STRAUB, Circuit Judge:
Defendants-Appellants, commissioners of the New York State Office of Temporary and Disability Assistance and of the New York State Department of Health, appeal from an Order entered in the United States District Court for the Southern District of New York (Richard J. Holwell, Judge) granting declaratory and injunctive relief against them and in favor of Plaintiffs-Appellees, who are applicants for, or recipients of, Medicaid home health services who are not solely challenging any decision regarding Medicaid eligibility.
Plaintiffs allege that they have a statutory right, enforceable under 42 U.S.C. § 1983, to an opportunity for Medicaid fair hearings. Plaintiffs further allege that this right, as construed by an applicable federal regulation, entitles them to "final administrative action" within 90 days of their fair hearing requests, and that Defendants violated this right.
The District Court agreed. It declared that "final administrative action" includes the holding of Medicaid fair hearings, the issuance of fair hearing decisions, and the implementation of any relief ordered in those decisions. And it permanently enjoined Defendants to ensure that "final administrative action" — so defined — is implemented within 90 days of Plaintiffs' fair hearing requests.
We
"Medicaid is a cooperative federal-state program through which the Federal Government provides financial assistance to States so that they may furnish medical care to needy individuals." Wilder v. Va. Hosp. Ass'n, 496 U.S. 498, 502, 110 S.Ct. 2510, 110 L.Ed.2d 455 (1990).
Any state that participates in Medicaid must designate "a single State agency"
States that participate in Medicaid must grant "an opportunity for a fair hearing before the State agency to any individual whose claim for medical assistance under the plan is denied or is not acted upon with reasonable promptness." 42 U.S.C. § 1396a(a)(3).
Section 431.244 of Title 42 of the Code of Federal Regulations — entitled "Hearing decisions" — provides that the State agency "must take final administrative action ... [o]rdinarily, within 90 days" of the date a fair hearing is requested. See 42 C.F.R. § 431.244(f)(1)(ii) ("regulation"). The phrase "final administrative action" is not defined in the regulation or in the Medicaid Act.
In New York, the State agency responsible for administering Medicaid is the New York State Department of Health ("DOH"). See N.Y. Soc. Serv. Law § 363a(1).
In accordance with federal law, the DOH has established a Medicaid fair hearing system, which purportedly allows individuals an opportunity to be heard with respect to claims for medical assistance that are "denied or [are] not acted upon with reasonable promptness." 42 U.S.C. § 1396a(a)(3); see N.Y. Soc. Serv. Law § 22. The DOH has elected to delegate to the New York State Office of Temporary and Disability Assistance ("OTDA") the duty to conduct Medicaid fair hearings. But the DOH itself remains responsible for "making final administrative determinations and issuing final decisions," see N.Y. Soc. Serv. Law § 364(2)(h), and for ensuring the fair hearing system's compliance with federal law and regulations, see 42 C.F.R. § 431.205.
Plaintiffs in this class action are residents of New York City who applied for or received Medicaid-funded home health services,
For purposes of this appeal, Plaintiffs allege that DOH and OTDA (collectively, "Defendants") failed "to take and/or ensure final administrative action within 90 days from the date [Plaintiffs] request fair hearings challenging the denial, discontinuance and/or reduction of Medicaid home health services" ("90-day claim"). Am. Compl. ¶ 131. According to Plaintiffs, this conduct violated their statutory right to an opportunity for Medicaid fair hearings, see 42 U.S.C. § 1396a(a)(3) — a right which, as construed by the regulation, allegedly entitles Plaintiffs to "final administrative action... [o]rdinarily, within 90 days" from
Plaintiffs claim they may enforce the foregoing statutory right — as construed by the regulation — through an action under 42 U.S.C. § 1983.
Following discovery, Plaintiffs moved for class certification and for partial summary judgment on the 90-day claim. Defendants cross-moved for summary judgment, arguing "primarily ... that there is no cause of action for the alleged deficiencies in Medicaid Fair Hearing procedures." Shakhnes ex rel. Shakhnes v. Eggleston, 740 F.Supp.2d 602, 609 (S.D.N.Y.2010).
By Memorandum Opinion & Order filed September 30, 2010 ("2010 Order"), the District Court certified Plaintiffs' proposed class, granted partial summary judgment in favor of Plaintiffs on the 90-day claim, and denied Defendants' cross-motion for summary judgment. See Shakhnes, 740 F.Supp.2d at 637.
First, the District Court held that the fair hearing requirement in 42 U.S.C. § 1396a(a)(3) is enforceable through a cause of action under § 1983. See id. at 615-16.
Second, the District Court concluded that the regulation's 90-day requirement defines the content of the statutory right to a fair hearing. That is, the District Court held that the "`ordinarily, within 90 days' requirement defines the temporal element of a § 1983 cause of action for enforcement of 42 U.S.C. § 1396a(a)(3)." Id. at 618 (quoting 42 C.F.R. § 431.244(f)(1)).
In short, the District Court concluded that Plaintiffs have a cause of action to enforce their statutory right to an opportunity for a fair hearing, as defined by the regulation's requirement that "final administrative action" be taken within the specified time frame. Based on the record evidence, the District Court concluded that Defendants violated that right.
The District Court subsequently issued an Order granting declaratory and injunctive relief in favor of Plaintiffs. See Order, Shakhnes ex rel. Shakhnes v. Eggleston, No. 06 Civ. 4778 (S.D.N.Y. Apr. 15, 2011), ECF No. 146 ("2011 Order").
In pertinent part, the District Court declared that
Id. at 2 ¶ 4.
The District Court also directed Defendants to ensure that "Final Administrative Action" — as defined above — is provided "within 90 days of ... [a] request for a Fair Hearing." Id. at 3 ¶ 7.
Defendants now appeal.
First, they argue that the District Court erred by concluding that the regulation "merely flesh[es] out the meaning of" the statutory right to an opportunity for a fair hearing. Def. Mem. at 22. Defendants contend that because the regulation's 90-day requirement is an "additional" obligation "not contained or reasonably implicit
Second, Defendants argue that the District Court's injunction is overbroad. Specifically, they argue (1) that "the district court's construction of the phrase `final administrative action' to include the actual provision of services is wrong as a matter of law," id. at 21; and (2) that the injunction applies the 90-day requirement to certain hearings "that are outside the express terms of the regulation," id. at 43.
We review de novo a district court's legal conclusions made in the context of an order granting summary judgment. See Vera v. Saks & Co., 335 F.3d 109, 116 (2d Cir.2003) (per curiam).
"We review the scope of a district court's injunction for abuse of discretion, which can be found if the district court ... incorrectly applied the law." Catanzano v. Wing, 103 F.3d 223, 228 (2d Cir.1996) (citation and quotations omitted).
The District Court correctly concluded in its 2010 Order that Plaintiffs' statutory right to an opportunity for Medicaid fair hearings — as construed by the regulation — is enforceable through § 1983.
Section 1983 creates a cause of action against any person who, acting under color of state law, abridges "rights, privileges, or immunities secured by the Constitution and laws" of the United States. 42 U.S.C. § 1983. Violations of rights thus give rise to § 1983 actions; mere violations of laws do not. See Gonzaga Univ. v. Doe, 536 U.S. 273, 284-85, 122 S.Ct. 2268, 153 L.Ed.2d 309 (2002). The question, then, is whether an alleged right is enforceable under § 1983.
We think it important to underscore the source of the alleged right here at issue.
Defendants correctly observe that many of our Sister Courts have held that regulations may not independently create individual rights enforceable under § 1983.
Instead, the District Court held that Plaintiffs have a statutory right under 42 U.S.C. § 1396a(a)(3) to an opportunity for Medicaid fair hearings that is enforceable through a cause of action under § 1983. Defendants do not argue that this particular holding was in error.
Defendants do, however, argue that the District Court misconstrued the scope of Plaintiffs' statutory right to an opportunity for Medicaid fair hearings. That is, Defendants argue that the regulation requiring "final administrative action" ordinarily within 90 days of a fair hearing request cannot properly be deemed to "merely flesh out the meaning of" the statutory right to an opportunity for Medicaid fair hearings. Def. Mem. at 22 (quotations omitted). As a result — say Defendants — Plaintiffs cannot enforce the statute in conjunction with the regulation.
It is well-settled that, "[a]s an agency interpretation of a statute, a regulation may be relevant in determining the scope of the right conferred by Congress." Save Our Valley v. Sound Transit, 335 F.3d 932, 943 (9th Cir.2003). The following rubric guides our inquiry in that regard:
Harris v. James, 127 F.3d 993, 1009 (11th Cir.1997) (quotations omitted) (emphasis and formatting added); see also D.D. v. N.Y.C. Bd. of Educ., 465 F.3d 503, 513 (2d Cir.2006) (parenthetically quoting Harris ).
A review of the case law in this area proves instructive.
We begin with Wright v. City of Roanoke Redevelopment and Housing Authority, 479 U.S. 418, 107 S.Ct. 766, 93 L.Ed.2d 781 (1987), a decision on which the Eleventh Circuit relied in formulating the rubric we apply here, see Harris, 127 F.3d at 1008-09.
The plaintiffs in Wright brought a § 1983 claim alleging that a public housing authority overbilled them for utilities. According to the plaintiffs, the housing authority's conduct violated (i) a federal statute, which imposed a rent ceiling based on plaintiffs' incomes, and (ii) the statute's
The Court rejected this argument. According to the Court, the applicable statute "could not be clearer: ... tenants could be charged as rent no more and no less than 30 percent of their income." Id. at 430, 107 S.Ct. 766. In addition, the applicable regulations "expressly required that a `reasonable' amount for utilities be included in rent that [the housing authority] was allowed to charge." Id. The Court then observed that the relevant federal agency had "adhered" to the regulations' "interpretation" of the statute, and noted that the agency's "view is entitled to deference." See id. The Court rejected the argument that the regulations' "definition of rent as including a reasonable charge for utilities is not authorized by the statute." Id. at 431 n. 11, 107 S.Ct. 766.
The Court subsequently described its holding in Wright as follows:
Suter v. Artist M., 503 U.S. 347, 361 n. 13, 112 S.Ct. 1360, 118 L.Ed.2d 1 (1992).
We emphasize that "the regulation at issue in Wright merely defined the specific right that Congress already had conferred through the statute." See S. Camden Citizens in Action v. N.J. Dep't of Envtl. Prot., 274 F.3d 771, 783 (3d Cir.2001). In other words, "the Wright Court located the alleged right in the statutory provision and then relied upon the implementing regulations to define and interpret that right." Id.; see also Harris, 127 F.3d at 1007-08 (same).
Our decision in D.D. v. New York City Board of Education, 465 F.3d 503 (2d Cir. 2006) provides another example of a regulation deemed to "define" the scope of an extant, statutory right, such that the right — so defined — is enforceable under § 1983.
The plaintiffs in D.D. alleged that the New York City Department of Education ("DOE") violated their rights under the Individuals with Disabilities Education Act ("IDEA"). Id. at 506.
Pursuant to the IDEA, states must provide disabled students with "free appropriate public education" designed to serve the students' needs. Id. "Free appropriate public education" is defined in part as "special education and related services that ... are provided in conformity with the individualized education program ["IEP"] required under [the IDEA]."
Citing to Wright, we concluded (i) that the IDEA "creates the right to a free appropriate public education enforceable through § 1983," and (ii) that the federal regulation "merely defines the scope of that right with respect to the requisite time frame for implementing an IEP." Id. at 513. We emphasized, however, that the federal regulation "requires only that IEPs be implemented `as soon as possible,'" and not "immediately" or within 30 days, as the plaintiffs had asserted. See id.
The Eleventh Circuit's decision in Harris provides an example of a regulation that "goes beyond explicating the specific content of [a] statutory provision," such that the underlying statutory right — at least as "defined" by the regulation — could not be enforced under § 1983. See Harris, 127 F.3d at 1009.
In Harris, the court considered whether Medicaid recipients have a federal right to transportation to and from Medicaid providers, which right may be enforced in an action under § 1983. Id. at 996. The court answered that question in the negative.
As a preliminary matter, the Harris court noted that "the plaintiffs seek to enforce a transportation requirement that appears explicitly not in the Medicaid Act, but in a federal regulation." Id. at 1005. But the court rejected any suggestion that an enforceable right could be created (i) by a regulation alone, or (ii) by a regulation's "valid ... interpretation of a statute that creates some enforceable right." Id. at 1008. Instead, the court held that the plaintiffs' purported right would be enforceable under § 1983 only if "the statute itself confers a specific right upon [them], and [the] valid regulation merely further defines or fleshes out the content of that right." Id. at 1009. Under such circumstances, "the statute — in conjunction with the regulation — [would] create a federal right as further defined by the regulation." Id. (quotations omitted).
The court then examined certain of the statutory provisions which allegedly conferred specific rights on the plaintiffs. See id. at 1010-12. One required state Medicaid plans to provide medical assistance "with reasonable promptness." Id. at 1005. Another required the plans to provide comparable assistance to different categories of needy individuals. See id. The court assumed that these provisions "create[ ] some federal right." See id. at 1011 & n. 27. And the court further assumed that "the transportation regulation is a valid interpretation of each of these provisions." See id. at 1011. But the court nevertheless concluded that the plaintiffs enjoyed no "federal right to transportation." Id. The court reasoned as follows:
Id. at 1011-12 (first emphasis and formatting added).
The District Court correctly held that 42 U.S.C. § 1396a(a)(3) — as construed by the regulation — creates a right, enforceable under § 1983, to receive a fair hearing and a fair hearing decision "[o]rdinarily, within 90 days" of a fair hearing request.
We conclude that the regulation's 90-day requirement "merely further defines or fleshes out the content" of the right to "an opportunity" for Medicaid fair hearings, such that Plaintiffs have a right — enforceable under § 1983 — to final administrative action "[o]rdinarily, within 90 days" of their request, see 42 C.F.R. § 431.244(f).
As discussed, the regulation here at issue says Defendants must take "final administrative action ... [o]rdinarily, within 90 days" of the date a fair hearing is requested. See id. § 431.244(f)(1)(ii). Defendants strenuously argue that "final administrative action" refers to the issuance of decisions after fair hearings.
But does this aspect of the regulation merely further define or flesh out the content of the statutory right to an opportunity for Medicaid fair hearings? We conclude it does. And we think our decision in D.D. leaves no room to conclude otherwise.
The statute at issue in D.D. — the IDEA — did not specify a time frame for implementing the statutory right to a free appropriate public education. The regulation at issue in D.D., however, required that IEPs be implemented "as soon as possible" following their development. We concluded that this regulation "merely defines the scope" of the statutory right to a free appropriate public education "with respect to the requisite time frame for implementing" that right. See D.D., 465 F.3d at 513.
Similarly, the Medicaid Act does not specify a time frame within which Defendants must provide Plaintiffs with Medicaid fair hearings; the relevant statutory provision says only that Defendants must grant "an opportunity" for such hearings to individuals whose claims for medical assistance have not been decided with reasonable
We find no merit in Defendants' contention that D.D. is inapposite to the instant matter.
Defendants argue that, unlike the regulation at issue in D.D., the regulation at issue here imposes specific temporal guidelines and thus affords Plaintiffs greater relief than they could obtain under the Medicaid Act itself. Specifically, Defendants contend that, in D.D., we "construed the regulation's `as soon as possible' language as by design, a flexible requirement, and stressed that the regulation did not impose a rigid, outside time frame for implementation, but rather permitted specific inquiry into the causes of the delay in the particular case." Def. Mem. at 29 (quotations omitted). By contrast — Defendants argue — the regulation at issue in the instant matter "imposes a rigid, outside time frame for final administrative action ..., and does not permit specific inquiry into the causes of the delay on a case-by-case basis." Id. at 30 (quotations omitted).
Contrary to Defendants' reading of D.D., we did not hold in that case that a regulation may be deemed to "further define[ ]" or "flesh[ ] out the content" of a statutory right only if the regulation imposes "flexible" requirements. Rather, our discussion in D.D. of the "flexible" nature of the language in the regulation there at issue came in response to an argument made by the plaintiffs: According to the plaintiffs, the regulation in D.D. required that their statutory right to a free appropriate public education be implemented either "immediately," or "within 30 days." See D.D., 465 F.3d at 513. We rejected that argument based on our review of certain rulemaking "commentary." We observed that the Secretary of Education had explicitly declined to adopt "a rigid, outside time frame for implementation." See id. at 514. This observation does not, however, signify that a regulation's "rigid" temporal guideline may never "further define[ ]" or "flesh[ ] out the content" of an underlying statutory right.
Finally, we note that the statute and regulation at issue here stand in contrast to those that were at issue in Harris. The regulation in Harris required that the plaintiffs be given transportation to and from Medicaid providers. Harris, 127 F.3d at 996. Such a requirement could not "reasonably [be] understood to be part of the content of," for example, a statutory right to receive medical assistance with reasonable promptness; the regulation thus did not merely define the content of that underlying right. See id. at 1012. By contrast, the 90-day requirement in the regulation at issue here may reasonably be understood to be part of the content of the
We further conclude that the right to an opportunity for Medicaid "fair hearings" includes a right to a decision following such hearings. That being so, we have little difficulty concluding that the regulation's 90-day requirement "merely further defines or fleshes out the content of that right." See Harris, 127 F.3d at 1009.
The Medicaid Act does not define the contours of "a fair hearing" for purposes of 42 U.S.C. § 1396a(a)(3). But the applicable federal regulation says that the Medicaid "hearing system must meet the due process standards set forth in Goldberg v. Kelly, 397 U.S. 254, 90 S.Ct. 1011, 25 L.Ed.2d 287 (1970)." See 42 C.F.R. § 431.205(d).
The due process standards set forth in Goldberg entitle Plaintiffs to decisions following their Medicaid fair hearings. For one, Goldberg says that "the decisionmaker's conclusion ... must rest solely on the legal rules and evidence adduced at the hearing," and that "the decision maker should state the reasons for his determination and indicate the evidence he relied on." Goldberg, 397 U.S. at 271, 90 S.Ct. 1011 (emphasis added). In addition, the Goldberg Court emphasized that "an impartial decision maker is essential." Id. We see little reason why this would be so unless the right to a fair hearing includes the right to a decision.
In light of the foregoing, we conclude that the statutory right to an opportunity for a "fair hearing" includes the right to a decision. Implicit in the right to a decision is that the decision must be issued within some period of time. The regulation — which, Defendants concede, encompasses the issuance of fair hearing decisions — says what that period of time is. Accordingly, we hold that the regulation merely defines or fleshes out Plaintiffs' fair hearing right, which is enforceable under § 1983. See D.D., 465 F.3d at 513.
Although the District Court correctly held that the statutory right to an opportunity for Medicaid fair hearings — as construed by the regulation — is enforceable under § 1983, the District Court exceeded
An injunction is overbroad when it restrains defendants from engaging in legal conduct. See City of N.Y. v. Mickalis Pawn Shop, LLC, 645 F.3d 114, 145 (2d Cir.2011).
The injunction here at issue is thus overbroad because it compels Defendants to implement the relief ordered in a fair hearing decision within the regulation's 90-day time frame, despite the fact that the regulation imposes on Defendants no such obligation.
Defendants also contend that the injunction is overbroad because it applies the regulation's 90-day requirement to persons who are not enrollees in Medicaid managed care organizations. We disagree.
In its 2011 Order, the District Court enjoined Defendants to provide "final administrative action" within 90 days of a request for a Medicaid fair hearing. According to the District Court, "[f]inal [a]dministrative [a]ction occurs when [D]efendants ... have ... taken all actions necessary to implement the relief ordered" in decisions after fair hearings. 2011 Order at 2 ¶ 4 (emphasis added).
We do not agree with the District Court's construction of "final administrative action." That phrase is not defined in the Medicaid Act or in the applicable regulations. But the structure, text, and drafting history of the applicable regulations, together with a review of administrative law principles and other statutory and regulatory provisions, convince us that "final administrative action" does not include the implementation of relief ordered in fair hearing decisions. Accordingly, although we have previously acknowledged that the statutory right to Medicaid fair hearings under 42 U.S.C. § 1396a(a)(3) "must include within it the right to effective redress," Catanzano, 103 F.3d at 229, that right — at least in conjunction with the regulation here at issue — does not require Defendants to implement the relief ordered in fair hearing decisions within the regulation's 90-day time frame. The District Court's injunction is thus overbroad. Cf. Mickalis Pawn Shop, 645 F.3d at 145.
The structure and text of the applicable regulations lead us to conclude that "final administrative action" refers to the holding of fair hearings and to the issuance of fair hearing decisions, rather than to the implementation of relief ordered in those decisions.
As a preliminary matter, the regulation appears under a subpart entitled "Fair Hearings For Applicants and Recipients." The regulation itself is entitled "Hearing decisions." See 42 C.F.R. § 431.244 (emphasis added). It sets forth the required elements of fair hearing decisions,
The subject matter of § 431.244 is thus generally confined to the composition and issuance of decisions after fair hearings. And nothing in the regulation's text suggests that "final administrative action" encompasses the implementation of relief authorized in such decisions. This makes sense, because a separate regulation, entitled "Corrective action," covers the implementation of certain types of relief. See 42 C.F.R. § 431.246 (stating that Defendants must provide retroactive benefits and provide for the admission to medical facilities if hearing decisions so require). Indeed, we have observed that "the results of [fair] hearings will be binding on the state" based on the "Corrective action" regulation, rather than on the "Hearing decision" regulation that is at issue here. See Catanzano, 103 F.3d at 228.
The drafting history of the regulation further demonstrates that the 90-day time frame applies to the issuance of decisions rather than to the implementation of relief.
We begin with 45 C.F.R. § 205.10, the predecessor to 42 C.F.R. § 431.244. Section 205.10 was entitled "Fair hearings." See Fair Hearings, 35 Fed.Reg. 8448 (May 29, 1970). Subsection (11) of § 205.10 provided that "[p]rompt, definitive and final administrative action will be taken within 60 days from the date of the request for a fair hearing, except where the claimant requests a delay in the hearing." Id. at 8449. The time frame for "[p]rompt, definitive, and final administrative action" was later extended to 90 days. See Methods for Determination of Eligibility, 38 Fed.Reg. 22,005, 22,008 (Aug. 15, 1973). The relevant agency explained the need for the change as follows: "In view of the difficult position facing States with substantially increased hearing caseloads, the 60-day period is considered insufficient for the orderly processing of cases." Id. at 22,006 (emphasis added). The agency concluded that "[n]inety days for processing hearings" was "a more realistic time frame." Id. (emphasis added). And the agency described the change as an "[e]xtension from 60 to 90 days for hearing decisions." Id. (emphasis omitted).
Later agency commentary similarly referred to the 90-day requirement in § 431.244 as a deadline for the issuance of hearing decisions. See, e.g., Medicaid Program; Medicaid Managed Care: New Provisions, 67 Fed.Reg. 40,989, 41,060 (June 14, 2002) (referencing "the 90-day clock for a fair hearing decision" (emphasis added)); id. ("[T]he State is required to resolve the State fair hearing within 90 days." (emphasis added)); id. at 41,064 (referencing "the overall 90-day timeframe for a final fair hearing decision" (emphasis added)); id. at 41,076 (referencing "the 90-day timeframe for resolution of the State fair hearing" (emphasis added)).
The agency's commentary with respect to § 431.244(f)(2) and (3) is particularly revealing. These provisions once required that "final administrative action" be taken within "72 hours" for certain cases necessitating
The provisions were later amended, such that "final administrative action" for expedited cases was required "within 3 working days" of certain triggering events. See 42 C.F.R. § 431.244(f)(2), (3) (2002). In explaining this amendment, the agency noted that "commenters recommended that the State Medicaid agency be permitted 3 working days to hear expedited appeals that they receive, rather than 72 hours." 67 Fed.Reg. at 41,062 (emphasis added). The agency "agree[d]," and noted that the amended regulation "now requires the State to conduct a fair hearing and make its decision within 3 working days." Id. (emphasis added).
If taking "final administrative action" "within 3 working days" means that the State is required to implement relief in that time frame, the agency made no mention of it.
The State Medicaid Manual ("Manual"), to which we owe deference,
For one, the Manual says that "[a] conclusive decision in the name of the State agency shall be made by the hearing authority." Manual § 2903.2(A) (emphasis added). Although the hearing authority may remand the matter to a local hearing officer where "the materials submitted are insufficient to serve as [a] basis for a decision," the Manual clarifies that such a remand "is not a substitute for definitive and final administrative action." Id. (emphasis added) (quotations omitted). If "final administrative action" refers to the issuance of a final agency decision, the foregoing clarification is justifiable: It could make sense to clarify that a decision to remand a matter for further consideration does not discharge the obligation to issue a final decision. But if, as Plaintiffs contend, "final administrative action" refers to the implementation of relief, the foregoing clarification would be unnecessary: The decision to remand a matter for further consideration could never constitute the implementation of relief.
In addition, § 2903.3 of the Manual — entitled "State Agency Responsibility In Carrying Out The Hearing Decision" — states that Defendants "are responsible for assuring that the [hearing authority]'s decision is carried out promptly." Id. § 2903.3(A) (emphasis added). "Promptly" does not, however, necessarily mean "within 90 days" of a request for a hearing. Had the drafters of the Manual wished to use the latter standard in § 2903.3(A), they certainly could have done so; indeed, the Manual recites that standard in the very next subsection, see id. § 2903.3(B).
Well-settled principles of administrative law further indicate that the phrase "final administrative action" in the regulation here at issue refers to a final determination after a Medicaid fair hearing, rather than to the implementation of relief.
Under the Administrative Procedure Act, 5 U.S.C. § 551 et seq., courts may not review agency actions unless such actions are "final." See, e.g., Bennett v. Spear, 520 U.S. 154, 177, 117 S.Ct. 1154, 137 L.Ed.2d 281 (1997); Fund for Animals, Inc. v. United States BLM, 460 F.3d 13, 18 (D.C.Cir.2006). An agency action is final if two conditions are met: (1) "the action must mark the `consummation' of the agency's decisionmaking process — it must not be of a merely tentative or interlocutory nature," and (2) "the action must be one by which `rights or obligations have been determined,' or from which `legal consequences will flow.'" Bennett, 520 U.S. at 177-78, 117 S.Ct. 1154 (citation omitted).
Defining "final administrative action" in accordance with the background principles of administrative law makes good sense. Plaintiffs may not obtain judicial review of Medicaid fair hearing decisions until such decisions are "final." See N.Y. Soc. Serv. L. § 22(9)(b) ("Any aggrieved party ... may apply for review as provided in [N.Y. C.P.L.R. § 7801]."); N.Y. C.P.L.R. § 7801 ("[A] proceeding under this article shall not be used to challenge a determination... which is not final."). The drafters of 42 C.F.R. § 431.244(f) were no doubt aware of the administrative law scheme to which they contributed. We thus cannot discount the possibility that they used the phrase "final administrative action" to signify the final determination of rights or obligations which sets the stage for judicial review in state court.
Finally, we note that other statutory and regulatory provisions not at issue in this case explicitly cover the furnishing of Medicaid. Section 1902(a)(8) of the Medicaid Act requires state plans for medical assistance to provide that "medical assistance... shall be furnished with reasonable promptness to all eligible individuals." 42 U.S.C. § 1396a(a)(8). A regulation that implements § 1902(a)(8) directs state agencies to "[f]urnish Medicaid promptly to beneficiaries without any delay caused by the agency's administrative procedures." 42 C.F.R. § 435.930(a).
Had the drafters of 42 C.F.R. § 431.244(f) wished to require the "furnish[ing]" of Medicaid within the regulation's 90-day time frame, they clearly knew how to do so.
In light of the foregoing, we conclude that "final administrative action" in 42 C.F.R. § 431.244(f) does not include the implementation of relief ordered in decisions after Medicaid fair hearings. The District Court thus exceeded the bounds of its allowable discretion by enjoining Defendants to "take[ ] all actions necessary to implement the relief ordered" in such decisions within 90 days of Plaintiffs' fair hearing requests. See 2011 Order at 2 ¶ 4.
As discussed, the injunction requires Defendants to ensure that "every New York City applicant for, and recipient of," Medicaid-funded home health services receive final administrative action within the time frame specified in 42 C.F.R. § 431.244(f). See 2011 Order at 3 ¶ 7.
Defendants argue that the injunction is overbroad because it applies the 90-day requirement "to fair hearings that are outside
Id.
We reject Defendants' construction of the regulation. In our view, the regulation applies to all Medicaid "enrollees," and not just to enrollees in managed care organizations ("MCOs").
Section 431.244(f), by its terms, applies to "enrollees." Specifically, the regulation provides that "final administrative action" must be taken
42 C.F.R. § 431.244(f) (emphasis added).
What, then, is the intended scope of "enrollees"? The term is not defined in 42 C.F.R. § 431.244. But the regulation's drafting history, together with a definition provided in a related regulation, convince us that the term must simply refer to persons who are enrolled in the Medicaid program.
As originally implemented, the regulation provided that "[t]he agency must take final administrative action within 90 days from the date of the request for a hearing." See 42 C.F.R. § 431.244(f) (1979); see also Medicaid Program: Redesignation and Rewrite, 44 Fed.Reg. 17,926, 17,933 (Mar. 23, 1979). In 2001, the regulation was amended to its current form. See 42 C.F.R. § 431.244(f) (2001).
The enactment of the Balanced Budget Act of 1997 ("BBA"), Pub.L. No. 105-33, 111 Stat. 251 (1997), led to the 2001 amendment. In brief, when the Medicaid program was originally created, "coverage typically was provided through reimbursements by the State agency to health care providers who submitted claims for payment after they provided health care services to Medicaid beneficiaries." 67 Fed. Reg. at 40,989. This "fee-for-service" arrangement gradually faded from prominence as State agencies began to provide Medicaid coverage through contracts with MCOs. See id.; see also id. at 40,992.
The BBA "significantly renovated the Medicaid managed care program." Id. at 40,990. In pertinent part, the BBA required MCOs "to establish internal grievance procedures under which Medicaid enrollees... may challenge the denial of coverage of, or payment for, medical assistance." See 42 C.F.R. § 438.400(a)(3) (emphasis added); see also 67 Fed.Reg. at 41,054. An applicable regulation clarified that each MCO "must have a system in place for enrollees that includes a grievance process, an appeal process, and access to the State's fair hearing system." 42 C.F.R. § 438.402 (emphasis added).
It was against this backdrop that the drafters of 42 C.F.R. § 431.244(f) "proposed conforming amendments ... to reflect changes in terminology and other new provisions enacted in the BBA." 67 Fed.
We find nothing in the foregoing drafting history which suggests that the relevant federal agency intended to strip non-MCO enrollees of their long-standing statutory right to "final administrative action" "[o]rdinarily, within 90 days." See 42 U.S.C. § 1396a(a)(3); 42 C.F.R. § 431.244(f). As noted, the agency itself described the 2001 revision to the regulation as a mere "conforming" amendment. 67 Fed.Reg. at 41,054. Defendants offer no evidence that the agency additionally intended its "conforming" amendment to eviscerate the statutory fair hearing right enjoyed by the millions of people nationwide who are not enrolled in MCOs.
In addition, we note that another regulation defines the term "enrollee" as encompassing persons beyond those who are enrolled in MCOs. Part 1003 of Title 42 of the Code of Federal Regulations in part provides for the imposition of civil money penalties against persons who "[s]ubstantially fail to provide an enrollee with required medically necessary items and services." See 42 C.F.R. § 1003.100(b)(1)(vii) (emphasis added); see also id. § 1003.103(f)(1)(i). For purposes of Part 1003, "enrollee" is defined broadly as "an individual who is eligible for ... Medicaid and who enters into an agreement to receive services from a contracting organization that contracts with the Department under ... title XIX of the Act." 42 C.F.R. § 1003.101.
In light of the foregoing, we conclude that the regulation applies to all Medicaid "enrollees." The District Court's injunction thus is not overbroad on the ground that it covers such persons. And we note that Defendants do not dispute that the certified class consists only of persons who, at a minimum, are Medicaid "enrollees."
We have considered the parties' remaining contentions, and find them to be moot or without merit.
To summarize, we hold as follows:
On remand, the District Court must craft an order of injunctive relief consistent with this opinion.
For the reasons stated above, the Order of the District Court is
Plaintiffs are wrong. In reviewing an order granting a permanent injunction, we "may also address the summary judgment order that served as the district court's principal legal basis for granting the injunction," at least where "the district court's ruling on summary judgment was inextricably intertwined with its ruling granting a permanent injunction." Law v. NCAA, 134 F.3d 1010, 1015 (10th Cir.1998); see also SongByrd, Inc. v. Estate of Grossman, 206 F.3d 172, 178 (2d Cir.2000) (an "appeal from a final judgment brings up for review all reviewable rulings which produced the judgment" (quotations omitted)).
The 2010 Order served as the District Court's "principal legal basis for granting" declaratory and injunctive relief in the 2011 Order. See Law, 134 F.3d at 1015. Any doubt as to whether the two Orders are "inextricably intertwined" should have been dispelled by the first sentence of the 2011 Order, which states that the District Court granted certain relief "[f]or the reasons set forth in [the 2010 Order]." See 2011 Order at 1.
In short, Defendants' failure to explicitly state in their Notice of Appeal that they sought to appeal from the 2010 Order does not preclude our review of that Order.
2011 Order at 2 ¶ 5.
