Weaver v. Reagen

• Decision Date: 06 November 1989
• Docket Number: No. 88-2560,88-2560
• Citation: 886 F.2d 194
• Parties: , 27 Soc.Sec.Rep.Ser. 113, Medicare & Medicaid Gu 38,049 Glenn C. WEAVER, T.G., and Mark Momot, individually and on behalf of all others similarly situated, Appellees, v. Michael REAGEN, Director of the Missouri Department of Social Services; and Jane Y. Kruse, Director of the Missouri Division of Medical Services, Appellants.
• Court: U.S. Court of Appeals — Eighth Circuit

Page 194

886 F.2d 194

58 USLW 2195, 27 Soc.Sec.Rep.Ser. 113,

Medicare & Medicaid Gu 38,049

Glenn C. WEAVER, T.G., and Mark Momot, individually and on behalf of all others similarly situated, Appellees, v. Michael REAGEN, Director of the Missouri Department of

Social Services; and Jane Y. Kruse, Director of

the Missouri Division of Medical

Services, Appellants.

No. 88-2560.

United States Court of Appeals,

Eighth Circuit.

Submitted April 13, 1989.

Decided Sept. 25, 1989.

Rehearing and Rehearing En Banc Denied Nov. 6, 1989.

Bruce Farmer, Jefferson City, Mo., for appellants.

Ann B. Lever, St. Louis, Mo., for appellees.

Before FAGG, Circuit Judge, and ROSS and TIMBERS, ^* Senior Circuit Judges.

ROSS, Senior Circuit Judge.

Appellees/plaintiffs Glenn Weaver, T.G., and Mark Momot are members of a class of Medicaid eligible individuals (plaintiffs) who are disabled by the disease Acquired Immunodeficiency Syndrome (AIDS). Plaintiffs filed suit against Michael Reagen, Director of the Missouri Department of Social Services, and Jane Kruse, Director of the Missouri Division of Medical Services (defendants) claiming that defendants had violated their statutory right to Medicaid benefits by denying coverage of the drug Retrovir (formerly known as azidothymidine or AZT) for treatment of their AIDS. ¹ Finding that AZT was medically necessary treatment, the United States District Court for the Western District of Missouri granted plaintiffs' motion for summary judgment and enjoined Missouri officials from denying coverage of AZT to the plaintiff class. We affirm.

I.

Caused by an infection with the human immunodeficiency virus (HIV), AIDS is characterized by a compromised functioning of the immune system, life-threatening opportunistic infections, neoplasia or the abnormal development of tumors, and a fatal outcome. Infection with the HIV virus involves various stages from testing positive for the AIDS virus, to AIDS-related complex (ARC), to the AIDS disease itself. According to the Centers for Disease Control guidelines, a diagnosis of AIDS is made when there is laboratory evidence of HIV infection coupled with certain indicator diseases or opportunistic infections. The indicator diseases include such conditions as esophageal candidiasis, Kaposi's Sarcoma, pneumocystis carinii pneumonia (PCP), HIV encephalopathy (AIDS dementia), or HIV wasting syndrome.

On March 20, 1987, the Food and Drug Administration (FDA) announced its approval of AZT under the brand name Retrovir, for the treatment of AIDS. The labeling approved by the FDA for AZT stated:

Retrovir capsules are indicated for the management of certain adult patients with symptomatic HIV infection (AIDS and advanced ARC) who have a history of cytologically confirmed Pneumocystis carinii pneumonia (PCP) or an absolute CD4 (T4 helper/inducer) lymphocyte count of less than 200/mm in the peripheral blood before therapy is begun.

At the time this action was filed on July 6, 1987, the State of Missouri did not provide any Medicaid coverage for AZT. Three days after the suit was filed, the Missouri Department of Social Services promulgated an emergency rule, providing Medicaid coverage of AZT under certain diagnoses or conditions. Adopted as a permanent rule with minor modifications effective November 12, 1987, Missouri regulations now provide coverage for AZT as follows:

The availability of the drug Zidovudine, formerly known as Azidothymidine, for Missouri Medicaid coverage shall be limited to only those eligible recipients for whom the prescribing physician has established a medical diagnosis of acquired immunodeficiency syndrome (AIDS) and who have a history of cytologically confirmed Pneumocystis carinii pneumonia (PCP) or an absolute CD4 (T4 helper/inducer) lymphocyte count of less than two hundred (200) per cubic millimeter in the peripheral blood before therapy is begun.

Mo.Code Regs. tit. 13, Sec. 70-20.110. This language is virtually identical to FDA's approval statement for the drug.

At the present time, the drug AZT is the only approved treatment of AIDS or ARC. While there are treatments for particular opportunistic infections which the AIDS patient may develop, AZT is the only approved drug which acts on the HIV virus itself.

Although plaintiff Glenn Weaver, who had suffered from pneumocystis carinii pneumonia (PCP), became eligible for Medicaid coverage of AZT as a result of the change in the Missouri Medicaid rules, the present action was continued when other plaintiffs were granted leave to intervene. The new plaintiffs suffered with AIDS and certain AIDS indicator diseases, but did not meet the restricted medical conditions necessary for coverage of AZT under Missouri's Medicaid rule (history of PCP or an absolute CD4 lymphocyte count below 200). For example, plaintiff Mark Momot was diagnosed as infected with the AIDS virus and suffering from oropharyngeal/esophageal candidiasis, an AIDS indicator disease, as well as significant diarrhea, fever, sweats and lymphadenopathy. In order to prevent or retard the progression of the disease to a more serious illness, his personal physician prescribed AZT. However, because Momot had no history of PCP and his CD4 count had not dropped below 200, Missouri Medicaid denied coverage of his AZT prescription because "he did not meet the diagnosis criteria set forth in the state regulation."

The case was submitted to the district court on cross-motions for summary judgment. On September 29, 1988, the district court granted plaintiffs' motion for summary judgment and certified the plaintiff class. 701 F.Supp. 717. The class so certified is defined as:

All persons in Missouri who would have or will be determined eligible for Medicaid and who are infected with the [AIDS virus] and whose physicians have or will in the future prescribe the drug Retrovir for their treatment and who do not meet the medical criteria set forth in [Missouri's Medicaid rule] for Medicaid coverage of AZT.

The trial court held that defendants' rule limiting Medicaid coverage of AZT to only those recipients who meet certain diagnostic criteria or conditions violated federal Medicaid law, 42 C.F.R. Secs. 440.230(b), 440.240(b), and 42 U.S.C. Sec. 1983. The district court found that AZT is medically necessary treatment for individuals in the plaintiff class who do not fit within the restrictive criteria of Missouri's Medicaid rule. The court, therefore, enjoined Missouri officials from denying coverage of AZT to "persons eligible for Medicaid and infected with the AIDS virus."

II.

In reviewing nonadjudicatory federal agency action, a court is limited to deciding whether the action is arbitrary, capricious, an abuse of discretion or otherwise not in accordance with the law. See Citizens to Preserve Overton Park, Inc. v. Volpe, 401 U.S. 402, 416, 91 S.Ct. 814, 823, 28 L.Ed.2d 136 (1971). "Although the answer is far from clear," at least one court has assumed without deciding that a court "is entitled to review the actions of a state agency administering federal Medicaid funding as it would review the actions of a federal agency." Mississippi Hosp. Ass'n, Inc. v. Heckler, 701 F.2d 511, 516 (5th Cir.1983). See also Clallam County v. Washington State Dept. of Transp., 849 F.2d 424, 429 n. 7 (9th Cir.1988), cert. denied, --- U.S. ----, 109 S.Ct. 790, 102 L.Ed.2d 782 (1989).

Title XIX of the Social Security Act, 42 U.S.C. Secs. 1396-1396s, commonly known as the Medicaid Act, is a federal-state cooperative program designed to provide medical assistance to persons whose income and resources are insufficient to meet the costs of medical care. Although a state's participation is voluntary, once a state chooses to participate in the program it must comply with federal statutory and regulatory requirements, Alexander v. Choate, 469 U.S. 287, 289 n. 1, 105 S.Ct. 712, 714 n. 1, 83 L.Ed.2d 661 (1985); Ellis v. Patterson, 859 F.2d 52, 54 (8th Cir.1988); 42 U.S.C. Sec. 1396a, including the requirement that participating states provide financial assistance for in-patient hospital services, out-patient hospital services, laboratory and x-ray services, skilled nursing facilities and physicians' services. See 42 U.S.C. Sec. 1396a(a)(10) and Sec. 1396d(a)(1)-(5).

The participating state may also elect to provide other optional medical services such as prescription drugs. See 42 U.S.C. Sec. 1396d(a)(12). Once a state chooses to offer such optional services it is bound to act in compliance with the Act and the applicable regulations in the implementation of those services, see Ellis v. Patterson, supra, 859 F.2d at 56; Meyers v. Reagan, 776 F.2d 241, 243 (8th Cir.1985), including the requirement that "[e]ach service must be sufficient in amount, duration, and scope to reasonably achieve its purpose." 42 C.F.R. Sec. 440.230(b).

Although a state has considerable discretion in fashioning its Medicaid program, the discretion of the state is not unbridled: "[A state] may not arbitrarily deny or reduce the amount, duration, or scope of a required service * * * to an otherwise eligible recipient solely because of the diagnosis, type of illness or condition." 42 C.F.R. Sec. 440.230(c). "[A]ppropriate limits [may be placed] on a service based on such criteria as medical necessity or utilization control procedures." Id. at Sec. 440.230(d). Moreover, the state's plan for determining eligibility for medical assistance must be " 'reasonable' and 'consistent with the objectives' of the Act." Beal v. Doe, 432 U.S. 438, 444, 97 S.Ct. 2366, 2371, 53 L.Ed.2d 464 (1977) (quoting 42 U.S.C. Sec. 1396a(a)(17)). This provision has been interpreted to require that a state Medicaid plan provide treatment that is deemed "medically necessary" in order to comport with the objectives of the Act. See id. at 444-45, 97 S.Ct. at 2370-71 ("serious statutory questions might be presented if a state Medicaid plan excluded necessary medical treatment from its coverage"); Pinneke v. Preisser, ...