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Medicaid

Clayworth/California Medical Association v. Bonta, 140 Fed.Appx. 677 (9th Cir. 2005)

Outcome:     Very unfavorable

Issue

The issue in this case was whether the “quality of care” and “equal access” section of the Medicaid Act, 42 U.S.C. § 1396(a)(30)(A), provides a private (i.e., non-governmental) right of action against states (in this case, California) for failure to fund Medicaid programs adequately.

AMA interest

The AMA believes that every United States citizen should have access to necessary medical care, regardless of ability to pay.

Case summary

Due to a fiscal crisis, the California Legislature required an across-the-board 5% reduction in the reimbursement rate paid to California Medicaid service providers.  However, the Medicaid Act requires that state Medicaid programs satisfy minimum "quality of care" and "equal access" requirements for recipients.  The State of California did not determine whether the across-the-board rate cuts would satisfy these provisions of the Medicaid Act, and anecdotal evidence suggested that they would not.

Two separate lawsuits, consolidated into one action, challenged the rate cut.  These were brought by various individuals and organizations, including the California Medical Association (CMA), the California chapter of the American Academy of Pediatrics, and several other specialty medical societies.  The trial court preliminarily enjoined the rate cuts on fee-for-service payments.  The Director of the California Department of Health and Human Services, Diana Bonta, then appealed the preliminary injunction to the Ninth Circuit.

The Ninth Circuit summarily reversed the trial court, holding that private parties do not have a right of action to enforce the “equal access/equal quality” provision of the Medicaid Act.  CMA petitioned for rehearing en banc, but, the Ninth Circuit denied the request for rehearing.

Litigation Center involvement

The Litigation Center and the American Academy of Pediatrics filed a brief as amicus curiae to support the plaintiffs.  The Litigation Center also contributed to the cost of the lawsuit. 

United States Court of Appeals for the Ninth Circuit brief.

DeSario v. Thomas (f/k/a Slekis v. Thomas), 139 F.3d 80 (2d. Cir. 1998)

Outcome:     Very favorable

Issue

The issue in this case was whether a state Medicaid program could provide health care coverage to a majority of the Medicaid recipients, rather than according to the standards of the Medicaid Act.

AMA interest

The AMA believes that every United States citizen should have access to necessary medical care, regardless of ability to pay.

Case summary

This class action lawsuit challenged the use of an exclusive list of coverage for durable medical equipment by the Connecticut Medicaid program.  The United States Court of Appeals ruled that an exclusive list would be acceptable and that states can limit Medicaid coverage to services that meet the needs of the majority of its population.  The court acknowledged that its ruling was inconsistent with the rulings of other circuits which had addressed the same issue.  The plaintiffs then sought certiorari from the U.S. Supreme Court.

The Health Care Financing Administration (“HCFA”) subsequently distributed a clarification letter to all state Medicaid directors.  The letter stated that the coverage test that the Second Circuit had (arguably) approved in DeSario would not, in the future, be acceptable to HCFA.  In light of HCFA’s policy pronouncement, the U.S. Supreme Court granted certiorari, vacated the Second Circuit decision, and remanded the case for reconsideration.

Litigation Center involvement

The Litigation Center joined approximately 200 other public interest organizations in filing an amicus brief in support of the petition for certiorari.

Douglas v. Independent Living Center of Southern California and California Medical Association

132 S.Ct. 1204 (U.S. 2012)

Outcome:    Unfavorable

Issue

The issue in this case was whether private parties can sue to prevent arbitrary cuts in Medicaid funding through invocation of the Supremacy Clause of the United States Constitution.

AMA interest

The AMA believes that Medicaid funding should be sufficient to enable the program to serve its purpose as a social safety net.

Case summary

The Supremacy Clause, found in Article VI of the Constitution states: “This Constitution, and the Laws of the United States which shall be made Pursuance thereof … shall be the supreme Law of the Land … any Thing in the Constitution or Laws of any State to the Contrary notwithstanding.”

Medicaid is a cooperative federal-state program that directs federal funding to states to assist them in providing medical assistance to needy individuals.  Federal laws impose various participation requirements on those states that choose to participate in the Medicaid program.  One of the Medicaid Act requirements, sometimes known as the “Equal Access Requirement”, 42 U.S.C. § 1396(a)(30)(A), specifies that a state plan must

“assure that payments are … sufficient to enlist enough providers so that care and services are available under the plan at least to the extent that such care and services are available to the general population in the geographic area.”

The California Assembly enacted an across- the-board 10% reduction in payments to medical providers participating in the California Medicaid program.  The plaintiffs, including the California Medical Association (CMA) sued to have the rate reduction declared invalid under the Supremacy Clause of the United States Constitution, as the reduction conflicted with the Equal Access Requirement.

The trial court denied the plaintiffs’ motion for a preliminary injunction, because the Medicaid Act does not establish a private right of action to enforce the Equal Access Requirement.  However, the Ninth Circuit reversed.  It held that, even though private persons have no right to sue for enforcement of the Equal Access Requirement, they may have a right of action under the Supremacy Clause.  The State of California appealed to the United States Supreme Court.

On February 22, 2012, the Supreme Court, by a split decision, reversed the Ninth Circuit decision and remanded for further determination.  The Court observed that, since the Ninth Circuit had rendered its decision, the United States Department of Health & Human Services had found that the California Medicaid cuts were in compliance with the Medicaid Act Equal Access Requirement.  It was thus appropriate for the lower courts to determine how this change should affect the case.

AMA involvement

The AMA, along with several specialty medical societies and the American Dental Association, filed an amicus brief to support the plaintiffs.  The Litigation Center also helped to offset the CMA legal expenses.

United States Supreme Court brief.

Frew v. Hawkins, 457 F.3d 432 (5th Cir. 2006)

Also under Payment issues (for patients)

Outcome:    Very favorable

Issue
The issue in this case was whether the Texas Medicaid program was required to comply with federal Medicaid mandates regarding health care for needy children.

AMA interest
The AMA believes that every United States citizen should have access to necessary medical care, regardless of ability to pay.

Case summary
This class action sought, through enforcement of a consent decree, to require the Texas Medicaid program to provide needy children with “Early and Periodic Screening, Diagnosis and Treatment Services” mandated under the federal Medicaid law.

The State of Texas appealed from an order finding that it failed to comply with a consent decree requiring compliance with this Medicaid mandate. The United States Court of Appeals for the Fifth Circuit affirmed the trial court order and in January 2007, the United States Supreme Court denied review of the Fifth Circuit's affirmance.

Litigation Center involvement
The Litigation Center contributed toward the plaintiffs' legal expenses.

McCreary v. Offner, 172 F.3d 76 (D.C. Cir. 1999)

Also under Medicare and Payment issues (for physicians)

Outcome:    Very unfavorable

A number of state Medicaid programs adopted policies that limited or denied Medicaid reimbursement of Medicare Part B copayments for patients who qualify under both Medicare and Medicaid.  The issue in this case was whether, in the event of such dual qualification, the states had to pay at the higher Medicare rates, or whether they could pay at the lower Medicaid rates.  All four federal circuits that considered the issue prior to 1997 found that the state programs violated federal law and they were required to pay based on the higher Medicare rates.

In January 1997, the Litigation Center, in states affected by these policies, began helping its members resolve their physician members’ Medicaid reimbursement shortfalls through negotiation with Medicaid programs and through litigation in both federal court (seeking declaratory relief prospectively) and state court (seeking payment of claims retrospectively).

In August 1997, Congress passed the Balanced Budget Act of 1997 (“BBA”), which authorized Medicaid’s underpayment of Medicare copayments for future medical services and which also attempted to moot any pending lawsuits filed to collect past-due reimbursement.  The Litigation Center challenged Congress’ retroactive application of the BBA provisions in court cases then pending in Montana and the District of Columbia. The Litigation Center also served as amicus curiae in related cases in Tennessee and Wisconsin.

The Seventh Circuit, the Ninth Circuit, and the U.S. District Court for the District of Columbia all held against the physician plaintiffs. The Litigation Center supported a petition for certiorari by the California Medical Association and filed its own amicus curiae brief.  The Supreme Court denied the CMA petition as well as similar petitions by other parties in these lawsuits.  In a final effort to preserve physician rights, the Litigation Center supported an appeal by the Medical Society of the District of Columbia to the D.C. Court of Appeals.  The case was named McCreary v. Offner.  The appellate court held that HHS’s permitting states to limit reimbursement to health care providers was reasonable. 

Interest in this Case: Physicians have provided medical services to poor and elderly patients and patients with disabilities, for which they have not been properly compensated by the Medicaid programs.  The Litigation Center wants to help these physicians recover the money they were promised at the time they rendered their services, according to the law in effect when those services were rendered. 

Result:  Following the above-mentioned rulings in other jurisdictions, the D.C. Court of Appeals also ruled against the physician plaintiffs.

North Carolina Medicaid Computer System Litigation (Wake Cnty. Super.Ct.)

Also under Payment issues for physicians

Issue

The issue in this case is whether the North Carolina Medicaid program can be required to pay physicians for the services rendered to Medicaid participants.

AMA interest

The AMA supports adequate and appropriate payment to physicians under the Medicaid program.

Case summary

In December 2008, the North Carolina Department of Health and Human Services (NC HHS) awarded a $265 million contract to Computer Sciences Corporation (CSC) to keep track of claims made and payments rendered to or on behalf of patients covered under the North Carolina Medicaid plan. The computer system was to be known as “NC Tracks Medicaid Claims.” In addition to CSC, the principal contractor, Maximus Consulting and SLI Global helped to develop and implement the NC Tracks system.

Initially, NC Tracks was to “go-live” in August 2011. However, this deadline was repeatedly extended and the contract price was periodically increased. Ultimately, NC Tracks began operation on July 1, 2013, at a cost of considerably more than $265 million.

Unfortunately, NC Tracks, at least from the viewpoint of the North Carolina Medical Society (NCMS), was a disaster. System errors have caused, inter alia, delayed payments, denied reimbursements, and pre-approval denials. NCMS believes these problems go beyond ordinary computer “glitches,” in that the NC Tracks system has systematically misapplied the Medicaid payment rules. Nearly every North Carolina Medicaid provider has been affected in some way.

In the opinion of NCMS, NC HHS and CSC have been unresponsive to complaints. Moreover, the CSC customer service only exacerbates the mistakes. Despite these concerns, NC HHS has defended the CSC work product.

NCMS believed that if something were not done, resolution of the NC Tracks problems would not be foreseeable. Accordingly, NCMS sponsored a lawsuit by its members to recover money owed for Medicaid services and compel remediation of the computer system. The case, entitled Abrons Family Practice and Urgent Care v. North Carolina Department of Health and Human Services, was filed in the Wake County Superior Court on January 16, 2014. The defendants moved to dismiss the complaint.

Litigation Center involvement

The Litigation Center is helping to defray the NCMS litigation expenses.

Oklahoma Chapter of the American College of Pediatrics v. Fogarty, 472 F.3d 1208 (10th Cir. 2007)

Also under Payment issues (for patients)

Outcome:    Favorable

Issue
The issue in this case was whether the Oklahoma Medicaid Program violated the “equal access” provision of the federal Medicaid law and deprived Medicaid recipients of their civil rights.  The suit maintained that the State of Oklahoma, if it were to continue the program, had to increase its funding and reduce the bureaucratic barriers to access.

AMA interest
The AMA believes that all Americans should have access to necessary medical care, regardless of ability to pay.

Case summary
The Oklahoma Chapter of the American Academy of Pediatrics (OKAAP), the Community Action Project of Tulsa County, and several patients (but no individual physicians) sued the individuals responsible for running the Oklahoma Health Care Authority (OHCA).  The first named defendant, Michael Fogarty, was the Chief Executive Officer of OHCA.

The principal claim was that Oklahoma Medicaid funding was so low that physicians were unwilling or financially unable to treat qualifying children.  In addition, OHCA imposed bureaucratic requirements on Medicaid recipients, which made their continued participation in the program more difficult and induced some of them to cease using its benefits, even though they were substantively eligible.  Thus, the care available to these children was less than the care available to the general population of children.

The complaint alleged that the equal access violation deprived the plaintiffs of their civil rights under 42 U.S.C. § 1983.  The suit asked the court to certify a plaintiff class, to consist of those Oklahoma children who were currently or in the future would be eligible for certain services under Medicaid.  Ultimately, the complaint sought an injunction to require that OHCA meet the federal equal access requirements and otherwise comply with Medicaid standards. 

One irony of the lawsuit was that, to an extent, the defendants sympathized with the plaintiffs who, after all, were asking that the defendants receive additional funding from the State of Oklahoma, so they could discharge their statutory duties.  On January 26, 2002, the Tulsa World reported that Dr. T.J. Brickner, OHCA Chairman, acknowledged that Medicaid payments were insufficient to cover physicians’ costs:  “We’ve got to solve the access problem.  The pediatricians have a point.”

The trial court certified a plaintiff class of patients, found that OHCA had substantially violated the Medicaid equal access requirement, and referred the case to a United States Magistrate Judge for submission of a proposed injunctive order.  The trial judge also found that OKAAP lacked standing as a plaintiff and dismissed it from the lawsuit. 

The trial court entered a final judgment and injunction, ordering the largest and broadest reimbursement rate increase in any case of its kind in United States history.  The court ordered that, on an immediate interim basis, the Oklahoma Medicaid Program reimburse covered, medically necessary physician services for minor children at 100% of the Current Procedural Terminology (CPT) rate paid by Medicare for such services.  The court also required the Oklahoma Medicaid Program to hire a consulting firm to determine the reimbursement rate needed to comply on a long term basis with the Medicaid equal access provision. 

The plaintiffs appealed from the final judgment and injunction, contending in particular that the trial court erred in applying a “substantial compliance” standard in determining whether defendants met their statutory obligations to provide medical assistance to the plaintiff class.  The defendants cross-appealed.

On January 3, 2007, the Tenth Circuit Court of Appeals reversed the trial court decision and remanded the case with instructions to enter judgment for the defendants.  The ruling was based on the appellate court’s conclusion that there was a lack of  a private (i.e., non-governmental) right of action and a failure of evidence on the merits.

Although the court result appears to have been ultimately unfavorable, during the approximately year-and-a half that the trial court order was in effect the Oklahoma Legislature substantially increased Medicaid funding.  Moreover, notwithstanding the Tenth Circuit’s reversal, those funding levels were, to an extent, carried forward.  Thus, this lawsuit significantly benefited thousands of physicians and hundreds of thousands of needy children in Oklahoma.

On June 7, 2010, the plaintiffs asked the Tenth Circuit to reverse its 2007 decision.  They cited to a Congressional report, promulgated in connection with the Patient Protection and Affordable Care Act (Pub.L. 111-148), which stated that several court holdings, including this one, were based on a misunderstanding of the law.  However, this motion was denied.

Litigation Center involvement
The Litigation Center contributed substantially toward the plaintiffs’ litigation expenses.  Also, the Litigation Center, along with the American Academy of Pediatrics (the national organization), filed a brief as amici curiae to the Tenth Circuit.

United States Court of Appeals for the Tenth Circuit brief

Sanchez v. Johnson, 416 F.3d 1051 (9th Cir. 2005)

Also under Payment issues (for patients)

Outcome:    Very unfavorable

Issue
The issue in this case was whether the "quality of care" and "equal access" section of the Medicaid Act, 42 U.S.C. § 1396a(a)(30)(A), provides a private (i.e., non-governmental) right of action against states (in this case, California) for failure to fund Medicaid programs adequately. 

AMA interest
The AMA believes that all Americans should have access to necessary medical care, regardless of ability to pay.

Case summary
Plaintiffs, developmentally disabled individuals, contended that this provision creates a private right of action, and such right is necessary to ensure that states provide "equal access" to health care for Medicaid beneficiaries. 

On August 2, 2005, the Ninth Circuit reversed the trial court, holding that private parties do not have a right of action to enforce the “equal access/equal quality” provision of the Medicaid Act.  The plaintiffs asked for a rehearing of the panel decision, but their request was denied on December 5, 2005.

Litigation Center involvement

The Litigation Center joined with the American Academy of Pediatrics in an amicus curiae brief  to support the plaintiffs.

United States Court of Appeals for the Ninth Circuit brief

Washington Chapter of the American College of Emergency Physicians v. Washington HCA

(Thurston Cnty., Wash., Super. Ct.)

Also under Regulatory burdens, Payment Issues for Physicians

Outcome:    Very Favorable

Issue

The issue in this case is whether regulations imposed on emergency physicians who seek payment for treating Medicaid patients are valid.

AMA interest

The AMA believes that Medicaid funding should be sufficient to enable the program to serve its purpose as a safety net for the nation’s most vulnerable populations.

Case summary

As part of its 2011-2013 budget, the Washington legislature directed the Washington State Health Care Authority (HCA) to impose a three-visit-per-year limit on non-emergent emergency department visits by Medicaid patients.  The legislature also directed HCA to “collaborate closely with the Washington state hospital and medical associations in identification of the diagnostic codes … that will be used to determine whether an emergency room visit is a nonemergency condition.”

HCA asserted that, as a result of meetings with hospital and physician groups, it developed a list of services for non-emergency conditions.  The physicians and hospitals, however, denied that the meetings were conducted in good faith and contended that HCA unilaterally and somewhat arbitrarily (and erroneously) decided which codes could be deemed to indicate the absence of an emergency.  HCA then posted approximately 700 ICD-9 codes on its website for procedures which it considered to be of a non-emergency nature.

HCA notified all Washington Medicaid recipients that HCA would only pay for three non-emergency visits to the emergency room per recipient per year.  HCA then adopted an emergency regulation, which, with certain exceptions, limited Medicaid coverage to “a maximum of three emergency room visits that do not meet the definition of emergency services per client, per state fiscal year.”  The revised regulation also provided that HCA “will retroactively recoup payments from all of the billing providers, [including] … professional … fees.”

The Washington Chapter of the American College of Emergency Physicians sued HCA, and the Washington State Medical Association (WSMA) later intervened as an additional plaintiff.  The suit claimed that HCA’s adoption of the non-emergency ICD-9 codes was improper because (1) HCA did not meet the requirements for adopting an emergency regulation, (2) HCA did not collaborate sufficiently with the state hospital and medical associations before publishing the list on non-reimbursable ICD-9 codes, (3) HCA violated various state and federal laws governing Medicaid programs, (4) the HCA policy violated the Supremacy Clause of the United States Constitution, and (5) “the list of ineligible diagnostic … include[d] numerous diagnoses that represent true emergencies.”

On November 11, 2011, the court found that HCA had violated the required rule making procedures in adopting its emergency regulation.  It therefore held the regulation invalid.

Subsequently, the parties negotiated a settlement.

Litigation Center involvement

The Litigation Center contributed to the WSMA legal expenses.