New York State Dept. of Social Services v. Bowen, CV 86-2132.
| Decision Date | 28 April 1988 |
| Docket Number | No. CV 86-2132.,CV 86-2132. |
| Parties | The NEW YORK STATE DEPARTMENT OF SOCIAL SERVICES, Cesar Perales, as Commissioner of the New York State Department of Social Services, and Rosel Hoevals, by Her Representative and Next Friend, William Kaufman, SS # XXX-XX-XXXX, Plaintiffs, v. Otis R. BOWEN, M.D., Secretary of the United States Department of Health and Human Services, Defendant. |
| Court | U.S. District Court — Eastern District of New York |
Robert Abrams, Atty. Gen. by Marla Tepper, New York City, for plaintiffs.
Andrew J. Maloney, U.S. Atty. by Kevan Cleary, Asst. U.S. Atty., Brooklyn, N.Y., for defendant.
Plaintiff, The New York State Department of Social Services ("DSS" or the "State Agency") seeks reimbursement of funds expended in paying for a now-deceased individual's treatment at a convalescent facility. Reimbursement is sought from the United States Department of Health and Human Services ("HHS" or the "Federal Government") on the ground that the Federal Government improperly denied payment of the relevant services under the federally administered Medicare program thus requiring payment by the State Agency pursuant to the State administered Medicaid program. Presently before the Court is the Federal Government's motion to dismiss or in the alternative to stay or remand this case to HHS for further proceedings. For the reasons that follow, the stay is denied and the complaint is dismissed.
The Medicare program establishes a federally funded system of health insurance for the aged and disabled. The payments at issue here arise under Part A of Medicare which provides basic insurance against the cost of, among other things, post-hospitalization extended care. 42 U.S.C. § 1395d(a)(2)(A). Such expenses are covered by Medicare if they are deemed to be primarily medical in nature and if they are reasonable and necessary to the patient's treatment. 42 U.S.C. § 1395f(a)(2)(C). While purely custodial post-hospitalization expenditures are not covered by Medicare, see 42 U.S.C. § 1395y(a)(9), such expenditures are often covered by Medicaid—a jointly funded federal-state welfare program that pays the medical expenses of individuals who cannot afford to do so.
Since New York's Medicaid program covers post-hospitalization custodial services, Medicaid will reimburse the providers of such services if Medicare expenses are denied. This is precisely the factual scenario that led to this lawsuit.
On August 6, 1984, following a 98-day hospital stay, Rosel Hoevals, a 95 year-old widow, was admitted to the Consolation Residence in West Islip, New York. Although Ms. Hoevals remained at Consolation Residence until her death on February 7, 1985, the dispute here arises out of payments covering the period between August 6, 1984 and September 4, 1984.
According to plaintiffs, Ms. Hoevals required and received skilled nursing care between August 6 and September 4, 1984, the cost of which should have been covered by Medicare. This theory was pursued by the State at the administrative level by an employee of DSS who Ms. Hoevals' daughter appointed to act as Ms. Hoevals' representative. Since Medicare's rejection of the State's argument resulted in payment of fees by DSS, the State seeks, through this lawsuit, to appeal the administrative decision of HHS denying Medicare coverage and to ultimately be reimbursed in the amount of the funds paid.
The merits of the decision denying Medicare coverage are not presently at issue. Rather, defendant's motion sets forth threshold questions. Specifically, defendant seeks dismissal of the complaint pursuant to Rules 12(b)(1) () and 12(b)(6) () of the Federal Rules of Civil Procedure and pursuant to Rule 17(a) of the Federal Rules of Civil Procedure for failure to name a real party in interest. Alternatively, defendant seeks: (1) a stay of this decision pending a decision of the Second Circuit in New York State Department of Social Services v. Bowen, 661 F.Supp. 1537 (S.D.N.Y.1987), app. pending, No. 87 Civ. 6200 (2d Cir.); or (2) upon a determination of the proper party plaintiffs, a remand for further administrative proceedings.
As an initial matter, the Court will consider whether to grant defendant's request to stay this proceeding pending a decision of the Second Circuit Court of Appeals in New York State Department of Social Services v. Bowen, 661 F.Supp. 1537 (S.D.N.Y.1987), app. pending, No. 87 Civ. 6200 (2d Cir.) ("DSS v. Bowen"). The Court notes that a stay would be proper if the ultimate opinion rendered in that case would dispose of the issues raised here. Arguing against imposition of a stay, plaintiffs argue that the case pending before the Court of Appeals is both factually and legally distinguishable. Although the case presently pending an appellate decision and the case before this Court share some common legal issues, the Court agrees with plaintiffs that the cases are distinguishable.
In DSS v. Bowen, the plaintiff State Agency requested administrative review of multiple determinations reached during the Federal administrative process and, in addition, challenged Federal regulations regarding the assignability of Medicare benefits. Here, in contrast, judicial review of a single decision in which the state participated is challenged. In addition, in the case pending before the Second Circuit, it appears that the District Court was not presented with the opportunity to pass upon the applicability of 42 U.S.C. § 1395gg(e)—a principle argument set forth by plaintiffs here. Thus, the appellate decision will likely shed no light on this Court's application of that section.
In light of these facts, the Court holds that a decision in the case presently pending before the Second Circuit will not necessarily dispose of all of the issues in this case. The Court concludes, therefore, that the more prudent course to take is to consider this case on the merits and risk a later remand if the appellate court holds otherwise. Accordingly, the Federal government's request for a stay is denied.
The named plaintiffs in this lawsuit are: (1) The New York State Department of Social Services; (2) Cesar Perales, an individual who appears in his capacity as the Commissioner of DSS; and (3) Rosel Hoevals by her representative William Kaufman, an employee of DSS who was appointed by Ms. Hoevals' daughter to act as Ms. Hoevals' representative during the administrative proceedings that preceded this lawsuit.
Plaintiffs assert that jurisdiction is proper pursuant to 42 U.S.C. §§ 1395ff and 405(g). Section 1395ff is part of the Medicare statute and provides that the initial determination of whether an individual is entitled to Medicare benefits is to be made by the Secretary of HHS (the "Secretary") in accordance with regulations prescribed by him. 42 U.S.C. § 1395ff(a). That section further provides that any individual dissatisfied with the Secretary's determination is entitled to an administrative hearing before the Secretary to the same extent as is provided in 42 U.S.C. § 405(b) and that such individual is then entitled to judicial review of the administrative decision as provided in section 405(g). 42 U.S.C. § 1395ff(b). Sections 405(b) and (g) are part of the Social Security Act that deals with old-age, survivors and disability insurance.
In order to state a claim, plaintiffs rely on the plain language of section 405(g) as well as two additional statutes—42 U.S.C. § 1395gg(e) and 42 U.S.C. § 1396a(a)(25). Section 1395gg(e) deals with payments made by the Secretary on behalf of individuals receiving medical care. Section 1396a(a)(25), commonly referred to as the "third party recovery" provision of the Medicare statute, obligates State agencies administering Medicaid programs to pursue any third party that may be liable for the payment of medical services in order to obtain reimbursement for funds expended by Medicaid. The Court will discuss each of plaintiffs' grounds in turn.
Citing the language of section 405(g), plaintiffs assert that named plaintiff William Kaufman's participation in the administrative proceedings entitles him to seek judicial review of the administrative decision denying Medicare coverage. Specifically, plaintiffs rely on the language of section 405(g) incorporated by reference into the Medicare statute that grants the right of judicial review to any individual who was "a party to" the administrative hearing from which judicial review is sought. See 42 U.S.C. § 405(g). Section 405(g) however, refers specifically to administrative hearings held in conformance with section 405(b). That section enumerates the individuals who may be parties to administrative hearings. Included in that list of individuals are wives, husbands, widows, children and other family members who can make a showing that their rights may be prejudiced by the Secretary's decision. Since State agencies and their employees are absent from the section 405(b) list, they are not included in the class of individuals to whom section 405(g) refers. Thus, the Court concludes that plaintiffs cannot claim that jurisdiction exists pursuant to section 405(g).
As noted above, section 1395gg(e) discusses payments made on behalf of individuals. The subsection of section 1395gg cited by plaintiffs is entitled "settlement of claims for benefits under section 1395gg on behalf of deceased individuals" and specifies the party to whom payment for covered services is to be made if the individual for whom the services at issue were provided is deceased. Here, plaintiffs rely on a provision authorizing payment to be made on behalf of deceased individuals to the "person or persons determined ... to have paid" for the deceased individual's...
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