New York City Health & Hospitals Corp. v. Perales
| Decision Date | 10 March 1995 |
| Docket Number | D,No. 227,227 |
| Citation | 50 F.3d 129 |
| Parties | , 47 Soc.Sec.Rep.Ser. 240, Medicare & Medicaid Guide P 43,105 NEW YORK CITY HEALTH & HOSPITALS CORPORATION; Medical Society of the State of New York; Sidney Finkel; and John A. Bleski, Plaintiffs-Appellees, and Benedictine Hospital, et al., Plaintiffs-Hospital-Intervenors-Appellees, and Midwood Ambulance & Oxygen Service, Inc., et al., Plaintiffs-Ambulance-Intervenors-Appellees, v. Cesar A. PERALES, as Commissioner of Social Services of the State of New York, Defendant-Appellant, Louis W. Sullivan, as Secretary of the United States Department of Health and Human Services, Defendant. ocket 93-6306. |
| Court | U.S. Court of Appeals — Second Circuit |
Judy E. Nathan, Asst. Atty. Gen. of N.Y.; New York City (G. Oliver Koppell, Atty. Gen. of N.Y.; New York City, of counsel), for defendant-appellant.
Peter F. Nadel, New York City (David A. Florman, Rosenman & Colin, New York City, of counsel; Jay G. Safer, LeBoeuf, Lamb, Greene & Macrae, New York City of counsel), for appellees. *
Jay G. Safer, New York City (LeBoeuf, Lamb, Greene & Macrae, New York City, of counsel; Peter F. Nadel, David A. Florman, Rosenman & Colin, New York City, of counsel), for appellees. *
Before: LUMBARD, CARDAMONE and MINER, Circuit Judges.
The Eleventh Amendment is at the center of this appeal. We recognize the always existing tension between the supremacy of federal law and the limitation on federal judicial power--established by the Eleventh Amendment--that enshrines the states' sovereign immunity. Eleventh Amendment jurisprudence has dealt with these conflicting concepts by using notions of an ongoing wrong, remedied prospectively, contrasted with a past wrong for which compensation is sought, termed retroactive relief. The contrast between prospective relief, permitted under the Eleventh Amendment, and retroactive relief, barred by that Amendment, is far from that between day and night. It is more like examining a subject in that half-light called the gloaming, where to identify it accurately one needs to have the instincts of Argos, Odysseus' dog, who recognized his master dressed as a beggar upon his return home after 20 years' absence. Homer, The Odyssey 196-97 (W.H.D. Rouse trans., 1937).
Defendant Cesar A. Perales (Commissioner), as Commissioner of the New York State Department of Social Services (DSS or Department), challenges two orders of the United States District Court for the Southern District of New York (Lowe, J.), that construe the Department's obligations to plaintiffs New York City Health & Hospitals Corporation, Sidney Finkel, John A. Bleski, et al. (plaintiffs or health care providers) under a prior judgment of the district court. The orders, reported at 833 F.Supp. 353 and 1994 WL 17945 respectively, require the Commissioner to provide full Medicaid reimbursements to plaintiffs for medical services that were performed prior to the date of the district court's judgment, but for which reimbursement claims were not filed with DSS until after the date of judgment.
The parties agree that the retroactive-prospective dichotomy of relief permissible under the Eleventh Amendment hinges upon when, as a result of being unable to recover a certain portion of their fees, the injury to health care providers occurs. Whether injury occurs upon the date health care providers render the service for which reimbursement is due or whether the injury occurs when an invalid regulation is applied to deny them their full reimbursement is the question we must answer.
Plaintiff New York City Health and Hospitals Corporation is a New York public benefit corporation created by the State of New York. It is a principal provider of hospital services for low-income patients in New York
City. The other plaintiffs are hospitals, individual doctors, an organization of doctors and a provider of ambulance services, each of which provides health care services in New York State. All of the plaintiffs provide services for dually eligible and other qualified beneficiaries under the Medicare and Medicaid Acts. Defendant Cesar A. Perales, the Commissioner of DSS, is the New York State official responsible for the operation of the Medicaid program in New York, and defendant Louis W. Sullivan, a named defendant who has been succeeded by Donna E. Shalala, as Secretary of the United States Department of Health and Human Services (HHS), is the person who oversees Medicare and Medicaid at the federal level.
To properly understand the issue on this appeal, it is helpful to review briefly the facts of a predecessor case, New York City Health and Hosp. Corp. v. Perales, 954 F.2d 854 (2d Cir.), cert. denied, --- U.S. ----, 113 S.Ct. 461, 121 L.Ed.2d 369 (1992). That case challenged a New York regulation, 18 NYCRR Sec. 360-7.7 (1989), that effectively eliminated health care providers' right to be paid reasonable compensation upon treating poor Medicare patients. In accepting plaintiff's position we struck down the just cited New York regulation as violative of the Medicare Act, Title XVI-II of the Social Security Act, 42 U.S.C. Secs. 1395-1395ccc, and the Medicaid Act, Title XIX of the Social Security Act, 42 U.S.C. Secs. 1396-1396v. See Perales, 954 F.2d at 855.
Medicaid, a joint federal and state funded system in which New York State participates, subsidizes medical care for the needy, regardless of age. A state wishing to participate in Medicaid proposes a plan that includes, among other things, a schedule of payment rates that the state designates for various kinds of medical care. The plan must then be approved by the Secretary of HHS. Upon the Secretary's approval of a state's plan, the federal government assists the state in its reimbursement program, supplying federal Medicaid funds. Health care providers willing to treat Medicaid patients must agree to accept the designated Medicaid rate for their services and not ask the patient to pay additional money.
Medicare is a federally funded medical insurance program for persons who are 65 years of age and older and certain disabled individuals. Medicare "Part A" covers 100 percent of the reasonable inpatient hospital costs. In addition, people who are Medicare-eligible may voluntarily obtain supplementary insurance--known as Medicare "Part B"--for additional medical care, including certain physician services, hospital outpatient services, and other health services not covered under Part A. As is the case with private insurance, a Medicare-eligible person must pay insurance premiums for Part B coverage. Under Part B, the federal government pays 80 percent of the reasonable costs and charges of covered services. Reasonable costs and charges are established pursuant to the Medicare Act and regulations. In addition to premiums, Part B insureds are responsible for paying the annual deductible and the remaining "coinsurance" amount, i.e., 20 percent of reasonable costs and charges of covered services. See 954 F.2d at 856.
Medicare and Medicaid protection occasionally overlap, generally for poor elderly and disabled individuals who are eligible under both programs. Congress recognized that the poor Medicare-eligible generally would not be able to afford to enroll in the optional Part B Medicare coverage because they would be unable to pay the insurance premiums, the annual deductible, and the 20 percent coinsurance. The Medicare Act therefore provides that a state may agree to pay Part B insurance premiums on behalf of such poor elderly and disabled--known as "dual eligibles" or "crossovers"--and thereby assist such individuals to acquire Part B coverage. See 42 U.S.C. Sec. 1395v (1988 & Supp. V 1993), as elaborated by 42 C.F.R. Sec. 407.40-407.50 (1993). These dual eligibles are accordingly enrolled in the Medicare Part B program by the state just as less needy individuals enroll themselves when they choose to obtain Part B coverage and pay their own insurance premiums. The federal government contributes funds to subsidize these state "buy-in" arrangements. New Up until 1987 New York paid the premiums, the annual deductible, and the 20 percent copayment for buy-in dual eligibles. As of January 1 of that year New York altered its practice by promulgating the predecessor of Sec. 360.7-7, the regulation at issue in Perales. The regulation provided that in the case of dual eligibles covered by Part B through a buy-in agreement, "New York [would] not pay any cost-sharing amounts [annual deductible and copayments] except ... [w]hen the 80% of reasonable costs or charges that Medicare reimburses amounts to less than the Medicaid rate, [in which case] New York [would] pay the difference." 1 New York City Health and Hosp. Corp. v. Perales, 833 F.Supp. 353, 356 (S.D.N.Y.1993). The regulation also prohibits health care providers from collecting any money from buy-in crossovers themselves. The principal effect of the regulation was that in New York State a dual eligible's health care providers almost never collected more than 80 percent of their reasonable costs or charges, because the scheduled Medicaid payments were invariably less than 80 percent of the corresponding reasonable costs or charges of a given type of service under Medicare. See Perales, 954 F.2d at 857.
York has such a buy-in agreement with the Secretary.
Plaintiffs, as health care providers, brought suit against defendants, the Commissioner of DSS and the Secretary of HHS, in 1987 challenging the regulation on the grounds it violated the Medicare Act and the Medicaid Act. The district court granted summary judgment to the defendants. Upon appeal, we ruled the state regulation violated both acts, and reversed and remanded the case to the district court for entry of summary judgment in favor of the plaintiffs. Perales, 954 F.2d at 863.
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