D.Me.: Mixed Medicaid/1983/preemption decision

Maine’s federal district court held that the Medicaid “reasonable standards” provision, 42 U.S.C. § 1396a(a)(17), is not enforceable through 42 U.S.C. § 1983, but permitted a claim that the provision preempted a state regulation.

In addition to recognizing that a violation of (a)(17) can be asserted through preemption, the court also rejected the state’s contention that its regulation did not base its coverage of medical services on the financial responsibilities of another. Suzman v. Harvey, 2008 WL 2945430 (D.Me. Jul. 25, 2008), report and recommendation adopted by 2008 WL 3929586 (D.Me. Aug 27, 2008) (No. 07-217).

 

          Suzman was initially assessed as needing 80 hours of Personal Care Attendant (PCA) services per week. He purchased an additional 23 hours per week with his own resources, and sought an increase in coverage to the maximum of 86.25 hours per week. Citing his ability to pay for 23 hours per week, the agency instead reduced his coverage to 57 hours. Suzman prevailed before a hearing officer, but that decision was also reversed by the state, relying on a regulation in the state Medicaid manual. The regulation states that a plan of care must consider “services provided by other public or private funding sources to assure non-duplication of services.”

 

            Suzman claimed that this violated § 1369a(a)(17)(D), which  requires “reasonable standards…for determining eligibility for and the extent of medical services under the plan which…(D) do not take into account the financial responsibility of any individual for any applicant or recipient” except for a spouse or the parent of a minor, unless they are a minor or disabled. Suzman alleged that Maine’s regulation violated (a)(17)(D) by basing the extent of his coverage on his ability to pay for part of the PCA services he needed.

 

            The magistrate noted the rejection of § 1983 claims under (a)(17) in Lankford v. Sherman, 451 F.3d 496, 509 (8th Cir.2006), and Watson v. Weeks, 436 F.3d 1152, 1162 (9th Cir.2006). The magistrate agreed with these decisions, stating that (a)(17) “is focused on the state and does not identify ‘a discrete class of beneficiaries.’” The magistrate also stated that “Subpart (D) cannot be construed, as the plaintiff would have it, separately from the ‘reasonable standards’ language” analyzed in Lankford and Watson.

 

            The magistrate nevertheless went on to analyze the merits of the Suzman’s preemption claim, demonstrating its recognition that a § 1983 cause of action is not necessary to enjoin state regulations that are contrary to the Medicaid Act. Although this fact is not mentioned by the magistrate, Lankford explicitly recognized preemption as an alternative basis for enforcing the Medicaid Act, as did the First Circuit in Pharm. Res. and Mfrs. of Am. v. Concannon, 249 F.3d 66 (1st Cir. 2001), aff’d 538 U.S. 644 (2003).

 

            The state argued that (a)(17)(D) “deals with financial eligibility for services while [the regulation] deals with medical eligibility for services.” The magistrate rejected this interpretation, noting that the regulation’s only reference to medical eligibility was to whether a recipient’s medical needs have already been identified. The magistrate also rejected the state’s argument that the regulation was permissible because it did not ask whether services could be provided through another funding source (as forbidden by (a)(17)(D)) but only whether they were already being so provided. The magistrate called this “a distinction without a difference” since it leads to the same result, with the only possible difference being that under the state’s interpretation a recipient could suffer a sudden cutoff of coverage. The magistrate stated that the regulation “certainly appears to be based on ‘the financial responsibility of any individual for any …recipient of assistance,’ which is prohibited in some circumstances by [(a)(17)].”

 

            The magistrate also rejected without discussion the state’s argument that Suzman was challenging only the state’s interpretation of its regulation, not the regulation itself.  The magistrate said that on the contrary, the complaint “presents a direct challenge to the regulation on its face.” (Though not further explained by the magistrate, this resemble an argument made by the state in James v. Richman, 465 F.Supp.2d 395 (M.D. Pa. 2006), appeal pending (No. 06-5092). There, the state has argued that there can be no preemption claim because the challenged state actions are pursuant to an uncodified agency policy, whereas the Supremacy Clause only preempts a state’s “Constitution or Laws.” The district court in James also rejected this argument.)

 

            Accordingly, the court dismissed the § 1983 claim, but not the preemption claim.