintiffs, v. James K. HAVEMAN, Jr., in his official capacity as Director, Michigan Department of Mental Health, and Douglas E. Howard, in his official capacity as Director, Michigan Family Independence Agency, Defendants.

No. 00-CV-10437-BC.

United States District Court, E.D. Michigan, Northern Division.

October 11, 2001.

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Terri L. Stangl, Jacqueline Doig, Saginaw, MI, for plaintiffs.

William R. Morris, Michigan Department of Attorney General, Social Services Division, Lansing, MI, for defendants.

OPINION AND ORDER GRANTING SUMMARY JUDGMENT FOR PLAINTIFFS, GRANTING IN PART AND DENYING IN PART DEFENDANTS' MOTION TO DISMISS AND FIRST MOTION FOR SUMMARY JUDGMENT, AND DENYING DEFENDANTS' SECOND MOTION FOR SUMMARY JUDGMENT

LAWSON, District Judge.

Title XIX of the Social Security Act, 42 U.S.C. §§ 1396, et seq., established the federal Medicaid program which is intended to provide financial assistance to needy individuals seeking medical care and treatment. The legislation creates a cooperative program in which participating states receive federal assistance to administer their individual plans under federally-established rules. A participating state's plan must, however, comport with the requirements of the Social Security Act and the regulations promulgated by the Secretary of Health and Human Services. 42 U.S.C. §§ 1396, 1396a, 42 C.F.R. § 435.10. Federal law requires each state to designate a state agency to administer the program. 42 U.S.C. § 1396a(a)(5). Michigan has created the Family Independence Agency for this purpose.

The plaintiffs in this case are recipients or potential recipients of Medicaid funds who have brought suit for themselves and others similarly situated against state officials pursuant to 42 U.S.C. § 1983, alleging a violation of rights established under the laws of the United States regulating the state's Medicaid plan. Under the State of Michigan's plan, certain needy individuals must incur a specific amount of monthly out-of-pocket expenses for medical care before they are eligible to receive Medicaid payments. This personal expense figure is referred to as the "spend down" amount, and it is calculated by a formula based on household income. The spend down formula allows certain exclusions from income for the needs of the individual Medicaid applicant and certain other specifically-described household residents. A greater number of exclusions results in a lower net household income, and thus a lower spend down amount.

In this case, the plaintiffs are caring for their grandchildren within their household. Although the state's plan would allow parents to exclude from household income an amount allocated to the care of a resident minor child, it does not allow grandparents to claim that exclusion. The plaintiffs claim that the state's distinction between parent caretakers who are allowed this exclusion, and non-parent caretakers who are nonetheless relatives of the children in their care but are denied the exclusion, violates the federal statutes and regulations governing the state's Medicaid plan. The plaintiffs seek an injunction that compels the state directors of the Department of Community Mental Health and the Family Independence Agency (which administer the state Medicaid plan) to allow resident relative caretakers to claim the exclusion for dependent children and adjust the spend down amount downward. The defendants have filed a motion to dismiss or in the alternative for summary judgment seeking dismissal of the complaint.

The Court heard oral argument of the parties on their respective motions on March 8 and March 14, 2001. Since that time, the plaintiffs have filed an amended complaint and a corrected amended complaint, and the defendants have filed a second motion for summary judgment, to which the plaintiffs have responded. Thereafter, the plaintiffs filed a second amended complaint by leave granted in accordance with the parties' stipulation. The Court has also determined that the matter should proceed as a class action based on the parties' stipulation and has certified the class in an order entered on October 10, 2001. The Court now finds that the state plan's distinction between parent caretakers and non-parent relative caretakers in calculating a Medicaid recipient's spend down amount violates the federal statutes and regulations governing the administration of the state Medicaid plan. The Court, therefore, will grant summary judgment in favor of the plaintiffs and order permanent injunctive relief, deny in part the defendants' motion to dismiss, and deny the defendants' first and second motions for summary judgment.

I.

Plaintiffs Richard and Deanna Markva are grandparents acting as sole caretakers of their seven-year-old grandson, Matthew Markva, Jr., who has resided with them since he was two months old. Richard and Deanna Markva are married; Richard is Matthew Markva's sole legal guardian under a May 16, 1994 order by the Isabella County Probate Court. Richard is on disability leave from his employment due to recurring health problems for which he has been prescribed several medications costing approximately $460 per month. He receives approximately $823 per month through his employee disability coverage. Deanna Markva was employed as a janitor and received $329 per month. She also has health problems and as a former cancer patient she uses prescription drugs costing approximately $25 per month. At the time of the motion hearing, Ms. Markva had left her employment to care for Richard and Matthew. In addition, Matthew Markva receives $137 per month in cash assistance on his own application.

Plaintiff, Beverly Langsdon, is raising her 14 year old grandson, Christopher. She receives $1,009 per month in Social Security disability benefits and Christopher receives $330 per month in Social Security survivors benefits. Ms. Langsdon recently was approved to receive $10 per month in Food Stamps.

The fourth plaintiff, Peggy Otler, was added by Second Amended Complaint which was filed on September 28, 2001 pursuant to stipulation of the parties and order granting leave. Ms. Otler resides with her husband, Jerome Otler, in Genesee County, Michigan. Ms. Otler also lives with three grandchildren who are her wards: Jalen Cook, an eight-year old boy whose parents do not live with or support him; Venesia Crayton, a five-year old girl whose parents do not live with or support her; and Charles Williams, a one-year old boy whose parents do not live with him, although he receives $15 per month in child's Social Security benefits on his father's account. The Otlers' two youngest children, Jerome Otler, II and Ikeya Otler, also live with them in Genesee County. Although both Ms. Otler and her husband are not employed, they receive income from various public welfare programs. For instance, Jerome Otler receives $776 per month in Veterans Administration (VA) benefits for total disability, and $172 per month in housebound VA benefits. Peggy Otler receives $240 in spouse's VA benefits. Jerome Otler, II receives $132 dependent's VA benefits. Ikeya Otler also receives $132 in dependent's VA benefits. Venesia Crayton, Jalen Cook, and Charles Williams receive $396 in Family Independence Program (FIP) benefits. Charles Williams receives $15 in dependent's Social Security benefits.

The Otler household's total combined income is $1863 per month or $22,356 per year for their household of 7 persons. The Otlers also receive about $223 per month in Food Stamps. Peggy Otler suffers from several severe medical conditions for which she requires ongoing treatment, including uncontrolled hypertension, asthma, and severe back and joint pain that recently was diagnosed as secondary to lupus.

Defendant, James Haveman, is the Director of the Michigan Department of Community Health (MDCH), which is responsible for administration of the federal and state jointly funded Medicaid program. Defendant, Douglas Howard, is the Director of the Michigan Family Independence Agency (MFIA), which is responsible for administration of public assistance programs at local levels including making determinations of whether applicants meet the eligibility requirements of Medicaid.

Michigan has authorized its participation in the federal Medicaid program through Mich. Comp. Laws §§ 400.105, et seq. The United States Department of Health and Human Services (HHS) oversees the state's administration of Medicaid benefits to ensure that the state is in compliance with federal law and thus should receive matching federal funds. See Harris v. McRea, 448 U.S. 297, 301, 100 S.Ct. 2671, 65 L.Ed.2d 784 (1980).

In August 2000, the Markvas applied for Medicaid benefits for themselves through the Saginaw County FIA. They were approved for their Medicaid benefits in October 2000, with eligibility to begin January 1, 2001. Using a formula that was adopted in 1999 for establishing eligibility for assistance, the FIA determined that in order to receive benefits, Mr. and Mrs. Markva would be required to pay a $306 monthly spend down amount prior to monthly activation of Medicaid coverage. In calculating the spend down, the FIA assumed that the Markvas' income was limited to Richard's disability pay (because Deanna had quit her job to care for her disabled husband and their grandchild) and that such pay was used to support only Richard and Deanna Markva. Furthermore, FIA's determination was based on the assumption that both Richard and Deanna Markva qualified as non-parent caretaker relatives. The FIA did not, however, exclude from household income any amount allocated for the monthly care of Matthew.

The FIA arrived at the $306 figure by first referring to a Michigan Department of Social Services manual which establishes that individuals...