West Virginia ex rel. McGraw v. D.H.H.S.

• Decision Date: 07 March 2001
• Docket Number: Civ.A. No. 2:98-1150.
• Citation: 132 F.Supp.2d 437
• Court: U.S. District Court — Southern District of West Virginia
• Parties: State of WEST VIRGINIA, by Darrell V. McGRAW, Jr., Attorney General, Plaintiff, v. UNITED STATES DEPARTMENT OF HEALTH AND HUMAN SERVICES; Tommy G. Thompson, Secretary of the United States Department of Health and Human Services; and Michael McMullen, Administrator, Health Care Financing Administration, Defendants.

132 F.Supp.2d 437

State of WEST VIRGINIA, by Darrell V. McGRAW, Jr., Attorney General, Plaintiff, v. UNITED STATES DEPARTMENT OF HEALTH AND HUMAN SERVICES; Tommy G. Thompson, Secretary of the United States Department of Health and Human Services; and Michael McMullen, Administrator, Health Care Financing Administration, Defendants.

Civ.A. No. 2:98-1150.

United States District Court, S.D. West Virginia, Charleston Division.

March 7, 2001.

As Corrected March 14, 2001.

Silas B. Taylor, Senior Deputy Attorney General, Office of the Attorney General of the State of West Virginia, Charleston, WV, for plaintiff the State of West Virginia by Attorney General Darrell V. McGraw, Jr. Rebecca A. Betts, United States Attorney, Michael L. Keller, Assistant United States Attorney, Office of the United States Attorney for the Southern District of West Virginia, Charleston, WV, Sheila M. Lieber, Vesper Mei, United States Department of Justice, Civil Division, Washington, DC, Stuart E. Schiffer, Deputy Assistant Attorney General, David S. Cade, Acting General Counsel, Sheree R. Kanner, Chief Counsel for Health Care Financing, Henry R. Goldberg, Deputy Chief Counsel for Litigation, Linda Banks, United States Department of Health and Human Services, Washington, DC, for defendants the United States Department of Health and Human Services et al.

MEMORANDUM OPINION AND ORDER

GOODWIN, District Judge.

Pending before the court are the plaintiff's Motion for Preliminary Injunction and the parties' cross-motions for summary judgment. The plaintiff filed this suit against the United States Department of Health and Human Services ("DHHS"), its then-Secretary, Donna Shalala and then-Administrator of the Health Care Financing Administration ("HCFA"), Nancy-Ann Min DeParle,¹ asking the court to declare that the 1993 amendments to 42 U.S.C. § 1396p are unconstitutional and to enjoin the defendants from enforcing the amendments. At issue is the requirement in these amendments that states recover from the estates of certain Medicaid recipients reimbursements for nursing home and other long-term care benefits (hereinafter the "estate recovery program").

West Virginia, by its Attorney General, argues in effect that conditioning receipt of Medicaid funds upon the implementation of an estate recovery program is an unacceptable Hobson's choice. Thomas Hobson, an English liveryman, required his customers to take the horse nearest the stable door or none. If one needed a horse, he had to take the one offered. West Virginia desperately needs Medicaid funding. Read in the harshest way, the amendments say: Take the funding that requires you to implement an estate recovery program or take no funding at all. The question before the court is whether Congress can put the matter to the State of West Virginia in such a way. Can Congress, consistent with the Constitution, require West Virginia to implement an estate recovery program as a condition precedent to the receipt of Medicaid funds?

For the following reasons, the court FINDS that there is no genuine issue of material fact and that the defendants are entitled to judgment as a matter of law. The court GRANTS the defendants' Motion for Summary Judgment, DENIES the plaintiff's Motion for Summary Judgment and DENIES AS MOOT the plaintiff's Motion for Preliminary Injunction.

I. HISTORY OF MEDICAID AND ESTATE RECOVERY

In 1935, the United States Congress enacted the Social Security Act as "a series of related measures designed as a unified, well-rounded program of attack upon the principal causes of insecurity in our economic life." S.Rep. No. 628, 74th Cong., 1st Sess. 2 (1935). The Act covered five broad categories: old-age security, unemployment compensation, aid to dependent children, public health measures and aid to the blind. See Oklahoma v. Schweiker, 655 F.2d 401, 403 (D.C.Cir.1981). "Under the various titles of the Act, the federal government reimbursed the states for part of the cost of cash payments made to assist the needy in acquiring food, shelter and medical care. The states administered the programs and determined the levels of assistance, but they had to comply with various federal requirements in order to receive federal matching funds." Id.

In 1965, Congress passed amendments to the Social Security Act. These amendments created the Medicaid program, the largest federal-state matching fund program in existence, which authorized states to set up comprehensive plans for supplying medical services to indigents. In accordance with the plans, the states reimburse health care providers for the cost of medical care furnished to Medicaid recipients, and the states in turn recoup a portion of their expenditures from the federal government. Id. To qualify for Medicaid, applicants must show they are aged, blind, disabled or the parent of a minor child, and that their income and resources are insufficient to meet the costs of necessary care and services, according to program criteria, which are found at 42 U.S.C. § 1396a (1994). See John Bigler, Diane Archer & John Regan, An Overview of Social Security, Medicare and Medicaid, 65 N.Y.ST.B.J. 14, 18 (1993); see also Atkins v. Rivera, 477 U.S. 154, 156, 106 S.Ct. 2456, 91 L.Ed.2d 131 (1986). However, in determining eligibility, an applicant's home is excluded as a countable resource, thus allowing someone with a potentially valuable asset to receive benefits along with those who have greater financial need.² Congress addressed this anomaly through estate recovery.

The legislative history of the estate recovery program reflects Congress's salutary purpose of maximizing the amount of money available to those who absolutely cannot afford medical and nursing care. Prior to 1993, states were permitted, but not required, to establish estate recovery programs. See Pub.L. No. 89-97 (July 30, 1965); see also Pub.L. No. 97-248 § 132, 96 Stat. 324 (1982). Congress passed the estate recovery provision as part of the Omnibus Budget Reconciliation Act of 1993 (OBRA '93) to counterbalance rocketing Medicaid expenditures and overall budget and deficit reductions. Ira Stewart Wiesner, OBRA '93 and Medicaid, Asset Transfer, Trust, Availability, and Estate Recovery Statutory Analysis in Context, 47 SOC.SEC.REP.SERV. 757, 758 (1995). Congress sought a way to stymie the growth in state Medicaid expenditures without depriving eligible recipients of much-needed care. Id. Thus, although states could allow Medicaid recipients to retain their homes during their lifetime, Congress began requiring states to recoup benefits from the estates of certain deceased Medicaid recipients as a condition of receiving Medicaid funds. OBRA '93 § 13611(a), 107 Stat. at 622 (amending Social Security Act § 1917(c)(1), 42 U.S.C. § 1396p(c)(1) (1989)).

Specifically, OBRA '93 required that each State include in its State Plan a provision for making recoveries from the estates of Medicaid recipients who: 1) permanently reside in nursing facilities, medical institutions, or intermediate care facilities for the mentally retarded; 2) who receive home- or community-based services, or any long-term care services after the age of 55; and 3) who have received or are entitled to receive benefits under a long-term care insurance policy. 42 U.S.C. § 1396p(b)(1). States failing to participate in the estate recovery program risk losing all or part of their Medicaid funding. 42 U.S.C. § 1396c.³

OBRA '93 does not force estate recovery upon any citizen of a state. Persons subject to estate recovery elect to receive Medicaid benefits and the regulations demand that such recipients receive notice of the estate recovery requirement when choosing to accept or reject Medicaid long-term care benefits. See State Medicaid Manual, § 3810(I), HCFA.PUB. 45-3 (September 1994) ("General Notice — You should provide notice to individuals at the time of application for Medicaid that explains the estate recovery program in your State.") Additionally, the statute safeguards a home from recovery if it is needed for the support of a spouse or dependent child. See 42 U.S.C. 1396p(b)(2); see also State Medicaid Manual § 3810(A)(4), HCFA.PUB. 45-3. Furthermore, estate recovery may be waived in individual situations in which undue hardship can be shown. See State Medicaid Manual § 3810(C), HCFAPUB. 45-3 ("Where estate recovery would work an undue hardship, adjustment or recovery is waived.")

Until 1995, West Virginia law did not provide for estate recovery. However, in 1995, West Virginia enacted West Virginia Code section 9-5-11c, which authorized the state Department of Health and Human Resources to implement the estate recovery program. The legislature included a provision that directed the state Attorney General to commence an action to determine the validity of the estate recovery program and to determine whether the federal mandate was constitutional. Three years later, the Attorney General filed this suit, arguing that the choice of implementing an estate recovery program or losing all or part of desperately needed Medicaid funds is so coercive as to make the requirement unconstitutional and violate the Tenth Amendment.

II. DISCUSSION OF LAW

The Tenth Amendment to the United States Constitution provides that "[t]he powers not delegated to the United States, by the Constitution, nor prohibited by it to the States are reserved to the States respectively, or the people." U.S. CONST., amend X. As a general matter, the Tenth Amendment is not implicated when Congress acts pursuant to one of its enumerated powers. Certain powers, which are specifically enumerated in the Constitution, have been broadly interpreted to provide Congress with substantial latitude in regulating areas which might otherwise be left to the states. "[O]ur Constitution ... authorizes some enumerated powers that are broad enough to allow congressional control over any aspect of human affairs." Robert F. Nagel, The Future of Federalism, 46 CASE...