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WESTMILLER BY HUBBARD v. SULLIVAN

January 2, 1990

ELNORA WESTMILLER, BY HER ATTORNEY IN FACT GEORGE A. HUBBARD, AND VIRGINIA F. CRANSTON, AS ADMINISTRATOR OF THE ESTATE OF VIRGINIA A. CRANSTON, INDIVIDUALLY, AND BOTH ON BEHALF OF ALL OTHER PERSONS SIMILARLY SITUATED, PLAINTIFFS,
v.
LOUIS W. SULLIVAN, SECRETARY, DEPARTMENT OF HEALTH AND HUMAN SERVICES;[FN1] CESAR PERALES, COMMISSIONER, NEW YORK STATE DEPARTMENT OF SOCIAL SERVICES; W. BURTON RICHARDSON, COMMISSIONER, MONROE COUNTY DEPARTMENT OF SOCIAL SERVICES; AND DANE R. SPRAGUE, COMMISSIONER, GENESEE COUNTY DEPARTMENT OF SOCIAL SERVICES, DEFENDANTS.



The opinion of the court was delivered by: Larimer, District Judge.

DECISION AND ORDER

INTRODUCTION

This case, although it turns on this Court's interpretation of a single section buried deep in the vast, labyrinthian Medicaid Act, 42 U.S.C. § 1396 et seq., affects a great many of those citizens receiving Medicaid assistance. Plaintiffs, suing on behalf of themselves and all others similarly situated,*fn2 ask this Court to enjoin the Secretary of the United States Department of Health and Human Services ("Secretary") from enforcing an interpretation of the Medicaid Act that forbids states participating in Medicaid from using a "resource spend-down" to determine eligibility for benefits. Pending before me are the parties' cross motions for summary judgment. The facts of this case are uncontroverted; hence, all that remain are questions of law.

FACTS

Title XIX of the Social Security Act, known as the Medicaid Act and codified at 42 U.S.C. § 1396 et. seq., creates a jointly financed federal-state program which provides financial assistance to those without sufficient resources to pay for health care. In order for a state to receive federal reimbursement for funds provided to these individuals, it must submit for approval by the Secretary a "plan," on federally-provided preprinted forms, detailing the structure of its Medicaid program. This plan includes, inter alia, methods for determining Medicaid eligibility.

The record shows that for approximately 14 years, from 1966, when Congress enacted Medicaid, until 1980, states had the option to determine eligibility for assistance by means of a "resource spend-down." The New York State plan, like many others, provides that an applicant qualifies for assistance only if her income and resources for a given month do not exceed a certain amount, known as the "asset disregard." In many cases, however, while an applicant may possess resources exceeding the monthly limit by a few hundred dollars, her medical bills for that month may total thousands of dollars beyond her available assets. A resource spend-down would allow this individual to apply the resources that are in excess of the limit to payment of the medical bills, leaving Medicaid to cover the balance. In other words, the applicant is allowed to "spend-down" to the limit, thereby becoming eligible for assistance.

HHS Action Transmittal 80-58 ("Transmittal"), issued in August, 1980, for the first time announced the Secretary's new position that while the Medicaid Act, at 42 U.S.C. § 1396a(a)(17)(D), allows expressly for spend-down of excess income, neither this section nor the rules promulgated thereunder allow for spend-down of excess resources. The Secretary therefore denied states the option to include a resource spend-down provision in their plans.

Prior to 1980, New York had opted to apply such a resource spend-down procedure in determining Medicaid eligibility. In order to comply with the Transmittal, effective January, 1982, New York discontinued its prior practice and precluded use of the resource spend-down.

The named plaintiffs in this action are two applicants for Medicaid whose requests for assistance were denied because their resources exceeded the allowable limits. Nevertheless, in both cases, their incurred medical expenses for the months in which coverage was denied greatly exceeded their available assets.

Plaintiffs contend that the Secretary's enforcement of the Transmittal, preventing states from employing a resource spend-down, violates the Medicaid Act and should therefore be enjoined.*fn3 In support of their position, plaintiffs point to 14 years of uninterrupted federal toleration of and acquiescence in the resource spend-down procedures utilized by New York and other states. Plaintiffs also rely on federal legislation*fn4 passed in 1988 amending the Medicaid Act to permit use of such a resource spend-down in determining Medicaid eligibility, retroactive to October, 1982.

The Secretary focuses his argument on the "plain language" of the Medicaid Act, which he reads to impliedly forbid utilization of a resource spend-down in determining eligibility. In essence, the Secretary contends that since Congress expressly provided for income spend-down, if it had intended states to employ resource spend-down it would have said so.

Much water has passed under the bridge since this lawsuit was begun. In response to Congress' July 1988 enactment of the MCCA, New York reinstituted its resource spend-down procedure in March 1989, intending to make it retroactive to October 1982. The Court held this decision in abeyance for some time in the hope that the Secretary might promptly rule on New York's plan and therefore render this case moot. Federal approval, however, of this amendment to the state plan is still pending, and it apparently may be months or even years before there is any action. Such approval concededly might render plaintiffs' motion Moot,*fn5 although the Secretary has recently expressed to this Court his position that the MCCA makes a state resource spend-down provision retroactive only as far back as the first day of the quarter in which it was first enacted by a state. Therefore, the Secretary asserts that for New York's new resource spend-down provision to be retroactive to October 1982, it would have to have been part of the state's approved plan as of that date, which it was not. It thus appears that HHS' "approval" of the state's March 1989 amendment retroactive to October 1982 is questionable.

In any event, it is not necessary for the Court to rule on the retroactivity of New York's March 1989 plan under MCCA.

For the reasons discussed, infra, plaintiffs' motion for summary judgment is granted and the defendant Secretary is enjoined from enforcing the Medicaid Act so as to preclude the State of New York from using a resource spend-down to determine eligibility for benefits.

DISCUSSION

A. "Plain Language" of the ...


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