Opinion
Case No. 4:03CV3030
March 4, 2003
ORDER ON PLAINTIFFS' MOTIONS FOR CLASS CERTIFICATION AND PRELIMINARY INJUNCTION
This matter is before the Court on the Plaintiffs' Motion for Preliminary Injunction (Filing No. 10) and the Plaintiffs' Motion for Class Certification (Filing No. 8). On February 13, 2003, a hearing was conducted on the motions and evidence was received. The parties were allowed to file post-hearing memoranda that have now been considered (Filing Nos. 23 and 25). During the hearing, the parties stipulated to the class members, and the Court certified the class as follows:
"All caretaker relatives in Nebraska with earned income a) who have received Medicaid for at least three of the six months prior to having their Medicaid benefits terminated due to the defendant's elimination of its stacking methodology; and b) who, but for the defendant's elimination of its stacking methodology, would continue to be eligible to receive Medicaid."
The class members include working, single parents whose income used to be counted in such a way that they qualified for Medicaid, but, given a new method for calculating their income, they no longer qualify. While their children are still entitled to Medicaid benefits, because the family's gross income is more than the maximum income level used by NDHHS to measure eligibility for participation in certain Medicaid programs, the single parents have lost their own Medicaid benefits.
Through their motion for preliminary injunction, Plaintiffs seek to enjoin Defendant Ron Ross, as the Director of the Nebraska Department of Health and Human Services ("NDHHS"), from denying Transitional Medical Assistance ("TMA") to them. TMA is a medical benefit offered through the Medicaid program. Plaintiffs claim to be within the group of people for whom Congress expressly authorized TMA.
Statutory Background
The right to TMA is found in Section 1925, which states:
(a) Initial 6-month Extension. — (1) Requirement. — Notwithstanding any other provision of the title, each State plan approved under this subchapter must provide that each family which was receiving aid pursuant to a plan of the State approved under part A of subchapter IV of this chapter in at least 3 of the 6 months immediately preceding the month in which such family becomes ineligible for such aid, because of hours of, or income from, employment of the caretaker relative . . . shall, subject to paragraph (3) and without any reapplication for benefits under the plan, remain eligible for assistance under the plan approved under this subchapter during the immediately succeeding 6-month period in accordance with this subsection.42 U.S.C. § 1396r-6(a)(1) (2002 Supp.). "Part A of title IV" is the section of the Social Security Act that formerly provided benefits to eligible families through the AFDC program. 42 U.S.C. § 1396(a)(10)(A)(i)(I). Families who qualified for AFDC automatically were entitled to Medicaid benefits. However, in 1996, the Personal Responsibility and Work Opportunity Reconciliation Act ("PRWORA") repealed the AFDC program and replaced it with a program know as the Temporary Assistance to Needy Families ("TANF"). Unlike former AFDC recipients, families who qualify for TANF are not automatically entitled to Medicaid benefits. Thus, at the same time that Congress enacted TANF, Congress also amended the Medicaid Act by enacting Section 1931, which ensures that certain people, such as those who had formerly been receiving AFDC benefits, continue to receive Medicaid benefits. Section 1931 is codified at 42 U.S.C. § 1396u-1.
The parties agree that TMA extends only to those persons who are included in the category of persons identified in Section 1931. Thus, Section 1925, which grants TMA to eligible persons, applies only to those families who 1) formerly received benefits under the AFDC program, or 2) are treated as having received AFDC benefits according to the terms of Section 1931. Plaintiffs contend that they are eligible for TMA because they were treated as having received benefits according to the provisions of Section 1931, and Defendant contends that the Plaintiffs are not eligible for TMA because they are not included in the category of persons described in Section 1931.
Section 1931 states, in part:
a) References to subchapter IV-A are references to pre-welfare-reform provisions.
Subject to the succeeding provision of this section, . . . any reference in this subchapter . . . to a provision of part A of subchapter IV of this chapter, or a State plan under such part . . . shall be considered a reference to such a provision or plan as in effect as of July 16, 1996, with respect to the State.
b) Application of pre-welfare-reform eligibility criteria
(1) In general
For purposes of this subchapter, subject to paragraphs (2) and (3), in determining eligibility for medical assistance,
an individual shall be treated as receiving aid or assistance under a State plan approved under part A of subchapter IV of this chapter only if the individual meets —
(i) the income and resource standards for determining eligibility under such plan, and
(ii) the eligibility requirements of such plan under subsections (a) through (c) of section 606 of this title and section 607(a) of this title as in effect as of July 16, 1996, and the income and resource methodologies under such plan as of such date shall be used in the determination of whether any individual meets income and resource standards under such plan.42 U.S.C. § 1396u-1(a) and (b)(1). The proper construction of these provisions is at issue in this case.
Standard on Motion for Preliminary Injunction.
In determining whether preliminary injunctive relief should issue, this Court must consider the factors set forth in Dataphase Systems, Inc. v. C L. Sys., Inc., 640 F.2d 109, 114 (8th Cir. 1981) (en banc). The Eighth Circuit Court has summarized those factors as follows:
When considering a motion for a preliminary injunction, a district court weighs the movant's probability of success on the merits, the threat of irreparable harm to the movant absent the injunction, the balance between the harm and the injury that the injunction's issuance would inflict on other interested parties, and the public interest. Dataphase Systems, Inc. v. C L. Sys., Inc., 640 F.2d 109, 114 (8th Cir. 1981) (en banc). We reverse the issuance of a preliminary injunction only if the issuance "is the product of an abuse of discretion or misplaced reliance on an erroneous legal premise." City of Timber Lake v. Cheyenne River Sioux Tribe, 10 F.3d 554, 556 (8th Cir. 1993) cert. denied 512 U.S. 1236, 114 S.Ct. 2741, 129 L.Ed.2d 861 (1994).
Pottgen v. Missouri State High Sch. Activities Ass'n., 40 F.3d 926, 929 (8th Cir. 1994). The burden of establishing the propriety of a preliminary injunction is on the movant. Baker Elec. Co-op, Inc. v. Chaske, 28 F.3d 1466, 1472 (8th Cir 1994); Modern Computer Sys., Inc., v. Modern Banking Sys., Inc., 871 F.2d 734, 737 (8th Cir. 1989) (en banc). "No single [Dataphase] factor in itself is dispositive; in each case all of the factors must be considered to determine whether on balance they weigh towards granting the injunction." Baker Elec. Co-op, 28 F.3d at 1472 (quoting Calvin Klein Cosmetic Corp. v. Lenox Labs, Inc., 815 F.2d 500, 503 (8th Cir. 1987), and also citing Dataphase. Each of the Dataphase factors is considered below.
Success on the Merits
In determining whether the Plaintiffs are likely to succeed on the merits of this case, and demonstrate that they are entitled to TMA under state and federal law, an understanding of the relevant statutory and regulatory schemes is necessary. Medicaid is the federal medical assistance program of Title XIX of the Social Security Act that is administered by participating states. While a State's participation in the Medicaid program is optional, the States that choose to participate in the Medicaid program are given matching funds by the federal government only if the States comply with the applicable federal rules and regulations. Schweiker v. Gray Panthers, 453 U.S. 34, 37 (1982). The State of Nebraska participates in the Medicaid program, and the Nebraska Department of Health and Human Services ("NDHHSA") administers the program.
States are required to provide Medicaid benefits to certain groups of people. Before the AFDC program was repealed, one group of people that States were required to cover was AFDC grant recipients, and Nebraska automatically provided Medicaid benefits to families who qualified for AFDC benefits. States may choose to provide Medicaid benefits to other groups of people. See Section 1902(a)(10)(A)(ii). Nebraska opted to provide Medicaid benefits to a group known as "medically-needy-caretaker relatives." In determining which applicants received which benefits, Nebraska employed different methodologies to measure an applicant's income. Plaintiffs concede that "a state may, and Nebraska does, have different income-counting methodologies and different income eligibility limits depending on the category of Medicaid for which a person or family is being considered." Brief in Support of Motion for Preliminary Injunction at 4.
The federal welfare program for families with dependent children was known as Aid to Families with Dependent Children or AFDC. The State of Nebraska's equivalent program is known as Aid to Dependent Children or ADC. When AFDC was repealed and TANF enacted, Nebraska did not change the name of its state program. To avoid confusion, the Court will refer to both the state ("ADC") and federal welfare program ("AFDC") as AFDC.
According to Section 1931, when determining whether a person should be treated as having received AFDC benefits, — and therefore entitled to TMA under Section 1925 — the benefit administrator, ultimately this Court, must apply the income methodologies that were used by the State in July 1996. During the hearing, Michael B. Harris, the deputy administrator for the Nebraska Department of Health and Human Services, Office of Economic and Family Support, testified. He explained that during 1996, when NDHHS received an application for welfare benefits under the AFDC program, the Department first considered whether the applicant qualified for AFDC. In so doing, the applicant's countable income, which is basically a net income after certain deduction, was measured against a federally mandated income level that was a percentage of the then applicable standard of need ("standard of need"). See 468 Neb. Admin. Code § 2-009 (i.e. Exs. 7 and 9). If the family's countable income was below the standard of need, then the applicant's family qualified for AFDC benefits and was statutorily entitled to Medicaid benefits. If the applicant's countable income was found to be greater than the applicable standard of need level, then NDHHS would automatically consider whether the applicant qualified for Medicaid under optional programs administered by the State, including the medically-needy-caretaker-relative category. According to the Defendant, the medically-needy-caretaker-relative category was specifically designed to provide medical care for those caretaker relatives whose income exceeded the standard for AFDC eligibility, but who continued to be in need of medical assistance.
An applicant's countable income was not compared against a federal standard of need level in determining the family's eligibility for Medicaid under Nebraska's medically-needy-caretaker-relative category. Rather, Nebraska then employed an income methodology known as "stacking" and compared the results of that methodology to the maximum income level for eligibility under the medically-needy-caretaker-relative program. Under the stacking methodology, NDHHS calculated the maximum income level for a medically-needy caretaker's family by assigning an income amount — known as a component — to each family member based on each individual family member's category of Medicaid eligibility, i.e., infant, toddler, school-aged child, parent. Next, the family member's individual components were added together to calculate the family's maximum income level. The value of the components and the maximum income levels are contained in the State's administrative code and department regulations. See 468 Neb. Admin. Code § 4-010. For example, the component assigned to a medically-needy caretaker relative was $392, and the component assigned to an infant was $1,107, for a maximum income level for that two-member family of $1,499. Ex. 101. Regardless of family size, Defendant asserts that a family's maximum income level, when determined through the stacking methodology, was always two to four times greater than the AFDC standard of need level for the same sized family. See Def.'s Brief in Opposition to the Motion for Preliminary Injunction (Filing No. 23) at 7.
In October 2002, L.B. 8 (2002) became law in Nebraska. Ex. 5. The new law made changes in the medically-needy-caretaker-relatives program-eligibility standards, and use of the "stacking" methodology for determining income eligibility levels for the medically-needy-caretaker-relative category was abandoned. As a result, many persons who previously qualified for Medicaid benefits as medically-needy-caretaker relatives were no longer eligible. The Plaintiffs were notified by NDHHS, or will be notified, that they are no longer eligible for Medicaid benefits. The State's new methodology for determining income levels counts more of the applicant's gross income than did the stacking methodology.
Plaintiffs contend that they are eligible for Medicaid benefits because they are covered by 42 U.S.C. § 1396u-1 as individuals who should be treated as having qualified for AFDC under the standards and income methodologies employed by the State of Nebraska in July 1996. In support of this argument, Plaintiffs contend that by reference to the stacking methodology used by Nebraska in 1996, each of their income levels was below then applicable federal AFDC eligibility limit of $542, which — based on the evidence now available to the Court — was the then-applicable standard of need level. In determining whether the Plaintiffs are individuals who should be treated as having received AFDC, and thus included in Section 1396u-1, Plaintiffs urge this Court to find that each one and all of the Plaintiffs' countable income levels is $392. The $392 amount represents the income component that had been assigned to each of them in their capacity as a medically-needy-caretaker relative under Nebraska's stacking methodology which was in use in 1996. See Exs. 6 and 101.
The $542 figure is taken from Ex. 7, which sets forth the AFDC income eligibility level applicable in February 1994, for a two-member family, such as the Kai and Noller families. The $542 amount is 185 percent of the federally-set standard of need. In exhibits 103 and 104, Defendants uses a "need standard"of $494, which was the applicable standard of need level used just prior to the effective date of LB8 in October 2002. Ex. 8.
What the Plaintiffs ignore, which the Court cannot ignore, is that NDHHS's stacking methodology always used more than one income component in determining a family's maximum income level. Thus, the income component assigned to the "medically-needy-caretaker relative" meant nothing by itself. The medically-needy-caretaker relative was potentially eligible for Medicaid benefits, in part, by virtue of the adult's relationship to the Medicaid-eligible child, and therefore, the issue was one of family income — not individual income. The stacking methodology was an additive process. One component, standing alone, could not have informed NDHHS of the family's maximum income level for the program.
Plaintiffs would have this Court ignore the fact that the named Plaintiffs' net income levels during the applicable period far exceeded then applicable standard of need level applicable to the AFDC program of $542. However, the Defendant has made a strong showing that the NDHHS would have rejected the named Plaintiffs' applications for ADC if they had applied in 1996, because their respective net incomes — that is countable incomes — far exceeded then applicable standard of need level. See Ex. 103 and 104 (even using the $542 "need standard" as a substitute). Considering all the evidence, and the applicable statutes, the Court concludes that the Plaintiffs' likelihood of success on the merits of this case is slim, and that this factor weighs against issuance of the preliminary injunction.
Irreparable Harm
Plaintiffs make a strong case that the deprivation of temporary medical assistance will cause irreparable harm to them because their health may be seriously jeopardized if they do not take their regular prescription medications, which the Plaintiffs cannot otherwise afford. Considering the two named Plaintiffs, the Court observes that Kai takes prescription medications for her Type II diabetes and high blood pressure. She also suffers from asthma and depression. Noller suffers from schizophrenia and bipolar disorder, and she currently takes four prescription drugs that have allowed her to successfully perform her daily activities and to maintain employment. Since they have become ineligible for Medicaid benefits, and their brief continuances of benefits pending of appeal have expired, the named Plaintiffs are not longer able to pay for their medications from their own resources.
Defendant argues that the Plaintiffs are not subject to any risk of irreparable harm by the deprivation of TMA because they are not entitled to it under the law. Defendants argue that the TMA benefit was not designed or intended to apply to persons whose net income levels are as high as the Plaintiffs' net income levels. Since Plaintiffs are not entitled to compensation, Defendant argues, they cannot credibly maintain that they will suffer irreparable harm if the preliminary injunction is not issued. Defendant's argument relative to this factor relies heavily upon its argument in the connection with the success on the merits argument, probably because it is difficult to argue that the Plaintiffs' risk of irreparable harm is insignificant. The Court finds that the Plaintiffs' risk of irreparable harm, because the harm is health-related and of a serious nature, weighs in favor of granting the motion. See Harris v. Blue Cross Blue Shield of Missouri, 995 F.2d 877, 879 (8th Cir. 1993) (acknowledging appropriateness of preliminary injunction when plaintiff had life-threatening illness and sought medical care).
Balance of Hardships
The balance between the harm and the injury that the injunction's issuance would inflict on other interested parties is also a Dataphase factor. Defendant argues that the State of Nebraska is operating under serious budget constraints, and that one of the purposes of LB 8, which abandoned the stacking method, was to eliminate the least needy people from the medically-needy-caretaker group. Defendant contends that the new maximum income levels operate to ensure the most needy receive benefits while contemporaneously protecting the State's fisc. In addition, although the Plaintiffs are theoretically correct in arguing that the State has the legal right to be reimbursed for the value of any benefits that are erroneously paid to the Plaintiffs, I agree with the Defendant that the State's chances of actually recouping the money are nil, particularly because the Plaintiffs, though working, are not earning enough money to pay for more than their basic necessities. In considering the balance of harm to the Plaintiffs against the risk of injury to third parties, specifically the taxpayers of Nebraska, the Court finds that balance weighs in favor of the Plaintiffs because of the nature of the purported harm to their health. See Kansas Hosp. Ass'n v. Whiteman, 835 F. Supp. 1548, 1553 (D.Kan. 1993) aff'd. Williams v. Whiteman, 36 F.3d 1106 (10th Cir. 1994) (concluding that "the relative budgetary impact the state would incur as a result of imposing a temporary restraining order is not very significant in comparison to the irreparable harm that would be caused [to] . . . individual Medicaid beneficiaries")
Public Interest
Plaintiffs argue that enforcement of laws passed by Congress is in the public interest, even when that means enjoining allegedly illegal action by a State, citing Glenwood Bridge, Inc. v. City of Minneapolis, 940 F.2d 367, 372 (8th Cir. 1991). While the Court agrees with the proposition of law, the proposition is inapplicable to the case presented here because the Court finds that the Defendant is likely to succeed on the merits of this case as previously discussed.
There is certainly a public interest in securing medical care for the working poor of this nation. How best to accomplish that goal is a matter of widespread and lively debate. The State of Nebraska, working within its budgetary constraints, has adopted one manner of accomplishing this goal, which, while it may not be as broad as Plaintiffs wish it to be, is reasonable given the financial resources of the State and the requirements of the Medicaid program. Because I do not believe that Nebraska's administration of its Medicaid programs is inconsistent with federal law, the Court finds that the clear public interest in the timely and proper enforcement of the laws of the State of Nebraska outweighs the public interest asserted by Plaintiffs.
CONCLUSION
The Court has considered the Dataphase factors and is mindful that no single factor, in itself, is dispositive. While the factors relating to the threat of irreparable harm to the Plaintiffs and the balance of harms may weigh in favor of issuance, when all of the factors are considered the balance weighs heavily against issuance of the injunction. The Defendant's decision to deny Medicaid benefits to the members of the class was not subjective. Rather, the Defendant has demonstrated that he has followed state and federal law to the best of his ability in determining who is eligible for Medicaid benefits and who is not. The Court believes that the Defendant will be able to show at trial that he has administered the Medicaid program in Nebraska consistent with federal law. Thus, when the Plaintiffs' slim chance of success on the merits is considered with the other factors, the Court is persuaded that the preliminary injunction should not issue. For these reasons, the Plaintiffs' motion will be denied.
IT IS ORDERED:
1) Plaintiffs' Motion for Class Certification (Filing No. 8) is granted consistent with this Memorandum and Order; and
Plaintiffs' Motion for Preliminary Injunction (Filing No. 10) is denied.