Wong v. Daines

• Citation: 582 F.Supp.2d 475
• Decision Date: 29 September 2008
• Docket Number: No. 07 Civ. 879(MGC).,07 Civ. 879(MGC).
• Parties: Sai Kwan WONG by his Guardian Kevin Wong, individually and on behalf of a class of all others similarly situated, Plaintiffs, v. Richard F. DAINES, M.D., in his official capacity as Commissioner, New York State Department of Health, Robert Doar, in his official capacity as Commissioner, New York City Human Resources Administration, and Michael O. Leavitt, in his official capacity as Secretary, United States Department of Health and Human Services, Defendants.
• Court: U.S. District Court — Southern District of New York

582 F.Supp.2d 475

Sai Kwan WONG by his Guardian Kevin Wong, individually and on behalf of a class of all others similarly situated, Plaintiffs, v. Richard F. DAINES, M.D., in his official capacity as Commissioner, New York State Department of Health, Robert Doar, in his official capacity as Commissioner, New York City Human Resources Administration, and Michael O. Leavitt, in his official capacity as Secretary, United States Department of Health and Human Services, Defendants.

No. 07 Civ. 879(MGC).

United States District Court, S.D. New York.

September 29, 2008.

Woods Oviatt Gilman LLP, by: René H. Reixach, Jr., Esq, Rochester, NY, for Plaintiffs.

Petroff & Bellin, LLP, by: Aytan Y. Bellin, Esq., New York, NY, for Plaintiffs.

Andrew M. Cuomo, Attorney General of the State of New York, by: Ivan B. Rubin, Esq., New York, NY, for Defendant Commissioner Daines.

Michael A. Cardozo, Corporation Counsel of the City of New York, by: Marilyn Richter, Esq., New York, NY, for Defendant Commissioner Doar.

Michael J. Garcia, United States Attorney for the Southern District of New York, by: Carolina A. Fornos, Esq., New York, NY, for Defendant Secretary Leavitt.

OPINION

CEDARBAUM, District Judge.

Sai Kwan Wong ("Wong")/ through his guardian Kevin Wong, sues Richard Daines, Commissioner of the New York State Department of Health ("DOH"); Robert Doar, Commissioner of the New York City Human Resources Administration ("HRA"); and Michael Leavitt, Secretary of the United States Department of Health and Human Services ("HHS"). Wong sues these officers in their official capacity and principally seeks injunctive and declaratory relief. He sues the state and city officers pursuant to 42 U.S.C. § 1983 and the federal officer pursuant to 5 U.S.C. § 702.¹ Commissioner Daines moves for summary judgment. Commissioner Doar moves to dismiss for failure to state a claim, or, in the alternative, for summary judgment. Secretary Leavitt moves to dismiss for lack of subject matter jurisdiction, or, in the alternative, for summary judgment. Wong moves for summary judgment and for class certification on behalf of all disabled, institutionalized individuals in New York who receive Medicaid benefits and place income into a supplemental needs trust under 42 U.S.C. § 1396p(d)(4).

For the reasons that follow, the defendants' summary judgment motions are granted.

BACKGROUND

The parties have stipulated to all of the material facts. Sai Kwan Wong, a fifty-four-year-old man, has resided in a nursing home in Queens since October of 2005. Wong was institutionalized after suffering severe brain trauma in an automobile accident.

In November of 2005, Wong applied for Medicaid coverage. Medicaid, in the words of Judge Friendly, is "a statute of unparalleled complexity." DeJesus v. Perales, 770 F.2d 316, 321 (2d Cir.1985). Medicaid is a joint federal-state program in which federal and state governments pay for the cost of medical care for certain categories of people. States that choose to participate in Medicaid must operate their Medicaid programs in accordance with federal law. 42 U.S.C. § 1396a; Schweiker v. Gray Panthers, 453 U.S. 34, 37, 101 S.Ct. 2633, 69 L.Ed.2d 460 (1981). In the state of New York, Medicaid is administered by the Department of Health. DOH has divided the state into fifty-eight social services districts, and in New York City the Human Resources Administration is the local agency responsible for administering the Medicaid program.

Broadly speaking, Medicaid is available to low-income people who are blind, disabled, aged 65 and older, members of families with dependent children, or qualified pregnant women or children. 42 U.S.C. § 1396a(a)(10); 42 C.F.R. §§ 430.0; 435.4.

In December of 2005, HRA determined that Wong was eligible for Medicaid. Wong does not challenge his eligibility determination; he challenges HRA's determination of his Medicaid benefits, or more precisely, HRA's determination of the amount of money Wong must contribute to his medical care.

In the case of institutionalized individuals, eligible Medicaid recipients are required to contribute to the cost of their care if possible. 42 C.F.R. § 435.832(a)(1). In New York, an individual's contribution is called a NAMI, an acronym for Net Available Monthly Income. Wong's sole source of income is a monthly Social Security Disability Insurance payment of $1,401. To determine his NAMI, HRA begins with Wong's total monthly income of $1,401 and makes certain deductions, such as a personal needs allowance of $50 a month and a health insurance premium. 18 N.Y.C.R.R. 360-4.9. Wong's income less the deductions, i.e. his NAMI, is $1024.81 per month. Each month, therefore, Wong must contribute $1024.81 toward the cost of his nursing home care. Medicare pays the rest, approximately $8000 a month.

In November of 2006, Wong began depositing his monthly Social Security Disability Insurance payment into a supplemental needs trust ("SNT") established under 42 U.S.C. § 1396p(d)(4)(A).

In general, supplemental needs trusts are established for the benefit of people with severe and chronic disabilities. Supplemental needs trusts are meant to provide for expenses that government assistance programs such as Medicaid do not cover. Sullivan v. County of Suffolk, 174 F.3d 282, 284 (2d Cir.1999). "For example, a disabled person can use an SNT to provide additional health care services and equipment, specialized or unique therapy, private health insurance, educational and vocational training, computers and software, case management services, and recreational activities." Joseph A. Rosenberg, Supplemental Needs Trusts for People with Disabilities: The Development of a Private Trust in the Public Interest ("Rosenberg"), 10 B.U. Pub. Int. L.J. 91, 95-96 (2000). Wong's supplemental needs trust was created to pay for a Cantonese-speaking aide. (Transcript of November 29, 2007 Hearing, at 16.)

In November of 2006, HRA reviewed Wong's supplemental needs trust and determined that Wong was still eligible for Medicaid benefits. However, HRA determined that Wong's monthly income was not sheltered by its placement in the trust. HRA continued to calculate his NAMI as $1024.81, and Wong continues to make monthly payments toward his nursing home care in that amount.

According to Wong's interpretation of the applicable Medicaid statute, 42 U.S.C. § 1396p(d), the monthly income placed in his supplemental needs trust should be sheltered from the benefits determination. Under this interpretation, his total income is zero, his NAMI must also be zero, and Medicaid should therefore pay the entire $9000-a-month bill for his nursing home.

DISCUSSION

I. The motions to dismiss

Before moving to the merits of the statutory arguments, it is necessary to address Commissioner Doar's motion to dismiss for failure to state a claim and Secretary Leavitt's motion to dismiss for lack of subject matter jurisdiction. Commissioner Doar argues that he is not a necessary party because, first, HRA simply implements the regulations and policies of the state and federal governments, and, second, he has no ability to provide the relief sought by Wong. Secretary Leavitt argues that Wong cannot sue under 5 U.S.C. § 702 because there has not been final agency action, see Darby v. Cisneros, 509 U.S. 137, 153-54, 113 S.Ct. 2539, 125 L.Ed.2d 113 (1993), because Wong has failed to exhaust his administrative remedies in compliance with 5 U.S.C. § 704, and because Wong has not shown injury-in-fact as required by Article III of the Constitution, see Lujan v. Defenders of Wildlife, 504 U.S. 555, 560, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992).

Unlike Secretary Leavitt and Commissioner Doar, Commissioner Daines presents no alternative to his motion for summary judgment. Therefore the merits of the case must be decided in any event. Because all defendants succeed on the merits, it is not necessary to decide Commissioner Doar's motion to dismiss for failure to state a claim or Secretary Leavitt's motion to dismiss for lack of subject matter jurisdiction, with the exception of the latter's injury-in-fact argument.

In Steel Co. v. Citizens for a Better Environment, the Supreme Court invalidated the doctrine of "hypothetical jurisdiction" as it applied to Article III standing. 523 U.S. 83, 101-02, 118 S.Ct. 1003, 140 L.Ed.2d 210 (1998). Some courts had engaged in the practice of assuming there was standing under Article III and moving directly to the merits of the case, where the merits were clear, the standing question was unclear, and the same party would win in either case. Id. The Court held that Article III standing must be decided first. Id. at 101-02, 118 S.Ct. 1003. The Court stated, however, that jurisdiction in other situations could be assumed when the party seeking dismissal for lack of jurisdiction would win on the merits. Id. at 97 n. 2, 99-100, 118 S.Ct. 1003 (citing, inter alia, Philbrook v. Glodgett, 421 U.S. 707, 721, 95 S.Ct. 1893, 44 L.Ed.2d 525 (1975), in which jurisdiction over the Secretary of Health, Education, and Welfare was assumed, because "[t]he merits issue of statutory construction involved in the claim against the Secretary was precisely the same as that involved in the claim against the Commissioner [of the Vermont Department of Social Welfare]"); Guaylupo-Moya v. Gonzales, 423 F.3d 121, 132 n. 10 (2d Cir.2005) (because "exhaustion requirement raises a question of statutory, rather than constitutional, jurisdiction, we need not resolve the exhaustion issue in this case and can dispose of [the] argument on its merits").²

Secretary Leavitt argues that Wong's injury is not an injury-in-fact under Article III because he failed to avail himself of existing administrative remedies. This argument is without merit. To satisfy the requirement of injury-in-fact, Wong must show invasion of an interest, resulting in harm that is concrete, that affects the plaintiff personally and individually, and that is actual and...