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February 4, 1998

MICHELLE CATANZANO, FRANCINE CATANZANO, SAM CATANZANO, SARA TRAFTON, on behalf of herself and all persons similarly situated, Plaintiffs-Appellees, JANINE WILSON, MARY JANE SMITH, CHARLES NMI SMITH, Intervenors-Plaintiffs-Appellees,
BRIAN WING, as Acting Commissioner of the New York State Department of Social Services and BARBARA DeBUONO, as Commissioner of the New York State Department of Health, Defendants-Appellants.

The opinion of the court was delivered by: LARIMER

 On September 20, 1995, this court issued a Decision and Order adopting a final plan to fully implement a preliminary injunction that the court had issued on March 31, 1994. Catanzano v. Dowling, 900 F. Supp. 650, 652 (W.D.N.Y. 1995). On December 23, 1996, the Court of Appeals for the Second Circuit affirmed that judgment, except as to one issue (103 F.3d 223).

 The Court of Appeals held that it did not consider in its prior July 13, 1995 decision in the case (60 F.3d 113), whether federal law, specifically the so-called "Freedom of Choice" law, 42 U.S.C. § 1396a(a)(23), conflicted with the New York Medicaid Program obligating home health care providers to provide care in certain circumstances. My assumption that the Second Circuit had so ruled was determined to be erroneous and the Court of Appeals remanded the case on that issue alone.

 The Court of Appeals' remand directive was as follows:

We affirm the judgment of the district court, except to the extent that it assumed that our prior opinion in this case had decided the question of whether federal law precludes a state from obligating its home health care providers to give care in certain circumstances against their will. We vacate that portion of the district court's judgment that so held and remand for consideration of that question anew.

 This Decision and Order constitutes my ruling on that issue.


 Familiarity with the several prior decisions of both this court and the Court of Appeals in this case is assumed. The issue now before me stems from Medicaid's "freedom of choice" law, 42 U.S.C. § 1396a(a)(23). That statute provides that a Medicaid claimant may obtain services from any qualified provider "who undertakes to provide him such services ..." A 1991 regulation promulgated by the Health Care Financing Administration ("HCFA") based upon this section also states that "a recipient may obtain Medicaid services from any [qualified provider] that is ... willing to furnish them to that particular recipient." 42 C.F.R. § 431.51 (b)(1)(ii). In an explanation of this regulation, the HCFA states that it had "added language to counteract a misunderstanding that has arisen in the past: freedom of choice does not obligate a Medicaid provider to furnish services to every recipient. Within specified limits, a recipient may seek to obtain services from any qualified provider, but the provider determines whether to furnish services to the particular recipient." 56 Fed. Reg. 8835 (1991). The HCFA stated that this was consistent with the reference in § 1396a(a)(23) to a provider "who undertakes to provide him such services." Id. Defendants interpret these provisions to mean that if a CHHA concludes that treatment is not medically necessary, it cannot be forced to provide treatment, even after a professional director or fair-hearing decision had determined that the recipient should receive such treatment.

 As the Second Circuit noted in its 1996 decision in this case, "'there is no [clear] precedent in this circuit or in any other circuit on' the question of 'whether this provision of the Social Security Act [ 42 U.S.C. § 1396a(a)(23)] creates aright enforceable by' Medicaid providers." Catanzano, 103 F.3d at 232 (quoting Silver v. Baggiano, 804 F.2d 1211, 1217 (11th Cir. 1986)). Nonetheless, although the Eleventh Circuit in Silver found it unnecessary to decide this issue, it aptly observed that "as with the Medicaid statute as a whole, § 1396a(a)(23) was intended to benefit Medicaid recipients," and that "there is no indication in the language that health care practitioners are given any rights by this provision." Silver, 804 F.2d at 1216-17 (footnote omitted). See also RX Pharmacies Plus, Inc. v. Weil, 883 F. Supp. 549, 553-54 (D.Colo. 1995) (concluding that § 1396a(a)(23) was intended to protect Medicaid recipients, and does not confer any enforceable rights on Medicaid providers).

 After reviewing the prior decisions in this case and the parties' submissions, however, I find defendants' interpretation of § 1396a(a)(23) unpersuasive. First, the legislative history of this section, like that of the Medicaid statutes in general, indicates that it is intended to confer rights upon health care recipients, not providers. The Senate Report on the 1968 amendments that added subsection (a)(23) states that the Medicaid statutes had been amended to "allow recipients free choice of qualified providers of health services ..." S. Rep. No. 744 (1967), reprinted in 1967 U.S.C.C.A.N. 2834, 2838. The report goes on to say that the amendments were intended to provide that "people covered under the medicaid program would have free choice of qualified medical facilities and practitioners," id. at 2868, and that "under [§ 1396a(a)(23)], an individual is to have a choice from among qualified providers of service." Id. at 3021. The legislative history gives no indication that Congress intended to confer upon providers a right to refuse to accept particular recipients.

 Moreover, to adopt defendants' position would eviscerate much of what this court as well as the Court of Appeals have written about CHHAs' status as state actors. In its 1995 decision in this action, the Second Circuit expressly "rejected the State's argument that the CHHA's determinations should not be deemed state action." Catanzano, 60 F.3d 113 at 119. The court observed that "the CHHAs are not 'independent actors doing business with the state,' but are entities that assumed the 'responsibility for [the State's] mandated health care duties.'" Id. at 120 (quoting J.K. By and Through R.K v. Dillenberg, 836 F. Supp. 694, 697-98 (D.Ariz. 1993)).

 In its most recent decision, the Court of Appeals likewise rejected defendants' attempt to limit the scope of its prior holding that CHHAs are state actors with respect to certain specific types of determinations. The court stated that its 1995 decision "necessarily compels the conclusion that CHHAs are also state actors in being bound by the results of administrative hearings overturning their determinations. The CHHA is 'the state' at the fair hearing, and must therefore be required to shoulder 'the state's' burden if it loses at that hearing." Catanzano, 103 F.3d 223 at 228.

 I realize that the CHHAs' status as state actors does not in itself answer the question now before me, i.e., whether the freedom of choice law bars the State from forcing CHHAs to accept patients. To hold that it does, however, would make meaningless the State's obligations to provide care under the Medicaid statutes. As I stated in my 1995 decision, "the State cannot relieve itself of the obligation to provide home health care to eligible applicants merely because a CHHA does not wish to provide care. ... The State's 'responsibility' [to provide care] would provide cold comfort to the applicant if that responsibility could be evaded simply by delegating these decisions to CHHAs." Catanzano, 900 F. Supp. at 652.

 It is a fundamental rule of statutory construction that courts should avoid an interpretation of a statute that renders any part of it superfluous, or that creates an inconsistency between two parts of the statute. In re Colonial Realty Co., 980 F.2d 125, 132 (2d Cir. 1992); State of Nevada v. Watkins, 939 F.2d 710, 715 (9th Cir. 1991). Applying defendants' interpretation of the statute, however, the Medicaid laws would on the one hand require states to provide care in certain circumstances, yet at the same time permit them to nullify ...

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