Shakhnes v. Berlin

• Decision Date: 13 August 2012
• Docket Number: Docket No. 11–2003–cv.
• Parties: Boris SHAKHNES, by his next friend Alla Shakhnes, individually and on behalf of all others similarly situated, by his next friend Mikhail Feldman, individually and on behalf of all others similarly situated, by his next friend Fei Mock, individually and on behalf of all others similarly situated, by his next friend Sha–Sha Willis, individually and on behalf of all others similarly situated, by his next friend Chaio Zhang, individually and on behalf of all others similarly situated, Plaintiff–Appellee, v. Elizabeth R. BERLIN, Executive Deputy Commissioner of the New York State Office of Temporary and Disability Assistance, Nirav R. Shah, as Commissioner of the New York State Department of Health, Defendants–Appellants, Verna Eggleston, Commissioner, New York City Human Resources Administration, Defendant.
• Court: U.S. Court of Appeals — Second Circuit

689 F.3d 244

Boris SHAKHNES, by his next friend Alla Shakhnes, individually and on behalf of all others similarly situated, by his next friend Mikhail Feldman, individually and on behalf of all others similarly situated, by his next friend Fei Mock, individually and on behalf of all others similarly situated, by his next friend Sha–Sha Willis, individually and on behalf of all others similarly situated, by his next friend Chaio Zhang, individually and on behalf of all others similarly situated, Plaintiff–Appellee,

v. Elizabeth R. BERLIN, Executive Deputy Commissioner of the New York State Office of Temporary and Disability Assistance, Nirav R. Shah, as Commissioner of the New York State Department of Health, Defendants–Appellants,Verna Eggleston, Commissioner, New York City Human Resources Administration, Defendant.

Docket No. 11–2003–cv.

United States Court of Appeals, Second Circuit.

Argued: June 28, 2012.

Decided: Aug. 13, 2012.

Sandra D. Hauser, SNR Denton LLP, New York, N.Y., for Plaintiff–Appellee.

Yisroel Schulman, New York Legal Assistance Group, New York, N.Y., for Plaintiff–Appellee.

Simon Heller, Assistant Solicitor General (Barbara D. Underwood, Solicitor General, Richard Dearing, Deputy Solicitor General, on the brief), for Eric T. Schneiderman, Attorney General of the State of New York, New York, N.Y., for Defendants–Appellants.

Before: WINTER, STRAUB, and CHIN, Circuit Judges.

STRAUB, Circuit Judge:

Defendants–Appellants, commissioners of the New York State Office of Temporary and Disability Assistance and of the New York State Department of Health, appeal from an Order entered in the United States District Court for the Southern District of New York (Richard J. Holwell, Judge ) granting declaratory and injunctive relief against them and in favor of Plaintiffs–Appellees, who are applicants for, or recipients of, Medicaid home health services who are not solely challenging any decision regarding Medicaid eligibility.

Plaintiffs allege that they have a statutory right, enforceable under 42 U.S.C. § 1983, to an opportunity for Medicaid fair hearings. Plaintiffs further allege that this right, as construed by an applicable federal regulation, entitles them to “final administrative action” within 90 days of their fair hearing requests, and that Defendants violated this right.

The District Court agreed. It declared that “final administrative action” includes the holding of Medicaid fair hearings, the issuance of fair hearing decisions, and the implementation of any relief ordered in those decisions. And it permanently enjoined Defendants to ensure that “final administrative action”—so defined—is implemented within 90 days of Plaintiffs' fair hearing requests.

We AFFIRM in part the Order of the District Court, because we conclude that Plaintiffs have a right to a Medicaid hearing and decision ordinarily within 90 days of their fair hearing requests, and that such right is enforceable under § 1983. But we also conclude that the District Court's permanent injunction is overbroad because “final administrative action” refers not to the implementation of relief ordered in fair hearing decisions, but to the holding of fair hearings and to the issuance of fair hearing decisions. Accordingly, we VACATE in part the Order of the District Court, and we REMAND the matter for further proceedings consistent with this opinion.

BACKGROUND

I. Overview of Medicaid and the Fair Hearing System.

A. Medicaid.

“Medicaid is a cooperative federal-state program through which the Federal Government provides financial assistance to States so that they may furnish medical care to needy individuals.” Wilder v. Va. Hosp. Ass'n, 496 U.S. 498, 502, 110 S.Ct. 2510, 110 L.Ed.2d 455 (1990).¹ The federal and state governments share the cost of Medicaid, but each state government administers its own Medicaid plan. See Conn. Dep't of Soc. Servs. v. Leavitt, 428 F.3d 138, 141 (2d Cir.2005). State Medicaid plans must, however, comply with applicable federal law and regulations. See42 U.S.C. § 1396c; 42 C.F.R. § 430.0.

Any state that participates in Medicaid must designate “a single State agency” (“State agency”) to administer—or to supervise the administration of—the state's Medicaid plan. See42 U.S.C. § 1396a(a)(5). Although the State agency may delegate to local entities the performance of certain responsibilities, see42 C.F.R. § 431.10(e), the State agency must (1) “[h]ave methods to keep itself currently informed of the adherence of local [entities] to the State plan provisions and the agency's procedures for determining eligibility,” and (2) “[t]ake corrective action to ensure their adherence,” 42 C.F.R. § 435.903.

B. The Fair Hearing System.

1. Applicable Federal Law and Regulations.

States that participate in Medicaid must grant “an opportunity for a fair hearing before the State agency to any individual whose claim for medical assistance under the plan is denied or is not acted upon with reasonable promptness.” 42 U.S.C. § 1396a(a)(3).

Section 431.244 of Title 42 of the Code of Federal Regulations—entitled “Hearing decisions”—provides that the State agency “must take final administrative action ... [o]rdinarily, within 90 days” of the date a fair hearing is requested. See42 C.F.R. § 431.244(f)(1)(ii) (“regulation”). The phrase “final administrative action” is not defined in the regulation or in the Medicaid Act.

2. New York's Fair Hearing System.

In New York, the State agency responsible for administering Medicaid is the New York State Department of Health (“DOH”). SeeN.Y. Soc. Serv. Law § 363–a(1).

In accordance with federal law, the DOH has established a Medicaid fair hearing system, which purportedly allows individuals an opportunity to be heard with respect to claims for medical assistance that are “denied or [are] not acted upon with reasonable promptness.” 42 U.S.C. § 1396a(a)(3); seeN.Y. Soc. Serv. Law § 22. The DOH has elected to delegate to the New York State Office of Temporary and Disability Assistance (“OTDA”) the duty to conduct Medicaid fair hearings. But the DOH itself remains responsible for “making final administrative determinations and issuing final decisions,” seeN.Y. Soc. Serv. Law § 364(2)(h), and for ensuring the fair hearing system's compliance with federal law and regulations, see42 C.F.R. § 431.205.

II. The Instant Matter.A. The Complaint.

Plaintiffs in this class action are residents of New York City who applied for or received Medicaid-funded home health services,² and who requested or will request fair hearings to challenge the denial, reduction, or termination of such services.

For purposes of this appeal, Plaintiffs allege that DOH and OTDA (collectively, “Defendants”) failed “to take and/or ensure final administrative action within 90 days from the date [Plaintiffs] request fair hearings challenging the denial, discontinuance and/or reduction of Medicaid home health services” (“90–day claim”). Am. Compl. ¶ 131. According to Plaintiffs, this conduct violated their statutory right to an opportunity for Medicaid fair hearings, see42 U.S.C. § 1396a(a)(3)—a right which, as construed by the regulation, allegedly entitles Plaintiffs to “final administrative action ... [o]rdinarily, within 90 days” from the dates they requested fair hearings, see42 C.F.R. § 431.244(f)(1)(ii). See id.

Plaintiffs claim they may enforce the foregoing statutory right—as construed by the regulation—through an action under 42 U.S.C. § 1983.

B. Proceedings in the District Court.

Following discovery, Plaintiffs moved for class certification and for partial summary judgment on the 90–day claim. Defendants cross-moved for summary judgment, arguing “primarily ... that there is no cause of action for the alleged deficiencies in Medicaid Fair Hearing procedures.” Shakhnes ex rel. Shakhnes v. Eggleston, 740 F.Supp.2d 602, 609 (S.D.N.Y.2010).

* * *

By Memorandum Opinion & Order filed September 30, 2010 (“2010 Order”), the District Court certified Plaintiffs' proposed class, granted partial summary judgment in favor of Plaintiffs on the 90–day claim, and denied Defendants' cross-motion for summary judgment. See Shakhnes, 740 F.Supp.2d at 637.

First, the District Court held that the fair hearing requirement in 42 U.S.C. § 1396a(a)(3) is enforceable through a cause of action under § 1983. See id. at 615–16.

Second, the District Court concluded that the regulation's 90–day requirement defines the content of the statutory right to a fair hearing. That is, the District Court held that the “ ‘ordinarily, within 90 days' requirement defines the temporal element of a § 1983 cause of action for enforcement of 42 U.S.C. § 1396a(a)(3).” Id. at 618 (quoting 42 C.F.R. § 431.244(f)(1)).

In short, the District Court concluded that Plaintiffs have a cause of action to enforce their statutory right to an opportunity for a fair hearing, as defined by the regulation's requirement that “final administrative action” be taken within the specified time frame. Based on the record evidence, the District Court concluded that Defendants violated that right.

* * *

The District Court subsequently issued an Order granting declaratory and injunctive relief in favor of Plaintiffs. See Order, Shakhnes ex rel. Shakhnes v. Eggleston, No. 06 Civ. 4778 (S.D.N.Y. Apr. 15, 2011), ECF No. 146 (“2011 Order”).

In pertinent part, the District Court declared that

Final Administrative Action occurs when defendants, separately or collectively, have scheduled a Fair Hearing, held the Fair Hearing, issued a Decision After Fair Hearing (“DAFH”), and taken all actions necessary to implement the relief ordered in the DAFH. For cases in which care is ordered by the DAFH, Final Administrative Action occurs on the date on which an aide goes to the Appellant's home to provide the ordered home health care services.

Id. at 2 ¶ 4.

The District Court also directed Defendants to ensure that “Final Administrative Action”—as defined above—is provided “within 90 days of ... [a] request for a...