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BASS v. ROCKEFELLER

May 27, 1971

Morris BASS, Barney Scardino, individually and on behalf of all others similarly situated, Plaintiffs,
v.
Nelson ROCKEFELLER, Governor of the State of New York, individually and in his official capacity, et al., Defendants


Tenney, District Judge.


The opinion of the court was delivered by: TENNEY

TENNEY, District Judge.

On May 12, 1971, after oral argument with both sides present, this Court filed a memorandum-opinion and order temporarily restraining defendants from implementing (a) Chapters 113 and 131 of the Laws of New York, which chapters amend Sections 366 and 365-a, respectively, of the New York Social Services Law, McKinney's Consol. Laws, c. 55, and were to become effective May 15, 1971, and (b) two Administrative Letters (71-PWD-17 and 71-PWD-19) *fn1" issued by the Department of Social Services pursuant thereto. Argument on the instant motion for a preliminary injunction was deferred at the State's request until May 20, 1971.

 The thrust of Chapter 113 is to reduce the availability of medical assistance to poor persons by lowering the income and resource levels which are determinative of eligibility for medical assistance under New York State's Medicaid Program, N.Y. Soc. Serv. L. §§ 363 et seq. Chapter 131 eliminates a number of benefits and services (e.g., dental care, prescription drugs, eyeglasses, optometrist's services, podiatrist's services, chiropractic services and rehabilitative therapies) *fn2" previously available to many persons who qualified for medical assistance under the Medicaid Program. More specifically, the Chapter 131 cutbacks, if implemented, would deprive the "medically needy" citizens of the State (i.e., those individuals whose income and resources exceed public assistance levels but are nevertheless unable to purchase the covered medical services) of benefits and services previously available to them.

 Plaintiffs, *fn3" individually and on behalf of all others similarly situated, urge that Chapters 113 and 131, if implemented, will violate Section 1902(d) of the Social Security Act (hereinafter referred to as the "Act"), 42 U.S.C. § 1396a(d), and cause them and members of their class immediate, serious and irreparable injury. The gravamen of the complaint and basis for the within application for injunctive relief is that Section 1902(d) of the Act, 42 U.S.C. § 1396a(d), prohibits reduction of both the number of persons eligible for Medicaid, and the benefits and services provided such persons, without prior approval by the Secretary of Health, Education and Welfare (hereinafter referred to as the "Secretary"), pursuant to a required certification from the Governor of the State.

 Section 1396a(d) of Title 42 of the United States Code, the statute at issue herein, provides as follows:

 
"(d) Modification; certification requirements
 
Whenever any State desires a modification of the State plan for medical assistance so as to reduce the scope or extent of the care and services provided as medical assistance under such plan, or to terminate any of such care and services, the Secretary shall, upon application of the State, approve any such modification if the Governor of such State certifies to the Secretary that --
 
(1) the average quarterly amount of non-Federal funds expended in providing medical assistance under the plan for any consecutive four-quarter period after the quarter in which such modification takes effect will not be less than the average quarterly amount of such funds expended in providing such assistance for the four-quarter period which immediately precedes the quarter in which such modification is to become effective,
 
(2) the State is fully complying with the provisions of its State plan (relating to control of utilization and costs of services) which are included therein pursuant to the requirements of subsection (a)(30) of this section, and
 
(3) the modification is not made for the purpose of increasing the standard or other formula for determining payments for those types of care or services which, after such modification, are provided under the State plan,
 
and if the Secretary finds that the State is complying with the provisions of its State plan referred to in clause (2); except that nothing in this subsection shall be construed to authorize any modification in the State plan of any State which would terminate the care or services required to be included pursuant to subsection (a)(13) of this section. Any increase in the formula or other standard for determining payments for those types of care or services which, after such modification, are provided under the State plan shall be made only after approval thereof by the Secretary.

 In construing this statute, plaintiffs contend that approval by the Secretary is a condition precedent to any modification by the state, which would either increase the standard of eligibility for medical assistance or decrease the services available to existing recipients of these benefits. It is not disputed, nor could it be, that the amendments to the New York Social Services Law at issue herein will have this effect. In opposition to the injunction, the State argues, first, that this Court is without jurisdiction over the instant action, and, second, that even assuming that jurisdiction exists, prior federal approval of the State's modification is not required under the statute. *fn4"

 Inasmuch as the absence of jurisdiction would preclude this Court from further considering movant's arguments on the merits, logic dictates that this threshold issue be first resolved.

 Plaintiffs assert jurisdiction of this Court on three different bases. Inasmuch as jurisdiction is properly vested in this Court under 28 U.S.C. § 1331, it is unnecessary to determine whether jurisdiction properly exists under 28 U.S.C. §§ 1343 and 1337. *fn5" Section 1331 provides this Court with original jurisdiction over civil actions arising under the laws of the United States if the matter in controversy exceeds the value of $10,000. Clearly the within action is one arising under the laws of the United States; however, it is disputed as to whether plaintiffs individually meet the monetary requirement and, if not, whether they can aggregate their claims in order to reach the $10,000 amount.

 The Supreme Court in Snyder v. Harris, 394 U.S. 332, 89 S. Ct. 1053, 22 L. Ed. 2d 319 (1969), reaffirmed the principle that "separate and distinct" claims presented by various claimants may not be added together to provide the $10,000 jurisdictional amount in controversy. Prior to the 1966 amendment of Fed. R. Civ. P. 23, only in "true" class actions was aggregation of the class claims permitted since the rights of the class members were deemed common and undivided. The Court, in Snyder v. Harris, supra, held that the amendment of Rule 23 had not altered the test for aggregation which was based upon a statutory interpretation of "matter in controversy ".

 Unfortunately, while Snyder v. Harris, supra, reaffirmed settled law on aggregation of class claims, it did not clarify the distinction between "separate and distinct" claims and those claims in which the class had a common and undivided interest. The case law interpreting these concepts has often been confusing and occasionally inconsistent. See generally, Aggregation of Claims in Class Actions, 68 Col. L. Rev. 1554 (1968).

 It has been noted that there exist essentially two tests for determining when aggregation will be permitted. Aggregation of Claims in Class Actions, 68 Col. L. Rev. at 1558-62. The interest in distribution test indicates that a common and undivided claim exists when the adversary of the class has no interest in how the claim is to be distributed among the class members. E.g., Shields v. Thomas, 58 U.S. (17 How.) 3, 15 L. Ed. 93 (1854). The second test, the essential party test, allows aggregation of class claims when none of the class members could bring suit without directly affecting the rights of his co-parties. E.g., Pentland v. Dravo Corp., 152 F.2d 851, 852 (3rd Cir. 1945). Under either of these approaches it seems clear that the present suit is proper for aggregation. The defendants, various New York State officials, although concerned with whether the State can cut back Medicaid expenditures prior to approval by the Secretary, have no interest in the apportionment of these ...


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