Pereira by Pereira v. Kozlowski, 92-2529

• Decision Date: 24 June 1993
• Docket Number: No. 92-2529,92-2529
• Citation: 996 F.2d 723
• Parties: Medicare & Medicaid Guide P 41,496 Natalia PEREIRA, By Her Next Friends, Carlos and Lourdes PEREIRA, Plaintiff-Appellee, and The Children's Transplant Association, Plaintiff, v. Bruce U. KOZLOWSKI, Director of the Department of Medical Assistance Services of the State of Virginia, Defendant-Appellant.
• Court: U.S. Court of Appeals — Fourth Circuit

Page 723

996 F.2d 723

Medicare & Medicaid Guide P 41,496

Natalia PEREIRA, By Her Next Friends, Carlos and Lourdes PEREIRA, Plaintiff-Appellee and The Children's Transplant Association, Plaintiff, v. Bruce U. KOZLOWSKI, Director of the Department of Medical Assistance Services of the State of Virginia Defendant-Appellant.

No. 92-2529.

United States Court of Appeals Fourth Circuit.

Argued April 1, 1993.

Decided June 24, 1993.

Pamela Malone Reed, Asst. Atty. Gen., Richmond, VA, argued (Stephen D. Rosenthal, Acting Atty. Gen. of Va., Roger L. Chaffe, Senior Asst. Atty. Gen., on the brief), for defendant-appellant.

E. Clarke Dummit, American Law Offices, P.C., Winston-Salem, NC, argued, for plaintiff-appellee.

Before PHILLIPS, HAMILTON, and LUTTIG, Circuit Judges.

OPINION

LUTTIG, Circuit Judge:

Through her parents as next friends, a three-year old child with terminal cardiac dysfunction brought suit seeking to compel the Virginia Department of Medical Services, which administers the Virginia Medicaid Program, to pay for a medically necessary heart transplant. After the district court entered an order enjoining the Commonwealth to fund the operation, 805 F.Supp. 361 (1992) this court denied a stay pending appeal, and the operation was successfully performed. Conscious of our limited role to interpret the law as enacted by Congress, we now affirm.

I.

The facts of this case are simple and not in dispute. Without a heart transplant, Natalia Pereira would have died. A qualified Medicaid recipient, she sought coverage for the operation under that program. Under the Medicaid Act, 42 U.S.C. § 1396 et seq., states devise medical assistance plans, which are then funded in part by the federal government. Although not required to participate in Medicaid, once a state elects to do so, its plan must comport with federal requirements. Among these requirements is the provision of at least seven types of services. See id. § 1396a(a)(10)(A). The Commonwealth concedes that absent exception in the Act, Pereira's heart transplant would be covered as one of those services.

The Commonwealth finds such an exception in section 1396b(i)(1) of Title 42, which provides that the federal government will contribute no part of the cost of organ transplant procedures "unless the State plan provides for written standards respecting the coverage of such procedures...." The Commonwealth reads this language as an affirmative grant to the states of complete discretionary authority over which, if any, transplants they will cover. It contends that the states are to evidence their decisions by providing written standards only for those transplants for which they will provide payment. Because Virginia has provided written standards for kidney and cornea transplants only, it refused Pereira's request for coverage of the costs associated with her heart transplant.

Pereira brought suit claiming that the Commonwealth's refusal to fund heart transplants for children under twenty-one years of age violates the express terms of sections 1396d(a)(4)(B) and (r)(5) of the Medicaid Act. The former section provides that states must provide "early and periodic screening, diagnostic, and treatment services ["EPSDT"] ... for individuals who are eligible under the plan and are under the age of 21." The latter section defines EPSDT in part as "necessary health care, diagnostic services, treatment, and other measures described in [42 U.S.C. § 1396d(a) ] to correct or ameliorate defects and physical and mental illnesses and conditions discovered by the screening services, whether or not such services are covered under the State plan."

The district court embraced Pereira's argument. See J.A. at 91 ("The language of 42 U.S.C. § 1396d(r) makes all medically necessary treatment which is permissible under the Medicaid Act mandatory for participants under age 21 and explicitly does so regardless of whether such services are included in the State plan in question."). Exercising our plenary review over summary judgment dispositions, we affirm, but for reasons different from those relied upon by the district court.

II.

The Commonwealth conceded at argument, and we assume for purposes of this opinion that EPSDT encompasses the type of medically necessary heart transplant at issue here and that, absent some saving provision, it would be required to fund Pereira's operation. We conclude that section 1396b(i)(1) of Title 42, the only section relied upon by the Commonwealth, does not represent such a provision.

A.

The district court apparently agreed with the Commonwealth's contention that in section 1396b(i)(1) Congress conferred upon the states absolute discretion to determine whether to cover transplants, and if any coverage is provided, which transplants to fund. See J.A. at 92. The district court held, however, that section 1396d(r)(5), enacted after section 1396b(i)(1), essentially revoked that discretion as to transplants for children under twenty-one years of age. See id. ("Section 1396d(r), however, unambiguously removes the states' discretion to consider any medically necessary treatment optional for a patient under age 21. If the treatment is permissible under the Medicaid Act, which transplants surely are, it must be made available to a participant under age 21 when medically necessary."). Unlike the district court, we reject the Commonwealth's contention that section 1396b(i)(1) affirmatively confers upon the states the unqualified discretion whether to fund transplants.

Nothing in the language of section 1396b(i)(1) suggests that Congress conferred upon the states such discretion. By its plain terms, the statute simply provides that federal Medicaid payments will not be made for organ transplants unless the state has promulgated the specified written procedures. Despite its remonstration that "[i]t is obvious ... that [1396b(i)(1)'s] language gives states complete latitude to provide as much or as little transplant coverage as they choose," Appellant's Br. at 9, even the Commonwealth is forced to acknowledge the narrow effect of the section, see id. at 8 ("In general, § 1396b(i) places limitations on the scope and availability of services for which federal funding is available.").

The tenuousness of the Commonwealth's textual argument is evidenced by its need to read subparagraph one of section 1396b(i) differently from the remaining subparagraphs of that section so as to avoid the statutory inconsistencies that would otherwise result. Unlike the way in which it reads subparagraph one, it reads subparagraphs two through fourteen--wherein Congress detailed numerous other circumstances under which it would decline payment for certain services--consistently with their plain language, as mere limitations on the federal government's obligation to make payment. Were the Commonwealth to read the latter subparagraphs instead in the same way it reads subparagraph one, it would be constrained to argue that subparagraph two, for example, in which Congress provides that federal funds may not be used to pay for the services of a physician excluded from Medicaid participation, confers upon the states absolute discretion to cover such services, a conclusion squarely at odds with 42 U.S.C. § 1320a-7(a). Reading the like subparagraphs within section 1396b(i) differently, of course, is unsatisfactory under the most elemental principles of statutory construction. This is especially so where, as here, they can be read alike and in harmony with the balance of the statutory scheme.

When Congress has intended to make provision of a medical service optional within the state's discretion, it has listed that service in section 1396d(a) but refrained from making its provision mandatory pursuant to section 1396a(a)(10). Had Congress followed this course with respect to organ transplants or even had it affirmatively provided in section 1396b(i)(1) that states shall have the discretion to cover organ transplants (or some but not all such transplants), this appeal would present a different question. It did not, however. It provided merely that the federal government will not contribute to the cost of transplants unless a state satisfies the various conditions of section 1396b(i)(1).

Section 1396d(r)(5), therefore, does not repeal 1396b(i)(1) by implication, as stridently maintained by the Commonwealth. Indeed, rather than being inconsistent with each other, the two sections complement one another. In section 1396d(r)(5), the Congress imposed upon the states, as a condition of their participation in the Medicaid program, the obligation to provide to children under the age of twenty-one all necessary services, including transplants. The Congress provided in section 1396b(i)(1), however, that the federal government would not be obligated under the general terms of section 1396b to contribute to the cost of any such transplants unless the state satisfied the conditions of that section. Given the concerns that apparently prompted enactment of section 1396b(i)(1), see, e.g., Appellant's Br. at 8 ("Prior to 1985, state coverage had been inconsistent and Congress was concerned that political influence and favoritism may have been involved in some state coverage decisions."), it was manifestly reasonable for Congress to promote the integrity of state coverage by effectively requiring standardized procedures through its control of the fisc.

B.

The Commonwealth relies heavily on Ellis ex rel. Ellis v. Patterson, 859 F.2d 52 (8th Cir.1988), which did purport to hold that the states have total discretion whether to fund any organ transplants. Accord Dexter v. Kirschner, 972 F.2d 1113 (9th Cir.1992) (following Ellis ); Meusberger v. Palmer, 900 F.2d 1280 (8th Cir.1990) (same); Miller ex rel. Miller v. Whitburn, 816 F.Supp. 505 (W.D.Wis.1993). The relevant portion of Ellis appears to be dicta, as during the pendency of the appeal in that case the state decided to fund generally the types...