Wilson v. Gordon

Citation822 F.3d 934
Decision Date23 May 2016
Docket NumberNo. 14–6191.,14–6191.
PartiesMelissa WILSON et al., Plaintiffs–Appellees, v. Darin GORDON et al., Defendants–Appellants.
CourtUnited States Courts of Appeals. United States Court of Appeals (6th Circuit)

822 F.3d 934

Melissa WILSON et al., Plaintiffs–Appellees
v.
Darin GORDON et al., Defendants–Appellants.

No. 14–6191.

United States Court of Appeals, Sixth Circuit.

Argued: June 18, 2015.
Decided and Filed: May 23, 2016.

Rehearing En Banc Denied Aug. 1, 2016.
*


822 F.3d 938

ARGUED: Michael W. Kirk, Cooper & Kirk, PLLC, Washington, D.C., for Appellants. Samuel Brooke, Southern Poverty Law Center, Montgomery, AL, for Appellees. ON BRIEF: Michael W. Kirk, Cooper & Kirk, PLLC, Washington, D.C., Linda A. Ross, Carolyn E. Reed, Office of the Tennessee Attorney General, Nashville, TN, for Appellants. Samuel Brooke, Sara Zampierin, Southern Poverty Law Center, Montgomery, AL, Jane Perkins, Elizabeth Edwards, National Health Law Program, Carrboro, NC, Gordon Bonnyman, Jr., Christopher E. Coleman, Tennessee Justice Center, Nashville, TN, for Appellees. Mark B. Stern, Alisa B. Klein, United States Department of Justice, Washington, D.C., for Amicus Curiae.

Before: MOORE, SUTTON, and WHITE, Circuit Judges.

MOORE, J., delivered the opinion of the court in which WHITE, J., joined. SUTTON, J. (pp. 959–60), delivered a separate dissenting opinion.

OPINION

KAREN NELSON MOORE, Circuit Judge.

Eleven named plaintiffs, residents of Tennessee who applied for Medicaid (“Plaintiffs”), filed a class action complaint for declaratory and injunctive relief against Darin Gordon, the Director of the Bureau of TennCare, Larry Martin, the Commissioner of the Department of Finance and Administration, and Dr. Raquel Hatter, the Commissioner of Human Services (collectively “the State”), alleging that the delays Plaintiffs have experienced in receiving eligibility determinations on their Medicaid applications violate 42 U.S.C. § 1396a(a)(8) of the Medicaid statute, and that the State's failure to provide a fair hearing on their delayed applications violates § 1396a(a)(3) and the Due Process

822 F.3d 939

Clause of the United States Constitution. The district court certified a class and granted Plaintiffs' motion for a preliminary injunction, which requires the State to grant a fair hearing on delayed applications to class members who request one. The State now appeals the grant of the preliminary injunction, but has not appealed the class certification order. For the reasons set forth below, we AFFIRM the district court's grant of a preliminary injunction.

I. BACKGROUND

A. Factual Background

The Medicaid statute requires that states electing to participate in Medicaid “provide that all individuals wishing to make application for medical assistance under the plan shall have opportunity to do so, and that such assistance shall be furnished with reasonable promptness to all eligible individuals.” 42 U.S.C. § 1396a(a)(8). Regulations implementing the statute provide that “the determination of eligibility for any applicant may not exceed” 90 days for those “who apply for Medicaid on the basis of disability” and 45 days for all other applicants. 42 C.F.R. § 435.912(c)(3). The Medicaid statute additionally requires that states must “provide for granting 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) ; 42 C.F.R. § 431.220(a)(1) (“The State agency must grant an opportunity for a hearing to ... [a]ny applicant who requests it because his claim for services is denied or is not acted upon with reasonable promptness.”). Where a hearing concerns a delayed application, “[t]he hearing must cover ... [a]gency action or failure to act with reasonable promptness on a claim for services, including both initial and subsequent decisions regarding eligibility.” 42 C.F.R. § 431.241(a). Moreover, a state is required to designate a “single State agency to administer or to supervise the administration of the plan.” 42 U.S.C. § 1396a(a)(5). Tennessee's Medicaid program is known as TennCare and is administered by the Bureau of TennCare, which is within the Department of Finance and Administration. R. 52 (Gordon Decl. ¶ 1) (Page ID # 660).

The Affordable Care Act (“ACA”) introduced several changes to federal law that affected Medicaid. First, the ACA required the creation of Exchanges, state-specific health insurance marketplaces where individuals can compare and purchase private insurance plans. 42 U.S.C. § 18031. States were required either to create their own Exchange by January 1, 2014, or to allow the federal Centers for Medicare and Medicaid Services (“CMS”) to operate an Exchange in the state. Id. §§ 18031(b)(1) ; 18041(b) & (c); 18083(a). Second, states must now use a standard methodology to calculate income eligibility for most categories of Medicaid, called “modified adjusted gross income” (“MAGI”).1 Id. § 1396a(e)(14).

Third, states must use a single, streamlined application for state health insurance and subsidy programs, including Medicaid and Children's Health Insurance Program (“CHIP”). Id. § 18083(b)(1)(A); § 1396w–3(b)(3). Fourth, states are required to develop an electronic system for data exchange

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that enables information on the application to be checked against data available electronically from federal agencies like the Internal Revenue Service (“IRS”) and the Social Security Administration (“SSA”). Id. § 18083(c). CMS has established the Federal Data Services Hub as “a single repository for all federal data that may be useful in verifying Medicaid eligibility.” R. 55 (Purcell Decl. ¶ 4) (Page ID # 708).

Fifth, the ACA created a “no wrong door” policy, meaning that individuals can apply for health coverage with the streamlined application through the state Medicaid agency, the state CHIP agency, or the Exchange. 42 U.S.C. § 18083(b)(1)(A)(iii). Thus, states must actually have a system in place for accepting streamlined applications directly. See also 42 C.F.R. § 435.907(a) (stating that “the agency must accept an application” for Medicaid) (emphasis added). States must provide applicants the option to apply online, by telephone, by mail, or in person. 42 U.S.C. § 18083(b)(1)(A)(ii) ; 42 C.F.R. § 435.907(a). Applicants to the Exchange found eligible for Medicaid or CHIP must be enrolled in the applicable program, and applicants to a state agency who are found ineligible for Medicaid or CHIP must be screened for eligibility for Exchange plans, and enrolled if found eligible. 42 U.S.C. §§ 1396w–3(a) & (b)(1)(C), 18083(a). Finally, when receiving Medicaid determinations from the federal Exchange, states may elect to be either a “determination” state, meaning that the state will accept CMS's final eligibility determination, or an “assessment” state, meaning that CMS's determination is preliminary and the state can accept or change it. 42 C.F.R. §§ 431.10(c)(1)(i), 435.1200(c) & (d) ; 45 C.F.R. § 155.302(b).

The ACA required states to accept and process all Medicaid applications using the MAGI methodology by October 1, 2013, regardless of whether the state operates its own Exchange. 42 U.S.C. § 18083(b) & (c) ; 42 C.F.R. § 435.907(a) ; R. 4–1 (Ltr. from Mann to Gordon at 2) (Page ID # 297). Tennessee informed CMS in 2013 that it could not update its pre-ACA computer system for processing Medicaid applications to perform MAGI calculations by this deadline. R. 4–1 (Tennessee Mitigation Plan at 1) (Page ID # 274). Thus, the State proposed temporarily to redirect all MAGI-based applicants to the federal Exchange rather than accepting the applications itself through December 2013. Id. Tennessee also opted to be a determination state. Id. CMS approved this mitigation plan on August 16, 2013 as a “short-term measure, not a long-term solution.” R. 4–1 (Ltr. from Kahn to Gordon at 1) (Page ID # 263); R. 4–1 (Ltr. from Mann to Gordon at 3) (Page ID # 298). However, Tennessee did not meet the January 1, 2014 deadline, and at the time this appeal was filed the State had not yet successfully created a new computer system to process MAGI-based applications, called the TennCare Eligibility Determination System (“TEDS”). R. 4–1 (Contract at 4) (Page ID # 261); TennCare, Tennessee to Go in New Direction for Medicaid Eligibility Determination System (Jan. 12, 2015), http://news.tn.gov/node/13420. Thus, Tennessee continues to refer all MAGI-based applicants to the Exchange. R. 4–1 (Tennessee Mitigation Plan at 1) (Page ID # 274). Tennessee continues to process directly applications for non-MAGI categories of Medicaid. R. 55 (Purcell Decl. ¶ 10) (Page ID # 711–12).

B. Procedural History

The eleven named plaintiffs are residents of Tennessee who applied for Medicaid in Tennessee and did not receive a final determination of their eligibility within the requisite time periods, and who were not provided hearings on their delayed applications

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when requested. R. 1 (Compl. at 22–32) (Page ID # 22–32). Plaintiffs' applications were pending anywhere from 146 to 194 days as of the day the case was filed. R. 1–1 to 1–8 (Decls.) (Page ID # 41–71). On July 23, 2014, Plaintiffs filed a class action complaint for declaratory and injunctive relief against Darin...

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