MEMORANDUM IN OPPOSITION TO DEFENDANTS* MOTION TO DISMISS
OR FOR SUMMARY JUDGMENT
The State of Kentucky has attempted to respond to a "Perfect Storm" budget
crisis, caused by "Too Many Patients, Too Little Money," Defendants* Memorandum,
p. 2, by adopting an "emergency regulation" redefining eligibility for Medicaid
long-term care so as to render ineligible, persons previously certified as
eligible for nursing facility services, a mandatory form of service under the
federal Medicaid statute.1 This draconian action has resulted in determinations
that two groups of people, some residing in nursing homes and some receiving
home and community based services ("HCBS"), but all of whom had already been
acknowledged by the state to need nursing facility services, are no longer
eligible for long-term care under Kentucky*s Medicaid program. Plaintiffs and
the class they represent are being deprived of a mandatory service, nursing
facility services, by implementation of the new regulations.
Defendants have not attempted to assert that their administrative redefinition
of the need for nursing facility services is based upon new medical knowledge
providing a more enlightened understanding of who actually needs nursing
facility services, or indeed upon any medical or health-related considerations
at all. There is no suggestion in their motion or supporting memorandum or
documents that the amendments are in the best interests of Kentucky Medicaid
recipients. Indeed, Defendants never even say that the new regulations are
consistent with the objectives of the Medicaid Act. or in accord with federal
There seems to be no serious disagreement as to the basic nature of the Medicaid
Act or of the obligations of the state under the Act. Defendants acknowledge in
their memorandum that the Medicaid Act "is a cooperative federal-state program
to facilitate the availability of medical care for needy individuals," that,
"[c]ertain Medicaid programs are mandatory," and that "if a state participates
in Medicaid, it must provide a base level of services." Defendants* Memorandum
at 6. Defendants also acknowledge that participating states are "required to
provide financial assistance to qualified individuals for specified categories
of medical services, and that one of those mandatory services is "skilled (sic)
nursing facility services."3 Id.
Defendants also do not dispute Plaintiffs* allegation that Defendants previously
determined that all the Plaintiffs needed nursing facility services, "but have
recently reversed those determinations solely on the basis of budgetary
constraints and not on any improvement in the Plaintiffs* health or daily living
skills necessary to live independently." Complaint, * 1. No non-budgetary reason
is given for the state*s peremptory action in redefining eligibility for long
term care to remove persons long certified as requiring nursing facility
services. Defendants do not identify any provision of the Medicaid statute, the
regulations thereunder, or any court decision which they say authorizes states,
for budgetary reasons, to shrink the number of persons eligible for mandated
services simply by redefining the need for such services to conform to their
II. STATEMENT OF THE CASE
A. The Medicaid Program
The federal Medicaid program provides a federal subsidy to states that choose to
pay for certain health care to be provided to low-income individuals. See 42
U.S.C. *1396 et seq. (Medicaid Act). Generally, low-income elderly and disabled
individuals, low-income single parents, pregnant women, and children are the
populations entitled to be served by the Medicaid program. 42 U.S.C.
*1396a(a)(10). "Although participation in the [Medicaid] program is voluntary,
participating states must comply with certain requirements imposed by the Act
and regulations promulgated by the Secretary of Health and Human Services."
Harris v. McRae, 448 U.S. 297, 301 (1980); Wilder v. Virginia Hospital Ass*n,
496 U.S. 498, 502 (1990). Kentucky has chosen to participate in the Medicaid
program, and is therefore bound by federal Medicaid statutes and regulations in
the operation of its program.
1. Nursing Facility Services Are A Mandatory Service Under Medicaid - There are
services that a state, at its discretion, may or may not make available for
coverage in that state*s Medicaid program. These optional services include
routine prescription drugs, dental services, physical therapy, dentures, and
others. 42 U.S.C. *1396d(a).
By contrast, the nursing facility services under consideration in this case are
mandatory services that any state which participates in the Medicaid program
must provide. See Westside Mothers v. Haveman, 289 F.3d 852, 856 (6th Cir. 2002)
("The Medicaid Act and related regulations set out a detailed list of services
every state program must provide."). Specifically, 42 U.S.C. *1396a(a)(10)(A)
requires that for all individuals meeting the eligibility requirements, a state
"must...provide...for..medical assistance...at least the care and services
listed in paragraphs (1) through (5), (17) and (21) of section 1396d(a)." The
services that *1396d(a) mandates all states to provide include:
"(4)(A) nursing facility services.....for individuals 21 years of age or older."
The "nursing facility services" identified as a mandatory service in
*1396d(a)(4) are subsequently defined as "services which are or were required to
be given an individual who needs or needed on a daily basis nursing care
(provided directly or requiring the supervision of nursing personnel) or other
rehabilitation services which as a practical matter can only be provided in a
nursing facility on an inpatient basis." 42 U.S.C. *1396d(f). Thus, individuals
within the categorical populations in 42 U.S.C. *1396a(a)(10), as are
Plaintiffs, and who need on a daily basis, nursing care which as a practical
matter, can be delivered only in a nursing facility on an inpatient basis, must
be provided coverage for nursing facility services.
2. Home and Community Based Services Are Provided Only To Persons Who Have Been
Found To Need Nursing Facility Services Or Institutionalized Care - The Medicaid
statute contemplates that states may choose to offer services in a setting other
than a nursing home to some people who are entitled to mandatory long-term care
services. States may offer a specified package of HCBS to Medicaid beneficiaries
who, "but for the provision of such services would require the level of care
provided in a hospital, nursing facility or intermediate care facility for the
mentally retarded the cost of which could be reimbursed under the State
[Medicaid] program." 42 U.S.C. **1396a(a)(10) (A)(ii)(VI); see also 42 U.S.C.
*1396n(c)(1). In order to include HCBS within Medicaid, a state must submit an
application to the federal Centers for Medicare and Medicaid Services (CMS) for
an HCBS waiver, and receive subsequent approval from CMS.
The term, "waiver,"4 does not mean that a state may operate such a program any
way it wants, without regard to federal law. In all nonwaived aspects, the
state*s home and community based waiver program must comply with federal
Medicaid law. See 42 U.S.C. *1396a(a)(10)(A). Individuals who receive home or
community-based services in lieu of nursing facility services must still be
provided the basic package of Medicaid services. Id; see Bryson v. Shumway , 308
F.3d 79, 89 (1st Cir. 2002) ("The strictures of the reasonable promptness
requirement of federal Medicaid law should apply with no less force to opt-in
plans such as the waiver program."); Ass*n of Residential Res. in Minn.(ARRM) v.
Minn.Comm*r of Human Services, 2003 WL 22037719 *7-8 (D.Minn. Aug. 29, 2003)
(Exhibit E) (state must abide by Medicaid "equal access provision" in its HCBS
program, as rules of statutory construction dictate that provisions not
specifically identified as ones that may be waived must be considered
obligatory). Furthermore, a state must abide by the specific rules which relate
to the waiver program itself. See Wood v. Tompkins, 33 F.3d 600, 608 (6th Cir.
1994) ("[certain provisions of the waiver statute] impose mandatory duties upon
Defendants opine that, "Should the Plaintiffs succeed" in this litigation, the
state "may be forced to consider whether it should abandon altogether any effort
to provide these optional [HCBS] services and remove them from their State
Plan." Defendants* Memorandum at 5. That statement is misleading for it implies
that the state somehow would save money by abolishing the HCBS program. As
already explained, all individuals receiving services under Kentucky*s HCBS
program are doing so because they meet the Medicaid program*s categorical
requirements and have been found to need nursing facility services. In an HCBS
waiver program, qualified individuals receive services either in the nursing
facility or in their home and/or other community setting, generally depending on
whether the state has a sufficient number of waiver "slots" to incorporate the
individual into the waiver program. In absence of a slot, or waiver program, the
state must provide coverage for nursing facility care. 42 U.S.C. **1396a(a)(10)
and 1396d(a) Thus, if Kentucky were to abandon the HCBS program, the state would
be obliged to provide nursing facility services for those beneficiaries in lieu
of HCBS. No basis has been offered for thinking that nursing facility services
would cost the state less than HCBS. Indeed, to obtain approval of an HCBS
program, the state must certify that the program will not increase per capita
expenditures. 42 U.S.C. *1396n(c)(2)(D).
3. The New Regulations - As of April 4, 2003, based on determinations that they
were entitled to receive nursing facility services, all Plaintiffs were
receiving services under the Kentucky Medicaid program. Some were residing in
nursing homes. Others were part of the HCBS waiver program.
On April 4, 2003, in response to budgetary constraints, Kentucky adopted
"emergency regulations" which purported to alter eligibility for the mandatory
federal Medicaid nursing facility services. 907 KAR 1:022E. Defendants projected
that their alteration of the level-of-care criteria would save some $45 million.
Comp. * 2. In fact, redeterminations under the new regulations have resulted in
rulings that none of the Plaintiffs remained eligible for nursing facility
services. This is so despite the fact that all of them had previously been
recognized as needing nursing facility services. There is no finding or
suggestion that the conditions of Plaintiffs have changed, or that they are
somehow less in need of nursing facility services than they were before April 4,
B. For Purposes Of This Motion, Defendants Admit Plaintiffs* Factual Allegations
1. Motion To Dismiss - Defendants have moved to dismiss Plaintiffs* complaint
or, in the alternative, for summary judgment. Defendants correctly acknowledge
their understanding that in addressing their motion to dismiss, made under Rule
12 (b)(1) and (6) of the Federal Rules of Civil Procedure, the court will accept
as true all of the allegations set forth in the Complaint. Thus, for purposes of
the motion to dismiss, Defendants accept as true that:
* all Plaintiffs are physically and emotionally fragile low-income persons who,
as of April 4, 2003, were receiving long-term care services through the Kentucky
Medicaid program, pursuant to determinations by Defendants that all Plaintiffs
needed that level of care. Comp. * 1;
* some Plaintiffs were receiving long-term care in nursing homes and others were
receiving care through Kentucky*s Home and Community Based Services Waiver
program, but all were receiving such services by virtue of a determination that
they need nursing facility services, a mandatory category of services under the
federal Medicaid statute. Comp ** 1, 57- 103;
* prior to April 4, 2003 Kentucky officials decided to respond to the state*s
budgetary needs by eliminating $250 million worth of Medicaid services, Comp. *
2, and for that purpose alone, on April 4, 2003, issued "emergency regulations."
Comp. ** 1 and 2;
* the emergency regulations "substantially altered the level-of-care criteria
used to determine eligibility for long-term care services," Comp. * 2, in a
manner "projected to save $45 million annually." Id.;
* by operation of the new regulations, between April and July 2003 1,209 people
receiving HCBS and 198 people receiving nursing facility services were advised
they no longer qualify for long-term care services because they do not meet the
new criteria for nursing facility services. Comp * 2;6
* the rate of level of care denials increased by 480 percent from the first
quarter of 2003, prior to the adoption of the regulations, to the next quarter
of 2003, immediately after the effective date of the emergency regulations.
Comp. * 2.
* through such regulations, all Plaintiffs, without any improvement in their
conditions, have been determined no longer to be eligible for long-term care.
Comp. * 3, et passim;.
* Defendants have compounded the problem by issuing notices of the kind attached
to Plaintiffs* complaint, and by failing in some cases to ensure that benefits
are continued when a timely appeal is filed. Comp. * 4;
2. Motion For Summary Judgment - Defendants have also moved, in the alternative,
for summary judgment under Rule 56 of the Federal Rules of Civil Procedure.
Summary judgment is appropriate only when the "pleadings, depositions, answers
to interrogatories, and admissions on file, together with the affidavits, if
any, show that there is no genuine issue as to an material fact and the moving
party is entitled to judgment as a matter of law." Atlas Concrete Pipe, Inc. V.
Roger J. Au & Son, Inc. (In re Atlas Concrete Pipe, Inc.), 668 F.2d 905 (6th
Cir. 1982). Such a motion normally would be accompanied by one or more
affidavits setting out certain factual allegations.
In this case, Defendants have filed only one affidavit, by Benjamin R. Sweger,
Director of the Division of Long Term Care and Disability Services of the
Kentucky Department for Medicaid Services. The affidavit, however, merely
recites certain information concerning administration of the Kentucky Medicaid
program. The affidavit is silent as to any healthcare, or nonbudgetary, purpose
in adopting the emergency regulations and does not appear on its face to remove
numerous material factual issues which preclude summary judgment for defendant.
Most of the Sweger statements straddle the key April 4, 2003 date, when the
emergency regulations went into effect, in a way that does not permit either the
Court or Plaintiffs to ascertain the degree to which rates of denials changed
after the emergency regulations went into effect. See ** 9-14, 16. These figures
can not be seen as contradicting any of the information set out in Plaintiffs*
Complaint. Significantly, the Sweger affidavit does not contradict Plaintiffs*
allegation that after the effective date of the emergency regulations, level-of-
care denials increased by 480 percent. Comp., * 2. Nor does Defendants*
Memorandum shed any light on the purpose of the affidavit. That Memorandum does
recite, at pages 16-17, some Sweger affidavit information, but does so without
explanation. Defendants do not suggest or argue that the affidavit contradicts
any of Plaintiffs* allegations.
The Sweger affidavit does contain information consistent with, or which directly
supports, some of Plaintiffs* contentions. For example, paragraph 15
acknowledges that during the period from April 4, through July 31, 2003, some
1201 persons who had been receiving HCBS were denied continuation of those
services. This is substantially consistent with Plaintiffs* complaint, paragraph
2, alleging that 1209 persons were denied continuing HCBS during that time.
Plaintiffs request the Court to take special note of paragraph 5 of the Sweger
affidavit. There, Director Sweger acknowledges that all persons receiving
nursing facilities services, whether in nursing homes or through the HCBS waiver
program, became eligible for such services by meeting the same criteria,
established for nursing facility services. He points to 907 KAR 1:022 (the
regulations prior to April 4, 2003) and 907 KAR 1:022E, the "emergency
regulations" adopted on April 4, 2003, as the source of such criteria.
A. Defendants Have No Health Related Reason For Adopting The New Regulations And
Do Not Seriously Argue That Their Actions Comply With The Medicaid Act
At the heart of this case is the fact that Defendants have determined that all
Plaintiffs have met the standards for mandatory nursing facility services, but
then without any change in the conditions of Plaintiffs, Defendants have, to
alleviate strains on Kentucky*s overall budget, changed the regulations as a
means of declaring that Plaintiffs no longer meet the standards. Defendants*
primary contention is that Plaintiffs should not be permitted to come before
this Court to assert their claims. They do not attempt to argue that there is
any health related purpose for their actions. Nor do they carefully parse the
words of the Medicaid Act or even assert that their actions are in compliance
with the law. Defendants do not contest that Plaintiffs meet the categorical
population requirements, nor do they appear to contest that Plaintiffs have a
medical need for a mandatory service. What Defendants seem to believe, however,
is that they need only provide such services to the degree they find
"practicable," after Kentucky has fulfilled all its other budgetary needs and
wishes. Defendants* Memorandum at 22. But Medicaid is intended to provide health
care security for poor and vulnerable persons, and nursing facility services are
a mandatory requirement, not an optional one.
Defendants make a weak attempt to defend their actions by broadly invoking
various authorities and implying that these authorities somehow give them
unfettered discretion to administer the Medicaid program in such a way as to
alleviate the "huge budget shortfalls" which have hit Kentucky*s "struggling
economy," Defendants* Memorandum, page 2, without regard to objectives of the
Medicaid program or the health care needs of Kentucky*s poorest and most
vulnerable residents. However, no authority they cite furnishes any support for
such a contention. The first case cited, Commonwealth v. Smith, 875 S.W. 2d 873
(Ky. 1994), involves a tax established under Kentucky state law and is
The second case, Pharmaceutical Research and Manufacturers of America v. Walsh,
123 S.Ct.1855, 155 L.Ed. 2d 889 (2003) (hereafter "Pharma") also does not
support a claim that states have carte blanche discretion to adjust the Medicaid
program in any way for any purpose whatever. In that case, Maine*s requirement
of prior authorization for prescriptions of certain drugs was permissible,
tentatively, because it was based on a health related purpose, protecting the
health of Maine*s uninsured residents. Pharma also is inapplicable to this case
because Congress had "effectively ratified" the practice of including prior
authorization plans in state plans. 123 S. Ct. at 1861. Also, Maine*s
programmatic changes involved an optional service, prescription drugs, not the
mandatory services at issue here. Most in contrast with this case, the Supreme
Court did not view the record as permitting a conclusion that "any patient*s
medical needs would be adversely affected" by Maine*s programmatic changes, 123
S. Ct. at 1870. The Court noted the district court*s assumption that Maine*s
program would "not deny a single Medicaid recipient access to the safest and
most efficacious prescription drug therapy indicated for their individual
medical circumstances." Id. at 1869.
Even the quote from Pharma, reproduced at pages 3 and 4 of Defendants*
Memorandum, far from suggesting carte blanche state discretion, bristles with
requirements protecting Medicaid beneficiaries. In Alexander v. Choate, 469 U.S.
287 (1985), the Court noted that the Medicaid Act "gives the States substantial
discretion to choose the proper mix of amount, scope, and duration limitation on
coverage, as long as care and services are provided in *the best interest of the
recipients.*" 469 U.S. at 303. Tennessee*s change in the number of annual days
of inpatient hospital care for Medicaid beneficiaries from 20 to 14 was upheld
because the new standard did not deny any beneficiary "meaningful access" to
mandatory hospital services. In this case, defendants are not just limiting the
number of hours or days of nursing care to be provided to eligible individuals,
but denying nursing facility care altogether to those in medical need of these
services. This is not permitted under the Medicaid Act.
In Beal v. Doe, 432 U.S. 438 (1977), Pennsylvania*s decision to refuse to
provide payment for nontherapeutic abortions was upheld because the state*s
health-related purpose, encouraging normal childbirth, provided justification.
Also, nontherapeutic abortions were an optional service, in contrast to the
mandatory nursing facility services being denied Plaintiffs in this case.
Neither those cases, nor any other authority of any kind, provide support for
Kentucky*s attempt to shrink eligibility strictly for budgetary purposes,
excluding large numbers of people from a mandatory Medicaid service which
Kentucky has already recognized they need.
B. Defendants Rely On Jurisdictional Obstacles to Bar Plaintiffs From Access To
1. Plaintiffs Are Directly Affected By The State*s Actions And Have Standing To
Bring This Action - Defendants devote several pages to argument that Plaintiffs
do not have standing to bring this action. Defendants* Memorandum at 17-19.
However, Plaintiffs plainly do have standing. Each plaintiff has a personal
stake in the outcome of this controversy. Plaintiffs* interests sought to be
protected fall within the *zone of interests* protected and regulated by the
Medicaid Act, and the established legal standards for constitutional standing
indisputably are met. Plaintiffs have properly alleged their concrete,
particularized injury, loss of HCBS and nursing facility services; that
Defendants caused their injury by adopting and implementing the regulations; and
that the relief Plaintiffs seek, an injunction preventing implementation of the
regulations, would redress or prevent their loss of mandated services under the
Medicaid Act. Thus, Plaintiffs fully satisfy the tests of both constitutional
and prudential standing. See generally, Lujan v. Defenders of Wildlife, 504 U.S.
555, 560-61 (1992); Whitmore v. Arkansas, 495 U.S. 149 (1990); Simon v. Eastern
Ky.Welfare Rights Organization, 426 U.S. 26, 41-42 (1976); Allstate Ins.Co.v.
Thrifty Rent-A-Car Systems, Inc., 249 F.3d 450, 456 (6th Cir.2001); and Coyne v.
American Tobacco Co., 183 F.3d 488, 494 (6th Cir.1999).
2. This Court Has Jurisdiction Under Section 1983 To Hear Plaintiffs* Claims
That Defendants* Actions Deprive Them Of Rights Under The Medicaid Act and the
Fourteenth Amendment to the United States Constitution - 42 U.S.C. *1983
provides a cause of action to a person who has been deprived by a state official
of "any rights, privileges, or immunities secured by the Constitution and laws"
of the United States. Plaintiffs allege that Defendants, both of whom are
Kentucky state officials, have denied them rights to which they are entitled
under the Medicaid Act and the Fourteenth Amendment. Specifically, Plaintiffs
allege that Defendants have denied them their rights under 42 U.S.C.
*1396a(a)(10), 1396a(a)(17), 1396d(a)(4) and 1396a(a)(3), which, collectively,
provide them the right to nursing facility services, reasonable eligibility
standards and the right to due process when appealing decisions.
In 1990, the Supreme Court found a provision of the federal Medicaid law
enforceable under Section 1983. Wilder v. Virginia Hosp. Ass*n, 496 U.S. 498
(1990). The since-repealed Boren Amendment required that a state Medicaid
program pay reasonable reimbursement rates. The Virginia Hospital Association
filed suit under Section 1983, alleging that the rates paid by the Virginia
Medicaid program were inadequate. The Supreme Court articulated what is now the
traditional three-part test to determine whether an enforceable right exists:
Such an inquiry turns on whether "the provision in question was intended to
benefit the putative plaintiff." [Golden State Transit Corporation v. Los
Angeles, 493 U.S.103, 106]. If so, the provision creates an enforceable right
unless it reflects merely a "congressional preference" for a certain kind of
conduct rather than a binding obligation on the governmental unit, Pennhurst
State School and Hospital v. Halderman, 451 U.S. 1, 19....., or unless the
interest the plaintiff asserts is "too vague and amorphous" such that it is
"beyond the competence of the judiciary to enforce."
496 U.S. at 509 . Applying the test, the Court found that the Boren Amendment
created a federal right and thus was enforceable under Section 1983.
As Defendants* Memorandum acknowledges, the relevant issue is whether the
statutory provisions "create enforceable rights, privileges, or immunities
within the meaning of [Section] 1983." Wright v. Roanoke Redevelopment and
Housing Authority, 479 U.S. 418, 423 (1987); see Defendants* Memorandum at 19.
But Defendants somehow reach the conclusion that the entire Medicaid Act is
unenforceable through Section 1983 because the Act, "creates no individual
rights to specific services because it only speaks in terms of what a state must
do to make itself eligible for funding." Id, at 23.
In reaching this startling conclusion, Defendants practically ignore Wilder.
They cite the case only once at the tail of a string of citations, Defendants*
Memorandum at 21, and do not discuss it at all. Instead, the emphasis is on the
Supreme Court*s decision in Gonzaga University v. Doe, 536 U.S. 273 (2002), to
which Defendants refer repeatedly. The implication seems to be that Gonzaga and
other recent Supreme Court cases have overruled Wilder. Defendants cite only one
case in support of their theory, Sabree v. Houston, 245 F.Supp.2d 653 (E.D.Pa.
2003) (appeal pending). Defendants* Memorandum at 23. While some of the district
court*s language in Sabree appears to say the Medicaid Act does not contain any
rights that may be enforced under Section 1983, the case stands alone, and even
that court recognizes that the Supreme Court found a provision of the Medicaid
Act enforceable in Wilder. Id. at 657.
Gonzaga cited Wilder with approval, 536 U.S. at 278, and other courts have
recognized that Gonzaga did not undermine Wilder. In Ass*n of Residential
Resources in Minnesota (ARRM) v. Minnesota Commissioner of Human Services, 2003
WL 22037719 (D.Minn. Aug. 23, 2003) (Exhibit D) (hereafter, "ARRM"), a provider
association sued under Section 1983, relying on two separate provisions of the
Medicaid Act. First , the provider claimed denial of rights in 42 U.S.C.
*1396n(c)(2)(A), requiring state assurance that "necessary safeguards (including
adequate standards for provider participation) have been taken to protect the
health and welfare of individuals provided services under the [home and
community based] waiver......"). The district court cited the Sixth Circuit*s
opinion in Wood v. Tompkins, 33 F.3d 600 (6th Cir, 1994), in finding that the
provision created an enforceable right for Medicaid recipients. "Defendants
challenge the vitality of Woods given the Supreme Court*s decision in Gonzaga.
Gonzaga, however, did not explicitly overrule Woods, and the Court finds Woods
persuasive here." 2003 WL 22037719 at *6. However, the district court, citing
Gonzaga, found that the provision only "unambiguously" intended to benefit
Medicaid recipients, not providers. Therefore ARRM did not have an enforceable
right in 42 U.S.C. *1396n(c)(2)(A) Id. at *6.
The court reached a different conclusion on ARRM*s claim that it was denied
rights under 42 U.S.C. *1396a(a)(30), the Medicaid Act*s "equal access
provision,"requiring that provider payments be "consistent with efficiency,
economy, and quality of care and are sufficient to enlist enough providers so
that care and services are available." The district court cited the Eighth
Circuit*s holding in Arkansas Medical Society v. Reynolds, 6 F.3d 519 (8th Cir.
1993), that the provision created an enforceable right for providers. The court
continued, "Defendants question the continued vitality of Arkansas Medical
Soc*y, and urge that the equal access provision does not create a private right
of action for [p]laintiffs under the holding of Gonzaga University. Gonzaga,
however, did not overrule Arkansas Medical Soc*y. Nor did it overrule the case
on which Arkansas Medical relied*Wilder v. Virginia Hosp. Ass*n." 2003 WL
22037719 at *7.
Similarly, the district court in Missouri Child Care Ass*n v. Martin, 241
F.Supp.2d 1032 (W.D.Mo.2003) refused to read Gonzaga as overruling any part of
Wilder. The court in Missouri Child Care Ass*n found a provision of the federal
Child Welfare Act, 42 U.S.C. **670, et seq, enforceable by child care providers
under Section 1983 using the reasoning of Wilder. The court said:
In Gonzaga, the U.S. Supreme Court did not overrule Wilder. Without
criticism, it stated that in Wilder, it had found standing to sue under Section
1983 "to enforce a reimbursement provision of the Medicaid Act, on the
ground that the provision....in Wilder explicitly conferred specific monetary
entitlements upon plaintiffs." Gonzaga, 122 S.Ct. at 2774. The Supreme
Court in Gonzaga then pointed out that in Suter and Blessing the Court
had refused to infer enforceable rights under the spending clause, but may
have put a misleading emphasis on benefits instead of focusing on Congress*
intent to permit individual suits to enforce spending legislation. If the
Supreme Court had intended to overrule Wilder, one would expect the criticisms
or clarification to be directed at Wilder and not Blessing
Id., at 1040-41 (emphasis added). See also Bryson v. Shumway, 308 F.3d 79, 88
Defendants stress that the "Supreme Court has only twice found spending
legislation to confer individual enforceable rights," Memorandum at 21 (emphasis
in original). But they do not address the fact that one of those was Wilder,
which upheld judicial enforcement of the Medicaid statute. In addition to
Gonzaga, Defendants cite Suter v. Artist M., 503 U.S. 347 (1992), and Blessing
v. Freestone. 520 U.S. 329 (1997), perhaps intending to suggest that those cases
have somehow overruled Wilder.
But those cases have not overruled or eroded Wilder. In Suter, the Court
reaffirmed Wilder, but in a way that some construed to prevent Section 1983
actions, where the statute is based on a state plan, as is the Medicaid statute.
Congress specifically overruled Suter in that respect, saying in a 1994 law
which remains in effect today:
In an action brought to enforce a provision of the Social Security Act, such
provision is not to be deemed unenforceable because of its inclusion in a
section of the Act requiring a State plan or specifying the required contents of
a State plan. This section is not intended to limit or expand the grounds for
determining the availability of private actions to enforce State plan
requirements other than by overturning any such grounds applied in Suter v.
Artist M., 112 S.Ct. 1360 (1992), but not applied in prior Supreme Court
decisions respecting such enforceability....
42 U.S.C. *1320a-2 (emphasis added). Blessing also reaffirmed Wilder and
repeated the three part test. Indeed, more recent cases refer to this as the
The Sixth Circuit Court of Appeals has concluded that neither Suter nor Blessing
limited an individual*s right to enforce provisions of the Medicaid Act by
virtue of its nature as a spending clause program. In Wood v. Tompkins, 33 F.3d
600 (6th Cir.1994), the court found the Medicaid home and community-based waiver
program provisions enforceable under Section 1983 and said, "[T]he Suter
majority expressly relied on parts of Wilder, carefully distinguished other
parts, did not overrule the earlier case, and is entirely consistent with
it....Defendant contends that Suter significantly changed the law.....[T]his
contention is without merit." 33 F.2d at 606. See also Westside Mothers v.
Haveman, 330 F.3d 758 (6th Cir.2002) (Medicaid early and periodic screening,
diagnosis and treatment ("EPSDT") services enforceable under Section 1983); and
Gean v. Hattaway, 330 F.3d 758 (6th Cir.2003) (Medicaid statutory fair hearing
provision and implementing regulations enforceable under Section 1983).7
Therefore, in determining whether Plaintiffs have enforceable rights within 42
U.S.C. *1396a(a)(10), 1396a(a)(17),1396d(a)(4) and 1396a(a)(3), the question
continues to turn on whether the provisions: 1) unambiguously confer rights
intended to benefit the Plaintiffs; 2) create a binding obligation on the state
rather than merely reflecting a congressional preference for a certain kind of
conduct; and 3) are sufficiently clear and focused as to be within the
competence of the judiciary to enforce.
a. Plaintiffs* First Claim Is Based Upon Enforceable Rights Created By 42 U.S.C.
**1396a(a)(10)(A)(i) and 1396d(a)(4) - Plaintiffs* first claim is that
Defendants have denied them "nursing facility services" in violation of 42
U.S.C. **1396a(a)(10)(A)(i) and 1396d(a)(4). One meeting the age and financial
requirements of 42 U.S.C. *1396a(a)(10)(A) must be provided the Medicaid
services enumerated in *1396d(a)(1)-(5), (17) and (21), which includes nursing
facility services (*1396d(a)(4)). Plaintiffs contend that these are rights
enforceable under *1983, and that Kentucky*s actions in redefining eligibility
for such mandatory services in a way designed to exclude, for budgetary reasons,
persons whom Kentucky already has recognized need nursing facility services is a
per se violation of Plaintiffs* rights under those provisions.
Just one year ago, the Sixth Circuit found that Medicaid beneficiaries had
rights enforceable under *1983 in virtually identical provisions of the Medicaid
Act * 42 U.S.C. *1396a(a)(10) and 1396d(a)(4). Westside Mothers v. Haveman, 289
F.3d 852 (6th Cir. 2002). In Westside Mothers, plaintiffs were children claiming
that Michigan was illegally denying them early and periodic, screening,
diagnostic and testing (EPSDT) services. Plaintiffs claimed that individuals
meeting the age and financial requirements of one of the categorical populations
in 42 U.S.C. *1396a(a)(10) must be provided the mandatory services found in
*1396d(a)(1)-(5), (17) and (21). Specifically, the plaintiffs claimed that they
were being denied services found in *1396d(a)(4), which includes, "(A) nursing
facility services.....for individuals 21 years or older; (B) early and periodic
screening, diagnostic, and treatment services.....for individuals eligible under
the plan and are under the age of 21; (C) family planning services and supplies
furnished....to individuals of child-bearing age....who are eligible under the
State plan and who desire such services and supplies." 289 F.3d at 856, 863.
Under the above provisions, the Sixth Circuit found rights enforceable under
*1983. "First, the provisions were clearly intended to benefit the putative
plaintiffs, children who are eligible for the screening and treatment services."
Id. at 863. The court focused on *1396a(a)(10)(A), which declares that each
state "must....provide (A) for making medical assistance available, including at
least the care and services listed in paragraphs (1) through (5), (17) and (21)
of section 1396d(a) of this title, to * (i) all individuals [who meet the age
and financial requirements of a categorical population]."
Next, it found that the relevant provisions set a binding obligation on the
state. "They are couched in mandatory rather than precatory language, stating
that Medicaid services *shall be furnished* to eligible children." Id. at 863.
The court referred to *1396a(a)(8) of the Medicaid statute, which declares that
participating states "must....provide that all individuals wishing to make
application for medical assistance under the plan shall have opportunity to do
so, and that such assistance shall be furnished with reasonable promptness to
all individuals." (emphasis provided). Lastly, the court found that the
provisions were not too vague or amorphous to be enforced by a court. To reach
this conclusion, the court pointed out that EPSDT services were specifically
defined in *1396d(r). It also concluded that Congress did not foreclose
enforcement in the language of the Medicaid statute, nor did it establish "any
remedial scheme sufficiently comprehensive to supplant *1983." Id.
The very same provisions that were at issue in Westside Mothers are at issue in
the case at hand. Plaintiffs claim that they meet the age and financial
requirements of one of the categorical populations in 42 U.S.C.
*1396a(a)(10)(A), but are being denied Medicaid coverage for nursing facility
services, a mandatory service contained in *1396d(a)(1)-(5), (17) and (21). In
fact, the service Plaintiffs are being denied are contained in *1396d(a)(4), the
same provision in *1396d that contains the EPSDT provision. There is nothing to
distinguish the provisions at issue in Westside Mothers with the provisions the
Plaintiffs are seeking in the case at hand.
Clearly, plaintiffs are the intended beneficiaries of 42 U.S.C. *1396a(a)(10) *
they have met the age and financial requirements of the section, and the state
therefore "must provide (A) for making medical assistance available, including
at least the care and services listed in paragraphs 1-5, 17 and 21 of section
1396d(a)" to them. And as directed by the Sixth Circuit in Westside Mothers, the
determination of whether the statute creates a binding obligation for the state
of Kentucky entails a simple reference to 42 U.S.C. *1396a(a)(8), which directs
that eligible individuals "shall be furnished" medical assistance, which the
statute defines as including, at a minimum, nursing facility services. Third,
the provisions are not so vague and amorphous as to defeat judicial enforcement.
Just as the EPSDT services were defined in *1396d (*1396d(r)), so too are
nursing facility services (*1396d(f)).
It also cannot be said that Congress prohibited enforcement within the statute,
or that there is any "comprehensive enforcement mechanism" within the statute
such that private enforcement is barred. Nothing in the Medicaid statute has
changed since Westside Mothers. See also Wood v. Tompkins, 33 F.3d at 612 ("In
Wilder, the Supreme Court held that the administrative remedies set forth in the
Medicaid Act for violations under the Act *cannot be considered sufficiently
comprehensive to demonstrate a congressional intent to withdraw a private
remedy. 496 U.S. at 522, 110 S.Ct. At 2524. This holding is dispositive in the
present case, for the remedies described in Wilder are the very same remedies
set forth in the Medicaid Act for the alleged violations at issue in the present
case. They are no more comprehensive now than they were in Wilder").
Furthermore, the provisions at issue here are easily distinguishable from the
provisions reviewed by the Supreme Court in Gonzaga. In analyzing FERPA*s
nondisclosure provision, the Court noted that the provision spoke only "in terms
of institutional policy and practice, not individual instances of disclosure."
Gonzaga, 536 U.S. at 288. "Therefore, as in Blessing, they have an *aggregate*
focus, 520 U.S. at 343, 117 S.Ct. 1353, they are not concerned with *whether the
needs of any particular person have been satisfied." Id. (emphasis provided).
The Medicaid Act, however, in mandating that "medical assistance....shall be
furnished....to eligible individuals," *1396a(a)(8), and that such medical
assistance is specifically defined to include a select group of services, each
of which is carefully defined (*1396d), cannot possibly be said to be
unconcerned with "the needs of any particular person." Therefore, 42 U.S.C.
**1396a(a)(10) and 1396d(a)(4) contain rights that Plaintiffs may enforce under
b. Plaintiffs Second Claim Is Based On Enforceable Rights Established By 42
U.S.C. *1396a(a)(17) of The Medicaid Act - Plaintiffs* second claim is that
Defendants are now enforcing unreasonable standards for determining eligibility
for nursing facility services in violation of 42 U.S.C. *1396a(a)(17). This
provision mandates that "a state plan for medical assistance
must.....(17).....include reasonable standards (which shall be comparable for
all groups.......) for determining eligibility for and the extent of medical
assistance under the plan.....which are consistent with the objectives of [the
Medicaid Act.]" This provision also provides a right that is enforceable under
A federal district court in the Sixth Circuit found this statutory provision
enforceable under *1983, and the Sixth Circuit Court of Appeals affirmed the
district court*s decision. Markva v. Haveman, 168 F.Supp.2d 695 (E.D.Mich.2001),
aff*d, 317 F.3d 547 (6th Cir.2002). In Markva, the plaintiffs were grandparent
caretakers who challenged Michigan*s Medicaid eligibility evaluation policy of
only allowing parents to deduct from their income certain expenses they incurred
in caring for their children. Grandparents seeking Medicaid eligibility who were
the caretakers of their grandchildren were prohibited from making the same
deductions. The plaintiffs claimed, among other things, that the eligibility
policy violated *1396a(a)(17). 168 F.Supp.2d at 699, 707.
The state claimed that the plaintiffs had no enforceable right to prosecute
*1396a(a)(17) under *1983. The district court disagreed. "[T]he statute by its
terms is intended to provide standards upon which individual applicants can rely
in the determination of their benefit eligibility by state officials. It is
intended to benefit the plaintiffs, and it is a binding obligation on the state
agency." Id., at 711.
This provision too * *1396a(a)(17) * is easily distinguishable from the
provision at issue in Gonzaga. This provision directs that a state "must"
include reasonable standards which "shall" be comparable for all eligible
individuals and which are "consistent with the objectives" of the Medicaid Act.
Section 1396a(a)(17) clearly speaks in terms "of the benefitted class," Gonzaga,
536 U.S. at 287, citing Cannon v. University of Chicago, 441 U.S. 677, 690-93
(1979), as opposed to the nondisclosure provisions of FERPA, which "speak only
to the Secretary of Education," and are "two steps removed from the interests of
individual students." 536 U.S. at 287.
Furthermore, the Court declared in Gonzaga that "[o]ur conclusion that FERPA*s
nondisclosure provisions fail to confer enforceable rights is buttressed by the
mechanism that Congress chose to provide for enforcing those
provisions.....These administrative procedures squarely distinguish this case
from Wright and Wilder, where an aggrieved individual lacked any federal review
mechanism...." Id. at 289-90 (emphasis added). And as the Sixth Circuit said,
"[T]he remedies described in Wilder are the very same remedies set forth in the
Medicaid Act for the alleged violations at issue in the present case. They are
no more comprehensive now than they were in Wilder." Wood v. Tompkins, 33 F.3d
Therefore, applying the proper Section 1983 analysis to all three provisions
cited by Plaintiffs reveals that all three contain enforceable rights, and the
courts that have had the opportunity to review these provisions have concluded
as much. All three are clearly intended to benefit the plaintiffs, speak in
mandatory terms and are not vague or amorphous. Binding precedent establishes
that the enforcement mechanism in the Medicaid Act is not so comprehensive as to
foreclose private enforcement under Section 1983, and the provisions cannot be
considered less than an unambiguously conferred right. Therefore, Plaintiffs
must be allowed to proceed with their Medicaid claims.
c. Plaintiffs* Fourth and Fifth Claims Are Based Upon Enforceable Rights
Established by 42 U.S.C. *1396a(a)(3) and the Fourteenth Amendment - Plaintiffs
allege that Defendants have denied them due process of law in violation of 42
U.S.C. *1396a(a)(3), its implementing regulations, 42 C.F.R. *431.200 et seq.,
and their constitutional due process rights under the Fourteenth Amendment to
the United States Constitution8. Under the Medicaid Act, participating states
must provide the opportunity for a fair hearing if Medicaid benefits are denied.
42 U.S.C. *1396a(a)(3). The regulations, 42 C.F.R. *431.205(d), explicitly
require that the Medicaid state hearing system meet the constitutional due
process standards set forth in Goldberg v. Kelly, 397 U.S. 254 (1970).
Numerous cases have found that the fair hearing requirements under the Medicaid
Act, as well as the procedural due process protections under the Fourteenth
Amendment, provide rights that are enforceable under 42 U.S.C. *1983. See
Moffitt v. Austin , 600 F.Supp. 295 (W.D. Ky. 1984) (Claim allowed under *1983
for violations of procedural due process under the Medicaid Act, its
regulations and the Fourteenth Amendment.,9 where state failed to provide
Medicaid recipients in intermediate care facilities with benefits pending
terminations and with specific reasons for terminations); Daniels v. Wadley, 925
F.Supp. 1305 (M.D. Tenn. 1996), aff*d in part and modified in part, 1998 U.S.
App. LEXIS 7973 (6th Circuit, April 22, 1998)10 (Plaintiffs permitted to proceed
in *1983 action to contest provisions of a Medicaid managed care program that
violated *1396a(a)(3) and the Fourteenth Amendment by failing to: a) maintain
enrollee*s benefits pending resolution of a coverage dispute; b) resolve claim
disputes within ninety days; and c) hold predeprivation hearing with an
impartial hearing officer).
Since the United States Supreme Court*s most recent rulings on the *1983 cause
of action, Blessing v. Freestone, 520 U.S. 329 (1997) and Gonzaga University v.
Doe, 536 U.S. 273 (2002), the Sixth Circuit has again found that a Medicaid
beneficiary may bring a *1983 claim for alleged violations of due process under
*1396a(a)(3) the Medicaid Act. Gean v. Hattaway, 2003 U.S. App. LEXIS 11291;
2003 Fed. App. 0183P (6th Cir. June 6, 2003). Section 1396a(a)(3) meets the
Gonzaga test because that section is phrased in terms of fair hearing rights for
the person(s) benefitted - Medicaid beneficiaries - demonstrating that Congress
unambiguously intended to create a federal right for such individuals. Gonzaga,
536 U.S. at 283-84.
Plaintiffs may pursue their due process claims under *1983 because *1396a(a)(3)
of the Medicaid Act and the Fourteenth Amendment are intended to establish
enforceable federal rights and have been held to do so. Both provisions are
clearly intended to benefit Medicaid recipients, are phrased in mandatory terms
and are not vague or amorphous. The above cases clearly demonstrate that
Plaintiffs may bring a *1983 claim to assert violations, under color of state
law, of their procedural due process rights under the Medicaid Act as well as
under the Fourteenth Amendment. 3. The Court Has Jurisdiction Under 28 U.S.C.
Section 1331 to Consider and Rule Upon Plaintiffs* Supremacy Clause Claim - Even
if Defendants were correct in their mistaken contention that Plaintiffs have no
rights under the Medicaid statute which may be asserted under 42 U.S.C. *1983,
this would not alter the fact that the court has jurisdiction over Plaintiffs*
Supremacy Clause claim under 28 U.S.C. *1331.11 Plaintiffs seek injunctive and
declaratory relief from enforcement of the Kentucky emergency regulations on the
grounds that the regulations are in conflict with, and therefore are preempted
by the Federal Medicaid Act. Complaint, Third Claim, ** 112-114. This is
sufficient to vest this court with jurisdiction over Plaintiffs* preemption
claims without regard to whether the Medicaid statute directly vests Plaintiffs
with a cause of action. In another case involving the Medicaid Act, the Second
Circuit Court of Appeals said:
We know of no governing authority to the effect that the federal statutory
provision which allegedly preempts enforcement of local legislation by conflict
must confer a right on the party that argues in favor of preemption. On the
contrary, a state or territorial law can be unenforceable as preempted by
federal law even when the federal law secures no individual substantive rights
for the party arguing preemption. Id. Thus, regardless of whether the Medicaid
statute's relevant provisions were designed to benefit PhRMA, PhRMA can invoke
the statute's preemptive force.
Pharmaceutical Research and Manufacturers of America v. Walsh, 249 F. 3d 66, 73
2001), rev*d on other grounds, __U.S__, 123 S. Ct. 1855, 155 L.Ed. 2d 889
Preemption derives from the Supremacy Clause of the United States Constitution,
which provides that the laws of the United States Constitution "shall be the
supreme Law of the Land...any Thing in the Constitution or Laws of any State to
the Contrary notwithstanding." U.S. Const. art. VI, cl. 2. The Supreme Court has
held that a claim that a state statute or regulation is preempted by federal law
is a justiciable cause of action which gives this federal court both
jurisdiction and the power to resolve preemption claims:
It is beyond dispute that federal courts have jurisdiction over suits to enjoin
state officials from interfering with federal rights. See Ex Parte Young, 209
U.S. 123, 160-62, 28 S. Ct. 441, 444-455, 52 L. Ed. 714 (1908). A plaintiff who
seeks injunctive relief from state regulation, on the ground that such
regulation is preempted by a federal statute which, by virtue of the Supremacy
Clause of the Constitution, must prevail, thus presents a federal question which
the federal courts have jurisdiction under 28 U.S.C. * 1331 to resolve. This
Court, of course, frequently has resolved pre-emption disputes in a similar
Shaw v. Delta Airlines, 463 U.S. 85, 96 n.14 (1983)).
In Verizon Md. Inc. v. Pub. Serv. Comm*n of Md., 535 U.S. 635 (2002), the
Supreme Court last year affirmed this rule, holding that jurisdiction was
supplied by 28 U.S.C. *1331 to review Verizon*s claim that a decision of a state
utility commission was preempted by the Telecommunications Act. The Court said:
We have no doubt that federal courts have jurisdiction under *1331 to entertain
such a suit. Verizon seeks relief from the Commission*s order "on the ground
that such regulation is pre-empted by a federal statute which, by virtue of the
Supremacy Clause of the Constitution, must prevail," and its claim "thus
presents a federal question which the federal courts have jurisdiction under 28
U.S.C. *1331 to resolve." Shaw v. Delta Air Lines, Inc. 463 U.S. 85, 96 N.14
532 U.S. at 642. This jurisdiction is not affected by the absence of a private
cause of action stated in the statute. In Verizon, the Supreme Court said:
The Commission contends that since the Act does not create a private cause of
action to challenge the Commission*s order, there is no jurisdiction to
entertain such a suit. We need express no opinion on the premise of this
argument. "It is firmly established in our cases that the absence of a valid (as
opposed to arguable) cause of action does not implicate subject-matter
jurisdiction, i.e., the court*s statutory or constitutional power to adjudicate
the case." Steel Co. v. Citizens for Better Environment, 523 U.S. 83, 89
(1998)). As we have said, "the district court has jurisdiction if *the right of
the petitioners to recover under their complaint will be sustained if the
Constitution and laws of the United States are given one construction and will
be defeated if they are given another,* unless the claim *clearly appears to be
immaterial and made solely for the purpose of obtaining jurisdiction or where
such a claim is wholly insubstantial and frivolous.* " Ibid.
535 U.S. at 642-43.(citations omitted). Thus, the Court upheld preemption
jurisdiction without finding it necessary to determine whether Verizon had a
private right of action under the Telecommunications Act providing for a cause
of action . Id.
In Lawrence County v. Lead-Deadwood Sch. Dist. No. 1, 469 U.S. 256, 259 n. 6
(1985), the Court stated:
The county originally sought a declaratory judgment that the state statute
conflicted with the federal Act and was therefore invalid under the Supremacy
Clause. The Federal District Court entered a declaratory judgment in favor of
the county. Lawrence County v. South Dakota, 513 F .Supp. 1040 (SD 1981). The
Court of Appeals for the Eighth Circuit vacated that judgment, however,
concluding that the county's invocation of the Supremacy Clause did not convert
the action into one arising under federal law for purposes of federal
jurisdiction under 28 U.S.C. * 1331. 668 F.2d 27 (1982). This ruling was
erroneous. In Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 103 S.Ct. 2890, 77
L.Ed.2d 490 (1983), we granted declaratory relief to a party challenging a state
statute on pre-emption grounds, reaffirming the general rule that "[a] plaintiff
who seeks injunctive relief from state regulation, on the ground that such
regulation is pre-empted by a federal statute which, by virtue of the Supremacy
Clause of the Constitution, must prevail, thus presents a federal question which
the federal courts have jurisdiction under 28 U.S.C. *1331 to resolve." Id., at
96, n. 14, 103 S.Ct., at 2899, n. 14.
See also Dalton v. Little Rock Family Planning Services, 516 U.S. 474 (1996)
(enjoining state statute conflicting with the Medicaid statute).
The Sixth Circuit Court of Appeals also has recognized that federal courts have
jurisdiction under 28 U.S.C. *1331 over suits to enjoin state officials from
enforcing state laws which conflict with federal law. Bunning v. Kentucky, 42
F.3d 1008, 1011 n.3 (6th Cir. 1994); also see Mich.Bell Tel.Co. v. MFS Intelenet
of Mich.Inc., 339 F.3d 428 (6th Cir. 2003); and GTE North, Inc. v. Strand, 209
F. 3d 909 (6th Cir. 2000). In Bunning, plaintiff sued to enjoin the operation of
the Kentucky Public Financing Campaign Act on the ground that it was in conflict
with the Federal Election Campaign Act and hence preempted by the Supremacy
Clause. The District Court entered judgment enjoining the Kentucky statute and
the Sixth Circuit affirmed. The court did not find a private right of action,
but nonetheless said:
The district court's subject matter jurisdiction to entertain Congressman
Bunning's preemption challenge to the Registry's investigation is clear.
Lawrence County v. Lead-Deadwood Sch. Dist. No. 1, 469 U.S. 256, 259 n. 6, 105
S.Ct. 695, 697 n. 6, 83 L.Ed.2d 635 (1985); Shaw v. Delta Air Lines, Inc., 463
U.S. 85, 96 n. 14, 103 S.Ct. 2890, 2899 n. 14, 77 L.Ed.2d 490 (1983) [FN3];
Alltel Tennessee, Inc. v. Tennessee Pub. Serv. Comm'n, 913 F.2d 305 (6th
Other courts of appeals too have found that 28 U.S.C. *1331 provides
jurisdiction for courts to adjudicate the merits of preemption claims without
finding a private cause of action under the relevant federal statute. Shaw Self-
Ins. Inst. of Am.v. Korioth, 993 F.2d 479, 483 (5th Cir. 1993) and Gillis v.
Louisiana, 294 F.3d 755, 760 (5th Cir. 2002)). See Ill. Ass*n of Mortgage
Brokers v. Office of Banks and Real Estate, 308 F.3d 762, 765 (7th Cir. 2002)
("It is not necessary for us to determine whether" the federal law at issue by
"its own force create[s] rights enforceable under *1983" because "federal
jurisdiction is supplied . . . when the plaintiff seeks declaratory relief
against regulation by a state agency and contends that the agency has violated
federal law by adopting particular regulations.") (citations omitted); St.
Thomas - St. John Hotel & Tourism Ass*n v. Gov*t of the U.S. V.I., 218 F.3d 232,
241 (3d Cir. 2000) ("We know of no governing authority to the effect that the
federal statutory provision which allegedly preempts enforcement of local
legislation by conflict must confer a right on the party that argues in favor of
preemption. On the contrary, a state or territorial law can be unenforceable as
preempted by federal law even when the federal law secures no individual
substantive rights for the party arguing preemption.") (citations omitted); Bud
Antle, Inc. v. Barbosa, 45 F.3d 1261, 1269 (9th Cir. 1995) ("Even in the absence
of an explicit statutory provision establishing a cause of action, a private
party may ordinarily seek declaratory and injunctive relief against state action
on the basis of federal preemption.") (citation omitted).
The Second Circuit in Burgio and Campofelice, Inc. v. NYS Dep*t of Labor, 107
F.3d 1000 (2d Cir. 1997), held that "[a]lthough there is some confusion in the
cases, we agree with those commentators who have concluded that *[t]he best
explanation of Ex parte Young and its progeny is that the Supremacy Clause
creates an implied right of action for injunctive relief against state officers
who are threatening to violate the federal Constitution or laws.* " (citing 13B
C. Wright, A. Miller & E. Cooper, Federal Practice & Procedure: Jurisdiction 2d
* 3566, at 102 (1984); see also Guaranty Nat'l Ins. Co. v. Gates, 916 F.2d 508,
512 (9th Cir.1990) (quoting same). But see Legal Envtl. Assistance Found., Inc.
v. Pegues, 904 F.2d 640, 643 (11th Cir.1990)).
The decision in Planned Parenthood of Central Texas v. Sanchez, 280 F. Supp. 590
(W.D. Tex. Aug. 2003)(appeal pending) is directly in point. Although finding
that providers, such as plaintiffs in that case, have no Section 1983 rights
under the Medicaid Act sections sought to be enforced, the court nonetheless
enjoined the state statute as conflicting with the Medicaid statute under the
Supremacy Clause/preemption doctrine discussed above.
This case falls squarely within the holding of Verizon and other cases cited
here. Plaintiffs contend that Kentucky*s emergency regulations are contrary to
the Medicaid statute and are therefore violative of the Supremacy Clause. There
is no contention by Defendants, nor could there be, that Plaintiffs* claims are
"immaterial" or "wholly insubstantial and frivolous." Accordingly, the claims
asserted by Plaintiffs present federal questions which come within this Court*s
jurisdiction under 28 U.S.C. *1331 to enforce claims of preemption under the
C. Defendant*s Motions to Dismiss or For Summary Judgment on Plaintiff*s Due
Process Claims Must Also Be Denied
The Complaint (Fourth and Fifth Claim) clearly sets forth violations of the
procedural due process provisions of the federal Medicaid Act and regulations,
as well as the Kentucky Medicaid regulations and the 14th Amendment to the
United States Constitution. Complaint, ** 53-56, 59, 64, 68, 73, 78, 83, 88-89,
93-94, 99 and 102. These allegations are admitted for the purposes of the motion
to dismiss. As to summary judgment, defendants have not submitted any affidavits
or other evidence to demonstrate that there are no material facts at issue as
required by Rule 56. By contrast, the Declarations that Plaintiffs have attached
as Exhibits further outline these procedural violations. See Exhibit F -
Declarations of Vada Jewell Kerr ** 21-26; Exhibit G - Gena Bell ** 11; Exhibit
H - Thelma Garmon * 17; Exhibit I - Patricia Moore ** 14, 15; Exhibit J - Lydia
Allgood ** 7, 8; Exhibit K - Janet Hannah ** 4, 5, 7; Exhibit N - Ovaleria
Dubree ** 10;
In fact, Defendants* own conduct concedes that the notices were inadequate. When
faced with due process objections to the notices from other class members who
were fortunate enough to obtain representation, defendants issued new notices,12
but only when ordered to do so by the state*s own administrative law judges.
Complaint ** 59, 78; Exhibit G - Gena Bell * 11; Exhibit I - Patricia Moore *15.
In addition, most of the named Plaintiffs who had not already had their
defective notices vacated received revised notices after the complaint was
filed. See Exhibit O - Amended Notice to Hazel Barnett; Exhibit P - Amended
Notice to Tommy Hill; Exhibit J - Lydia Allgood * 8; Exhibit K - Janet Hannah *
7. These revised notices did nothing to help the thousands of Medicaid
applicants and beneficiaries who received only the original notice and who may
have surrendered their right to a hearing and continued benefits pending the
hearing decision because of the confusing notices described below.
Section 42 U.S.C..*1396a(a)(3) requires states to provide a fair hearing
whenever a Medicaid service is denied. The implementing regulations, 42 C.F.R.
*431.200 et seq., say:
A notice required under *431.206(c)(2), (c)(3), or(c)(4) of this subpart must
contain--(a) A statement of what action the State, skilled nursing facility, or
nursing facility intends to take;(b) The reasons for the intended action;(c) The
specific regulations that support, or the change in Federal or State law that
requires, the action;(d) An explanation of* (1) The individual's right to
request an evidentiary hearing if one is available, or a State agency hearing;
(2) In cases of an action based on a change in law, the circumstances under
which a hearing will be granted; and(e) An explanation of the circumstances
under which Medicaid is continued if a hearing is requested.
42 C.F.R. *431.210. See comparable Kentucky Medicaid regulations at 907 KAR
The notices sent to Plaintiffs and other class members, advising them that they
were no longer eligible for nursing home or HCBS under the new level of care
criteria were deficient in major respects. Such failures are all the more
critical when the class of recipients is by definition elderly and disabled. See
Vargas v. Trainor, 508 F.2d 485, 489-90 (7th Cir. 1974).
1. Inadequate Statement of Reasons - All of the Plaintiffs originally received
adverse notices stating:
Healthcare Review Corporation, having reviewed your medical case with your
physician or having made an effort to contact your physician, has determined
that the case as presented, does not meet payor criteria for: continued stay in
See Exhibits A through J to the Complaint13. The notices to five Plaintiffs
added, "*documentation was insufficient to support level of care for continued
stay in a nursing facility." See Exhibits A through E to the Complaint. The
notices sent to five other Plaintiffs added: "*documentation does not support
medical necessity/appropriateness for continued stay in a nursing facility level
of care as outlined in 907 KAR 1:022." See Exhibits F through J to the
These notices fail to give the Plaintiffs any idea of the specific reason why
they do not meet the level of care criteria, as required by 42 C.F.R.
*431.210(b) and 907 KAR 1:563 Sec. 2(3)(b). This information is essential to
allow Plaintiffs to prepare for a hearing to contest the denial of long-term
care benefits under Medicaid. Moffitt v. Austin, 600 F. Supp. 295, 297-98 (W.D.
Ky. 1984) is directly in point. It held that notices that state "further stay at
the intermediate care facility not necessary" and "after due consideration of
the medical data, ... the adverse decision should be upheld" are too generic and
the boiler-plate reasons are inadequate to allow the individuals to prepare a
defense and hence violate the due process regulations.
None of the notices sent to named plaintiffs or class members gave a reason that
identified which of the many pages of criteria had not been met. The notice does
not enable a Medicaid beneficiary to understand what information would have to
be produced at an administrative hearing.
2. No Citation or Erroneous Citation to Authority Supporting or Requiring the
Action - Defendants* notices were required to contain "the specific regulations
supporting the action". 42 C.F.R. * 431.210(c); 907 KAR 1:563 Sec. 2(3)(c). This
requirement, along with the other regulatory notice requirements, "is necessary
to protect claimants against proposed agency action *resting on . . .
misapplication of rules [or] policies [to] the facts of particular cases.*"
Ortiz v. Eichler, 794 F.2d 889, 893 (3rd Cir.1986), quoting Goldberg v. Kelly,
397 U.S. at 268. See also Rodriguez v. Chen, 985 F. Supp. 1189, 1195 (D.Az.1996)
(citation to the law relied on must be accurate and tailored to the individual
None of the original adverse level of care notices sent to Plaintiffs cited to
an accurate, specific regulation that supported the decisions. The notices to
five Plaintiffs failed to cite any regulation. Complaint, Exhibits A through E.
Notice to another Plaintiff incorrectly cited to 907 KAR 1:022, which had been
replaced by 907 KAR 1:022E. Complaint, Exhibit G.
Sections 907 KAR 1:022 and 1:022E are both very long, complicated regulations .
None of the notices even made an attempt to identify what section or subsection
of the regulation was at issue. The emergency regulation, 1.022E, for example,
is at least twelve pages long. It is unreasonable to expect beneficiaries
receiving this notice to locate the regulations, navigate through dense text,
and conclude which section is the applicable provision.
3. Failure to Explain When Benefits Will Be Continued Pending Appeal - Adverse
notices must provide an explanation of the circumstances under which Medicaid
will be continued if a hearing is requested. 42 C.F.R. *431.210(e); 907 KAR
1:563 Sec. 5. The original adverse notices sent to Plaintiffs explained it this
If the request for an administrative hearing is postmarked or received within
ten (10) calendar days of the adverse advance notice date of the denial
specified on the notice for denial of level of care, Medicaid vendor payments
shall continue until the date the hearing decision is rendered.
See Exhibits A through J of the Complaint. This language is confusing in many
ways. First, it is unclear whether the request for appeal has to be mailed or be
received within ten days. Also there are two dates on the notice, but no date is
identified as the adverse advance notice date.
4. Numerous and Conflicting Notices Violate Due Process - In Plaintiff Hannah*s
case, she received so many conflicting notices and was so confused that she took
no action, resulting in the loss of her HCBS and subsequently her Medicaid card.
On April 11, 2003, she received an adverse notice advising that she no longer
met the payor criteria for continued stay in a facility. See Complaint, Exhibit
D. Ten days later, on April 21, 2003, she received two notices from defendants,
one advising that she no longer qualified for Medicaid (Exhibit Q), and one
advising that she still qualified for Medicaid (Exhibit R). See Complaint ** 93-
94; Janet Hannah ** 4-5. See also Exhibit F - Vada Jewell Kerr ** 25-26;
Complaint * 60. Self-contradicting notices that create confusion on the part of
recipients about how to decide whether they are entitled to a hearing, and how
to express that decision, are notices that "unreasonably discourage the exercise
of a recipient*s established right." Ward v. Thomas, 895 F. Supp. 401, 404 (D.
5. Benefits Are Not Continued Pending Appeal - Defendants assert, without any
documentation, that individuals who have appealed an adverse level of care
decision within ten days will continue to receive benefits pending appeal, as
required by 42 C.F.R. *431.230 and 907 KAR 1:563 Sec. 5. Defendants* Memorandum
at 13. In fact, when the new regulations went into effect, many HCBS Medicaid
recipients had their services terminated even if they have appealed within ten
days. In Plaintiff Tivitt*s case, this resulted in loss of benefits for almost
two months before services resumed. See Exhibit N - Ovaleria Dubree ** 10-11. In
Plaintiff Garmon*s case, she requested a timely appeal on June 6, but had no
services at all until July 23, when she was offered sharply limited services.
See Complaint * 73; Exhibit H - Thelma Garmon. *17.
D. Plaintiffs Are Not Required to Exhaust Their Administrative Remedies
Defendants assert that this case should be dismissed because Plaintiffs have
failed to exhaust their administrative remedies. In support of this contention,
Defendants cite Crayton v. Callahan, 120 F.3d 1217 (11th Cir. 1997), a case in
which the court found that plaintiffs failed to exhaust their administrative
remedies with a federal defendant, the Social Security Administration. The
Crayton plaintiffs raised claims under the judicial review provision of the
Social Security Act, *504 of the Rehabilitation Act, 29 U.S.C. 794, and the due
process clause of the Fourteenth Amendment. Plaintiffs bring this case under 42
U.S.C. *1983 and the Supremacy Clause for alleged violations, by state actors,
of the federal Medicaid Act and the due process clause. Therefore, it is more
appropriate to consider whether exhaustion is required in *1983 cases.
In Patsy v. Board of Regents, 457 U.S. 496, 501 (1982), the Supreme Court
restated the general rule that "exhaustion is not a prerequisite to an action
under *1983," especially where plaintiffs have raised federal constitutional
issues. The Court noted that Congress* intent in enacting the Civil Rights Act
of 1871 was to protect citizens against the states and it assigned to the
federal courts the role of protecting constitutional rights. Id. At 500-03.
The Court made clear in Patsy that exhaustion of administrative remedies is only
required if Congress has specifically carved out an exception in a particular
type of case. Id. at 507 (Congressional act that requires adult prisoners to
exhaust administrative remedies indicates exceptions must be enacted). See also
Woods v. Smith, 60 F.3d 1161, 1165 (5th Cir. 1995); Wilbur v. Elton Harris, 53
F.3d 542, 545-56 (2nd Cir. 1995).
There is no specific carving out of the general exhaustion rule in the Medicaid
Act. The only administrative remedy for beneficiaries under that law is the
entitlement to a fair hearing when benefits are denied. 42 U.S.C. *1396a(a)(3).
As Plaintiffs have learned, that process cannot begin to address the type of
challenge that they have brought here. The state ALJs will not consider whether
the state*s new level of care regulations deny mandatory medical services to
Plaintiffs in violation of the Medicaid Act. They will only consider whether
Plaintiffs* medical and functional limitations meet the new criteria. Plaintiffs
have been more successful in advancing their due process arguments in fair
hearings, but it is even more clear that exhaustion is unnecessary when raising
constitutional claims. Patsy, 457 U.S. at 500. See also Rosado v. Wyman, 397
U.S. 397 (1970) (exhaustion of administrative remedies doctrine does not apply
where plaintiffs do not seek review of an administrative order, but instead are
challenging, under *1983, a state law that allegedly violates the Social
Defendants have made no serious effort to meet the FRCP 56(c) requirements They
have made no showing that there is no genuine issue of material fact or that
they are entitled to judgment as a matter of law. Plaintiffs respectfully submit
that the motion for summary judgment must be denied. This Court should also deny
Defendant*s motion to dismiss, as Plaintiffs have demonstrated in their
Complaint and in this Memorandum that they have properly asserted a cause of
action against Defendants under 42 U.S.C. *1983, under the Supremacy Clause of
the United States Constitution and under the due process clause of the
Plaintiffs respectfully request oral argument because of the complexity of the
Anne Marie Regan, Attorney at Law
Office of Kentucky Legal Services Programs, Inc.
1139 East Broadway
Louisville, KY 40204
Phone: 502-584-0349; Fax: 502-584-0349
Eric Carlson, Attorney at Law
Herbert Semmel, Attorney at Law
National Senior Citizens Law Center
3435 Wilshire Boulevard, Suite 2860
Los Angeles, CA 90010-1938
Phone: 213-639-0930, ext. 313
Edward C. King, Attorney at Law
Eugene Coffey, Attorney at Law
National Senior Citizens Law Center
1101 14th Street, N.W., Suite 400
Washington, D.C. 20005
Phone: 202-289-6976, ext. 208, 206
ATTORNEYS FOR PLAINTIFFS
CERTIFICATE OF SERVICE
I certify that a true copy of the foregoing Memorandum In Opposition to
Defendants* Motion to Dismiss or for Summary Judgment was mailed this ____ day
of December 2003 to Ann T. Hunsaker, Attorney for Defendants, Assistant Counsel,
Cabinet for Health Services, Office of General Counsel, 275 East Main Street,
5th Floor West, Frankfort, KY 40621.
_________________________________________ANNE MARIE REGAN
1The emergency regulations, 907 KAR 1:022E, have now been replaced by virtually
identical permanent regulations, 907 KAR 1:022. In all respects pertinent to the
issues before the Court, the regulations are identical. Sets of the former
regulations, the emergency regulations (showing changes from the former
regulations), and the permanent regulations are attached as Exhibits A, B and C.
2At page 4 of their brief, Defendants use language which may mislead the Court
to believe that the United States Center for Medicare and Medicaid Services has
approved Kentucky*s emergency regulations and the actions of the state which
Plaintiffs challenge in this case: "At all times relevant to this appeal, the
Department*s State Plan and all State Plan Amendments have been approved by
CMS." Actually, the state first submitted but then withdrew its request for
approval of the new regulations as an amendment of the State Plan. The Court
should be aware that no approval of the new regulations has been given by CMS,
and no request for approval is pending. See e-mail from CMS Regional Office,
attached to Affidavit of Anne Marie Regan, Exhibit D. Federal regulations
require such approval. 42 C.F.R. * 430.12.
3 The actual term used in the Medicaid statute is "nursing facility services."
See 42 U.S.C. *1396d(a)(4).
4 HCBS is a "waiver" program in the sense that a state which agrees to
participate is, for purposes of that particular waiver program only, freed from
certain normal federal Medicaid requirements not relevant here. See 42 U.S.C.
5 Plaintiffs have attached as Exhibits the Declarations of Plaintiffs, doctors
and a nurse which clearly demonstrate that Plaintiffs continue to be in dire
need of the mandatory nursing facility services at issue here. (Exhibit F -
Declaration of Veda Jewell Kerr; Exhibit G - Declaration of Gena Bell; Exhibit H
- Declaration of Thelma Garmon; Exhibit I - Declaration of Patricia Moore;
Exhibit J - Declaration of Lydia Allgood; Exhibit K - Declaration of Janet
Hannah; Exhibit L - Declaration of Paul Dunn, M.D.; Exhibit M - Declaration of
Mohammad Shahzad, M.D.; Exhibit N - Declaration of Ovaleria Dubree)
6New data released by the Cabinet for Health Services since this lawsuit was
filed indicate that, in fact, from April through September of this year, based
on the new level of care criteria, 2488 individuals have been denied HCBS, while
345 individuals have been denied nursing home services (a total of 2833
denials). During the six months prior to the enactment of the emergency
regulation, there were 423 HCBS denials and 38 nursing facility denials (a total
of 461). Plaintiffs assume that these numbers have increased substantially in
the past two months, but exact figures are not available to Plaintiffs. See
Exhibit A to Plaintiffs* Memorandum Of Law in Support of Motion for Class
Certification, p. 14.
7Defendants also refer to five pre-Gonzaga cases, ostensibly as instances of
courts holding "specifically ...that certain Medicaid provisions create no
enforceable rights." Defendants* Memorandum at 20-21. None support Defendants*
argument that this Court should find lack of jurisdiction under Section 1983.
One, Harris v. James, 127 F.3d 993 (11th Cir. 1997), did hold what Defendants
say, that the Medicaid transportation regulations did not create a privately
enforceable right, but the Sixth Circuit has specifically rejected Harris,
finding the Medicaid transportation regulation enforceable under Section 1983.
Boatman v. Hammons, 164 F.3d 286, 289 (6th Cir. 1998).
In Rodriguez v. City of New York, 197 F.3d 611 (2d Cir. 1999), plaintiffs sought
to require New York to include safety monitoring among the services available in
that state*s optional home care program. The court did not find Section 1983
inapplicable to that claim, but found no support for the claim in the Medicaid
Act. The other three cases cited by Defendants involve the federally
administered Medicare program, to which Section 1983 is inapplicable.
8Plaintiffs also assert supplemental jurisdiction under 28 U.S.C. *1367 to
enforce the corresponding Kentucky laws and regulations that require due process
protections for Medicaid recipients.
9 The Moffitt case describes the procedures then in use in Kentucky to determine
continuing eligibility for Medicaid recipients in intermediate care facilities.
It cites to some state laws and regulations that are no longer in effect, but
the decision on the due process issues remains valid.
10On appeal, the Sixth Circuit held that the District Court*s ruling on the
constitutional issues was unnecessary since plaintiffs were granted the relief
they sought under the Medicaid Act. Daniels v. Menke, 1998 U.S. App. LEXIS 7973
at p. 7 (6th Cir., April 22, 1998).
Nowhere is it written that issues may be raised under the Medicaid statute only
through invocation of Section 1983. Numerous Medicaid claims have been reviewed
by the courts and decided without any mention of Section 1983. See, e.g.,
Planned Parenthood Affiliates of Mich. v. Engler, 73 F.3d 634 (6th Cir. 1996);
Hope Medical Group for Women v. Edwards, 63 F.3d 418 (5th Cir. 1995); Elizabeth
Blackwell Health Ctr. for Women v. Knoll, 61 F.3d 170 (3d Cir. 1995); Hern v.
Beye, 57 F.3d 906 (10th Cir. 1995); Preterm, Inc. v. Dukakis, 591 F.2d 121 (1st
Cir. 1979); see also Planned Parenthood Ass*n of Utah v. Dandoy, 810 F.2d 984
(10th Cir. 1987) (enjoining state agency from enforcing a state law that
conflicts with federal Medicaid law).
13This same language was used in notices to those Plaintiffs receiving long-term
care in nursing homes as well as to those receiving care at home through the
HCBS program, even though the HCBS participants are not "in a facility," further
adding to the recipient*s confusion.