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O'REILLY v. WYMAN

UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK


September 22, 1969

John O'REILLY et al., Plaintiffs,
v.
George K. WYMAN, in his capacity as Commissioner of the New York State Department of Social Services and the New York State Department of Social Services, Defendants

The opinion of the court was delivered by: MOORE

MOORE, Circuit Judge.

The complaint attacks the constitutionality of an amendment to the New York Social Services Law, section 367-a(4) *fn1" , effective July 1, 1969 and seeks a declaration of its invalidity and an injunction against its enforcement.

Prior to July 1, 1969 plaintiffs, by order to show cause based upon the complaint and certain affidavits, sought the convocation of a three-judge court "for the purpose of hearing and determining an application for a preliminary injunction."

 On July 2, 1969, after hearing testimony and oral argument and reading plaintiffs' brief in support of their motion for a temporary restraining order, Judge Motley granted the order restraining the defendants from putting into effect section 367-a(4) and requested the convocation of a three-judge court. This court was accordingly designated. In view of the restraining order still in effect, no action has been taken under section 367-a(4) nor experience gained as to the factual consequences of its operation.

 The Amendment, Section 367-a(4)

 Before the amendment was enacted, all persons receiving out-patient care, who qualified as medically indigent, were entitled to free medical care, services and supplies, namely, 100% of such charges were paid for by the State. By virtue of the amendment, two income categories were established, the amounts depending on the number in the family, (1) public assistance level and (2) a level higher than public assistance, but which qualifies a person for medical benefits as medically indigent. For those persons (the medically indigent who are not on welfare) the State by the amendment provided for 100% of hospital care but only 80% of out-patient care, the patient being required to pay the remaining 20%. The amendment is referred to as the co-insurance amendment.

 To ascertain eligibility in these categories certain administrative procedures and factual investigations are necessary. It is these administrative details, primarily the determination of medical indigency on an annual basis and the alleged 30-day period for determining whether a patient is entitled to 100% out-patient coverage, which plaintiffs attack as potentially creating constitutional and/or statutory defects in the amendment.

 Jurisdiction

 First, the fundamental question of jurisdiction must be resolved. The defendant New York State Department of Social Services is not a "person" within the meaning of Section 1983 of 42 U.S.C. and there is no jurisdiction as to this Department. Rosado, etc. v. Wyman, etc., 414 F.2d 170, 2 Cir., decided July 16, 1969, and cases cited therein. Although Judge Hays in Rosado believed that the attack on a State statute was, or should be, against the State and that, because the suit was not based on action taken by the Commissioner under the statute, the Commissioner as an individual was not within the scope of Section 1983, here the plaintiffs assert threatened action under the statute by the Commissioner. Furthermore, in Rosado Chief Judge Lumbard was of the view that the district court "did have pendent jurisdiction over the statutory claim in the sense of judicial power.", 414 F.2d, at p. 180 but indicated that "the three-judge court might well have dismissed the pendent claim" and that "from the standpoint of judicial convenience and economy" the three-judge court could have disposed of the claims before it. 414 F.2d, at p. 181.

 Accordingly, we assume jurisdiction over the Commissioner for the limited purpose of resolving the only question currently before us, namely, the granting or the denial of a preliminary injunction. Do these facts presently before us disclose such a clear and present danger of illegal action about to be taken as to justify the granting of the extraordinary relief of restraining enforcement of a law enacted by the State Legislature pursuant to its powers to legislate with respect to the State's welfare program? Since the law has not as yet been applied because of the restraining order, plaintiffs are forced to base their fears of violation upon the way they believe Section 367-a(4) "will be administered." Such anticipated (in their opinion) administration "violates the requirements of Title XIX of the Social Security Act, 42 U.S.C.A. § 1396a et seq. (Supp. 1969)" (GRANTS TO STATES FOR MEDICAL ASSISTANCE PROGRAMS) which requires the State to "have submitted, and had approved by the Secretary of Health, Education, and Welfare, State plans for medical assistance." Section 1396. Comprehensive details as to what the State plans must provide are set forth in sections 1396a through 1396f.

 "[It] is not the wisdom of the law that * * * [the plaintiffs] here challenge. Rather [they claim] the law, as construed by the State administrators, is in conflict with the federal requirement that subsistence income is to be saved for the necessities of life - food and shelter - and not to be used for medical payments." Plaintiffs further narrow the issue by conceding that "On its face, the co-insurance amendment conforms to the federal requirement that an individual may not be required to pay the 20% co-insurance fee where to do so would require him to 'spend down' below the public assistance level * * *". Their complaint is that "the computation of available excess income for co-insurance purposes * * * will be made on an annual basis." (Pltfs' Memo. p. 17). Thus, they say, "The length of time over which income is deemed available under the New York co-insurance requirement clearly violates federal law." They cite a federal regulation, which relates to subsistence level income and refers to reasonable evaluation of income and resources (34 Fed.Reg. 1321, Chapter II, 45 C.F.R. § 248.21(4) as being "preferably of not more than 3 months, but not in excess of 6 months, ahead * * *"). Using this provision, providing for initial eligibility for medical assistance, plaintiffs argue that "As an absolute maximum, only six months' income can be deemed available, and it is preferred that only three months' income be considered." In addition plaintiffs invoke New York's requirements for determining income for Medicaid applicants namely, "only the excess income for the month or months in which care or services are given shall be considered as available for payment." (18 NYCRR § 85.4(e)(iii)).

 Plaintiffs cite no statute or regulation which requires that "available income" for co-insurance be determined on an annual basis. There is testimony of Albert F. Moncure, who is asserted to be in charge of implementing the new amendments, which tends to support the inference that an annual calculation may be used. (Tr. p. 104-06). But his testimony is vague and inconclusive and does not state explicitly that "available income" to pay specific medical bills incurred in a particular month is to be calculated on a yearly basis. He affirms only that one must co-insure until "excess" income is used up. No reference is made to borderline cases on which the plaintiffs so heavily rely.

 Also vague and inconclusive on yearly determination is Exhibit 1, a letter from defendant Wyman to the Commissioners of Social Services, which states "* * * persons are subject to cost sharing until their income is reduced to a public assistance level."

 In short, we have been shown no requirement, either statutory or regulatory, that "available income" for co-insurance must be determined on a yearly basis, as opposed to a shorter period. Moreover, if the State improperly determines "available income", or threatens to do so, which has not been proven to us, presumably there are adequate administrative or State remedies which are available. The medical assistance program challenged here is a State program, which is not yet in its incipiency, and recourse should not be made to federal courts when such problems as may arise can be more easily and more quickly corrected in the agency itself.

 In aid of their argument plaintiffs assume several hypothetical situations. Illustrative are:

 (1) A family of four has a yearly income of $4,090. The applicable public assistance level is $3,790, leaving an excess of $300 which must be spent on medical payments before the 20% co-insurance requirement is waived. Plaintiffs reduce this $4,090 income to $340 a month and the welfare income to some $316 a month, a differential of $24. They then assume a medical bill of $200 in a month as not unlikely. Again on the assumption that the patient will be forced to pay 20% of $200, namely, $40 within the one-month period, they reach a loss of $16 ($40 paid less $24 excess) which they assert "represents disaster to him."

 (2) If the welfare level is $3,000 and a person has an income of $3,005 then only $5 is available for medical expenses.

 (3) A person earns $4,000 a year, or $77 a week, $333 a month, $2,000 in six months and is assumed to have a medical bill of $400. This bill would exhaust his $77 and leave him with a debt of $323.

 The Legislature has decided that completely free medical aid should not be given to the medically indigent as above defined but rather that since they are above welfare levels they should contribute 20% to the cost of out-patient care. Such action has been specifically allowed by Congress. S.S.A. § 1902(a)(14); 42 U.S.C.A. § 1396a(a)(14). (Supp.1969). By taking certain suppositious cases plaintiffs contend that the persons therein involved would be driven below the public assistance level. This consequence, in turn, they say, offends the Social Security principle that "No recipient of medical assistance may be required in any circumstances, to pay co-insurance when his 'available' income is at or below the public assistance level." (Pltfs' Memo. p. 11). Section 1902(a)(14), amongst other matters, provides that cost sharing (co-insurance) "shall be reasonably related (as determined in accordance with standards approved by the Secretary and included in the plan) to the recipient's income or his income and resources;". The problem - who is to determine what is "reasonably related" - is resolved by the section itself; it is by the Secretary who is to approve the standards for determination. The method of calculating the recipient's income is not specified. The only prohibition is against any cost sharing which "would reduce the individual's income below the most liberal money payment standard used by the State, at any time on or after January 1, 1969, as a measure of financial eligibility in any categorical money payment program in the State." Reg. H.E.W.; 45 C.F.R. § 248.21(a)(1)(ii).

 Of course, fact assumptions can be made of large medical bills and small incomes with a resultant mathematical deficit. But injunctions must be based upon existing or actually threatened real situations and not on far-fetched hypotheses. Who, for example, would meet, or be expected to meet, a $400 medical bill, in the week in which it was received, out of an income of $77?

 In addition to complaining of the method which the State has proposed for determining income, plaintiffs object to any investigation period to enable the State to check the applicants' right to change their status from 80% to 100%. Thus they contend that "There is no reason whatever for the State not to grant 100% medical assistance immediately on the basis of a declaration of a recipient who has already been determined to be eligible for some Medicaid assistance that he has spent down to public assistance floor" (Pltfs' Memo. p. 28). During this indicated 30-day investigatory period, plaintiffs assert that those who pay their 20% in cash will not be reimbursed whereas those who receive credit from their providers will be paid if they are entitled thereto.

 Additionally, using many hypothetical situations all calculated to change medically indigent cases to those below a public assistance level, plaintiffs endeavor to find a constitutional defect in the amendment because (they assert):

 A. The one-year period of measuring income when one month is used for other determinations (which they claim are comparable) is a denial of equal protection;

 B. The difference in treatment of those who pay their 20% in cash as distinguished from those who receive credit creates an unreasonable classification which denies equal protection; and

 C. Refusal to reimburse is a deprivation of property without due process of law.

 As noted previously, there is inadequate proof that the State will make its determinations on a yearly basis. Furthermore, whenever classifications are established by law, there are bound to be borderline cases. The legislature, supposedly representing the will of the people, has decreed that certain benefits be given to certain groups depending upon their annual salaries. Within the groups, the law applies equally. Individual borderline situations may require a change in category. But this does not create constitutional infirmity.

 The same is true of the investigatory period. The period might have been 5 days, 15 days or 60 days. But this was a legislative decision and can scarcely be characterized as unreasonable, arbitrary or discriminatory.

 In final analysis, plaintiffs ask this court to substitute its judgment (and theirs) for that of the Legislature. This would be tantamount to the assumption by the judiciary of the legislative function.

 As an in terrorem argument, plaintiffs assert that the burdens imposed upon the medical profession because of the necessity of preparing two bills, one for 80%, one for 20%, will cause doctors and other providers to refuse to treat patients. Absent proof the court will not assume that the doctors of this State will be so faithless to the Hippocratic oath nor that a doctor would not grant credit for the 20% in needy cases. The affidavits of a dentist and a chiropractor that they could not be expected to treat a patient not paying the 20% in cash, the affidavits of the director of a health center and of the acting Commissioner of New York hospitals which predict that the quality of their services will be lowered because of the amendment are not to be awarded the dignity of proof. Not a single affidavit or statement has been produced from any doctor of medicine that he would refuse to treat an indigent patient who was unable to place a 20% payment in cash in his hand before he deigned to diagnose and prescribe.

 There remains only for consideration the solution of this particular case. Two of the fundamental guides are (1) the nature, extent and quality of proof and (2) the ultimate likelihood of success. The recent decision by this court in Rosado is not without significance. In that case Judge Hays believed that an injunction was inappropriate because "the practical effect of an injunction is to order the New York legislature to appropriate more funds for welfare." (414 F.2d, at p. 176). So would it be here.

 Chief Judge Lumbard did "not feel that the federal courts are the appropriate forum for the initial resolution of plaintiffs' statutory claim," (414 F.2d, at p. 181). He was of the opinion that "the federal claim seems more apt for initial resolution by the Department of Health, Education and Welfare, than by the courts." (p. 181); and that H.E.W. "with its expertise in the operation of the A.F.D.C. [Aid to Families with Dependent Children] program and its experience in reviewing the very technical provisions of state welfare laws," should have "an initial opportunity to consider whether or not § 131-a is in compliance with § 602(a)(23) [change in welfare payments statutes]" (p. 181). Here, likewise, there has been no such determination, and the statutory claim is "more apt for initial resolution" by the Secretary of Health, Education and Welfare.

 In dealing with ever-changing social problems, the courts should not blind themselves to current events. Changes of moment in the welfare fields may well be made in the near future - witness the President's address to the nation on August 8, 1969. The H.E.W. itself is considering New York's legislation. The State administrative officials have not as yet had an opportunity to act under the amendment or to react to specific cases.

 Under all applicable standards, it is clear that a preliminary injunction should be denied and the temporary restraining order dissolved. However, since there are these unresolved factual matters, it seems best to abstain at this time from passing upon the merits with finality but rather to retain jurisdiction so that upon a trial facts may be developed upon which the court may have a better foundation for a determination of the issues than are now before it.

 Preliminary injunction denied; temporary restraining order dissolved.


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