Opinion
Civil 3:98 CV 418 (DJS).
February 11, 2000.
RECOMMENDED RULING ON CROSS- MOTIONS FOR SUMMARY JUDGMENT
This provisionally-certified class action seeks declaratory and injunctive relief on behalf of home-bound elderly and disabled Medicare beneficiaries. 28 U.S.C. § 2201. The plaintiffs, who reside in Connecticut, New Jersey, Michigan, Massachusetts, Alabama, Iowa, California, Texas, and Colorado, allege that they did not receive "meaningful notice and appeal rights when their home health care benefits [were] reduced or terminated." (Complaint ¶ 1). Among other things, plaintiffs seek a declaratory judgment that defendant's home health care notice and appeals procedure violates 42 U.S.C. § 1395 et seq., and their fifth amendment due process rights (Complaint ¶ 5). The court has jurisddiction under 28 U.S.C. § 1331 and 42 U.S.C. § 1395 et seq.
The court will consider plaintiffs' claim for injunctive relief at a later date. Further declaratory relief may be forthcoming at that time.
Cross-motions for summary judgment are pending. They have been fully briefed and argued. On the instant record, the Secretary's motion (Dkt. #45) should be denied. The plaintiffs' cross-motion (Dkt. #53) should be treated as a motion for partial summary judgment seeking declaratory relief, and should be granted in part. Due to the evolving factual record and the prospective nature of injunctions, plaintiffs' motion for summary judgment on their claim for an injunction should be denied without prejudice. 11 J. Moore,Federal Practice § 56 App. 200 [36] at 142 and nn. 270-72 (1999).
A declaratory judgment should issue that the plaintiffs have a legal right to a written: (1) pre-deprivation statement why the HHA believes Medicare may not or may no longer cover their services; (2) explanation of the circumstances in which a beneficiary has the right to have a demand bill submitted, and (3) disclosure of information regarding a patient's right to appeal . . . ." (Dkt. #46). Any party may timely seek review of this recommendation; failure to do so may bar further review. 28 U.S.C. § 636 (b)(1)(B); Small v. Secretary of Health and Human Services, 892 F.d. 15, 16 (d. Cir. 1989).
I.
Title XVIII of the Social Security Act, also known as Medicare, 42 U.S.C. § 1395-1395ggg, provides for the payment of certain medical care for the persons 65 and older and the disabled. There are two separate benefit programs under Medicare. Part A, the primary benefits component, is funded by Social Security taxes and "provides major medical coverage for hospital care and related post hospitalization services." Isaacs v. Bowen, 865 F.2d 468, 470 (2d. Cir. 1989).
Part B is a federally subsidized voluntary health insurance program designed to supplement part A coverage. Id. Neither component is need-based, which means that "coverage is not related to financial need." Kraemer v. Heckler, 737 F.2d 214, 215 (2d. Cir. 1984). After medical and related services are rendered, the Health Care Financing Administration ("HCFA"), the agency within the Department of Health and Human Services ("HHS") that administers Medicare, reimburses providers of services which are covered.Heckler v. Ringer, 466 U.S. 602, 605 (1984); Issacs, supra.
Medicare beneficiaries are eligible to receive home health services under both Parts A and B. 42 U.S.C. § 1395d(a)(3) and 1395k(a)(2)(A). These services include such things as skilled nursing care, physical or occupational therapy, medical social services provided under the care of a physician, and the services of a home health aide. A patient receives home health services from a Home Health Agency ("HHA"), which is a private agency engaged in providing skilled nursing care and other therapeutic services. 42 U.S.C. § 1395x(o)(1).
II.
The plaintiffs' Local Rule 9 statement consists of 190 paragraphs and is accompanied by an appendix of declarations (Dkt. ##56, 57). The defendant unqualifiedly admits paragraphs 1-158, 160, 162-163, 165, 168-170, 174-175, 178-180, 182-184, 186, 189-190. She admits portions of paragraphs 166, 167, 171, and 185. She denies paragraphs 159, 161, 164, 181, and 187-188 in their entirety. With respect to defendant's motion, the plaintiffs admit paragraphs 1-6, 9-19, and portions of paragraphs 8 and 12 of defendant's Local Rule 9(c)1 statement. Plaintiffs deny paragraph 7 (Dkt. ##47, 57). The foregoing and their supporting documentation are incorporated by reference herein.
Unless noted otherwise, there appears to be no genuine dispute as to certain key facts. The plaintiffs range in age from their mid-40s to well over ninety years old. Because they are over age 65, or have been found to be disabled, all are or were eligible for home health care benefits under Medicare. Each of the named plaintiffs' home health care benefits have been reduced or terminated, or threatened to be reduced or terminated, orally and without any notice, or upon oral notification, sometimes as short as only a few days.
The plaintiffs were not advised of their right to appeal the reduction or termination of their benefits. When they were given reasons, they were often inconsistent, conflicting, or erroneous. The plaintiffs were not informed of the defendant's "demand bill" procedure by which the HHA's adverse determination can be appealed. The plaintiffs cannot afford to pay for home health care services while appealing the HHA's adverse determination. Such an appeal often takes as long as four months at the initial stage.
The defendant denies that most home health patients need home health care to live independently, or to live at all (See Dkt. #61, ¶ 159). It is not disputed that the named plaintiffs need, or needed, home health care to live independently or to live at all. The actual or threatened reduction and termination of home health care benefits has had a significant adverse impact on the named plaintiffs. The lack of notice and inadequate advice of appeals rights has added to plaintiffs' stress and adversity.
Defendant denies that "heavy-care" users of home health services have suffered particularly from cutbacks caused by the Interim Payment System (IPS), which will be discussed hereafter. She further denies that "HCFA does not know whether the cutbacks have particularly affected heavy-care users." (Dkt. #61, ¶ 164). "Heavy-care users" and "heavy service users" are synonymous terms referring to individuals whose condition requires a great deal of care or service by the HHAs, thus allegedly making them "economically undesirable patients." Winkler v. Interim Services, Inc., 36 F. Supp.2d 1026, 1027 (M. D. Tenn. 1999). There is no dispute that the plaintiffs require or have required substantial home health care.
The Secretary denies that home health care patients "often cannot afford to pay for the services while their appeals [are] being resolved. . . ." (Dkt. #61, ¶ 181). The defendant, however, has admitted that several named plaintiffs cannot afford to pay for their home health service, and the declarations of still other plaintiffs to the same effect appear to be unopposed.
The Secretary admits ¶¶ 7, 17, 43, 73, 85, 112, and 132 of plaintiffs' Local Rule 9 statement wherein seven of the named plaintiffs explicitly assert their inability to pay for services. The defendant also admits ¶¶ 86-90 which are based on the Moreno Declaration (Dkt. #55, Tab J ¶ 19) wherein it is attested that plaintiff Calderon cannot afford the services. Plaintiff Jones's declaration is to the same effect (Dkt. #55, Tab O ¶ 10). Though less explicit, the declarations regarding plaintiffs Culver and Flight fairly make the same point (Dkt. #55, Tabs F and S).
Defendant is correct that, since Medicare is not need-based, the inability of a patient to pay for services is not determinative. But, a beneficiary's impecuniousness is not irrelevant either. One's inability to pay for home health care underscores one's vulnerability and, hence, the importance of fair notice of a proposed reduction or termination of services, an understandable statement of the reason, and an accurate explanation of appeal rights.
Medicare patients have "the right to be fully informed in advance of any changes in the care or treatment to be provided by the agency that may affect the individual's well-being. . . ." 42 U.S.C. § 1395bbb(a)(1)(A). The Secretary's own regulations also require advance notice of changes in care. 42 C.F.R. § 484.10 (c)(1) The advance notice contemplated by the foregoing is, of course, fair and reasonable notice. The Secretary does not contend otherwise.
Medicare patients also have the right to request a "demand bill" regarding services, including home health care, which actually have been provided to the beneficiary. "A demand bill is a claim for services or items that the provider believes are not covered but which the provider must submit [to the Secretary] at the request of the beneficiary." (Defendant's Memorandum, Dkt. #46 at 10 ¶ 2).
The Secretary acknowledges that "[t]he only way that a Medicare home health beneficiary can obtain an official Medicare determination with respect to [an] HHA's decision of non-coverage is through the submission of a demand bill." (Dkt. #61, ¶ 179). A demand bill is the key to the administrative process and thence, if necessary, to judicial review under 42 U.S.C. § 405 (g).
The only way such a patient can appeal the HHA's adverse decision "is to pay for the disputed home health services and to have a demand bill submitted." (Dkt. ##56 and 61, ¶ 180). Plaintiffs argue that this is both paradoxical and illegal, and they seek injunctive relief changing the basic architecture of the system in this regard. Defendant, on the other hand, argues that this is what the statutes contemplate, and that it is integral to a fee-for service system of "retrospective reimbursement."
Although continuation of services is a prerequisite to appealing an adverse home health care decision, the defendant admits that "beneficiaries who wish to have a demand bill submitted cannot force their HHAs to continue services on a private-pay basis." (Dkt. ##56, 61 ¶ 182). If services are continued during the demand bill process, and the HHA's determination is later sustained by the Secretary, the cost of paying for these interim services is borne by the patient. Thus, the demand bill process entails some risk for the patient.
There is presently no system for expedited review of an HHA's decision. "The turnabout time for Medicare processing of home health claims is 60 days after they are received by the fiscal intermediary from the HHA." (Dkt. ##56, 61, ¶ 185). Within 30 days thereafter, the Secretary's Regional Home Health Intermediary ("RHHI") must inform the patient in writing of its initial determination and the reasons supporting it. 42 C.F.R. § 405.702. It also must advise the patient of his or her right to seek reconsideration. Id. (Dkt. #56 at 11).
The plaintiffs ask the court to issue a mandatory injunction requiring the Secretary to review demand bills within ten days.
When demand bills are submitted, they are very often successful. The defendant admits that "[f]rom 1994 through the first three months of 1998, the success (full or partial) rate for all demand bills submitted at the request of home health care beneficiaries was 50.2% (152,446 out of 303,802)." The yearly success rates were, for 1994: 57.2%; for 1995: 55.2%; for 1996: 47.9%; for 1997: 43.6%; and, for 1998: 34.9%. (Dkt. ##56, 61, ¶ 189). The Secretary admits that "HCFA does not know what percentage of HHAs have submitted demand bills on behalf of beneficiaries." (Dkt. ##56, 61, ¶ 183).
The named plaintiffs were not informed that they could cause a demand bill to be presented to the RHHI. Though the defendant denies it, plaintiffs argue that Medicare patients are routinely not given information about the use of a demand bill to appeal an HHA's adverse decision (Dkt. 56, ¶ 187; Deford Declaration). When one considers how frequently demand bills result in a reversal of HHA decisions, the impact of failing to advise patients of the procedure is clear.
If the right to challenge a proposed change in home health care is to mean anything at all, the patient must be aware of the existence of that right. Knowing that there is such a thing as a "demand bill" could result in patients, or their families, incurring the expense — even if they cannot afford to — believing that ultimately their view as to coverage will prevail when the demand bill is presented. Not disclosing information about the demand bill process leaves patients with no hope, and also blocks an important avenue for complaints about the performance of HHAs to make their way to the Secretary.
"HHAs enter into agreements with the HCFA which allow them to receive Medicare payments for specified health care services that they furnish to Medicare beneficiaries in conformity with the Medicare Act and HCFA's implementing rules." (Dkt. #46 at 5, citing 42 U.S.C. § 1395c, d and cc). An HHA's participation in the Medicare program is further governed by "conditions of participation" which are specified by statute and regulation. (Dkt. #61 at 6, citing 42 U.S.C. § 1395x(O); 1395bbb(a)).
The method by which HHAs are reimbursed was modified by the Balanced Budget Act, Pub.L. No. 105-33, enacted August 5, 1997. Among other things, that act requires that, on and after October 1, 1999, HHAs be paid under a Prospective Payment System ("PPS") similar to that used to pay other Medicare providers such as hospitals. Greater Dallas Home Health Care Alliance v. United States, 10 F. Supp.2d 638, 641 (N.D. Texas 1998).
Until the PPS can be implemented, Congress has required that the HCFA implement an Interim Payment System ("IPS"). Id., citing 42 U.S.C. § 1395x(v)(1)(L). The IPS became effective for cost-reporting periods beginning October 1, 1997 (Dkt. ##56, 61, ¶ 162). The defendant admits the "HCFA's monitoring and penalty system does not check on whether HHAs have terminated more patients since the IPS went into effect." (Dkt. ##56, 61, ¶ 167).
The defendant admits that home health spending has dropped since implementation of the IFS (Dkt. #61, ¶ 166), even though "an individual beneficiary's care or number of visits is not limited under IPS." (Dkt. #46 at 9 n. 5). Plaintiffs argue that this drop in spending is due to rampant, unreviewed coverage decisions by HHAs. These are often based on misapprehensions about payment limits, and a belief that the limits imposed by changes in the law apply to individual beneficiaries, thus requiring a cutback in the care given to heavy users (Dkt. #56, ¶ 166). The Secretary denies this.
The evidence indicates considerable confusion on the part of the HHAs whether an individual beneficiary's care and the number of home health visits have been limited by the foregoing changes in Medicare laws. There is no dispute that having a chronic condition does not disqualify a beneficiary from home health services, nor is there any dispute that IPS caps "do not apply to individual patients and do not dictate particular care patterns for home health patients." (Dkt. ##56, 61, ¶ 174-175). Nevertheless, when they were given reasons by their HHAs, the named plaintiffs were told that their benefits were being reduced or terminated due to purported changes in the law imposing "caps" or limiting the care of "chronic" and "stable" patients.
The Secretary monitors HHAs to determine whether they are in compliance with the conditions of participation. Defendant's monitoring process involves surveys and certification. "A survey consists of visits to beneficiaries' homes and a review of the quality of care and services furnished by the HHA for a case-mix stratified sample of the HHA's patients." Statute requires that an HHA be subject to a survey not less than every 36 months." (Dkt. #46 at 12).
An HHA is subject to an "extended survey" if found to be deficient. If the HHA remains out of compliance, it even may be referred to the HCFA "for further action, including possible termination." (Dkt. #46 at 13). In addition, "state agencies may investigate beneficiary complaints, including complaints regarding the failure of [an] HHA to provide required notice to beneficiaries or to submit demand bills upon request." (Dkt. #46 at 12). But, the "HCFA does not know whether any HHAs have been penalized, or found out of compliance with `Conditions of Participation,' for failing to submit demand bills at the request of Medicare home health patients." (Dkt. #56, 61, ¶ 184).
The Secretary argues that she cannot be blamed for what the HHAs do. She suggests that, rather than requiring her to force the HHAs to give reasons for their decisions and to advise patients of their right to appeal, the court could require patients to sue the HHAs directly, presumably in federal court. Defendant points to two cases where district courts have allowed health beneficiaries to maintain such actions. See Winkler v. Interim Serv., Inc., 36 F. Supp.2d 1026 (W.D. Tenn. 1999); Morris v. North Hawaii Comm. Hospital, 37 F. Supp.2d 1181 (D. Hawaii 1999). (Dkt. #46 at 31 n. 14).
It is admitted that, at the time this lawsuit was filed, the defendant did not require HHAs to use a uniform written notice when informing Medicare home health patients of denials, reductions or terminations (Dkt. ##56, 61, ¶ 171). Since this lawsuit has been filed, the defendant has taken steps to address this obvious problem. These are part of a process, albeit a frustratingly slow and ponderous one, which is continuing. The Secretary describes these steps as voluntary and undertaken out of a desire to be more "beneficiary friendly." (Dkt. #46 at 7, ¶ 2).
Plaintiffs argue that the Secretary has acted not out of beneficiary friendliness, but because even she recognizes the merit of plaintiffs' contentions in this case (See Transcript of January 27, 2000, oral argument at 13). This aside, the defendants' suggestion that patients are free to sue HHAs in district court undercuts the argument that her actions are merely part of a policy to be more "beneficiary friendly."
The parties' own words are best used to describe their versions of what is now transpiring. According to the June 1999 memorandum of defendant Secretary of HHS:
. . . HCFA currently is engaged in the process of developing mandatory notice language that the HHAs will be required to use when they believe that Medicare coverage may be denied from the outset, or that services will no longer be covered at all or at the same level . . . . In consultation with plaintiffs' counsel, HCFA has drafted proposed notice language, and submitted the draft for consumer testing. . . . Because the consumer testing revealed that some beneficiaries did not fully understand the draft notice language, HCFA currently is reviewing the results of the testing and making revisions to the draft. Regardless of the revisions, the new mandatory language will include the medical reason why the HHA believes that Medicare may not or may no longer cover the services, an explanation of the circumstances in which the beneficiary has the right to have a demand bill submitted for a Medicare initial determination, and information regarding the beneficiary's right to appeal. . . . HCFA anticipates the new mandatory notice language will be ready for publication in the near future.
(Dkt. #46 at 8; emphasis added).
Defendant's supplemental memorandum, filed shortly before oral argument on the pending motions, reports that the Secretary has published a notice in the Federal Register, seeking public comment on proposed mandatory language. (Dkt. #73 at Tab 1, citing 65 Fed. Register 135 (January 3, 2000)). The defendant goes on to report:
HCFA intends to implement a uniform mandatory notice after the P.A. [Paperwork Reduction Act of 1995 ("P.A."), 44 U.S.C. § 3506 (c)(2)(A)] process is concluded and the Office of Management and Budget ("OMB") has given the required approval.
In the interim, HCFA has issued two program memoranda that instruct HHAs and regional home health intermediaries ("RHHIs") regarding the requirements for notice that HHAs must provide. . . . The instructions include new model notices. . . . The program memoranda also instruct HHAs and RHHIs regarding the process required for submitting demand bills. . . . HHAs must be in compliance with the new instructions no later than February 14, 2000.
(Dkt. 73 at 1-2). The Secretary, however, advises the court that she "cannot implement a mandatory uniform notice without OMB's approval after the requirements of the P.A. have been satisfied. . . ." (Dkt. #73 at 6, ¶ 2; emphasis added).
Plaintiffs' counsel argues that the Secretary's reliance on the Paperwork Reduction Act is a disingenuous afterthought. "All last summer," plaintiffs' attorney argues, "the government said [it was] about to issue mandatory transmittals which will have mandatory notices. There was no mention of the Paperwork Reduction Act." Then, "all of a sudden, on September 30th [it said] `Oh, we forgot.' The Paperwork Reduction Act requires us to take all these other actions. Therefore, we are withdrawing these transmittals." (Transcript of January 27, 2000, oral argument at 31).
Defendant further states that, although use of the model notices is not mandatory at this time, "HHAs are encouraged to use the model notices. . . ." (Dkt. #73 at 8). Finally, the Secretary states that as of February 14, 2000, the interim instructions now in place will become mandatory for all Medicare HHAs. (Dkt. #73 at 9). Thus, defendant argues the court should not intercede (Id.).
The plaintiffs disagree, arguing that the foregoing series of events "only underscores the need for the Court's intercession." (Dkt. #74 at 3). They point out:
[I]n the five months since briefing on the merits was coming to a close, the Secretary has sent out a transmittal with mandatory notices for HHAs; changed that transmittal; withdrawn that transmittal; issued two nearly identical transmittals that render the notices voluntary; and published and corrected a Federal Register item which, at some unknown future date, may impose as yet unknown obligations on HHAs. Nevertheless, in the wake of this confused and disjointed scenario, which followed years of ignoring HHAs' failure to meet their procedural obligations to home health patients and during the concluding phases of litigation designed to remedy that situation, the Secretary again asks the court to refrain from interceding.
(Dkt. #74 at 2-3). Accordingly, plaintiffs request the court to proceed to a ruling on the merits and issue appropriate declaratory and injunctive relief. "From that point on," plaintiffs argue, "the details of relief can be negotiated by the parties, with the Court's additional intervention if and when necessary." (Dkt.#74 at 2-3).
III.
Summary judgment is appropriate when the evidentiary record shows that there are no genuine issues of material fact and that the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56; Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252 (1986); Celotex Corp. v. Catrett, 477 U.S. 317, 327 (1986). In determining whether the record presents genuine issues for plenary consideration, the court must view ambiguities in a light most favorable to the non-moving party and draw all reasonable inferences in the opponent's favor. See Hemphill v. Scott, 141 F.3d 412, 415 (2d Cir. 1998); Bedoya v. Coughlin, 91 F.3d 349, 351 (2d Cir. 1996); Bryant v. Maffucci, 923 F.2d 979, 982 (2d Cir.), cert.denied, 502 U.S. 849 (1991).
The court may not resolve factual disputes under the guise of Rule 56, but must ascertain whether there are genuine issues of material fact to be tried. Moore, supra § 56.11 [5] [a] at n. 47 (1990), citing Morris Okun, Inc. v. Harry Zimmerman, Inc., 814 F. Supp. 346, 348 (S.D.N.Y. 1998). Among other things, the court may consider a party's admissions as establishing material facts for purposes of summary judgment. Moore, supra § 56.11 [7] [b] at n. 93 (1999), citing Donovan v. Carls Drug Co., 703 F.d. 650, 651 (2d Cir. 1983).
"[C]onclusory statements, conjecture, or speculation by the party resisting the motion will not defeat summary judgment."Kulak v. City of New York, 66 F.3d 63, 71 (2d Cir. 1996). To defeat summary judgment, the opponent must point to genuine issues of material fact, Moore, supra § 56.13 [4], or demonstrate that the movant is not entitled to a judgment as a matter of law. Id. at n. 44.
"[T]he question is always whether, after `drawing all reasonable inferences in favor of the non-moving party and making all credibility assessments in [its] favor, there is sufficient evidence to permit a rational [factfinder] to find in [its] favor.'" McCarthy v. New York City Technical College of the City of New York, ___ F.3d ___, ___ (2d Cir. 2000), No. 97-9243, slip op. 9141 9150 (January 13, 2000). "Since the standard turns on whether the evidence can reasonably support a finding in [opponent's] favor, and reasonableness is the same whether exercised by judge or jury, the standard is the same" Id.
"[T]here is no doubt as to the applicability of the summary judgment procedure to a proceeding for declaratory relief." Moore,supra § 56 App. 200 [24] at 110. The same basic principles that govern the grant or denial of a motion for summary judgment also govern the motion for summary judgment on a claim for declaratory relief."Id. Partial summary judgment is often particularly useful in shaping litigation. Moore, supra § 56.40 [2]. The specification of facts pursuant to Fed.R.Civ.P. 56(d) further serves this purpose. The court notes, however, that the parties' cross-assertions that there are no genuine issues of material fact do not require entry of summary judgment for either side and are not "binding" on the court. Moore, supra § 56.10 [6] (1999).
IV.
The plaintiffs have shown that a declaratory judgment as a matter of law is appropriate on certain of the claims before the court. The Secretary has failed either to undermine plaintiffs' showing, or to establish her own entitlement to judgment as a matter of law.
Understandably, defendant attempts to distance herself from the HHAs by arguing that "HHAs are not state actors when, on their own initiative, they make changes in care on the ground that, in the HHAs' opinion, services may or may no longer be covered under the Medicare program, or for other reasons unrelated to coverage." (Dkt. #46 at 14 [footnote omitted]). The issue, however, is not the medical correctness of HHAs' changing the level of plaintiffs' care, but their making coverage decisions, without fair notice, under the mantle of the Secretary's authority, and in circumstances where their actions are fairly attributable to her.
This case does not involve purely private conduct by HHAs,American Mfrs. Mut. Ins. Co. v. Sullivan, ___ U.S. ___; 119 S.Ct. 977 (1999), nor does it seek to impose on the defendant and the HCFA "responsibility for conduct for which they cannot fairly be blamed." Lugar v. Edmondson Oil Co., 457 U.S. 922, 936 (1982). The court agrees with the plaintiffs that Sullivan does not carry the day for the defendant in this case. Sullivan involved inchoate claims for benefits to which there was not yet a perfected statutory right. The reasonableness and necessity of the benefits had not yet been determined. 119 S.Ct. at 978. Here, the reasonableness and necessity of plaintiffs' claims already has been determined in their favor. Their presumptively appropriate receipt of these benefits has been curtailed or terminated entirely by HHAs.
The present case is more closely analogous to West v. Atkins, 487 U.S. 42 (1988), wherein the Court held that a private physician's providing health care to prisoners was governmental action. There, the Court stated:
Contracting out prison medical care does not relieve the State of its constitutional duty to provide medical treatment to those in its custody, and it does not deprive the State's prisoners of the means to vindicate their [constitutional] . . . rights. The State bore an affirmative obligation to provide adequate medical care to [the inmate]; the State delegated that function to [the physician]; and the physician voluntarily assumed that obligation by contract.Id. at 56 (footnote omitted). West suggests that the seemingly private character of an actor does not preclude a finding of state action when there is an ongoing contractual relationship, interdependence, and the breach of an important duty which the government owes to a peculiarly vulnerable group.
Here, the plaintiffs have a right to the benefits they are receiving. The defendant has a statutory obligation to provide Medicare home health benefits to eligible individuals, 42 U.S.C. § 1395d(a) (3), 1395k(a)(2)(A), and to assure that HHAs comply with the conditions of participation as Medicare providers, including the duty to provide fair notice to beneficiaries when services are reduced or terminated. 42 U.S.C. § 1395bbb(9).
Defendant should not be permitted to sidestep legal responsibility by delegating to HHAs the power to summarily reduce, or extinguish without notice and an opportunity to be heard, crucial and often life-sustaining benefits that already have been awarded. The practicality and reality of the relationship between the defendant and the HHAs cannot be ignored.
In every real and practical sense, when a home health aide fails to show up at the home of an eligible beneficiary because the HHA has determined that theretofore covered care is no longer covered, the Secretary has acted. That she may one day reverse an HHA's earlier decision does not rob it of its federal character or its horrific impact. The enforceability of such rights should not turn on whether the Secretary chooses to describe decisions affecting those rights as "official." The nexus between her and the HHAs is, therefore, sufficiently close to satisfy the government action requirement in this case. Cf. Blum v. Yaretsky, 457 U.S. 991, 1004 (1982).
One plaintiff learned that his 87 year old mother's Medicare benefits had been terminated when no one showed up at the house to care for her (Dkt. #56 ¶¶ 51-57).
The court also relies on Catanzaro v. Dowling, 60 F.3d 113 (d. Cir. 1995). In Catanzaro, the court found that the denial of home health care under Medicaid was governmental action because the state had delegated sufficient power to the home health authorities so that their actions could fairly be deemed those of the state. Essentially the same is true here, where, for all practical purposes, an HHA's decision to reduce or terminate home health benefits may well be the only determination a beneficiary will ever receive, especially if left unaware of his or her right to seek review of the decision.
Additional support for this conclusion is provided by two other pre-Sullivan decisions, Grijalva v. Shalala, 152 F.3d 1115 (9th Cir. 1998), vacated and remanded, 119 S.Ct. 1572 (1999), andKraemer v. Heckler, 737 F.2d 214 (d. Cir. 1984). The district court and the Ninth Circuit in Grijalva, determined that private health maintenance organizations' denial of services was dictated by government statute, regulation, and policies and, therefore, satisfied the state action requirement. Id. at 1120. Admittedly,Grijalva would be more helpful but for the Supreme Court's remand for reconsideration in light of Sullivan, 119 S.Ct. 1573, but this does not compel the conclusion that Sullivan has underminedCatanzaro and Kraemer.
Plaintiffs have been left at the mercy of a non-system that the defendant, paradoxically, has commanded. Having done so, the defendant may not argue that the HHAs' actions cannot be fairly attributed to her. Kraemer, not Blum, is much closer to the present case.
Again, relying on Sullivan, the Secretary argues that plaintiffs are not entitled to due process protections because they "do not have a protected property interest in perpetual Medicare coverage for their home health services." (Dkt. #46 at 23; emphasis added). The present case seems distinguishable from Sullivan, however, for here the plaintiffs' eligibility has already been established and there is no evidence of change in medical necessity. 42 U.S.C. § 1395y(a)(1)(A).
Plaintiffs' entitlement to receipt of care they are, or were, receiving is not contingent upon their proving unfulfilled elements of their eligibility. The specific statutory and regulatory requirements that must be met before one may receive Medicare benefits all have been satisfied.
In view of the statutory basis for relief, it is unnecessary, at least at this point, to dwell on defendant's argument that plaintiffs do not enjoy a "property interest." The Secretary's argument is not convincing. Plaintiffs' interest is significantly greater than the Secretary's arguments admit.
A property interest does not exist solely because of the importance of the benefit to the recipient. Nor is the "unilateral expectation" of the continued receipt of the benefit sufficient to establish a property interest. Board of Regents v. Roth, 408 U.S. 564, 577, 92 S.Ct. 2701, 2709, 33 L.Ed. 548 (1972). To establish a property interest in continued participation in the Medicaid program, [plaintiff] must demonstrate "a legitimate claim of entitlement" to such uninterrupted participation. . . ."
* * * *
Property interests flow not from the Constitution itself, but from "existing rules or understandings that stem from an independent source. . . ." [Citations omitted]Kelly Kare Ltd. v. O'Rourke, 930 F.2d 170, 175 (2d. Cir.), cert. denied, 502 U.S. 907 (1991).
Here, plaintiffs' expectations are neither unilateral nor illegitimate. They are grounded in federal statute and regulations, and are more closely akin to those of Social Security disability recipients or persons receiving AFDC, the Secretary's arguments to the contrary notwithstanding. Sullivan, supra 119 S.Ct. at 990;Goldberg v. Kelly, 397 U.S. 254 (1970); Mathews v. Eldridge, 424 U.S. 319 (1976).
The Secretary has advised the Court that she "is in the process of developing and implementing mandatory notice language which all HHAs will be required to use and which will provide beneficiaries with all the information that even plaintiffs insist is required as a constitutional mandate." (Dkt. #46 at 28).
According to the defendant, this "new mandatory notice language will include the medical reason why the HHA believes Medicare may not or may no longer cover the services, an explanation of the circumstances in which a beneficiary has the right to have a demand bill submitted . ., and information regarding a beneficiary's right to appeal. . . ." (Dkt. #46 at 8) To the extent defendant's present regulations do not already explicitly require the foregoing, they are not adequate and fail to comply with the requirements of Title XVIII. A declaratory judgment should enter to that effect.
Though it may not be necessary for the district court to base its decision on a constitutional underpinning, if so directed by the court the undersigned will make further proposed findings should they be required to provide such a basis. The district court should not go beyond this on the present record. The court should retain jurisdiction and address plaintiffs' claim for injunctive relief at a later date, if necessary.
Dated at Hartford, Connecticut, this 11th day of February, 2000.