D.Haw.: Negative Medicaid § 1983, ripeness case

Hawaii’s federal district court dismissed Medicaid claims based on the state’s selection of only two managed care organizations (MCOs), both of which were allegedly unprepared to provide adequate services.

The court held that:

·        A Medicaid provision that states may not substantially impair access to services by limiting the number of provider agreements is not enforceable through 42 U.S.C. § 1983;

·        A Medicaid provision requiring assurances that MCOs will offer a sufficient range of services and providers is not enforceable through § 1983;

·        A Medicaid provision that minors cannot be required to enroll in an MCO was implicitly waived as part of the state’s demonstration project;

·        Claims under the Medicaid minimum services provision, the ADA and state law were not ripe.

The court did not address the enforceability of Medicaid provisions through the Supremacy Clause. Hawaii Coalition for Health v. Dept. of Hum. Servs., 2008 WL 4107977 (D. Haw. Sep. 4, 2008) (No. 08-00277).

 

            Hawaii selected Ohana Health and Evercare to administer its entire aged, blind and disabled (ABD) Medicaid program. Plaintiff Hawaii Coalition is a group representing Medicaid recipients.  They alleged that because the MCOs did not have provider networks in this place, and for other reasons, they would be unable to provide required services when the transition took place in November. The court rejected a similar suit under § 1983 grounds by a provider whose bid was rejected, concluding that the asserted Medicaid provisions were not designed to benefit providers. AlohaCare v. Hawaii, 2008 WL 2605208 (D.Haw. Jul. 2, 2008) (summary here).

 

            42 U.S.C. § 1396u-2(a)(1)(A)(ii)

 

            This provision provides that states “may restrict the number of provider agreements with managed care entities under the State plan if such restriction does not substantially impair access to services.” The court held that this language “focuses on when a State may limit the number of managed care provider agreements, and does not identify, much less even refer, to any particular individuals to be benefitted.” Accordingly, the court concluded that the provision lacked the “rights-creating language” needed to create enforceable rights under § 1983.

 

            The Coalition pointed to the word “individual” in the preceding subsection, which says that states “may require an individual …to enroll” with an HMO if it meets certain conditions, and argued that the provisions should be read together. § 1396(a)(1)(A)(i). But the court said that the word “individual” did not create a right of action in either subsection, because together they “address[ ] a state’s ability to limit the choice of providers that program participants might otherwise have,” not the rights of individuals.

 

42 U.S.C. § 1396u-2(b)(5)

 

            This provision requires that MCOs provide adequate assurances that they will offer “an appropriate range of services and access to preventive and primary care services for the population expected to be enrolled in [the] area,” and maintain “a sufficient number, mix and geographic distribution of providers.” The court compared the “adequate assurances” language to the Equal Access provision found unenforceable in Sanchez v. Johnson, 416 F.3d 1051 (9th Cir. 2005). As in Sanchez, applying this provision “would involve making policy decisions for which this court has little expertise and even less authority.”

 

42 U.S.C. § 1396(a)(10)

 

            The court “assumed” that the minimum services provision could be enforced under § 1983 – in fact the Ninth Circuit said so in Watson v. Weeks, 436 F.3d 1152 (9th Cir. 2006). But the court held that the claim here relied on “mere speculation,” because it was not clear that the MCOs would be unable to provide services at the start date. They still had months to put networks in place, and the state could still refuse to approve the program before the start date. In the meantime, services would continue as usual. Even though the state was apparently committed to the program, the court refused to assume that the state would ultimately “rubber-stamp” the programs no matter what.

 

42 U.S.C. § 1396u-2(a)(2)(A)

 

            The provision prohibits states from requiring that individuals under 19 enroll with an MCO. The court did not address the § 1983 enforceability of this provision, holding instead that it had been waived as part of the state’s demonstration project for the ABD population. The waiver was obtained under § 1315, which specifically allows the Secretary to waive compliance with the Medicaid freedom of choice provision, § 1396a(a)(23). Although § 1396u-2(a)(2)(A) was not specifically waived, the court said this provision  “does not override” the waiver of the freedom of choice provision, which facially applies to all individuals. The court pointed to a regulation stating the provision did not apply to demonstration projects, 42 C.F.R. § 438.50, and said that the opposite conclusion would run contrary to the statutory framework “and lead to a potentially absurd result.”

 

Americans with Disabilities Act

 

            The Coalition claimed that under the ADA the state must have a “comprehensive, effectively working plan” for providing Medicaid services to the disabled. The court said that the Coalition was misapplying this language from Olmstead v. L.C., 527 U.S. 581 (1999), which holds only that states must avoid unnecessary institutionalization of the disabled. The court found that Olmstead expressly did not impose standards for general medical services to the disabled; it only held that the ADA prohibits discrimination in services. Moreover, the court concluded that the ADA claims were unripe for the same reasons as the (a)(10) claim.

 

State law

 

            HRS § 432E-3 requires that an MCO demonstrate to the state insurance commissioner on request that they provide adequate access to services. The court noted that even if this law is privately enforceable, there was no allegation that the state commissioner requested and did not receive such assurances, so the law did not apply. Even if the Coalition could state a claim under the law, the claim would be unripe for the same reasons as the (a)(10) claim.

 

Leave to amend

 

            The court gave the Coalition leave to explain how it might be able to amend the complaint. The Coalition had discussed the Supremacy Clause in its briefing, but did not allege Supremacy Clause claims in its complaint. It’s not clear whether, if the Coalition brought Supremacy Clause claims in place of those dismissed under § 1983, the new claims would also be deemed unripe.

 

Summary of the court’s holdings:

 

(1)                          Where a provision was phrased as a limit on more general actions the state may take, the court concluded that the emphasis on the state’s options renders it unenforceable under § 1983.

(2)                          A provision phrased in terms of “adequate assurances” was treated as creating procedural rather than substantive requirements, and deemed unenforceable under § 1983.

(3)                          A program waiver was deemed to waive an additional, similar Medicaid provision beyond the provision explicitly waived.

(4)                          Challenges to the selection of MCOs, before their start date, were dismissed as unripe.