WIENER, Circuit Judge:
This appeal arises from the district court's termination of several provisions of a consent decree and the dissolution of a related corrective action order pursuant to the first clause of Federal Rule of Civil Procedure 60(b)(5) — that the judgment has been "satisfied, released, or discharged." Plaintiffs represent a class of Texas children eligible for Medicaid's Early and Periodic Screening, Diagnosis, and Treatment program ("EPSDT" or "the Program"). They concluded a consent decree (the "Decree") with various Texas state officials ("Defendants") in 1996 to make improvements to Texas's implementation of the Program. In 2007, the parties agreed on a corrective action order to resolve Plaintiffs' concerns with one part of the Decree. Defendants, believing their obligations to be satisfied, have now moved to dissolve that order and the associated Decree provisions under Rule 60(b)(5). The district court granted their motion. We affirm.
This action began in 1993 when Plaintiffs, representatives of a class of over 1.5 million Texas children eligible for EPSDT, sued Defendants under 42 U.S.C. § 1983 for violations of federal Medicaid law in the state's implementation of the Program.
In Frew III, the Court noted that Defendants' legitimate concerns over the Decree's potential to "undermine the sovereign interests and accountability of state governments" were not properly addressed to the Eleventh Amendment but to the district court's power, under Rule 60(b)(5), to grant relief "if `it is no longer equitable that the judgment should have prospective application.'"
On remand, we returned the case to the district court ("Frew IV").
Back in the district court, the parties agreed on eleven corrective action orders, each aimed at bringing Defendants into compliance with a specific portion of the Decree. CAO 637-8, the order at issue in this appeal, implemented ¶¶ 124-30 of the Decree, which concerned deficiencies in Medicaid-participating pharmacies' understanding of EPSDT. All eleven orders were entered into the record in 2007.
The 78-page Decree is organized into 308 paragraphs, of which only 7 are involved in this appeal. Paragraphs 124-30 form one subsection of a larger section that calls for a variety of training initiatives for healthcare providers. Of these 7 paragraphs, 2 mandate that Defendants perform specific actions:
Plaintiffs contend that three other paragraphs of the Decree are relevant: ¶ 3, which declares that "[r]ecipients are also entitled to all needed follow up health care
This corrective action order begins by referencing ¶¶ 3, 129, and 130 of the Decree. It then describes Plaintiffs' main complaint with pharmacists' understanding of EPSDT's prescription drug program: When EPSDT recipients seek to fill prescriptions for drugs that are not listed on the Program's Preferred Drug List ("PDL"), pharmacists may fill them only if they have "prior authorization" from the prescribing physicians. If a prescribing physician does not provide the authorization or could not be reached, the pharmacist must dispense a 72-hour emergency supply so that the class member is not deprived of needed medication. Many pharmacists, however, did not know that the stopgap measure was available or treated it as optional and improperly withheld class members' prescriptions.
To remedy the pharmacists' misunderstanding, CAO 637-8 established a detailed series of action items, elaborating on and expanding the requirements found in ¶¶ 124-30 of the Decree. CAO 637-8 is divided into 12 bullet points, of which 9 require specific actions by Defendants. Particularly contested in this appeal are their obligations in bullet points 6 and 10.
Bullet point 6 required Defendants to "provide intensive, targeted educational efforts to those pharmacies for which the data suggests a lack of knowledge of the 72-hour emergency prescriptions policy."
Bullet point 10 required Defendants to train staff at their ombudsman's office "about the emergency prescription standards," including "what steps to take to immediately address class members' problems
In 2012, Plaintiffs moved to enforce the pharmacy aspects of the Decree and CAO 637-8, contending that further action was required because the training efforts had not been effective. They asked the court to "require that Defendants develop a plan thorough and vigorous enough to eradicate the severe systemic dysfunction" still remaining in the interaction between pharmacies and EPSDT. Defendants countered, claiming that they had "satisfied the terms of the CAO," and moved to dissolve CAO 637-8 and Decree ¶¶ 124-30 "under the first ground set forth in Rule 60(b)(5)." They did not seek relief pursuant to the Rule's second or third grounds.
After a hearing, the district court agreed that Defendants had "substantially complied with the terms of CAO 637-8 and Decree [¶¶] 124-130" and granted their Rule 60(b)(5) motion. The court also found that Plaintiffs had conceded Defendants' compliance with all action items besides those in bullet points 6 and 10.
"Consent decrees are subject to Federal Rule of Civil Procedure 60(b)."
Plaintiffs urge that Frew I, in which Judge Justice construed various provisions of the Decree, is entitled to deference as "the law of the case." They appear to find this rule in a line of Sixth Circuit cases that apply "deferential de novo" review to interpretations of consent decrees by the judges who initially approved them.
Consent decrees, like other judgments, may be modified or terminated pursuant to Rule 60(b)(5), which provides three independent, alternative grounds for relief: "[1] the judgment has been satisfied, released, or discharged; [2] it is based on an earlier judgment that has been reversed or vacated; or [3] applying it prospectively is no longer equitable."
The vast majority of motions for modification and termination of consent decrees, especially those involving institutional reform, invoke Rule 60(b)(5)'s third clause.
Defendants urge us to import the principles of Frew III to this case, as the Decree implicates the exact same federalism concerns as before. Plaintiffs' response — that Frew III's hortatory language about state accountability pertains only to Rule 60(b)(5)'s third clause — is technically accurate, but fails to account for Rule 60(b)'s expansive scope:
In light of this statement and the lack of other precedent, we deem it reasonable to consider Defendants' motion with reference to the Supreme Court's unambiguous instructions in Frew III.
Consent decrees are construed according to "general principles of contract interpretation."
Plaintiffs contend that the district court erred in focusing narrowly on Defendants' satisfaction of specific provisions of CAO 637-8 and not considering the Decree's broader goals, as found in ¶¶ 3, 6, and 190. The purpose of the Decree, according to Plaintiffs, is results-oriented: It is not enough for Defendants to perform the required action items mechanically; the court must also find that these actions were effective in improving EPSDT recipients' access to health care. Plaintiffs conclude that, because the district court failed to construe the Decree as a whole document, it misapplied the rules of contract interpretation and erred as a matter of law.
Plaintiffs' recitation of the rules of contract interpretation is correct, but interpreting the Decree as an entire writing does not give Plaintiffs the victory they seek. In ¶¶ 3 and 190, the Decree states the uncontroversial position that Plaintiffs, including those served by managed care organizations, are entitled to EPSDT benefits as mandated by Medicaid. In ¶¶ 4 and 5, the Decree opines that Texas's implementation of EPSDT could and should be improved. Then, in ¶ 6, the Decree introduces the "changes and procedures" agreed to by the parties to effectuate this improvement, noting that these actions are in place "[t]o address the parties' concerns, to enhance recipients' access to health care, and to foster the improved use of health care services by Texas EPSDT recipients." These introductory paragraphs do not guarantee specific outcomes; rather, they show that the Decree is aimed at supporting EPSDT recipients in obtaining the health care services they are entitled to, by addressing concerns, enhancing access, and fostering use of services.
Defendants therefore fulfill the purpose of the Decree by implementing the broad range of supportive initiatives memorialized in the Decree.
To read the Decree as implying a secondary assessment of the impact of each
Plaintiffs have not pointed to any discrete endpoint for CAO 637-8 or these Decree paragraphs. Indeed, they may never be satisfied with Defendants' educational efforts: In their 2012 motion to enforce the Decree and CAO 637-8, Plaintiffs appeared to have given up on pharmacist training entirely. Acknowledging that "[n]o amount of education will cure the pervasive dysfunction in Defendants' deeply flawed system," Plaintiffs instead wanted Defendants to "propose a further action plan" to effectuate "systematic change" to the prescription drug program itself. Neither the rules of contract interpretation nor Frew III's instruction to "promptly" return state programs to state control countenance this rewriting of the Decree.
Plaintiffs also point to the word "effectively" in ¶ 129: Defendants were required to "implement an initiative to effectively inform pharmacists about EPSDT." Plaintiffs reason that if many EPSDT recipients are still not receiving their prescription drug benefits, Defendants' educational initiative must not have been effective. Reading ¶ 129 as a whole, however, reveals that "effectively" functions to require that all "presentations," "articles," and "mail out" initiatives conducted by Defendants convey information effectively. Paragraph 129 even provides some guidelines for effective communication, instructing Defendants to design mailings "to attract pharmacists' attention" and "explain EPSDT coverage clearly." Defendants were obligated to communicate information in an effective manner, no more. To infer a wholesale, results-oriented reevaluation of Defendants' efforts from this one word, taken out of context, would be wholly inconsistent with the rules of contract interpretation.
Finally, Plaintiffs rely heavily on the Ninth Circuit's opinion in Jeff D. v. Otter, which held that "[e]xplicit consideration of the goals of [the consent decree], and whether those goals have been adequately served, must be part of the determination to vacate."
In conclusion, we reject Plaintiffs' contention that the district court incorrectly interpreted the Decree in deciding Defendants' motion to terminate CAO 637-8 and Decree ¶¶ 124-30. If the Decree had explicitly guaranteed pharmacists' compliance, provided an objective standard for assessing the effectiveness of Defendants' actions, or set termination conditions referencing satisfaction of the Decree's overall purpose, Plaintiffs might legitimately complain about the district court's approach. As it is, the district court did not err in interpreting CAO 637-8 and ¶¶ 124-30 to mandate specific actions only, the performance of which would automatically satisfy the parties' intent in concluding these agreements.
Plaintiffs also challenge the district court's conclusion that Defendants have substantially complied with CAO 637-8 and Decree ¶¶ 124-30. In determining that a party to a contract has fulfilled its contractual obligations, Texas law allows substantial compliance.
The district court found that Defendants had substantially complied with the requirements of bullet points 6 and 10 in CAO 637-8 and ¶¶ 124-30 of the Decree. It did not make any specific findings with respect to the other bullet points in the CAO, as it determined that "[a]t the court's hearing on these motions, Plaintiffs acknowledged that Defendants substantially complied with all but two of the paragraphs of CAO 637-8."
Plaintiffs dispute that they made this concession, but their brief acknowledges that, during the hearing on Defendants' motion, their counsel agreed with the court that "some discrete efforts took place." A review of the hearing transcript confirms the propriety of the district court's ruling.
As for the two disputed bullet points, the district court's determination that Defendants have substantially complied with their obligations is consistent with the record. With respect to bullet point 6, which required Defendants to educate pharmacies that filled below-expected numbers of 72-hour emergency prescriptions in an "intensive, targeted" manner, Plaintiffs assert that Defendants' efforts were not sufficiently "intensive." But the district court found Defendants' actions — mailing certified letters to 822 pharmacies, visiting or calling the ones that did not receive the letter, and contacting corporate chain offices — to be sufficient. During oral argument, Plaintiffs' counsel also took issue with the content of the certified letter, contending that it "never told the pharmacists that they must provide the 72-hour prescription." According to counsel, the letter left out "the critical part" of the program — that this 72-hour emergency prescription was mandatory, not discretionary. Thus, "the whole system fell apart" because "the pharmacists think they have discretion, or they don't have to, or it's only permissive that they provide the 72-hour medication." After reviewing the mailing, however, we see no basis for this complaint. The letter told pharmacies that they "should dispense the 72-hour emergency supply"; the enclosed "Texas Medicaid Pharmacists' Guide to Dispensing 72-Hour Emergency Prescriptions" clearly stated that "[f]ederal and Texas law
With respect to bullet point 10, which required Defendants to train personnel in their ombudsman's office, Plaintiffs' complaints, essentially, are that any evidence of training is insufficiently detailed and conclusional. The district court relied on three declarations from state employees who testified that multiple training sessions occurred for ombudsman's office staff. Although Plaintiffs would prefer the district court not to credit these statements, absent any indicia of unreliability other than Plaintiffs' unsubstantiated accusations of bias, the court's decision to do so is not clearly erroneous.
Finally, Plaintiffs contend that the district court erred in dissolving Decree ¶¶ 124-30 because it did not find that Defendants' actions were effective. As already discussed, the word "effectively" in ¶ 129 applies to the Defendants' communication obligation, not to the participating pharmacies' compliance. The district court rejected Plaintiffs' contention that
Defendants have fulfilled their obligations to provide training on and make improvements to EPSDT's prescription drug program. The district court did not abuse its discretion in dissolving CAO 637-8 and ¶¶ 124-30 of the Decree pursuant to Defendant's motion for relief under the first clause of Rule 60(b)(5). Accordingly, the judgment of the district court is AFFIRMED.