Norman v. St. Clair

• Decision Date: 28 January 1980
• Docket Number: Nos. 77-1722,79-2471,s. 77-1722
• Parties: Nonnie Mae NORMAN et al., Plaintiffs-Appellants, v. Fred ST. CLAIR et al., Defendants-Appellees. Nonnie Mae NORMAN, et al., Plaintiffs-Appellees, v. Fred ST. CLAIR et al., and Patricia Roberts Harris, Secretary of Health and Human Resources, Defendants-Appellants. Nellie WILLIAMS et al., Plaintiffs-Cross Appellees. Minnie Merli, and all others similarly situated in her class, Plaintiff- Appellant, Cross-Appellee, v. Fred ST. CLAIR et al., and Patricia Roberts Harris, Secretary of Health and Human Resources, Defendants-Appellees, Cross-Appellants.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 1228

610 F.2d 1228

Nonnie Mae NORMAN et al., Plaintiffs-Appellants, v. Fred ST. CLAIR et al., Defendants-Appellees.

Nonnie Mae NORMAN, et al., Plaintiffs-Appellees, v. Fred ST. CLAIR et al., and Patricia Roberts Harris, Secretary of Health and Human

Resources, Defendants-Appellants.

Nellie WILLIAMS et al., Plaintiffs-Cross Appellees.

Minnie Merli, and all others similarly situated in her

class, Plaintiff- Appellant, Cross-Appellee, v. Fred ST. CLAIR et al., and Patricia Roberts Harris, Secretary of Health and Human

Resources, Defendants-Appellees, Cross-Appellants.

Nos. 77-1722, 79-2471.

United States Court of Appeals Fifth Circuit.

Jan. 28, 1980.

Dennis L. Horn, Central Miss. Legal Serv., Hazlehurst, Miss., Gill Deford, Nat'l Senior Citizens Law Center, Los Angeles, Cal., for plaintiffs-appellants.

Thomas E. Childs, Jr., Asst. Atty. Gen., State of Mississippi, Jackson, Miss., J. G. Dedeaux, Gen. Counsel, State Dept. of Public Welfare, Jackson, Miss., for defendants-appellees in No. 77-1722.

Alvin N. Jaffe, Asst. Reg. Atty., Dept. of HEW, Atlanta, Ga., for defendants-appellees in No. 77-1722 and defendants-appellants in No. 79-2471.

Robert E. Kopp, Dept. of Justice, Civ. Div., App. Section, Washington, D. C., for Secretary of HEW.

Jim R. Bruce, Sp. Asst. Atty. Gen., Robert E. Hauberg, U. S. Atty., L. A. Smith, III, Asst. U. S. Atty., Jackson, Miss., W. R. Phillips, Staff Atty., MS Medicare Comm., Jackson, Miss., for defendants-appellants.

Alice Mattice, App. Section, Dept. of Justice, Washington, D. C., for Secretary of HEW and defendants-appellants.

Appeals from the United States District Court for the Southern District of Mississippi.

Before COLEMAN, Chief Judge, and RONEY and FAY, Circuit Judges.

COLEMAN, Chief Judge.

This case and its companion, Williams v. St. Clair, ¹ require an exploration of the complexities of Medicaid regulations, state and federal. Here, we examine Mississippi's "deeming" procedures. In Williams we consider "spend-down" regulations. We uphold the use of deeming as against both statutory and constitutional attack.

In these class actions the plaintiffs ² challenge the Mississippi state practice of deeming the income of one spouse to be available for the support of the other spouse in (1) the calculation of Medicaid eligibility and in (2) the determination of the amount of the Medicaid payment. ³ The cases present a double attack on the deeming policy: (1) where the spouses are living together and (2) where one spouse is institutionalized and the other lives at home. Additionally, plaintiffs challenged the state practice of including one spouse's Old Age, Survivors and Disability Insurance (OASDI) benefits in calculating the other spouse's eligibility for Medicaid. Finally, they challenged state treatment of deductions for dependent children in Medicaid calculations.

Plaintiffs sought a preliminary injunction. After an evidentiary hearing, the District Court denied the preliminary injunction and an appeal was taken to this Court. We granted an injunction pending appeal. Class certification was denied in No. 77-1722 and granted in 610 F.2d 1244, No. 78-1625. ⁴

The issue was submitted on the merits in a stipulated record before a magistrate. The magistrate found the state's deeming process to be contrary to the medicaid statute. The District Court adopted the magistrate's order as the judgment of the district court. Upon a motion by defendants for alteration and amendment, the District Court allowed a form of deeming if the spouses live together. This appeal followed. The appeals from the denial of the preliminary injunction and from the decision on the merits were consolidated. We decide them together.

I. Background

A. The Operation of the Medicaid Program

In an effort to make medical services for the needy more generally available, Congress in 1965 established a federal program, denominated "Medicaid". This program was designed to liberalize the federal law under which states operate their medical assistance programs. H.Rep. No. 213, 89th Cong., 1st Sess. (1965); S.Rep. No. 404, 89th Cong., 1st Sess. (1965), reprinted in (1965) U.S.Code Cong. & Admin.News, pp. 1943, 2014.

Under Title XIX of the Social Security Act, 42 U.S.C. § 1396 Et seq., state medical assistance plans which meet certain general standards are eligible for federal assistance under what is essentially a matching funds formula. The state becomes entitled to grants of federal funds in reimbursement for a portion of the expenditures made in providing specific types of medical assistance to eligible individuals under the plan, where done in accordance with federal requirements. The Medicaid program is funded through the Department of Health, Education and Welfare but individual states receive wide discretion in the administration of their local programs. Although a number of federal legal and policy provisions affect state action under the program, the state has the responsibility for, Inter alia, establishing the level of reimbursement for providers of services and determining the scope of services to be offered under the particular state's program. Participating states must, however, provide five general categories of medical services to individuals classified as "Categorically needy ": (1) inpatient hospital services; (2) outpatient hospital services; (3) other laboratory and X-ray services; (4) skilled nursing facilities, screening and treatment for persons under the age of 21, and family planning services and supplies; and (5) physicians services. ⁵

States are not required to participate in the Medicaid program but if they choose to do so they must submit to the Secretary of Health, Education and Welfare a state plan which meets all requirements of the Act. The state plan describes the nature and scope of the state program and provides assurances that the state will administer that program in conformity with the requirements of the federal guidelines. 42 U.S.C. § 1396a(b). Beal v. Doe, 432 U.S. 438, 441, 97 S.Ct. 2366, 53 L.Ed.2d 464 (1977); Preterm, Inc. v. Dukakis, 1 Cir. 1979, 591 F.2d 121, 124, Cert. denied sub nom. Preterm, Inc. v. King, 441 U.S. 952, 99 S.Ct. 2182, 60 L.Ed.2d 1057 (1979); White v. Beal, 3 Cir. 1977, 555 F.2d 1146, 1149.

In 1969 Mississippi elected to participate in the Medicaid program and its state plan subsequently received HEW approval. The state plan is under the general supervision of the Mississippi Medicaid Commission and is administered by the Mississippi Department of Public Welfare. Miss.Code Ann. § 43-13-101 Et seq.

Under the federal program as it was originally established in 1965, participating states were required to provide medical assistance to those individuals receiving aid from the four general categorical assistance welfare programs, Aid to the Aged (Title I), Aid to the Blind (Title X), Aid to the Disabled (Title XIV), and Aid to Families with Dependent Children (Title IV). 42 U.S.C. § 1396a(a)(10)(A); 42 C.F.R. 435.4. These programs were themselves joint federal-state efforts, administered by the states. Additionally, the Medicaid provisions allowed states to include individuals whose incomes exceeded the Categorical assistance levels but whose resources were not sufficient to meet the costs of necessary medical and remedial care and services. These individuals are referred to as "Medically needy ". 42 U.S.C. § 1396a(a)(10)(A), (C); 42 C.F.R. § 435.301; Preterm, Inc. v. Dukakis, 1 Cir. 1979, 591 F.2d 121, 124, Cert. denied sub nom. Preterm, Inc. v. King, 441 U.S. 952, 99 S.Ct. 2182, 60 L.Ed.2d 1057 (1979). See also Friedman v. Berger, 2 Cir. 1976, 547 F.2d 724, 726, Cert. denied, 430 U.S. 984, 97 S.Ct. 1681, 52 L.Ed.2d 378 (1977). However, Mississippi chose not to have a Medically needy program and that is not involved in this litigation.

In 1972 Congress revamped the categorical assistance programs, replacing federal-state aid to the aged, blind, and disabled with a fully federal scheme, known as the Supplemental Security Income Program (SSI), Title XVI, 42 U.S.C. § 1381 Et seq. See Pub.L. No. 92-603 (1972). The states retained responsibility for administering the program of aid to families with dependent children. In many states, Mississippi included, the federalizing of the categorical assistance welfare grant programs would make more people eligible for assistance than had been eligible under the state-administered scheme. Therefore, to avoid overwhelming the states with an immense increase in Medicaid rolls, Congress allowed the states the option of including only those individuals Who met the eligibility requirements for the state-administered programs on January 1, 1972, rather than determining Medicaid eligibility according to the standards of the new SSI program. Pub.L. No. 92-603 § 209(b); 42 U.S.C. § 1396a(f); 42 C.F.R. § 435.1(d); Hayes v. Stanton, 7 Cir. 1975, 512 F.2d 133, 136-38. States which opted for the more restrictive 1972 standards are referred to as "209(b) states." ⁶ Mississippi is a "209(b)" state. Miss.Code Ann. § 43-13-115.

At the same time, Congress did not intend that those SSI recipients who did not meet their state's 1972 financial standards should be absolutely precluded from participation in the Medicaid program. It therefore required that states which employ the January 1, 1972, eligibility standards shall incorporate a "Spend-down " provision. This allows those individuals who would be eligible under the SSI standards to deduct their incurred medical expenses from their income. This spend-down would enable needy individuals to become eligible for Medicaid when that part of their incomes in excess of the 1972 eligibility standards is consumed by expenses for medical needs. Pub.L. No. 92-603 § 209(b); 42 U.S.C. § 1396a(f); H.Rep. No. 92-231, 92d Cong., 1st Sess. (1971), reprinted in (1972) U.S.Code Cong. & Admin.News pp. 4989, 5061; Hayes v. Stanton, supra.

B. Mississippi's Program

At the time these...