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PLAINTIFFS MEMORANDUM IN SUPPORT OF MOTION FOR

VIEWS: 7 PAGES: 42

									                 UNITED STATES DISTRICT COURT
                 EASTERN DISTRICT OF MICHIGAN
                   SOUTHERN DIVISION - FLINT




MARY LUE SCHOTT, CAROL LEVY,
and ERIC MAR,
                                      Case No: 96-75364
         Plaintiffs,
v.                                  Hon. Robert E. DeMascio
                                                       U.S.
District Judge

JAMES K. HAVEMAN, JR., in his capacity as
Director of the Michigan Department of
Community Health, and
MARVA LIVINGSTON HAMMONS, in her
capacity as Director of the Michigan Family
Independence Agency,

         Defendants.




PLAINTIFFS’ MEMORANDUM IN SUPPORT OF MOTION FOR
SUMMARY JUDGMENT
                                   TABLE OF CONTENTS

ISSUES PRESENTED
TABLE OF AUTHORITIES




I. INTRODUCTION                                              1
A. Overview of Plaintiffs’ Claims and Defendants’ Position   1
1. Failure to Ensure Provider Payments                       1
2. Failure to Furnish Recipient Reimbursements               2
3. Lack of Written Notice of Procedures                      2
B. Legal Bases for Plaintiffs’ Claims                        2




II. ARGUMENT                                                 4
A. LACK OF AN ADEQUATE POLICY AND PROCEDURE TO ENSURE
PROVIDER PAYMENT FOR MEDICAID-COVERED SERVICES RECEIVED
PRIOR TO MEDICAID ELIGIBILITY DETERMINATION VIOLATES         4
PLAINTIFFS RIGHTS UNDER FEDERAL MEDICAID LAW
1. VIOLATION OF FEDERAL RIGHT TO COMPARABLE MEDICAL
ASSISTANCE:
PLAINTIFFS ARE ENTITLED TO JUDGMENT AS A MATTER OF LAW ON
THEIR CLAIM THAT DEFENDANTS’ FAILURE TO PROMPTLY PAY        4
PROVIDERS FOR BILLS INCURRED BEFORE A MEDICAID ELIGIBILITY
DECISION IS ISSUED VIOLATES PLAINTIFFS’ RIGHT TO MEDICAL
ASSISTANCE THAT IS COMPARABLE IN AMOUNT DURATION AND
SCOPE TO THE MEDICAL ASSISTANCE RECEIVED BY PERSONS WHOSE
MEDICAID ELIGIBILITY WAS ESTABLISHED BEFORE THEY RECEIVED
THE MEDICAID COVERED SERVICES, UNDER 42 USC 1396a(A)(10)(B)
The Problem                                                  4
The Comparability Requirement                                6
2. VIOLATION OF FEDERAL RIGHT TO RETROACTIVE MEDICAL
ASSISTANCE:
PLAINTIFFS ARE ENTITLED TO SUMMARY JUDGMENT ON THEIR
CLAIM THAT DEFENDANTS’ POLICIES AND PROCEDURES (OR LACK                         9
THEREOF) REGARDING PAYMENTS TO PROVIDERS FOR SERVICES
RECEIVED PRIOR TO DETERMINATIONS OF MEDICAID ELIGIBILITY
DENY MEDICAID RECIPIENTS THEIR RIGHTS TO RECEIVE
RETROACTIVE MEDICAID FOR THE THREE CALENDAR MONTHS
PRIOR TO THE MONTH IN WHICH THEY APPLY FOR MEDICAID
The Problem                                                                     9
The Right to Retroactive Medicaid                                               9
3. VIOLATION OF FEDERAL RIGHT TO CORRECTIVE MEDICAID
PAYMENTS:
PLAINTIFFS ARE ENTITLED TO SUMMARY JUDGMENT ON THEIR
CLAIM THAT DEFENDANTS’ LACK OF POLICIES AND PROCEDURES                          10
FOR PROMPT PAYMENT FOR MEDICAID-COVERED SERVICES
RECEIVED BEFORE A MEDICAID RECIPIENT WINS MEDICAID ON
APPEAL VIOLATES RECIPIENTS’ RIGHT TO CORRECTIVE MEDICAID
PAYMENTS UNDER 42 CFR 431. 246
The Problem                                                                     10
The Right to Corrective Medicaid Payments                                       11
4. VIOLATION OF THE OBLIGATION TO PROMPTLY FURNISH MEDICAL
ASSISTANCE TO ELIGIBLE MEDICAID RECIPIENTS:
PLAINTIFFS ARE ENTITLED TO SUMMARY JUDGMENT ON THEIR
CLAIM THAT DEFENDANTS ARE VIOLATING PLAINTIFFS RIGHTS                           12
UNDER 42 USC 1396a(a)(8) BECAUSE THEY DO NOT HAVE POLICIES AND
PROCEDURES IN PLACE TO PROMPTLY PAY BILLS FOR MEDICAID
COVERED SERVICES INCURRED PRIOR TO A DETERMINATION OF
MEDICAID ELIGIBILITY
The Right to Prompt Payment for Medicaid-Covered Services Incurred During
Any Period of Medicaid Eligibility Is Enforceable                               12
Defendants Have Deprived Plaintiffs of Their Right to Timely Payment of Bills
for Medicaid-Covered Services                                                   15
5. VIOLATION OF RIGHT TO “EFFECTIVE” MEDICAID FOR ENTIRE
ELIGIBILITY PERIOD:
PLAINTIFFS ARE ENTITLED TO JUDGMENT AS A MATTER OF LAW ON
                                                                                16
THEIR CLAIM THAT DEFENDANTS HAVE VIOLATED THEIR RIGHTS TO
HAVE THEIR MEDICAID ELIGIBILITY BE EFFECTIVE
B. DEFENDANT’S FAILURE TO PROVIDE RECIPIENT REIMBURSEMENT
FOR AMOUNTS PAID BY MEDICAID RECIPIENTS FOR MEDICAID-COVERED
SERVICES RECEIVED PRIOR TO MEDICAID ELIGIBILITY
DETERMINATIONS VIOLATES PLAINTIFFS RIGHTS UNDER FEDERAL      17
MEDICAID LAW
1. VIOLATION OF FEDERAL RIGHT TO COMPARABLE MEDICAL
ASSISTANCE:
PLAINTIFFS ARE ENTITLED TO JUDGMENT AS A MATTER OF LAW ON
THEIR CLAIM THAT DEFENDANTS’ FAILURE TO REIMBURSE              17
PLAINTIFFS FOR BILLS PAID BEFORE A MEDICAID ELIGIBILITY
DECISION IS ISSUED VIOLATES PLAINTIFFS’ RIGHT, UNDER 42 USC
1396a(A)(10)(B), TO MEDICAL ASSISTANCE THAT IS COMPARABLE IN
AMOUNT DURATION AND SCOPE TO THE MEDICAL ASSISTANCE
RECEIVED BY PERSONS WHO DO NOT PAY THEIR MEDICAL BILLS
BEFORE MEDICAID ELIGIBILITY IS ESTABLISHED
The Problem                                                    17
The Comparability Requirement                                  18
2. VIOLATION OF FEDERAL RIGHT TO RETROACTIVE MEDICAL
ASSISTANCE:
PLAINTIFFS ARE ENTITLED TO SUMMARY JUDGMENT ON THEIR
CLAIM THAT DEFENDANTS’ POLICY OF REFUSING TO PROVIDE           19
RECIPIENT REIMBURSEMENT FOR PAYMENTS A RECIPIENT HAS
MADE TO A PROVIDER FOR SERVICES RECEIVED PRIOR TO A
DETERMINATION OF MEDICAID ELIGIBILITY DENIES MEDICAID
RECIPIENTS THEIR RIGHT TO RECEIVE RETROACTIVE MEDICAID
FOR THE THREE CALENDAR MONTHS PRIOR TO THE MONTH IN
WHICH THEY APPLY FOR MEDICAID
The Problem                                                    19
Federal Right to Retroactive Coverage                          20
3. VIOLATION OF FEDERAL RIGHT TO CORRECTIVE MEDICAID
PAYMENTS:
PLAINTIFFS ARE ENTITLED TO SUMMARY JUDGMENT ON THEIR
CLAIM THAT DEFENDANTS’ LACK OF POLICIES AND PROCEDURES         21
FOR PROMPT PAYMENT FOR MEDICAID-COVERED SERVICES
RECEIVED BEFORE A MEDICAID RECIPIENT WINS MEDICAID ON
APPEAL VIOLATES RECIPIENTS’ RIGHT TO CORRECTIVE MEDICAID
PAYMENTS UNDER 42 CFR 431.246
The Problem                                                    21
The Right to Corrective Medicaid Payments                      21
4. VIOLATION OF THE OBLIGATION TO PROMPTLY FURNISH MEDICAL
ASSISTANCE TO ELIGIBLE MEDICAID RECIPIENTS:
PLAINTIFFS ARE ENTITLED TO SUMMARY JUDGMENT ON THEIR
CLAIM THAT DEFENDANTS ARE VIOLATING PLAINTIFFS RIGHTS            23
UNDER 42 USC 1396a(a)(8) BECAUSE THEY DO NOT HAVE POLICIES AND
PROCEDURES IN PLACE TO PROMPTLY REIMBURSE RECIPIENTS
FOR BILLS FOR MEDICAID COVERED SERVICES INCURRED PRIOR TO
A DETERMINATION OF MEDICAID ELIGIBILITY
C. PLAINTIFFS ARE ENTITLED TO SUMMARY JUDGMENT ON THEIR CLAIM
THAT DEFENDANTS HAVE VIOLATED THEIR FEDERAL RIGHT TO
INFORMATION ABOUT PAYMENT FOR MEDICAID COVERED SERVICES
                                                                 23
The Problem                                                      23
The Information Requirement                                      24
D. RELIEF                                                        26
1. Declaratory Judgment                                          26
2. Injunctive Relief                                             28
3. Attorneys Fees                                                30
                      TABLE OF CONTROLLING AUTHORITIES

 [Sections violated by Defendants’ actions and inaction are marker with an asterisk (*)]

Statutes:
42 USC 602(a)(1)(B)(iii)                       Regulations:
42 USC 602(a)(9)                               20 CFR 416.1440
42 USC 1383[c]                                 42 CFR 431.220
42 USC 1396a(a)(5)                             42 CFR 431.246*
42 USC 1396a(a)(8)*                            42 CFR 435.905*
42 USC 1396a(a)(10)(A)                         42 CFR 435.909
42 USC 1396a(a)(10)(B)*                        42 CFR 435.914*
42 USC 1396a(a)(10)(C)                         42 CFR 440.210
42 USC 1396a(a)(17)(D)                         42 CFR 447.15
42 USC 1396a(a)(34)*
42 USC 1396a(m)
42 USC 1396d(a)
                                                                                                   7

Cases:
Blessing v Freestone, No. 95-1441, 1997 U.S. Lexis 2506 (April 21, 1997)
Blanchard v Forrest, 71 F.3d 1163 (5th Cir. 1996)
Clark v. Kizer, 758 F.Supp. 572 (E.D.Cal. 1990), aff’d in part rev’d in part, sub nom
Clark v. Coye, 967 F. 2d 585 (9th Cir. 1992)

Cohen by Cohen v. Quern, 608 F. Supp. 1324 (N.D.Ill. 1984)
Gardebring v. Jenkins, 485 U.S. 415 (1988)
Greenstein v. Bane, 833 F. Supp. 1054 (S.D.N.Y. 1993)
Hodecker v. Blum, 525 F.Supp. 867 (N.D.N.Y. 1981)
King v. Smith, 392 U.S. 309 (1968)
Pennhurst State School & Hosp. V. Halderman, 451 U.S. 1 (1981)
Sobky v. Smoley, 855 F. Supp. 1123 (E.D. Cal. 1994)
Suter v. Artist M., 503 U.S. 347 (1992)
Wilder v. Virginia Hosp. Ass’ns, 496 U.S. 498 (1990)
Wood v. Tompkins, 33 F.3d 600 (6th Cir. 1994)
Wright v. Roanoke Redevelopment & Housing Authority, 479 U.S. 418 (1987)
                                   ISSUES PRESENTED:

    1. Does Defendants’ failure to timely make provider payments for
    Medicaid-covered services provided prior to the Medicaid eligibility
                          determination violate:
         Plaintiffs’ rights to comparable Medicaid coverage under 42 USC 1396a(a)(10)(B)
          (Count I)?

         Plaintiffs’ right to retroactive Medicaid coverage under 42 USC 1396a(a)(34) (Count
          II )?

         Plaintiffs’ right to corrective payments under 42 CFR 431.246 (Count III)?

         Plaintiffs’ right to receive medical assistance with reasonable promptness under 42
          USC 1396a(a)(8) (Count IV)?

         Plaintiffs’ right to have Medicaid eligibility effective for periods during which they
          are Medicaid eligible under 42 CFR 435.914 (Count VI) ?
                                                                                         8
2. Does Defendants’ failure to make recipient reimbursement for bills paid by Plaintiffs
for Medicaid-covered services received before a Medicaid eligibility decision was issued
violate:
        Plaintiffs’ rights to comparable Medicaid coverage under 42 USC 1396a(a)(10)(B)
           (Count VII)?

          Plaintiffs’ right to retroactive Medicaid coverage under 42 USC 1396a(a)(34) (Count
           VIII)?

          Plaintiffs’ right to corrective payments under 42 CFR 431.246 (Count IX)?

          Plaintiffs’ right to receive medical assistance with reasonable promptness under 42
           USC 1396a(a)(8) (Count XI)?

          Plaintiffs’ right to have Medicaid eligibility effective for periods during which they
           are Medicaid eligible under 42 CFR 435.914 (Count X)?

3. Does Defendants’ failure to provide written notice to Medicaid applicants and
recipients explaining the procedures to be followed to obtain Medicaid payment for bills
incurred before a Medicaid eligibility decision is issued violate Plaintiffs’ rights to
information regarding Medicaid services and their rights under the Medicaid program
under 42 CFR 435.905(a)(Count XIII)?
                                                                                                     9
      PLAINTIFFS’ MEMORANDUM IN SUPPORT OF MOTION FOR
                     SUMMARY JUDGMENT


                                    I. INTRODUCTION

        This Memorandum describes the legal basis for each of Plaintiffs’ claims and explains
why, on the uncontested facts, they are entitled to prevail as a matter of law on Counts I – IV,
VI-XI, and XIII of their Complaint.

                  A. Overview of Plaintiffs’ Claims and Defendants’ Position

        Plaintiffs filed suit to enforce their rights under the Medicaid statute and implementing
regulations. Their claims concern the Michigan Medicaid program’s failure to pay for medical
bills for Medicaid-covered services that were incurred during a period for which the Plaintiffs
ultimately were found to be eligible for Medicaid coverage, but prior to the actual determination
of eligibility.   Plaintiffs challenge both (1) the Defendants’ failure to pay medical providers
(e.g. doctors, pharmacies, hospitals, laboratories) for outstanding bills and (2) Defendants’
failure to reimburse Plaintiffs for the amounts that Plaintiffs paid to providers for medical care
and services before they received a determination of Medicaid eligibility.     Throughout this
Memorandum, Plaintiffs will refer to these two components of Medicaid payment for
Medicaid-covered services as (1) “provider payments” and (2) “recipient reimbursements”,
respectively.     In addition, Plaintiffs challenge (3) the Defendants’ failure to provide written
information to Medicaid applicants and recipients to advise them of procedures for obtaining
provider payments and recipient reimbursements.

        1.    Failure to Ensure Provider Payments         1.   Failure to Ensure Provider
Payments

                            Defendants do not have adequate policies and procedures to ensure
that providers are promptly paid for Medicaid-covered services if there is a gap of time
between when the service was provided and when the recipient is ultimately found eligible for
Medicaid for those services. The Defendants’ current policy for making provider payments is
outlined in the Family Independence Agency’s Program Administrative Manual Item 402 [PAM
Item 402], Deposition Exhibit “4“ to the Deposition of Esther Reagan [hereinafter “Reagan
Dep.”]Deposition of Esther Reagan.. Defendants acknowledge that the procedure described in
                                                                                           10
PAM Item 402 “doesn’t work.”        See Deposition of Esther ReaganReagan Dep. at pp. 92-3.1
If a recipient needs provider payments    for services rendered more than 12 months before the
bill is submitted to Medicaid, Defendants agree that the provider payment “process is
unwieldy and prone to problems in a number of areas, and its reliability is in question, but it is
there.” See Deposition of Esther ReaganReagan Dep. at p. 40. The Defendants have stated that
they intend to “obsolete” PAM Item 402 “for reasons that this case has illustrated”.

       2.    Recipient Reimbursements2.         Failure to Furnish Recipient Reimbursements

       Defendants also do not contest that their existing policies prohibit recipient
reimbursements. See Deposition of Esther ReaganReagan Dep. at p. 55. Although official
state policy prohibits recipient reimbursement for Medicaid-covered services paid for by the
recipient,   in practice Defendants have made informal exceptions to this policy in order to
pay recipients directly   if required by court order or to facilitate settlement of litigation. As a
result of this informal exception process, Defendant’s paid Plaintiff Carol Levy $4,213.17,
which partially reimbursed her for the more than $8,386 that she paid for Medicaid-covered
services she received in August through December 1992. See Deposition of Esther
ReaganReagan Dep. at pp. 55-7; Plaintiff Levy’s Answers to Request for Admissions; and
Response to Defendants’ Second Request for Admissions.

       Defendants agree that they must design and implement policies and procedures for at
least some recipient reimbursements in the context of at least some Medicaid appeals.
Defendants do not agree that recipients must be reimbursed in full for amounts paid, as
evidenced by their refusal to reimburse Plaintiff Levy for approximately half of the amount she
paid, as it exceeds Defendants’ Medicaid payment rate for providers. Defendants insist that no
recipient reimbursements are required unless a written request for an appeal has been filed by
the recipient. See Deposition of Esther ReaganReagan Dep. at p. 73. As discussed below,
Plaintiffs and Defendants disagree, and the case law supports Plaintiffs’ position.

       3.    Lack of Written Notice of Procedures 3.        Lack of Written Notice of
Procedures


1
         Ms. Reagan is the Assistant to the Chief Executive Officer of the Medical Services
Administration – the portion of the Michigan Department of Community Health which administers
the Michigan Medicaid program. See Deposition of Esther ReaganReagan Dep. at p. 42. Ms.
Reagan attended earlier court proceedings in this matter and has been the Defendants’ spokesperson
in this litigation. Her responsibilities include the coordination and supervision of Defendants’
response to this litigation. See id. at p. 42-4.
                                                                                                      11
        It is uncontested that Defendants do not provide recipients with a written explanation
about procedures to be followed for obtaining provider payments or recipient reimbursements in
connection with bills incurred prior to the Medicaid eligibility decision.        See Deposition of
Esther ReaganReagan Dep. at p. 60. In addition, Defendants do not provide verbal information
about these matters unless asked by a recipient. See id. at pp. 60-61 and 67-8.

                                         B. Legal Bases for Plaintiffs’ Claims

        Plaintiffs’ claims in this case are raised under 42 USC 1983, which gives citizens of the
United States the right to sue for relief when their rights under the federal laws or Constitution
are violated under color of state law.         Here, the Defendants are the Directors of state agencies
                                     2
acting in their official capacity.         Accordingly, they are acting under color of state law.



                               B. Legal Bases for Plaintiffs’ Claims

        Defendants’ failure to timely make provider payments for Medicaid-covered services
provided prior to the Medicaid eligibility determination and Defendants’ failure to make
recipient reimbursement for bills paid by Plaintiffs for Medicaid-covered services received
before a Medicaid eligibility decision was issued violate:

        Plaintiffs’ rights to comparable Medicaid coverage under 42 USC 1396a(a)(10)(B)                   Formatted: Bullets and Numbering

            (Counts I & VII)

        Plaintiffs’ right to retroactive Medicaid coverage under 42 USC 1396a(a)(34) (Counts II
            and VIII)

        Plaintiffs’ right to corrective payments under 42 CFR 431.246 (Counts III & IX)

        Plaintiffs’ right to receive medical assistance with reasonable promptness under 42 USC
            1396a(a)(8) (Counts IV & XI)



2
        In April January 1996, the Medical Services Administration, which administers Michigan'’s
Medicaid program, was transferred f by Executive Order frrom the Family Independence Agency
["“FIAA”, then known as the Department of Social Services or "“DSSS”"ap"] to the DThe
Department of Community Health ["“DCHH”"]. DCH is now the "“SsInglSingle State Agency"”
responsible for the Medicaid program under 42 USC 1396a(a)(5). However, FIA, via agreements
with DCH, continues to process Medicaid applications and make Medicaid eligibility
determinations for DCH. See Deposition of Esther ReaganReagan Dep. at pp. 42-3, via
agreements with F. Accordingly, the Directors of both agencies are named as Defendants and both
act together to fulfill the functions of “the State Agency” administering Medicaid. i
                                                                                                 12
       Plaintiffs’ right to have Medicaid eligibility effective for periods during which they are
           Medicaid eligible under 42 CFR 435.914 (Counts VI & X)

       Defendants’ failure to provide written notice to Medicaid applicants and recipients
explaining the procedures to be followed to obtain Medicaid payment for bills incurred before a
Medicaid eligibility decision is issued violates Plaintiffs’ rights to information regarding
Medicaid services and their rights under the Medicaid program under 42 CFR 435.905(a).
Defendants’ failure to timely make provider payments for Medicaid-covered services provided
prior to the Medicaid eligibility determination and Defendants’ failure to make recipient
reimbursement for bills paid by Plaintiffs for Medicaid-covered services received before a
Medicaid eligibility decision was issued violate:

          Plaintiffs’ rights to comparable Medicaid coverage under 42 USC 1396a(a)(10)(B)
           (Counts I & VII)

          Plaintiffs’ right to retroactive Medicaid coverage under 42 USC 1396a(a)(34) (Counts
           II and VIII)

          Plaintiffs’ right to corrective payments under 42 CFR 431.246 (Counts III & IX)

          Plaintiffs’ right to receive medical assistance with reasonable promptness under 42
           USC 1396a(a)(8) (Counts IV & XI)

          Plaintiffs’ right to have Medicaid eligibility effective for periods during which they
           are Medicaid eligible under 42 CFR 435.914 (Counts VI & X)

       Defendants’ failure to provide written notice to Medicaid applicants and recipients
explaining the procedures to be followed to obtain Medicaid payment for bills incurred before a
Medicaid eligibility decision is issued violates Plaintiffs’ rights to information regarding
Medicaid services and their rights under the Medicaid program under 42 CFR 435.905(a).
                                                                                              13




                                    II.    ARGUMENT

A.    LACK OF AN ADEQUATE POLICY AND PROCEDURE TO
     ENSURE PROVIDER PAYMENT FOR MEDICAID-COVERED
     SERVICES RECEIVED PRIOR TO MEDICAID ELIGIBILITY
     DETERMINATION VIOLATES PLAINTIFFS’ RIGHTS UNDER
     FEDERAL MEDICAID LAW



       1. VIOLATION OF FEDERAL RIGHT TO COMPARABLE MEDICAL
       ASSISTANCE:
       PLAINTIFFS ARE ENTITLED TO JUDGMENT AS A MATTER OF LAW ON
       THEIR CLAIM THAT DEFENDANTS’ FAILURE TO PROMPTLY PAY
       PROVIDERS FOR BILLS INCURRED BEFORE A MEDICAID ELIGIBILITY
       DECISION IS ISSUED VIOLATES PLAINTIFFS’ RIGHT TO MEDICAL
       ASSISTANCE THAT IS COMPARABLE IN AMOUNT, DURATION AND
       SCOPE TO THE MEDICAL ASSISTANCE RECEIVED BY PERSONS WHOSE
       MEDICAID ELIGIBILITY WAS ESTABLISHED BEFORE THEY RECEIVED
       THE MEDICAID COVERED SERVICES, UNDER 42 USC 1396a(A)(10)(B)


                                             The Problem
       Ongoing Medicaid recipients – i.e., those whose eligibility already has been established
by the Medicaid agency – experience little difficulty in obtaining Medicaid coverage for
Medicaid-covered services3.    When an individual is an ongoing Medicaid recipient, s/he
receives a Medicaid “card” in the mail each month, confirming eligibility for the month and
providing a Medicaid identification number for the recipient, which is used by medical care
providers in submitting billings to the Medicaid agency.   If the recipient needs to obtain

3
      Medicaid, like private health insurance, does not pay for all services. Only certain,
medically necessary services are covered. See generally, 42 USC 1396a(a)(10)(A), 1396d(a), 42
CFR 440.210.
                                                                                               14
medical care or services, s/he provides the Medicaid “card” to the medical care provider as proof
of Medicaid insurance. The provider then is able to bill Medicaid and obtain payment for the
service provided to the recipient.    Medicaid applicants and recipients in Michigan are informed

 about the need to submit their Medicaid card to providers before they receive medical care.
See Exhibits “2” and “3” to Deposition of Esther ReaganReagan Dep. (“show your Medicaid
ID card to providers before you receive services” … “You must present the card each time any
of the eligible persons listed on the card asks for services.”).

       Defendant’s policy and procedure for making provider payments for bills incurred prior
to the eligibility determination is somewhat different, as the recipient is unable to provide a
Medicaid card at the time the recipient seeks before receiving the medical care or service. As
the individual does not yet have a Medicaid identification number, the service cannot be billed to
Medicaid at the time it is provided. See Deposition of Esther ReaganReagan Dep. at p. 68.
Instead, under Defendants’ policy,       the recipient is expected, when a Medicaid card is
received, to contact each of the providers who supplied medical care or services prior to the
eligibility determination, tell the providers about the Medicaid eligibility determination, and
arrange for the providers to bill Medicaid.    Id. at p. 67.   Defendants do not make any effort to
notify providers regarding Medicaid eligibility determinations. Id. at p. 68.

       Although the process for obtaining Medicaid provider payments for services rendered
before a Medicaid card is issued is left entirely to the recipient,   this process is never explained
to Medicaid applicants or recipients. Id. at p. 67; see also Deposition Exhibits “2” & “3” to the
Deposition of Esther ReaganReagan Dep. (agency publications about Medicaid contain no
information on provider payment for services received prior to eligibility determination).
Accordingly, newly-eligible recipients have no way of knowing that if they want their
outstanding bills paid, it is these recipients’ r responsibility to contact all providers from
whom they have received services, in order to facilitate payment. Defendant’s “system” of
relying on recipients to initiate provider billings is doomed to failure when Defendants do not tell
recipients how to obtain provider payments, or that providers will not be paid until they take
these actions.   Defendants’ policy fails to ensure that provider payments are available for all
Medicaid-covered services provided to newly-eligible Medicaid recipients.

       Furthermore, the system for making provider payment for services received over twelve
months before the eligibility determination simply “doesn’t work”.         See Deposition of Esther
ReaganReagan Dep. at p. 93. Thus, newly-eligible Medicaid recipients whose eligibility
                                                                                                 15
determinations are significantly delayed are even less likely to receive medical assistance in the
                                                                             4
form of provider payment for all Medicaid-covered services they receive.

       As reflected by the experiences of the named Plaintiffs in this case,     persons who are
newly-eligible for Medicaid frequently experience delayed or denied Medicaid payment for
Medicaid-covered services that they obtained prior to the Medicaid eligibility determination.
Thus, for example, Mary Lue Schott applied for Medicaid in late March 1992 but did not
receive a determination that she was Medicaid eligible until November 1993. See Exhibits “A”
& “B” to Affidavit of Ilene Segar, filed with this court 2/14/97.        In January 1997, when
DDefendants filed their motion to dismiss the instant case, they still had not paid for
Medicaid-covered services received by Ms. Schott during her Medicaid eligibility period in
March 1992. See papers filed by Defendants in January 1997 and this court’s Order dated
9/19/97.    Clearly, newly eligible recipients do not receive the same amount and scope of
medical assistance as ongoing recipients.

       In Michigan, ongoing Medicaid recipients receive reasonably prompt payment to
providers for Medicaid-covered services, while those who are newly-eligible do not.
Defendants do not have workable procedures and policies to ensure that providers are paid for
services renderedendered before a Medicaid card is issued. Thus, ongoing Medicaid recipients
have medical assistance that promptly pays for all of their Medicaid-covered services, while
newly-eligible recipients do not.

                                The Comparability Requirement

       The federal Medicaid statute, in 42 USC 1396a(a)(10)(B), requires that the Medicaid
assistance provided to any “categorically needy” individual “shall not be less in amount, duration, or
scope than the medical assistance made available to any other such [categorically needy] individual.”
See Sobky v. Smoley, 855 F. Supp. 1123, 1139 (E.D.Cal. 1994). It also requires that medical
assistance provided to any ”categorically needy” Medicaid recipient not be less in amount, duration,
                                                                     5
or scope than the assistance to “medically needy” individuals. Id.


4
         These delays occur most often when recipients are appealing a negative decision about their
eligibility for Medicaid or related program such as Supplemental Security Income. Such appeals take
more than 12 months if there are hearings at the administrative level and in Court.
5
         The federal Medicaid scheme establishes two general categories of Medicaid recipients: the
“medically needy” and the “categorically needy”.      The categorically needy groups, which include
recipients of Supplemental Security Income and Aid to Dependent Children, are identified in 42 USC
1396a(a)(10)(A). The “medically needy” groups include those aged, blind or disabled persons who
                                                                                              16
         Under these two “comparability” provisions of the Medicaid statute, comparable services
must be made available to all categorically eligible Medicaid recipients, both as compared to other
members of the “categorically needy” population and as compared with the “medically needy”. See,
e.g. Clark v. Kizer, 758 F. Supp. 572, 580 (E.D.Cal. 1990), aff’d in part, vacated in part on other
grounds, sub nom Clark v. Coye, 967 F.2d 585 (9th Cir. 1992)          Thus, for example, if the state
provides Medicaid coverage for hearing aids for SSI recipients (who are one group of categorically
needy Medicaid recipients), it must also cover hearing aids for Aid to Dependent Children recipients
and all others who are categorically eligible for Medicaid. Similarly, if the state’s Medicaid program
covers a medical service, such as prescription drugs, for any medically needy recipient, it must
provide Medicaid coverage for prescription drugs for all categorically needy Medicaid recipients as
well.6

         Arbitrary limits which restrict Medicaid benefits for particular group of categorically
needy recipients run afoul of the comparability requirement of 42 USC 1396a(a)(10)(B).7         State
policies or practices which result in greater Medicaid assistance for one categorically needy


qualify for Medicaid after meeting a “spenddown”, which is an income-based deductible amount. See 42
USC 1396 a(a)(10)(C) & (17)(D); 42 CFR 435.301(a)(1). For example, an elderly Social Security
recipient with low income and high prescription expenses that are not covered by Medicare may qualify
for Medicaid as a “medically needy” recipient.
        In the present case, at the time the Plaintiffs were determined eligible for Medicaid, Defendant
determined they were eligible for “medically needy” Medicaid. However, as the Court noted in its
September 19, 1997 Order, the declarations submitted by Plaintiffs in this case establish that they suffer
from medical problems which make it likely they will become eligible for Medicaid based on disability in
the future. As persons living below the poverty line, see Application to Proceed In Forma Pauperis,
Plaintiffs would be eligible for “categorically needy” Medicaid under 42 USC 1396a(a)(10)(A)(ii)(X)
and 1396a(m), which is known in Michigan as “AD-Care Medicaid”. See Program Eligibility Manual
Item 163, Exhibit “A___” to this Memorandum.            This “categorically needy” Medicaid eligibility
category did not exist during the months for which the named Plaintiffs were determined to be
retroactively eligible for Medicaid. See FIA Program Policy Bulletin 95-1 (AD-Care category
effective 1/1/95). Exhibit “B”Attachment “___” to this MemorandumBrief, and Deposition of Esther
ReaganReagan Dep. at p. 49.
6
        States may only provide less Medicaid coverage to the medically needy. Thus, for example, the
state could choose to provide dental service to the categorically needy Medicaid recipients but not to the
medically needy. Similarly, a State Agency State Agency may provide less Medicaid coverage to
some medically needy groups (e.g. parents of small children) than to others (e.g. the disabled). See
Hodecker v. Blum, 525 F.Supp. 867, 872 (N.D. N.Y. 1981), aff’d 685 F. 2d 424 (2d Cir. 1982).
7
        Thus, for example, a New York State Medicaid policy that “has the effect of awarding amounts of
Medicaid to minor SSI recipients that differ from amounts of Medicaid to adult SSI recipients” was held
to violate comparability requirement of the federal Medicaid statute. Hodecker v. Blum, 525 F. Supp. 867,
873 (N.D.N.Y. 1981), aff’d 685 F. 2d 424 (2d Cir. 1982).
                                                                                                17
recipient than another are unlawful, as is any policy which results in greater Medicaid assistance
for a medically needy recipient than for a categorically needy recipient.8

        In the present case, categorically needy Medicaid recipients whose eligibility is
newly-approved are entitled to the same prompt, reliable provider payments for
Medicaid-covered services as ongoing, categorically or medically needy Medicaid recipients.
Under 42 USC 1396a(a)(10), Defendants may not make provider payments that are fewer, later,
or less reliable for newly-approved Medicaid recipients than the payments madey make for
ongoing recipients.

        Defendants’ policies and practices result in prompt Medicaid provider payments for
Medicaid-covered services received by ongoing recipients, while provider payments for
newly-eligible recipients’ services are either are not made at all or are made only after significant
delays. Newly-eligible recipients theoretically have the same scope and amount of Medicaid
coverage as ongoing recipients, but they do not in fact receive the same amount and scope of
medical assistance. Medical bills of ongoing recipients get paid, while bills incurred by
newly-eligible recipients regularly do not, as demonstrated by the experiences of the named
Plaintiffs in this case.

        Although Defendants’ policies do not prohibit provider payment for services received
before an eligibility determination is made, Defendants admit that under current policies they
do not reliably furnish provider payments for services provided prior to eligibility
determinations, particularly when the determinations take a considerable length of time. See
Deposition of Esther ReaganReagan Dep. at pp. 40, 92-3..       Defendants arbitrarily limit the
medical assistance actually received by newly-eligible Medicaid recipients by failing to establish
and implement effective procedures to ensure that providers are paid promptly for covered
services provided before a Medicaid card is issued. Defendants’ policies and practices fail to


8
         For example, in Clark v Kizer, supra, 758 F. Supp. at 580, the court held that California’s
Medicaid program (“Medi-Cal”) violated the comparability requirement because “‘the availability of
dental services for Medi-Cal eligibles and the historical utilization rates of dental services by Medi-Cal
eligibles vary from county to county.’”      In that case, differences in availability of Medicaid services
based on where the recipient lived were unlawful, because they would result in greater services for a
medically or categorically needy recipient in one county than for a categorically needy recipient in
another county. Similarly, in Sobky v. Smoley, supra, 855 F. Supp. at 1142, the court held that the
state’s failure to fund a sufficient number of methadone maintenance treatment slots for Medicaid
recipients, resulting in some Medicaid recipients being placed on waiting lists for treatment, violated the
comparability law by providing less Medicaid assistance to those Medicaid recipients who were on the
waiting list and, thus, not receiving treatment.
                                                                                                 18
ensure that provider payments for Medicaid-covered services are available to newly-eligible
recipients to the same extent as they are available to ongoing recipients. Accordingly,
Defendants’ these policies and practices fail to provide comparable Medicaid assistance to all
categorically eligible Medicaid recipients, in violation of 42 USC 1396a(a)(10)(B).
                                                                                                  19

       2. VIOLATION OF FEDERAL RIGHT TO RETROACTIVE MEDICAL
       ASSISTANCE:


       PLAINTIFFS ARE ENTITLED TO SUMMARY JUDGMENT ON THEIR CLAIM
       THAT DEFENDANTS’ POLICIES AND PROCEDURES (OR LACK THEREOF)
       REGARDING PAYMENTS TO PROVIDERS FOR SERVICES RECEIVED
       PRIOR TO DETERMINATIONS OF MEDICAID ELIGIBILITY DENY
       MEDICAID RECIPIENTS THEIR RIGHTS TO RECEIVE RETROACTIVE
       MEDICAID FOR THE THREE CALENDAR MONTHS PRIOR TO THE
       MONTH IN WHICH THEY APPLY FOR MEDICAID



                                          The Problem

       As discussed in section II.A.1, above, Defendants’ policies and practices do not reliably

result in payment for Medicaid-covered services obtained by a Medicaid recipient prior to the
determination of her Medicaid eligibility. In some instances, these services were received in

one of the three calendar months prior to the recipient’s Medicaid application.

       For example, Carol Levy applied for Medicaid on October 13, 1992, and ultimately was
determined to be eligible for the period August 1992 through December 1992. See Hearing

Decision, Exhibit “G” to the Affidavit of Jill Nylander filed with the court 2/14/97.   Many of

the medical bills for which she sought Medicaid payment were incurred during August or
September 1992. See, e.g., Exhibit “C” to Plaintiffs’ Reply Brief on Class Certification.

                              The Right to Retroactive Medicaid

       42 USC 1396a(a)(34) provides:


       in the case of any individual who has been determined to be eligible for medical
       assistance under the plan, such assistance will be made available to him for care
       and services included under the plan and furnished in or after the third month
       before the month in which he made application ... for such assistance if such
       individual was (or on application would have been) eligible for such assistance at
       the time such care and services were furnished.


This statutory requirement of three months retroactive Medicaid eligibility clearly imposes on
Defendants an obligation to make Medicaid payments for services received prior to the
                                                                                                      20
recipient’s eligibility determination. Services provided in one of the three months prior to the
month of the Medicaid application obviously are a subset of the services provided prior to an
eligibility determination, which will not be issued until after the recipient applies.

       Defendants fail to provide retroactive Medicaid assistance required under 42 USC
1396a(a)(34) by failing to have policies and procedures for prompt, reliable provider payments
for services received prior to a determination of Medicaid eligibility.


       In Blanchard v. Forrest, 71 F 3dF.3d 1163, 1167-8 (5th Cir. (1996) and Cohen by Cohen

v. Quern, 608 F. Supp. 1324, 1330-2 (N.D. Ill. 1984), the courts invalidated policies of the
Louisiana and Illinois Medicaid agencies, respectively, holding that state policies which resulted
in a failure to pay for Medicaid-covered services received during the three months prior to the

month Medicaid application were a violation of 42 USC 1396a(a)(34).           In both Blanchard
and Cohen, the policies at issue did not specifically target bills incurred during the retroactive,

pre-application period. Indeed, in both Blanchard and Cohen, the policies at issue applied
regardless of when the medical bills were incurred.

       Here, as in Blanchard and Cohen, the court should declare unlawful and enjoin the

state’s policies and practices which prevent prompt, reliable payment of bills incurred during the
pre-application retroactive eligibility period, because they violate Plaintiffs’ rights under 42 USC

1396a(a)(34).




       3. VIOLATION OF FEDERAL RIGHT TO CORRECTIVE MEDICAID PAYMENTS:
       PLAINTIFFS ARE ENTITLED TO SUMMARY JUDGMENT ON THEIR CLAIM
       THAT DEFENDANTS’ LACK OF POLICIES AND PROCEDURES FOR
       PROMPT PAYMENT FOR MEDICAID-COVERED SERVICES RECEIVED
       BEFORE A MEDICAID RECIPIENT WINS MEDICAID ON APPEAL
       VIOLATES RECIPIENTS’ RIGHT TO CORRECTIVE MEDICAID PAYMENTS
       UNDER 42 CFR 431.246
                                            The Problem

       As the experience of the Plaintiffs reveals, Medicaid applicants who must pursue an
appeal from a denial of Medicaid eligibility are likely to experience long delays in obtaining
their favorable Medicaid eligibility determination.     Thus, for example, Mary Lue Schott
                                                                                                     21
applied for Medicaid in March 1992 and did not receive a favorable eligibility determination
until November 1993 – a year and a half later. See Exhibits “A” and “B” to Affidavit of Ilene
Segar filed 2/14/97. Carol Levy waited for three years – from October 1992 to October 1995 –
to obtain a favorable Medicaid eligibility determination. See Exhibit "G” to Affidavit of Jill
Nylander filed 2/14/97. For Eric Mar, it took nearly 4 years – from June 1991 to May 1995 – to
obtain a favorable Medicaid eligibility determination.     See Exhibits “A” and “B” to Affidavit
of Jill Nylander.

        Because of these delays, individuals who become eligible for Medicaid via an appeal are
likely to incur hundreds or thousands of dollars worth of medical bills for Medicaid-covered
services before their Medicaid is approved on appeal.      Furthermore, as the experience of the
named Plaintiffs demonstrates, appeals frequently result in an eligibility determination that is
issued more than 12 months after the Medicaid covered services were provided to the recipient.

        As discussed in Section II.A.1., above, the Defendants’ policies and procedures do not
reliably ensure provider payments for pre-eligibility determination bills, particularly if the
service was provided more than 12 months before the eligibility determination is issued.

        Accordingly, while these recipients win Medicaid ‘”“eligibility” by succeeding on their
appeal, Defendants fail to make Medicaid payments for many of their bills incurred during the
eligibility period.



                              The Right to Corrective Medicaid Payments

        Medicaid eligibility may be established by applying for Medicaid or cash assistance to
families (Family Independence Program or “FIP”) through the Michigan Family Independence
Agency [FIA] or by applying for Supplemental Security Income (“SSI”) through the Social
Security Administration. See generally 42 USC 1396a(a)(5), 42 CFR 435.909, and Deposition
of Esther ReaganReagan Dep. at pp. 49-50.

        If the individual’s application for Medicaid, FIP, or SSI is denied, s/he has the right to
appeal the denial. See 42 CFR 431.220 et seq., 42 USC 602(a)(1)(B)(iii), 42 USC 1383[c].
The appeal of a denial of SSI is accomplished through the Social Security Administration’s
hearings and appeal process under 42 USC 1383[c]9, while the appeal of a FIP or Medicaid


9
      42 USC 1383[c](1), gives an applicant or recipient the right to a Social Security
Administration hearing in connection with any adverse decision regarding SSI eligibility.        Under
                                                                                                22
denial is appealed through the Family Independence Agency’s appeal process. Id.          An appeal
of a negative Social Security Administration decision regarding SSI eligibility must be treated as
an appeal of a Medicaid denial, for purposes of determining the period for which the individual
is eligible for Medicaid and for which s/he is entitled to Medicaid provider payments. See
Deposition of Esther ReaganReagan Dep. at pp. 49-52, and June 18, 1997 Memoranda from
Lynda Crandall, Family Independence Agency Field Services Administration Deputy Director,
and Jim Nye to FIA County Directors and District Managers (Exhibit “C___” to this
Memorandum).

        Under 42 CFR 431.246,

               The agency must promptly make corrective payments, retroactive to the
       date an incorrect action was taken, if --
               (a) The hearing decision is favorable to the applicant or recipient; or
               (b) The agency decides in the applicant’s or recipient’s favor before the
                   hearing.


Under this “corrective action” regulation, Medicaid recipients who win their Medicaid
after they have appealed an initial denial of benefits are entitled to payment for
Medicaid-covered services that had not been paid due to the erroneous denial or unlawful
delay in establishing Medicaid eligibility.

       In the present case, Defendants’ failure to have a system to reliably and promptly
make provider payments when Medicaid is granted on appeal violates Plaintiffs’ right to
corrective payments under 42 CFR 431.246.



       4. VIOLATION OF THE OBLIGATION TO PROMPTLY FURNISH MEDICAL
          ASSISTANCE TO ELIGIBLE MEDICAID RECIPIENTS:


       PLAINTIFFS ARE ENTITLED TO SUMMARY JUDGMENT ON THEIR CLAIM
       THAT DEFENDANTS ARE VIOLATING PLAINTIFFS RIGHTS UNDER 42 USC
       1396a(a)(8) BECAUSE THEY DO NOT HAVE POLICIES AND PROCEDURES


the implementing regulations, the Social Security Administration has allowed itself the opportunity
to “reconsider” an initial eligibility determination before proceeding with an administrative
hearing. See generally, 20 CFR 416.1400. The applicant must seek appeal of the original
determination by filing a written appealRequest for Reconsideration, which triggers this
intermediate level appeal. As part of the reconsideration, the Social Security Administration
allows appellants the opportunity for a face-to-face meeting.
                                                                                                     23
       IN PLACE TO PROMPTLY PAY BILLS FOR MEDICAID COVERED
       SERVICES INCURRED PRIOR TO A DETERMINATION OF MEDICAID
       ELIGIBILITY


           The Right to Prompt Payment for Medicaid-Covered Services Incurred
                 During Any Period of Medicaid Eligibility Is Enforceable


       The Medicaid program is a joint, federal-state program designed “to furnish …medical
assistance on behalf of families with dependent children and of aged, blind, or disabled
individuals whose income and resources are insufficient to meet the costs of necessary medical
services.” 42 USC 1396. Under 42 USC 1396a(a)(8), Plaintiffs and other individuals have the
right to apply for Medicaid. In addition, “medical … assistance shall be furnished with
reasonable promptness to all eligible individuals.”    Id. The statute defines “medical
assistance” as “payment of part or all of the cost of [covered medical] care and services”. 42
USC 1396d(a).

       In the present case, as discussed extensively above, the State Agency State Agency         has
failed to establish policies and procedures to pay for Plaintiffs’ Medicaid-covered services with
reasonable promptness. Plaintiffs seek to enforce their federal right to reasonably prompt
Medicaid payments by requesting that the court order the State Agency State Agency         to
establish policies and procedures which will assure reasonably prompt Medicaid payment for
services received prior to the Medicaid eligibility decision.

       The State Agency State Agency       has erroneously suggested that Medicaid applicants
and recipients such as Ms. Mar, Ms. Schott, and Mr. Levy, do not have an enforceable right to a
policy and procedure whereby they can obtain prompt payment for Medicaid-covered services
that are provided to them during a period of Medicaid eligibility but prior to a determination of
their Medicaid eligibility.   See Defendants’ Brief in Opposition to Class Certification at pp.
8-9. In fact, under the three part analysis required by the United States Supreme Court,
Plaintiffs have federal rights which are enforceable underr 42 USC 1983.

       The first question under the analysis required by the Supreme Court is whether Congress
“intended that the provision in question [to] benefit the plaintiff.” Blessing v. Freestone, No.
95-1441, 1997 U.S. Lexis 2506, p. 7      US      (April 21, 1997) (copy attached as Exhibit “D”)
citing Wright v. Roanoke Redevelopment & Housing Authority,         479 U.S. 418 (1987).        In
the present case, Congress has unambiguously expressed its intent to benefit “all eligible
                                                                                                     24
individuals” – i.e. all persons approved for Medicaid. 42 USC 1396a(a)(8).        Thus, the
provision is intended to benefit the Plaintiffs in this case.

        The second question is whether the right protected by the statute is a binding obligation,
rather than a mere “congressional preference”. See Wood v. Tompkins, 33 F 3dF.3d 600 (6th
Cir. 1994), citing, inter alia, Wilder v. Virginia Hospital Ass’ns, 496 U.S. 498, 509 (1990).
“In other words, the provision giving rise to the asserted right must be couched in mandatory
rather than precatory terms. Blessing, supra, at p. 7 US at            . Here, Congress stated
clearly mandated that “assistance shall be furnished with reasonable promptness”. 42 USC
1396a(a)(8) (emphasis added). Thus, the provision imposes a clear requirement, rather than
setting a general policy goal.10

        Indeed, the words used in this section of the Medicaid statute are virtually identical to the
language of the Aid to Families with Dependent Children (AFDC) statute, Title IV-A of the
Social Security Act, which was cited by the Supreme Court as an example of an explicit
Congressional requirement in Pennhurst State School & Hosp. Vv. Halderman, 451 U.S. 1, 17
(1981) (citing King v. Smith, 392 U.S. 309, 333 (1968), wherein 42 USC 602(a)(9)’s provision
that requirement that AFDC “shall be furnished with reasonable promptness to all eligible
individuals” was enforced by the Supreme Court under 42 USC 1983).            Thus, in the present
case -- unlike in Pennhurst and, more recently, Suter v. Artist M., 503 U.S. 347112 S.Ct. 1360
(1992) – Congress provided “unambiguous notice to the States” that they were required to pay
for the Medicaid-covered care of all eligible persons with reasonable promptness.       See Artist
M. , %03 U.S112 S. Ct. at 356          .   Accordingly, the second prong of the test is met in the
present case.



10
        In their Brief in Opposition to Motion for Class certification, p.8, Defendants suggest that
the 42 USC 1396a(a)(8) is unenforceable, citing a footnote in a published opinion, Woods v.
Tompkins, 33 F 3dF.3d 600, 603, n. 6 (1994), which references the unpublished Sixth Circuit
opinion in Cook v. Hairston, No. 90-3437, 1997 WL 253302, CCH Medicaid & Medicare Guide
para. 39,729 (6th Cir. 1991). Under Sixth Circuit Rule 24(c), citation of unpublished opinions is
disfavored and such opinions are not binding in other cases. The published opinion in Woods v.
Tompkins does not express any opinion as to whether the unpublished, Cook decision is correct.
The Tompkins opinion merely notes that the Cook decision exists, and states unequivocally sthat
the issue of the enforceability of 42 USC 1396a(a)(8) was not on appeal before the Tompkins
courtin the Tompkins case. 33 F.3d at 603. Indeed, the Tompkins decision held that the plaintiffs
in that case had a private right of action to enforce several other sections of the Medicaid statute
(42 USC 1396n(c)(2)(A),(B),(C) & (E), and 42 CFR 431.302(a),(c),(d), and (f)(2)). 33 F.3d at 611.
Accordingly, there is no binding Sixth Circuit authority on this issue.
                                                                                                   25
       Third, the court must consider whether the right is too “vague and amorphous” to be
judicially enforceable.   Blessing, supra,    at p. 7. US at        .   In Wright, 479 U.S. at
418, the Supreme Court held that the tenants’ right to a “reasonable” utility allowance that was
conferred by Congress was “sufficiently specific and definite to qualify as rights under Pennhurst
and section 1983” and were “not … beyond the competence of the judiciary to enforce.”
Similarly, the hospitals’ right to “reasonable rates” under the Medicaid statute was held to be
sufficiently definite to be judicially enforceable in Wilder, 496 U.S. at 519 - 520.

       In Wilder, the court noted, “While there may be a range of reasonable rates, there
certainly are some rates outside that range that no State could ever find to be reasonable and
adequate under the Act.” Id. at 520.      Similarly, in the present case there may be a range of
time within which payment for medical care would be considered “reasonably prompt”, but the
delays of 16 months to 39 months (more than three years) in Medicaid payment that were
experienced by Plaintiffs could not be considered reasonable by any court.

       The action that must be taken by the State Agency State Agency         in the present case is
clear and specific: paying for Medicaid recipients’ medical care. There is no vagueness or
uncertainty about Congress’s intent: states must pay Medicaid recipients’ medical bills without
unreasonable delay. Although the court must determine whether any delay in payment is
unreasonable, “such an inquiry is well within the competence of the Judiciary.” See Wilder,
id.

       In contrast, judicial enforcement of the provision in Suter v. Artist M. would have
required the courts to determine whether the state had made “reasonable efforts” to maintain or
reunite children with their parents. The statute in that case specified neither the type of action
that the state was required to take, nor the timeliness or duration of the action.   While “efforts”
are not defined in the statute considered in Suter v. Artist M., “ the “medical assistance” that
must be furnished under the statute at issue in the present case is carefully defined by Congress
in the Medicaid statute, 42 USC 1396d(a). Accordingly, the statute at issue here, 42 USC
1396a(a)(8) more closely resembles the provisions enforced in Wilder and Wright than the
vague, unenforceable provision at issue in Suter v. Artist M.

       The right to reasonably prompt payment of Medicaid-covered bills contained in 42 USC
1396a(a)(8) meets all three prongs of the test for enforceability under 42 USC 1983.
Accordingly, the next question is whether the State agencies have deprived Plaintiffs of that right
by failing to maintain adequate procedures and policies.
                                                                                                  26




     Defendants Have Deprived Plaintiffs of Their Right to Timely Payment of Bills for
                              Medicaid-Covered Services


       >From a factual standpoint, it is clear that the policies and procedures in place in
Michigan do not provide prompt payment for services incurred prior to a determination of
Medicaid eligibility. The uncontested facts in this case reveal that the named Plaintiffs and
other Medicaid recipients were denied prompt Medicaid payment for covered services as a result
of the State agencies’ failure to implement policies and procedures for furnishing prompt
Medicaid payments. As the State Agency’s representative stated in her deposition, the current
“process is very unwieldy and prone to problems in a number of areas, and its reliability is in
question … It doesn’t work.” See Deposition of Esther ReaganReagan Dep. at pp. 40 & 93.

       In January 1997, when Defendants filed their Motion to Dismiss in this case, they were
still “ in the process” of paying Plaintiffs’ medical bills. Thus, Plaintiff Mary Lue Schott waited
more than three years after her Medicaid eligibility was established (and more than four and a
half years after she applied for Medicaid) for most of her medical bills to be paid. Carol Levy
waited more than sixteen months after her Medicaid eligibility was established (and more than
four and a half years after she applied for Medicaid) for most of her medical bills to be paid.
Eric Mar waited more than 21 months after his Medicaid eligibility was established (and more
than five and a half years after he applied for Medicaid) for most of his medical bills to be paid.
Some bills of each of the Plaintiffs have yet to be paid. See Deposition of Esther ReaganReagan
Dep. at p. 37. Similar delays are experienced by other Medicaid applicants. See Affidavits of
Rose A. Scott, James Cook, and Robert LaClair, filed as Supplemental Appendices to Reply on
Class Certification, 3/24/97.

        Under the uncontested facts of the case, Defendants have violated 42 USC 1396a(a)(8),
by failing to promptly pay for Medicaid covered services provided prior to a recipient’s
Medicaid eligibility determination.
                                                                                                   27
       5. VIOLATION OF RIGHT TO “EFFECTIVE” MEDICAID FOR ENTIRE
          ELIGIBLITY PERIOD:
       PLAINTIFFS ARE ENTITLED TO JUDGMENT AS A MATTER OF LAW ON
       THEIR CLAIM THAT DEFENDANTS HAVE VIOLATED THEIR RIGHTS TO
       HAVE THEIR MEDICAID ELIGIBILITY BE ‘EFFECTIVE’
       42 CFR 435.914(a) requires that the State Agency “make eligibility for Medicaid
effective” as of the earliest date that eligibility is established in accordance with the requirement
of retroactive eligibility under 42 USC 1396a(a)(34), as discussed above.

       By failing to promptly pay for Medicaid-covered services received by the recipient
during the recipient’s period of eligibility, Defendants have failed to make Medicaid “effective”
as required by the regulation.
                                                                                                28




B. DEFENDANT’S FAILURE TO PROVIDE RECIPIENT
REIMBURSEMENT FOR AMOUNTS PAID BY MEDICAID
RECIPIENTS FOR MEDICAID-COVERED SERVICES RECEIVED
PRIOR TO MEDICAID ELIGIBILITY DETERMINATIONS VIOLATES
PLAINTIFFS RIGHTS UNDER FEDERAL MEDICAID LAW

        1. VIOLATION OF FEDERAL RIGHT TO COMPARABLE MEDICAL
           ASSISTANCE:
        PLAINTIFFS ARE ENTITLED TO JUDGMENT AS A MATTER OF LAW ON
        THEIR CLAIM THAT DEFENDANTS’ FAILURE TO REIMBURSE
        PLAINTIFFS FOR BILLS PAID BEFORE A MEDICAID ELIGIBILITY
        DECISION IS ISSUED VIOLATES PLAINTIFFS’ RIGHT, UNDER 42 USC
        1396a(A)(10)(B), TO MEDICAL ASSISTANCE THAT IS COMPARABLE IN
        AMOUNT DURATION AND SCOPE TO THE MEDICAL ASSISTANCE
        RECEIVED BY PERSONS WHO DO NOT PAY THEIR MEDICAL BILLS
        BEFORE MEDICAID ELIGIBILITY IS ESTABLISHED
                                          The Problem

        A Medicaid recipient who has paid for some of the Medicaid-covered services she
received prior to a determination of Medicaid eligibility will be denied Medicaid payment for
those services. Under Defendants’ current policy, Medicaid recipients will not be reimbursed
for services they paid themselves during a period for which they are subsequently found eligible
for Medicaid.      See Deposition Exhibits “2” and “3” and Deposition of Esther ReaganReagan
Dep. at p.55. Accordingly, Medicaid recipients who paid their bills before receiving a Medicaid
card do not receive the same medical assistance as recipients who did not pay their bills.

        Thus, for example, Carol Levy, and her husband paid over $8,000 in medical bills
incurred during the period August – December 1992, while waiting more than three years for a
Medicaid eligibility determination. At the time this case was filed, in November 1996,
Defendants had refused to reimburse Ms. Levy for the bills she paid. As of this date,
Defendants have reimbursed Ms. Levy for only about half of the amount that she paid for
Medicaid-covered services received prior to the October 1995 determination of Medicaid
eligibility.    See Response to Defendants’ Second Request for Admissions, filed with this
memorandum.
                                                                                                29
       Ms. Schott and Mr. Mar, by contrast, did not pay the bills they incurred prior to receiving
a Medicaid card. Accordingly, they were entitled to Medicaid provider payments for the bills,
which completely eliminated their liability for the bills.11 Under Defendants’ policy, the
medical assistance received by recipients who do not pay their bills has far greater value than the
assistance received by recipients who pay their bills. Recipients who have paid nothing obtain
full release from liability for the Medicaid-covered services. Recipients who have paid, in
contrast, end up paying for (all, or in Ms. Levy’s case, part of) the Medicaid-covered services.

                                The Comparability Requirement

       As discussed in Section II.A.,1., above, the federal Medicaid statute, in 42 USC
1396a(a)(10)(B), requires that comparable Medicaid assistance must be made available to all
categorically eligible Medicaid recipients, both as compared to other members of the “categorically
needy” population and as compared with the “medically needy”. See, e.g. Clark v. Kizer, 758 F.
Supp. 572, 580 (E.D.Cal. 1990), aff’d in part, vacated in part on other grounds, sub nom Clark v.
Coye, 967 F.2d 585 (9th Cir. 1992).

       Arbitrary limits which restrict Medicaid benefits for particular categorically needy recipients
run afoul of the comparability requirement of 42 USC 1396a(a)(10)(B).       State policies or practices
which result in greater Medicaid assistance for one categorically needy recipient than another are
unlawful, as is any policy which results in greater Medicaid assistance for a medically needy
recipient than for a categorically needy recipient.

       In a case directly on point, the Fifth Circuit held that the Louisiana Medicaid agency
violated the comparability requirements of 42 USC 1396a(a)(10)(B) when it refused to provide
Medicaid reimbursement for medical expenses that a recipient already had paid, even though the
recipient was eligible for Medicaid coverage for the time in which the expenses were incurred.
Blanchard v. Forrest, 71 F. 3d 1163 (5th Cir. 1996).   The district court held, and the Fifth
Circuit affirmed, that Louisiana’s policy violated the comparability requirement of 42 USC
1396a(a)(10) because “Medicaid applicants who fail to pay for their medical bills incurred
during the retroactive period receive a greater amount of medical assistance than Medicaid
applicants who privately pay for medical supplies or services during the retroactive coverage
period. This unequal treatment violates the requirement of 42 USC 1396a(a)(10)”.          Id. at


11
        Under 42 CFR 447.15, a provider who bills Medicaid for a service must accept the Medicaid
payment as payment in full and is prohibited from charging the Medicaid recipient for any part of
the service.
                                                                                             30
1167_____..1213 The present case is not distinguishable from Blanchard v. Forrest, and the court
should follow the reasoning of the Fifth Circuit and declare that Defendants’ current policies and
practices violate 42 USC 1396a(a)(10)(B).



       2. VIOLATION OF FEDERAL RIGHT TO RETROACTIVE MEDICAL
       ASSISTANCE:


       PLAINTIFFS ARE ENTITLED TO SUMMARY JUDGMENT ON THEIR CLAIM
       THAT DEFENDANTS’ POLICY OF REFUSING TO PROVIDE RECIPIENT
       REIMBURSEMENT FOR PAYMENTS A RECIPIENT HAS MADE TO A
       PROVIDER FOR SERVICES RECEIVED PRIOR TO A DETERMINATION OF
       MEDICAID ELIGIBILITY DENIES MEDICAID RECIPIENTS THEIR RIGHT
       TO RECEIVE RETROACTIVE MEDICAID FOR THE THREE CALENDAR
       MONTHS PRIOR TO THE MONTH IN WHICH THEY APPLY FOR MEDICAID



                                          The Problem

       As Discussed in Section I and II.B.1., above, Defendants have a policy and practice of

refusing to reimburse Medicaid recipients for Medicaid-covered services received prior to a
determination of Medicaid eligibility, when the recipient has paid for the service and is unable to

obtain a refund from the provider.     This refusal to make direct reimbursement to Medicaid

recipients means that many Medicaid recipients do not, in fact, receive Medicaid payment for

services in the three months prior to the month in which they apply for Medicaid.

       For example, Carol Levy applied for Medicaid in October 1992, seeking Medicaid

coverage retroactive to August 1992.    See Rehearing Decision, Exhibit “E” to Affidavit of Jill

12
        Note that Defendants take the position that recipient reimbursement may only be made if
the recipient’s eligibility for Medicaid was wrongfully denied or delayed. If reimbursement
were only made available to recipients who appeal an unlawful denial or delay, then that
subgroup of recipients would receive medical assistance that is greater in amount, duration, or
scope than recipients who are determined eligible without an appeal. Such a policy would
violate 42 USC 1396a(a)(10).
13
        Note that Defendants take the position that recipient reimbursement may only be made if the
recipient’s eligibility for Medicaid was wrongfully denied or delayed. If reimbursement were only
made available to recipients who appeal an unlawful denial or delay, then that subgroup of
recipients would receive medical assistance that is greater in amount duration or scope than
recipients who are determined eligible without an appeal. Such a policy would violate the
comparability requirements of 42 USC 1396a(a)(10))(B).
                                                                                                   31

Nylander, filed with the Court on 2/14/97.     Ms. Levy paid several of her Medicaid providers
for Medicaid-covered services provided to her during the months of August and September 1992.

See Documents Provided In Response to Notice of Deposition. Under Defendants’ policy,
however, Ms. Levy was not entitled to Medicaid reimbursement for these Medicaid -covered

services.   See Deposition of Esther ReaganReagan Dep. at p. 55.          While the Defendants
made an exception to their policy in order to provide some reimbursement to Plaintiff Levy, they

refused to reimburse her at the rate that she paid, thus resulting in a loss of several thousand

dollars to Ms. Levy. See Defendant Levy’s Answers to Request for Admissions and Response
to Defendants’ Second Request for Admissions.

                                                 The

                       Statutory Right to Retroactive MedicaidCoverage

       As discussed in section II.A.23., above, 42 USC 1396a(a)(34) requires that Medicaid
assistance be furnished for services received by an eligible recipient up to three calendar months

before the month in which they apply for Medicaid.       The courts have interpreted the retroactive
coverage provision as requiring recipient reimbursement for Medicaid covered services received
during the retroactive eligibility period that were paid for by the recipient.        In Blanchard

v. Forrest, 71 F 3dF.3d 1163, 1167-8 (5th Cir. (1996) and Cohen by Cohen v. Quern, 608 F.
Supp. 1324, 1330-2 (N.D. Ill. 1984), the courts invalidated policies of the Louisiana and Illinois

Medicaid agencies, respectively, holding that the refusal to reimburse Medicaid recipients for

Medicaid-covered services received during the three months prior to the month Medicaid

application is a violation of 42 USC 1396a(a)(34).       In Blanchard v. Forrest, the Fifth Circuit
noted that the State Agency’s policy of not reimbursing recipients for payments made for

Medicaid-covered services received during the three month retroactive period if the provider was
unwilling to refund to the recipient the amount paid, had the effect of leaving the availability of
such [statutorily mandated retroactive] coverage to the discretion of the medical provider who

has interest adverse to the recipient’s, [which] clearly violates th[e Congressional] intent.”     71
F.3d at 1167.
                                                                                                  32

       The present case is not distinguishable from Blanchard and Cohen, and the court should
apply their holdings in this case. Defendants’ refusal to arrange reimbursement for Medicaid

covered services incurred in the three months prior to application, for which the recipient has
paid, violates 42 USC 1396a(a)(34).


       3. VIOLATION OF FEDERAL RIGHT TO CORRECTIVE MEDICAID PAYMENTS:
       PLAINTIFFS ARE ENTITLED TO SUMMARY JUDGMENT ON THEIR CLAIM
       THAT DEFENDANTS’ LACK OF POLICIES AND PROCEDURES FOR
       PROMPT PAYMENT FOR MEDICAID-COVERED SERVICES RECEIVED
       BEFORE A MEDICAID RECIPIENT WINS MEDICAID ON APPEAL
       VIOLATES RECIPIENTS’ RIGHT TO CORRECTIVE MEDICAID PAYMENTS
       UNDER 42 CFR 431.246
                                          The Problem

       As the experience of the Plaintiffs reveals, Medicaid applicants who must pursue an
appeal in order to obtain a favorable Medicaid eligibility decision are likely to experience long
delays in obtaining their Medicaid eligibility determination. During the appeal, these
individuals often pay for Medicaid-covered services themselves, either as prerequisite to
obtaining the service or in response to dunning notices and threats of litigation. See generally,
Documents Provided in Response to Defendants’ Notice of Deposition; Plaintiff Levy’s Answers
to Requests for Admission, and Response to Defendants’ Second Request for Admissions.

                             The Right to Corrective Medicaid Payments

       As discussed in Section II.A.3., above, 42 CFR 431.246 requires the Medicaid
agency to make corrective payments when a Medicaid recipient wins Medicaid eligibility
on appeal from an erroneous denial or an unlawful delay.

       It is well-established that state Medicaid policies which deny recipient reimbursement
violate recipients’ rights to corrective payments under 42 CFR 431.246. See, e.g., Salazar v.
District of Columbia, 954 F.Supp. 278 (D.D.C. 1996) 1996 WL 76038, No. CIV.A.93-452(GK)
(October 16, 1996) (copy Attached as Exhibit “___” to this memorandum); Greenstein v. Bane,
833 F.Supp.1054 (S.D.N.Y. 1993).      Indeed, Defendants appear to acknowledge that recipient
reimbursement is necessary in the context of “corrective payments” to effectuate relief in a
successful appeal. See Deposition of Esther ReaganReagan Dep. at pp.72-4.          The Health
Care Financing Administration [“HCFA”] -- the federal agency responsible for administering the
Medicaid statute -- has instructed states that direct recipient reimbursement is required whenever
                                                                                                   33
necessary to correct errors or delays following a recipient’s successful appeal of the denial or
delay of Medicaid. See HCFA State Medicaid Manual, 6320.1 - .2 (11-10-94August 1991))
(A copy is attached as Exhibit “E” to this Memorandum).

       Accordingly, it is clear that Defendants have violated Plaintiffs’ rights in the present case
by failing to establish and implement policies allowing recipient reimbursement for amounts paid
for Medicaid-covered services for which eligibility is established on appeal.

       Although Defendants appear to concede that direct recipient reimbursement is necessary
to comply with the corrective payment requirement, they nevertheless insist that a recipient need
not be fully reimbursed for the amounts paid. Thus, for example, Defendants have reimbursed
Plaintiff Levy for only half of the amounts that she paid for Medicaid-covered services.
Defendants insist that they need only pay recipients the amount that would be paid to a provider
of the service under the Medicaid rate schedule (“the Medicaid payment rate”).

       The courts have refused to accept the argument that a State Agency       need only partially
correct its errors under 42 CFR 431.246.    See    Greenstein, supra.    By limiting recipient
reimbursement to the Medicaid payment rate rather than the amount paid out-of-pocket by the
recipient, a state Medicaid agency fails to make the recipient whole. When only the Medicaid
payment rate is paid to the recipient, she is not returned to the position that she would have been
in had Medicaid been correctly and promptly provided. Instead, she suffers an out-of-pocket
loss, such as the $4,000 loss experienced by Plaintiff Carol Levy.

       Furthermore, she does not receive “comparable” Medicaid coverage. If Defendants are
permitted to pay only the Medicaid payment rate to reimburse the recipient, Defendants will pay
a comparable amount for both recipients who paid their bills and those who did not. However,
the recipients who paid their bills will not receive comparable medical assistance, because they
will not receive no-cost medical care. See Greenstein, supra, 833 F.Supp. at 1073-4.
Accordingly, any policy that limits the recipient reimbursement to the Medicaid payment rate not
only fails to correct the error, but also runs afoul of the comparability requirement of 42 USC
1396a(a)(10), which is discussed more fully in sections II.A.1 & B.1., above. Id.    Accordingly,
Defendants must be enjoined from failing to reimburse Medicaid recipients in full for amounts
paid directly to providers for Medicaid services received before the recipient obtains Medicaid
eligibility through an appeal of an unlawful denial or delay.
                                                                                                   34
       4. THE OBLIGATION TO PROMPTLY FURNISH MEDICAL ASSISTANCE TO
           ELIGIBLE MEDICAID RRECIPIENTS:


       PLAINTIFFS ARE ENTITLED TO SUMMARY JUDGMENT ON THEIR CLAIM
       THAT DEFENDANTS ARE VIOLATING PLAINTIFFS RIGHTS UNDER 42 USC
       1396a(a)(8) BECAUSE THEY DO NOT HAVE POLICIES AND PROCEDURES
       IN PLACE TO PROMPTLY REIMBURSE RECIPIENTS FOR BILLS FOR
       MEDICAID COVERED SERVICES INCURRED PRIOR TO A
       DETERMINATION OF MEDICAID ELIGIBILITY
       As discussed in Section II.A.4., above, the Medicaid statute, 42 USC 1396a(a)(8) requires
Defendants to furnish medical assistance with reasonable promptness. By failing to reimburse
recipients for amounts paid out of pocket for Medicaid-covered services received prior to the
Medicaid eligibility determination, Defendants have failed to furnish medical assistance – i.e.
Medicaid payment –for those services. Accordingly, Defendants’ refusal to make recipient
reimbursements violates 42 USC 1396a(a)(8).

       5.   VIOLATION OF RIGHT TO “EFFECTIVE” MEDICAID FOR ENTIRE
            ELIGIBLITY PERIOD:
       PLAINTIFFS ARE ENTITLED TO JUDGMENT AS A MATTER OF LAW ON
       THEIR CLAIM THAT DEFENDANTS HAVE VIOLATED THEIR RIGHTS TO
       ‘EFFECTIVE’ MEDICAID ELIGIBILITY
       42 CFR 435.914(a) requires that the State Agency “make eligibility for Medicaid
effective” as of the earliest date that eligibility is established in accordance with the requirement
of retroactive eligibility under 42 USC 1396a(a)(34), as discussed above.

       By failing to reimburse recipients for Medicaid-covered services received by the recipient
during the recipient’s period of eligibility, Defendants have failed to make Medicaid “effective”
as required by the regulation.   As discussed above, when Medicaid is in effect, it pays for
medical services for the recipient. By failing to provide recipient reimbursement when the
provider will not refund the recipient’s money and bill Medicaid, Defendants’ fail to make
Plaintiffs’ Medicaid “effective” for eligibility periods before a Medicaid card is issued, in
violation of 42 CFR 435.914.

C. PLAINTIFFS ARE ENTITLED TO SUMMARY JUDGMENT ON
THEIR CLAIM THAT DEFENDANTS HAVE VIOLATED THEIR
FEDERAL RIGHT TO INFORMATION ABOUT PAYMENT FOR
MEDICAID COVERED SERVICES
                                                                                                   35
                                            The Problem

       As noted in several sections, above, Defendants do not have written materials to tell
Medicaid applicants and recipients how they can obtain Medicaid payment for the
Medicaid-covered services they received before receiving a Medicaid card. See Deposition
Exhibits “2” & “ 3” to Deposition of Esther ReaganReagan Dep. and Dep.osition at pp. 59-60,
67-8. The written materials routinely distributed to Medicaid applicants and recipients do not
contain any information about the steps a recipient must take to obtain Medicaid payment for
pre-eligibility determination services. Id.

       Defendants do not routinely provide information to recipients about the fact that the
recipient must take affirmative steps to initiate the Medicaid payment of bills incurred prior to a
determination of Medicaid eligibility.     Id. Defendants’ caseworkers will answer questions if
asked. Id. However, Defendants’ policies do not require caseworkers to affirmatively offer
information about getting Medicaid payment for outstanding or recipient-paid bills when the
recipient is approved for Medicaid. Id.       As discussed in section II.A.1___, above, this “don’t
ask, don’t tell” approach precludes prompt, reliable payment for Medicaid-covered services,
because the system for payment of outstanding bills is recipient-initiated. If a recipient fails to
initiate the payment process because he is never told that it is his responsibility to    inform
providers about his Medicaid coverage and to arrange for those providers to bill Medicaid,
the recipient will be denied full medical assistance for Medicaid-covered services.

                                 The Information Requirement

       42 CFR 435.905(a) provides:

       The agency must furnish the following information in written form and orally as
       appropriate, to all applicants and to all other individuals who request it:
       (1) The eligibility requirements.
       (2) Available Medicaid services.
       (3) The rights and responsibilities of applicants and recipients.

       In the present case, Defendants have violated the “information regulation”, 42 CFR
435.905(a), by failing to provide recipients with written information about the policy and
procedure for obtaining provider payment and recipient reimbursement for Medicaid-covered
services received by the recipients before their Medicaid cards were issued. Medicaid
applicants and recipients remain uninformed about their right to payment for these pre-eligibility
                                                                                                     36
determination services, and about their responsibility to initiate provider billings or take other
action to obtain Medicaid payments for these bills.

       Plaintiffs have been unable to locate any cases directly on point, addressing the Medicaid
information regulation. In a case interpreting a similar “information regulation” under the
(now-defunct) Aid to Families with Dependent Children [“AFDC”] program, the Supreme Court
held that the information requirement could not interpreted and applied by the courts to block
implementation of a new federal law. Gardebring v. Jenkins, 485 U.S. 415 (1988).14

       The issue before the court in the present case is entirely different than the issue decided in
Gardebring. Here, Plaintiffs seek to enforce their right to notice of the procedure for getting
Medicaid payment for Medicaid-covered services as a means of accomplishing or enhancing
implementation of the longstanding federal Medicaid law. Providing information to Medicaid
recipients will further Congressional intent to provide reasonably prompt medical assistance
under 42 USC 1396a(a)(8), comparable medical assistance under 1396a(a)(10)(B), retroactive
medical assistance under 1396a(a)(34), and corrective Medicaid payments under 42 CFR
431.246.         In the present case, as discussed above, the state agency’s failure to provide
written materials disclosing the information about the recipients’ rights and responsibilities with
respect to provider payments and recipient reimbursements inhibits or prevents the State Agency
from complying with the federal mandate to provide         medical assistance for covered services
received during a period of eligibility.

       The Gardebring decision also is distinguishable from the present case because it involved
information about an eligibility rule which the Supreme Court characterized as

       only one of many conditions of eligibility for AFDC benefits that are meticulously
       described in 40 pages of the Code of Federal Regulations and in 66 pages of Minnesota’s
       recently revised AFDC rules and regulations. [cites omitted] The conditions are subject
       to frequent alteration, with many changes such as the new lump sum rule affecting
       only a small minority of AFDC recipients. ... Unquestionably it would be wise ... to
       precede every such change with adequate advance notice, but the regulation itself does
       not unambiguously impose any such requirement on state welfare agencies.

14
        In Gardebring, the plaintiffs sought to enjoin implementation of the federal statute creating
the “lump sum rule” -- which resulted in many families being cut from AFDC for months or years
on end when they received one-time, “lump sum” payments -- based on the state’s failure to provide
written notice of the new, “lump sum” rule.       Accordingly, the Supreme Court identified the
issue in the case as follows: “The question is whether the pre-existing regulation was intended to
forestall implementation of a congressionally mandated program change until the state agencies
provided AFDC [Aid to Families with Dependent Children cash assistance] recipients with notice of
the change.” 485 U.S. at 425.
                                                                                                     37
Id. at note 15.     In Gardebring, the undisclosed information was both ephemeral and of
minor importance in the whole scheme of the AFDC program.

        In the present case, by contrast, the payment of medical bills for eligible recipients is the
central purpose of the Medicaid program. The Medicaid program was established “[f]or the
purpose of enabling each State … to furnish … medical assistance on behalf of families with
dependent children and of aged, blind, or disabled individuals whose income and resources are
insufficient to meet the costs of necessary medical services.” 42 USC 1396a.

        The essence of “medical assistance” is the “payment of part or all of the cost of
(covered medical) care and services”. 42 USC 1396d(a).            Accordingly, under 42 CFR
435.905(a)(3),    the Agency must provide applicants and recipients with information about
recipients’ rights to payments for medical care during a period of established Medicaid
eligibility and the recipients’    responsibilities in obtaining such payments.     The rights and
responsibilities at issue in this case have not been the subject of frequent changes and they are
central to the purpose of the Medicaid program. Accordingly, the holding in Gardebring does
not apply in this case.

        Finally, the Supreme Court in Gardebring based its decision in part on its finding that
the federal agency which had promulgated the information rule at issue in that case did not agree
with the interpretation advanced by the Gardebring plaintiffs. 485 U.S. at 430.        In the present
case, by contrast, the federal agency responsible for administering the Medicaid program has not
expressed an opinion on, or advanced an interpretation of, the issue of the state’s obligation to
provide written information about recipients rights and responsibilities in connection with the
payment of outstanding or recipient-paid medical bills.

D. RELIEF

        As discussed in detail above, Plaintiffs have established that Defendants have violated
Plaintiffs’ rights under federal law. Accordingly, Plaintiffs are entitled as a matter of law to
summary judgment on Counts I-IV, VI-XI, and XIII of their Complaint.

        In this section, Plaintiffs outline the remedies that they seek under 42 USC 1983 and
1988, and that the court should enter in order to protect Plaintiffs and others from future
violations of federal rights.

        1. Declaratory Judgment

        Plaintiffs are entitled to a declaratory judgment that:
                                                                                                 38
(1) Defendants’ current policies, procedures, and practices for making Medicaid payments to
providers for Medicaid-covered services furnished prior to a determination of the Medicaid
recipient’s eligibility (or their lack of such policies and procedures):

       (a) Violate 42 USC 1396a(a)(10)(B) by failing to provide comparable medical
            assistance to recipients who are determined eligible for Medicaid after they receive
            the covered services, when compared with the assistance furnished to ongoing
            Medicaid recipients.

       (b) Violate 42 USC 1396a(a)(34) by failing to furnish medical assistance for covered
            services received in the three calendar months prior to the month in which the
            recipient applies for Medicaid.

       (a)(c) Violate 42 USC 1396a(a)(8) by failing to furnish medical assistance with
            reasonable promptness for covered services received by an individual during a period
            that the individual was Medicaid eligible.

       (d) Violate 42 CFR 435.914 by failing to make Medicaid eligibility effective for the
            entire eligibility period.

       (e) Violate 42 CFR 431.246 by failing to make corrective payments for Medicaid                 Formatted: Bullets and Numbering

            covered services received during a period for which the recipient wins Medicaid
            eligibility after an appeal of an unlawful denial or delay.

(2) Defendants’ failure to maintain and follow policies and procedures to reimburse recipients
    in full for amounts paid for Medicaid-covered services received prior to a determination of
    their Medicaid eligibility:

       (a) Violate 42 USC 1396a(a)(10)(B) by failing to provide comparable medical
            assistance to recipients who pay bills incurred prior to a determination that they are
            eligible for Medicaid, when compared with the assistance furnished to Medicaid
            recipients who have not paid their bills.

       (b) Violate 42 USC 1396a(a)(34) by failing to furnish medical assistance for covered
            services received in the three calendar months prior to the month in which the
            recipient applies for Medicaid.

       (c) (c) Violate 42 USC 1396a(a)(8) by failing to furnish medical assistance with
            reasonable promptness for covered services received by an individual during a period
            that the individual was Medicaid eligible.
                                                                                                    39
        (d) Violate 42 CFR 435.914 by failing to make Medicaid eligibility effective for the
               entire eligibility period.

         (e)

        (d) Violate 42 CFR 431.246 by failing to make corrective payments for Medicaid
               covered services received during a period for which the recipient wins Medicaid
               eligibility after an appeal of an unlawful denial or delay.

(3) Defendants’ failure to provide written (and, as necessary, oral) information to Medicaid
      applicants and recipients about the procedures to follow for obtaining provider payment or
      recipient reimbursement for medical bills incurred prior to a determination of Medicaid
      eligibility constitutes a violation of 42 CFR 435.905(a), which requires Defendants to
      furnish information regarding “[t]he rights and responsibilities of [Medicaid] applicants and
      recipients.”

      2. Injunctive Relief

(1)   Plaintiffs are entitled to an injunction requiring Defendants to take the steps outlined below
      within the proposed time lines or such other time frames as may be established by the
      Court: Implement policies and procedures which will result in prompt, reliable payment to
      providers for Medicaid-covered services received by recipients before they receive their
      Medicaid card, including:

        (a) Policies and procedures requiring Defendants to furnish written information (and
               oral information as needed) to all Medicaid applicants and to all Medicaid recipients
               who request information, explaining (i) the right to payment for Medicaid covered
               services received during a period of eligibility but before a determination of
               Medicaid eligibility is issued and (ii) the procedure for obtaining such payment,
               including any responsibilities of the recipient.

        Policies and procedures for furnishing written information (and oral information as              Formatted: Bullets and Numbering

               needed) to all Medicaid applicants and to all Medicaid recipients who request
               information, explaining (i) the right to provider payments for Medicaid covered
               services received during a period of eligibility but before a determination of
               Medicaid eligibility is issued and (ii) the procedure for obtaining such payments,
               including any responsibilities of the recipient.
                                                                                                     40
        (b) Policies and procedures to ensure that the system will be in effect in all political
            subdivisions of the state and will be monitored by the state agency, as required by 42
            CFR 431.50 and 435.904.

(2)   Implement policies and procedures to promptly furnish direct recipient reimbursement for
      amounts paid by recipients for Medicaid-covered services obtained during a period of
      Medicaid eligibility but prior to a determination of such eligibility, if the provider will not
      refund the amount paid to the recipient and bill Medicaid. Such policies and procedures
      shall include:

        (a) Policies and procedures to ensure that the recipient is not reimbursed at a rate that
            causes the recipient to be liable for any amount in excess of the amount that the
            recipient would have been required to pay if the provider had been able to bill
            Medicaid at the time the service was furnished to the recipient (i.e. “deductibles”
            such as patient pay amounts and spend-down amounts, or co-payments authorized
            by law).

        (b) Policies and procedures for furnishing written information (and oral information as
            needed) to all Medicaid applicants and to all Medicaid recipients who request
            information, explaining (i) the right to recipient reimbursements for Medicaid
            covered services received during a period of eligibility but before a determination of
            Medicaid eligibility is issued and (ii) the procedure for obtaining such payments,
            including any responsibilities of the recipient.

        (c) Policies and procedures to ensure that the system will be in effect in all political          Formatted: Bullets and Numbering

            subdivisions of the state and will be monitored by the state agency, as required by 42
            CFR 431.50 and 435.904.

(3)   Develop clear, written materials, and implement policies and procedures for providing
      written (and, as needed, oral) information to all Medicaid applicants and all recipients who
      request it, explaining recipients’ and applicants’ rights to provider payments and recipient
      reimbursements for Medicaid-covered services received during a period of Medicaid
      eligibility but prior to a determination of eligibility, and the applicants’ and recipients’
      responsibilities in connection with the procedure or process for obtaining such payments or
      reimbursements.
                                                                                               41
     Said policies and procedures shall include the maintenance of a toll free number, staffed by
     properly trained agency employees, to which recipients and applicants may direct inquiries
     regarding provider payments and recipient reimbursements. Said policies and procedures
     shall also include a provision for notifying applicants and recipients of the availability of
     the toll free number in writing on all Medicaid eligibility determinations, Medicaid cards,
     and other written materials produced in order to comply with the order in this case.

(4) Submit all proposed policies and procedures, and written materials for complying with the
    Court’s Order to the Court and to Plaintiffs’ attorney within 60 days after the Court Order is
    entered, after which Plaintiffs shall have 30 days to file any objections to the proposed
    policies, procedures, and written materials. The Court shall thereafter enter an Order
    approving the policies in whole or making any changes that the court deems necessary.

(5) Allow Plaintiffs’ attorneys an opportunity to review and comment upon any subsequent
    changes in the policies entered in order to comply with the Court’s Order, by providing
    Plaintiffs’ attorneys with a copy of any proposed changes at least 30 days prior to the
    proposed effective date of the change.

(6) Maintain all records necessary to allow Defendants and the court to monitor Defendants’
    compliance with this Order, including data regarding the timeliness of provider payments
    and recipient reimbursements, as measured from the date of the recipient’s eligibility
    determination and from the dates that bills or requests for reimbursement or provider
    payment are submitted to Defendants.

(7) Notify all current Medicaid recipients of the court’s decision and the information outlined in
    paragraph (3).

(8) Reimburse Plaintiff Levy for the full amounts paid for Medicaid-covered services.

    3. Attorneys Fees

       Plaintiffs are entitled to the payment of reasonable fees under 42 USC 1988 and the court
should permit Plaintiffs to submit a motion and affidavit outlining the time spent on this case and
a reasonable hourly fee.



                                                      Respectfully submitted,


                                                      ______________________________
                                                                                               42
                                                   Jacqueline Doig (P37105)
                                                        CENTER FOR CIVIL JUSTICE
                                                   320 S Washington, 2nd Floor
                                                   Saginaw, MI 48607
                                                   (517) 755-3120
                                                   Attorney for Plaintiffs




                                   CERTIFICATE OF SERVICE

I certify that I have this day served a copy of the foregoing Memorandum and all attachments
thereto on Morris Klau, Attorney for Defendants, by first class United States Mail.


January 9, 1998
                                                   ______________________________
                                                   Jacqueline Doig (P37105)




C. PLAINTIFFS ARE ENTITLED TO SUMMARY JUDGMENT ON THEIR CLAIM THAT
   DEFENDANTS HAVE VIOLATED THEIR FEDERAL RIGHT TO INFORMATION
            ABOUT PAYMENT FOR MEDICAID COVERED SERVICES

								
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