Medicare Part B premiums, deductibles, and coinsurance on behalf of those who are dually eligible (i.e., both elderly and poor). 42 U.S.C. § 1395v. New York is one of the States that has such a "buy-in" program. Before January 1, 1987, New York's Medicaid program paid Medicare Part B premiums, and if medical expenses are incurred, the deductible and personal 20% coinsurance responsibility as well.
New York State altered its practice in 1987. A regulation was effected that limited the State Medicaid program's responsibility for payment of Medicare Part B deductibles and coinsurance. N.Y. Comp. Codes R. & Regs. tit. 18, § 360.7-7.
The regulation effectively stated that health care providers who served dually eligible persons under Medicare Part B would be limited to recovery of the scheduled Medicaid fee for the services rendered. "New York [would] not pay any cost-sharing amounts except . . . when the 80% of reasonable costs or charges that Medicare reimburses amounts to less than the Medicaid rate, [in which case] New York [would] pay the difference." New York City Health & Hosps. Corp. v. Perales, 954 F.2d 854, 856-57 (2d Cir.), cert. denied, 121 L. Ed. 2d 369, 113 S. Ct. 461 (1992).
The regulation also prohibited Medicare providers from recovering from the dually eligible individuals, thus sealing the limitation on providers' reimbursement.
Plaintiffs are health care providers whose ability to recover reasonable charges under Medicare was limited by the regulation. They brought suit on July 10, 1987, claiming that the regulation violated the Medicare Act, 42 U.S.C. §§ 1395-1395ccc, and the Medicaid Act. 42 U.S.C. §§ 1396-1396u. This Court agreed with the defendants' interpretation of the two Acts, and granted their motions for summary judgment and to dismiss on March 18, 1991. Judgment was entered, but was then vacated to permit filing of an amended complaint. The amended complaint was dismissed in April 1991.
Plaintiffs appealed, and the Court of Appeals for the Second Circuit reversed. The Second Circuit disagreed with the defendants' interpretation of the Acts, and held that "a Medicare provider need not be satisfied with inadequate payment, i.e., less than reasonable costs or charges, even when that provider is treating a Medicare patient who happens also to be poor." Perales, 954 F.2d at 860. The Second Circuit reversed and remanded to this Court for entry of judgment in plaintiffs' favor. This Court entered judgment for plaintiff on June 3, 1992.
B. Present Controversy
The Commissioner has complied with the judgment only for services rendered after June 3, 1992. He contends that the June 3, 1992 Order cannot be understood as requiring reimbursement for services rendered prior to the judgment, because that would be retroactive relief barred by the Eleventh Amendment to the federal Constitution. Plaintiffs and the intervenors acknowledge that retroactive relief is barred by the Eleventh Amendment, but they insist that the payments they seek do not constitute retroactive relief. They seek two types of payment in particular: (1) payment for claims that were not submitted until after the Court's June 3, 1992 Order; and (2) payment for claims that were submitted before the June 3, 1992 Order to obtain the partial reimbursement permitted by the regulation.
A. Motion to Intervene
Rule 71 of the Federal Rules of Civil Procedure states: "When an order is made in favor of a person who is not a party to the action, that person may enforce obedience to the order by the same process as if a party . . . ." Fed. R. Civ. P. 71. "'Rule 71 was intended to assure that process be made available to enforce court orders in favor of and against persons who are properly affected by them, even if they are not parties to the action.'" Berger v. Heckler, 771 F.2d 1556, 1565 (2d Cir. 1985) (quoting Lasky v. Quinlan, 558 F.2d 1133, 1137 (2d Cir. 1977)).
The June 3, 1992 Order of this Court was "in favor of" the intervenors and "against" the Commissioner, even though the intervenors were not "parties to the action." Id. The motions to intervene are granted.
B. Motion for Contempt
The Eleventh Amendment
bars lawsuits in federal court where the party seeking compensation must be paid from public funds in the state treasury. Great Northern Life Insurance Co. v. Read, 322 U.S. 47, 88 L. Ed. 1121, 64 S. Ct. 873 (1944); Kennecott Copper Corp. v. State Tax Commission, 327 U.S. 573, 90 L. Ed. 862, 66 S. Ct. 745 (1946). The Supreme Court in Edelman v. Jordan, 415 U.S. 651, 39 L. Ed. 2d 662, 94 S. Ct. 1347 (1974), clarified the relief permissible under the Eleventh Amendment. The Court stated that "a federal court's remedial power, consistent with the Eleventh Amendment, is necessarily limited to prospective injunctive relief . . . and may not include a retroactive award which requires the payment of funds from the state treasury." Id. at 677. Injunctive relief is aimed at State officials rather than at the State and its funds. Id. at 663-68 (explaining Ex Parte Young, 209 U.S. 123, 52 L. Ed. 714, 28 S. Ct. 441 (1908)).
1. Previously Unsubmitted Claims
Plaintiffs and the intervenors assert that they are entitled to recover on all claims submitted after the June 3, 1992 Order. Defendants respond that the June 3, 1992 Order cannot apply to claims for services rendered prior to the Order, and that in any event, most of those claims are barred by an independent regulation that requires submission of claims within 90 days after services are rendered. N.Y. Comp. Codes R. & Regs. tit. 18, § 540.6(a).
a. Injury: Services Rendered versus Claims Submitted
The Commissioner has refused payment of claims for services rendered prior to the Court's June 3, 1992 Order. That refusal is based upon his position that injury occurs for purposes of the Eleventh Amendment when services are rendered, not when claims are submitted or acted upon.
The parties cite discordant precedents. Some of the cases indeed indicate that injury occurs when services are rendered. Perhaps the most extensive discussion is found in Kimble v. Solomon, 599 F.2d 599 (4th Cir.), cert. denied sub nom. Buck v. Kimble, 444 U.S. 950, 62 L. Ed. 2d 320, 100 S. Ct. 422 (1979):
A court of equity not subject to the eleventh amendment could order expansive relief . . . . First, retrospectively, those eligible recipients who had managed to obtain medical services despite the reductions would be paid benefits for such services in accordance with pre-1976 state law. Second, prospectively, those recipients who receive services after the court's order would be paid benefits under pre-1976 law . . . .