Oklahoma Chap. of Amer. Aca., Pediat. v. Fogarty

Decision Date22 March 2005
Docket NumberNo. 01CV0187-CVE-SAJ.,01CV0187-CVE-SAJ.
Citation366 F.Supp.2d 1050
PartiesOKLAHOMA CHAPTER OF THE AMERICAN ACADEMY OF PEDIATRICS (OKAAP), et al., Plaintiffs, v. Michael FOGARTY, Chief Executive Officer of the Oklahoma Health Care Authority (OHCA), et al., Defendants.
CourtU.S. District Court — Northern District of Oklahoma

Hardwick Gable Golden & Nelson (Tulsa), Patricia Whittaker Bullock, Miller, Keffer & Bullock, Robert Murray Blakemore, Miller, Keffer & Bullock, Tulsa, Thomas K Gilhool, Public Interest Law Center of Philadelphia, James Eiseman, Public Interest Law Center of Philadelphia, Philadelphia, PA, for Oklahoma Chapter of the American Academy of Pediatrics (OKAAP), Community Action Project of Tulsa County, Oklahoma (CAPTC), Tracy T as mother and next friend of Katelyn M. Wilbanks Katelyn M Wilbanks, Lisa P as mother and next friend of Joshua Lee O'Neal, Eric Hartman Cammiso, Melissa Ann Padelford and Mathew Scott PadelfordJoshua Lee O'NealEric Hartman CammisoMelissa Ann PadelfordMathew Scott Padelford, Rowena T as parent and next friend of Christy A. Towler, Katherine P. Towler and Jacob W. TowlerChristy A TowlerKatherine P TowlerJacob W Towler, Kevin T as parent and next friend of Christy A. Towler, Katherine P. Towler and Jacob W TowlerChristy A TowlerKatherine P TowlerJacob W Towler, Janice G as parent and next friend of Charles A. Scanlan and Robert M. GarvinCharles A ScanlanRobert M Garvin, Theodore G as parent and next friend of Charles A. Scanlan and Robert M. GarvinCharles A ScanlanRobert M Garvin, Regina H as parent and next friend of Jacob W. Hercules and Everett L. HerculesJacob W HerculesEverett L Hercules, Gus H as parent and next friend of Jacob W Hercules and Everett L. HerculesJacob W HerculesEverett L Hercules, Heather R as parent and next friend of Stephanie MoncriefStephanie Moncrief, All Plaintiffs, Plaintiffs.

Andrew J Tevington, Oklahoma Health Care Auth (OKC-PO), General Counsel, James McKee Robinson, Office of the Attorney General (OKC-4545), Lynn S Rambo-Jones, Oklahoma Health Care Authority (OKC-4545), Oklahoma City, for Michael Fogarty Chief Executive Officer of the Oklahoma Health Care Authority (OHCA), Lynn Mitchell State Medicaid Director, Charles Ed McFall Chairman of the OHCA Board of Directors, T J Brickner, Jr Vice-Chair of the OHCA Board of Directors, Wayne Hoffman Member of the OHCA Board of Directors, Jerry Henlee Member of the OHCA Board of Directors, Ronald Rounds, O.D., Member of the OHCA Board of Directors, George Miller Member of the OHCA Board of Directors, Lyle Roggow Member of the OHCA Board of Directors, Jerry Humble Member of the OHCA Board of Directors, Defendants.

Alexander Floyd King, Crowe & Dunlevy (Tulsa), Tulsa, Kevin Dell Gordon, Crowe & Dunlevy (OKC), Timila Stacy Rother, Crowe & Dunlevy (OKC), Oklahoma City, for UniCare Inc, Movant.

FINDINGS OF FACT AND CONCLUSIONS OF LAW

EAGAN, Chief Judge.

Introduction

Plaintiff Oklahoma Chapter of the American Academy of Pediatrics ("OKAAP") is a non-profit professional organization of pediatricians and pediatric specialists. Plaintiff Community Action Project of Tulsa County, Inc. ("CAPTC") is a non-profit organization located in Tulsa, Oklahoma. The individual named plaintiffs are thirteen children and their parents; they also serve as representatives of the class certified by the Court. Defendants are officials of the State of Oklahoma and Oklahoma Health Care Authority ("OHCA"), the designated agency responsible for implementing and administering Oklahoma's program to provide eligible children with the health and medical services at issue in this case.

Plaintiffs filed this action in March 2001, alleging essentially that defendants' policies and procedures denied or deprived eligible children of the health and medical care to which those children are entitled by federal law. Plaintiffs seek injunctive relief to ensure that eligible children receive that care. After the Court ruled on motions to dismiss, plaintiffs filed an amended complaint in May 2002. The Court defined and certified the plaintiff class of children on May 30, 2003. The Court then held a non-jury trial for 19 days in April and May 2004. The parties made closing arguments and submitted proposed findings of fact and conclusions of law in July 2004.

On October 5, 2004, plaintiffs filed a motion for supplemental relief and request for preliminary injunction. The motion essentially requested that the Court enjoin defendants from denying coverage for the anti-immunoglobulin E ("IgE") drug Xolair (the trade name for omalizumab) to six class members suffering from elevated IgE-related symptoms and whose physicians determined Xolair to be medically necessary for them. The Court held a hearing on October 29 and November 1, 2004 to address this limited issue. The Court ordered additional medical evaluations and held an additional hearing on January 4, 2005. The parties submitted proposed findings of fact and conclusions of law regarding the Xolair issue on January 18, 2005.

I. FINDINGS OF FACT1
A. THE OKLAHOMA MEDICAID PROGRAM FOR CHILDREN
1. History

1. The Medicaid program was created in 1965 by Title XIX of the Social Security Act. Title XIX established a joint, cooperative federal-state program for furnishing and financing health care and services to individuals who qualify for cash or welfare assistance. Tr. Vol. IX, at 1126: 5-10. Title XIX's children's health care provisions were first made express in 1967. Each state decides whether to participate in the Title XIX's "Medical Assistance" program, and Oklahoma has chosen to participate. The Center for Medicare and Medicaid Services ("CMS"), formerly the Health Care Financing Agency ("HCFA"), in the United States Department of Health and Human Services, oversees the program for the Secretary. Defendant Oklahoma officials are responsible under Title XIX and by designation of State law, Okla. Stat. tit. 63, § 5005 et seq., for implementation of the program in accordance with the requirements imposed by Title XIX, its regulations, 42 C.F.R. § 440.40(b), 441-50 et seq., the terms of its waiver, and policy directions such as CMS's State Medicaid Manual. The State Medicaid Manual produced by CMS includes advisory and optional policies and procedures as well as mandatory policies and procedures. Tr. Vol. II, at 259:13-24; Pl.Ex. 2, at BB.0033. The State Medicaid Manual is neither a federal statute nor a federal regulation. Tr. Vol. II, at 344:11-18.

2. Participating states are reimbursed by CMS — without any financial cap — for the largest portion of their medical assistance expenditures, in exchange for compliance with the requirements of Title XIX. Under Title XIX, children's health care is mandatory upon each participating state and it includes "early and periodic screening, diagnostic, and treatment services" (sometimes referenced as "EPSDT") for individuals under the age of 21. 42 U.S.C. § 1396d(a)(4)(B). Such services include comprehensive screening examinations, vision services, dental services, hearing services, and all other health care, diagnostic services, treatment, and other measures described by the statute as necessary to correct or ameliorate defects and physical and mental illnesses and conditions. See 42 U.S.C. § 1396d(r). Title XIX also requires "equal access," meaning that each participating state must "assure that payments ... are sufficient to enlist enough providers so that care and services are available ... at least to the extent that such care and services are available to the general population in the geographic area." 42 U.S.C. § 1396a(a)(30)(A).

3. Prior to 1995, Oklahoma operated on a "fee-for-service" basis for its Medicaid recipients. SoonerCare Application, 12/94, Pl.Ex. 669, Intro., at 10. "Fee-for-service" means that when a provider sees a patient, and then files a claim with the state Medicaid agency for that service, the provider is paid a fee for that service. Tr. Vol. II, at 197:15-17; Tr. Vol. IX, at 1170:15-23. The agency responsible for administering Oklahoma's Medicaid program prior to 1995 was the Department of Human Services ("DHS"). SoonerCare Application, 12/94, Pl.Ex. 669, Ch. 2, at 18.

4. In 1989, Congress expanded the numbers of low income children who are entitled to health care, particularly those in working families whose jobs pay only low wages and for large families who have near-median family income. From 1988 to 1992, the number of Oklahomans enrolled in Oklahoma's Medicaid program increased from 245,000 to 360,000. OHCA Annual Report, Def. Ex. 35, at 19. Due to budgetary constraints, the State began exploring alternative ways in which to deliver Medicaid services. Id. Medicaid benefits and the population eligible for Medicaid were being reduced within the parameters allowed by federal law. Tr. Vol. XVII, at 2274:20 — 2275:15.

5. In 1993, OHCA was created by State statute, Okla. Stat. tit. 63, § 5004 et. seq., for the purpose of administering Oklahoma's Medicaid program. Tr. Vol. IX, at 1122:16-17. Under the statute, OHCA was given broad powers, including the power to purchase health care benefits for Medicaid recipients. Okla. Stat. tit. 63, § 5006. The Legislature also vested OHCA with the responsibility of converting the Oklahoma Medicaid program into a "managed care system." Id., § 5009. Managed care grew in response to health care costs increasing at a rate faster than inflation since the 1970s. Tr. Vol. II, at 232:24 — 233:5. On January 1, 1995, OHCA assumed total responsibility for administration of Oklahoma's Medicaid program. SoonerCare Application, 12/94, Pl.Ex. 669, Ch. 2 at 18.

6. On January 3, 1995, OHCA submitted an application to the federal government for development of a Medicaid managed care plan, SoonerCare. Pl.Ex. 669. The SoonerCare model required the...

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