No § 1983 rights to challenge Medicaid exclusion

A New York federal district court held that the “minimum services,” “comparability” and “reasonable standards” provisions of the Medicaid Act do not create enforceable rights under 42 U.S.C. § 1983 to challenge a cost-based exclusion of certain medical services. Casillas v. Daines, 2008 WL 3157825 (S.D.N.Y. Aug. 5, 2008).

 The court’s analysis turned on 42 C.F.R. § 440.230(d), which provides that states “may place appropriate limits on a service based on such criteria as medical necessity or on utilization control procedures.” Without resolving the extent of this “carve-out authority,” the court held that in light of this regulation the Medicaid provisions do not confer an unambiguous right to particular services, and they are too vague and amorphous to be enforceable via § 1983.

 

          Background

 

          The facts of this case are ably summarized by NY Law Prof. Arthur Leonard at his blog. In brief, Casillas is a transsexual woman who had been receiving hormone therapy under the New York Medicaid program since 1980. However, near the end of the Pataki administration a new regulation cut off all coverage for gender transition therapies, including both hormone therapy and reassignment surgery. After more than 20 years of hormone therapy she was forced to discontinue treatment, with adverse physical and psychological effects. Notably, the state defended the rule on the basis of cost control, not medical necessity.

 

          Similar litigation has produced mixed results. See Pinneke v. Preisser, 623 F.2d 546 (8th Cir. 1980) (state violated Medicaid provisions by “absolutely excluding the only available treatment known” for gender identity disorder); Rush v. Parham, 625 F.2d 1150 (5th Cir. 1980) (reversing summary judgment for plaintiff; state could attempt to show at trial that reassignment surgery was experimental and not medically necessary procedure); Smith v. Rasmussen, 249 F.3d 755 (8th Cir. 2001) (state could exclude reassignment surgery on “medical necessity” basis after commissioning a study and going through formal rulemaking; court appeared to emphasize process over medical correctness); see also Lankford v. Sherman, 451 F.3d 496, 511 (8th Cir. 2006) (citing Pinneke for proposition that exclusion of “non-experimental, medically-necessary” services within a required category is “per se unreasonable”). Unlike previous cases, this one was decided on a motion to dismiss and on grounds of lack of enforceable rights under § 1983.

 

          Section 1396a(a)(10)(A)

 

          Section (10)(A) requires that states provide all categorically required services to eligible persons. Casillas argued that the services at issue here were required services; for example, reassignment surgery fits the definition of inpatient hospital services in 42 C.F.R. § 440.10(a). But the court said that even if that were so, there can be no § 1983 right to any particular service in light of the state’s authority under § 440.230(d) to “place appropriate limits on a service based on such criteria as medical necessity or on utilization control procedures.” Allowing the state to categorically limit services on the basis of state-wide cost control, the court said, “is inconsistent with a right conferred upon an individual or a class of individuals.”

 

          Moreover, the court stated that the gloss put on (10)(A) by § 440.230(d) rendered it too vague and amorphous. While courts can generally decide issues of medical necessity, the court said, “the loose standard of ‘utilization control procedures’” “is susceptible to multiple plausible interpretations and lacks a fixed meaning.” Moreover, the court read § 440.230(d) as permitting other limitations based on other “such criteria” beyond medical necessity and cost control, thus “enhance[ing] the vagueness problem.”

 

          Section 1396a(a)(10)(B)(i)

 

          Section (10)(B)(i) provides that the services provided to an individual “shall not be less in amount, duration, or scope” than those provided to any other individual. Casillas argued that New York’s exclusion violated this requirement by excluding a variety of treatments for transsexual women and men that are provided to people with other diagnoses. The court rejected this argument, relying on Rodriguez v. City of New York, 197 F.3d 611 (2d Cir.1999). Rodriguez assumed a cause of action under § 1983, but held that (10)(B)(i) does not require provision to people with one diagnosis of services that are “comparable” but not identical to services already provided to people with a different diagnosis.

 

           The court recognized that unlike Rodriguez, the comparisons being drawn by Casillas involved the very same treatments, not “comparable” ones. Nevertheless, the court said that as in Rodriguez mandating coverage would provide a disincentive to expand coverage, “because the state would have to consider other possible diagnoses for which the treatment might be prescribed before deciding whether to make it available for any single condition.” The court accordingly refused to find an unambiguously conferred right to any particular medical service under (10)(B)(i).

 

           The court further said that its discussion of the § 440.230(d) “carve-out authority” “applies with equal force” to (10)(B)(i), and supports the conclusion that it does not confer enforceable rights and is vague and amorphous.

 

Section 1396a(a)(17)

 

            Section (a)(17) requires states to create “reasonable standards…for determining…the extent of medical assistance” that are consistent with Medicaid’s objectives. The court said that this requirement of “a reasonable plan” contains “no language which could be reasonably construed as unambiguously conferring the right” to particular services.

 

           Casillas pointed to 42 C.F.R. § 440.230(b) and (c), which require services “sufficient in amount, direction, and scope to reasonably achieve [their purpose],” and forbid arbitrary denial of service “solely because of the diagnosis, type of illness, or condition.” The court acknowledged the breadth of these commands – noting, for example, that (c) would prohibit “a plan from treating less favorably a patient with pneumonia with an accompanying diagnosis of HIV-AIDS than one with pneumonia without the accompanying diagnosis of HIV-AIDS.”

 

            Nevertheless, the court said that these commands must be read in conjunction with the § 440.230(d) carve-out authority. As previously stated, “the existence of the carve-out authority precludes a finding that the right that this plaintiff invokes is unambiguously conferred by the statute. It also would be a vague and amorphous standard for the reasons previously stated.”

 

Equal protection

 

            The court also dismissed an Equal Protection Clause challenge to the exclusion. Noting the broad discretion permitted under the rational basis standard, the court found adequate the state’s unsupported assertions of “serious complications” from reassignment surgery and “danger” from hormone therapy.

 

Discussion

 

            One positive aspect of this decision is that it is limited by its terms to the available of § 1983 causes of action, and does not decide the merits of the Medicaid claims. The decision gives little indication as to how the “carve-out authority” regulation would affect the merits if similar claims were brought under the Supremacy Clause instead of § 1983.  Notably, the plaintiff here did not argue that § 440.230(d) is unreasonable, and the court treated the regulation as authoritative.

 

            Another positive element is that the § 1983 holdings appear limited to the context of categorical exclusions of particular services. In other contexts, circuit courts have held (10)(A) enforceable and (a)(17) unenforceable under § 1983. See, e.g., Watson v. Weeks, 436 F.3d 1152 (9th Cir.2006). There are no court of mixed district court decisions and appeals decisions on (10)(B).

 

            The downside is that, while the court may have been biased by its clear antipathy toward gender transition therapies, its § 1983 analysis appears applicable to any claim involving “utilization control procedures,” such as categorically excluding a particular service. As Georgetown Prof. Nan Hunter commented on her blog: “Nothing in the Casillas opinion limits its applicability to gender reassignment care; the same argument could be deployed with regard to other conditions as well.”