Appeal from an order of the District Court for the Southern District of New York, Inzer B. Wyatt, Judge, dismissing a complaint wherein plaintiffs challenged the validity of a regulation requiring "medically needy" institutionalized recipients of Medicaid to "spend down" to $28.50 per month of their income. Affirmed.
Friendly, Hays and Mulligan, Circuit Judges.
This appeal raises the question how much personal income can be retained by individuals who are receiving assistance under the New York State Medicaid program*fn1 while in a hospital or nursing home for extended care and in particular whether a New York State Medicaid regulation restricting the amount of retained income to $28.50 per month is valid under the federal Social Security Act and pertinent regulations.
Plaintiffs are recipients of New York State Medicaid who are aged, blind, or chronically ill, have been in hospitals or nursing homes for one month or longer, and qualify as "medically needy"; this designation*fn2 means that their annual income is too low to meet their medical expenses including the enormous cost of institutional care but too high to qualify them for the federal cash grant program providing "Supplemental Security Income" (SSI) for the aged, blind, and disabled.*fn3 By federal law the provision of Medicaid assistance to such persons is a matter of state option, 42 U.S.C. § 1396a(a)(10)(C), but must conform to federal requirements. Aged, blind, and disabled patients whose personal incomes are low enough to qualify under the SSI program are considered "categorically needy"*fn4 and must be included within any state Medicaid plan, 42 U.S.C. § 1396a(a)(10)(A).
At issue is how much personal income of "medically needy" Medicaid recipients such as plaintiffs can be required to be applied toward the cost of institutional care as a condition of their receiving Medicaid. The New York regulation under challenge is 18 New York Code of Rules and Regulations (NYCRR) § 360.5(e), which provides that a Medicaid recipient who is "receiving chronic care in a medical institution or intermediate care facility" and has no dependents can retain only $28.50 per month of his income for personal expenses. "All resources in excess . . . shall be utilized to meet the cost of medical assistance for that applicant or recipient. . . ."*fn5 In Social Security idiom, the regulation requires institutionalized Medicaid recipients such as plaintiffs to "spend down" to all but $28.50 per month of their income. Putting constitutional arguments aside, plaintiffs urge that this regulation is deficient for two reasons: first, that the Social Security Act provides medically needy Medicaid recipients with an express guarantee of at least $45 retained income per month; and second, that, even if this not be so, the Social Security Act requires that the medically needy be aided under standards "comparable" to those applied to categorically needy Medicaid recipients who are allegedly permitted to retain more than $28.50 personal income under the New York State program.
Plaintiffs are appealing here from a decision of Judge Wyatt in the District Court for the Southern District of New York, 409 F. Supp. 1225, denying their motion to certify as a class all Medicaid recipients in chronic care institutions with personal incomes in excess of $45 and a preliminary injunction against enforcement of 18 NYCRR § 360.5(e) and directing dismissal of the complaint. Jurisdiction is adequately based on 28 U.S.C. § 1343(3) because of plaintiffs' dormant constitutional claim.*fn6 We affirm the dismissal of the complaint, though on somewhat different reasoning; in light of this we do not reach the question of class certification.
Explanation of plaintiffs' first claim requires a foray into statutory provisions and HEW regulations of labyrinthine complexity.*fn7 Under Title XIX of the Social Security Act, the Medicaid legislation, a state which wishes to participate in Medicaid must submit a plan for providing such assistance that conforms with federal law. 42 U.S.C. § 1396a(a)(17) requires that:
A State plan for medical assistance must -
(17) include reasonable standards . . . for determining eligibility for and the extent of medical assistance under the plan which . . . (B) provide for taking into account only such income and resources. . . (in the case of any applicant or recipient who would, except for income and resources, be eligible . . . to have paid with respect to him supplemental security income benefits under subchapter XVI of this chapter [the SSI program] as would not be disregarded (or set aside for future needs) in determining his eligibility for such aid, assistance or benefits. . . . (emphasis added).
In other words, for persons such as plaintiffs, who would be eligible to receive SSI benefits because of their age, blindness or disability were it not for their income, state standards must provide that income which is disregarded in determining SSI eligibility also be disregarded in determining eligibility for and the extent of medical assistance under Medicaid. This statutory requirement is supplemented by HEW regulation, 45 C.F.R. § 248.3(c)(3)(ii)(A).*fn8
Unfortunately for the plaintiffs, however, when one turns to the portion of the Social Security Act governing disregards under the SSI program, Title XVI, one discovers that only $20 per month is subject to such disregard. 42 U.S.C. § 1382(e)(1) reads as follows:
(e) Limitation on eligibility of certain individuals.
(e)(1)(A) Except as provided in subparagraph (B), no person shall be an eligible individual . . . for purposes of this subchapter [Title XVI] with respect to any month if throughout ...