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CARROLL v. DEBUONO

March 7, 1998

HELEN CARROLL, as Surviving Spouse of RAYMOND CARROLL, Deceased, and HARRIET S. HERRICK, as Surviving Spouse of JOHN HERRICK, on behalf of themselves and all others similarly situated, Plaintiffs, against BARBARA DeBUONO, M.D., MPH, Commissioner of Health of the State of New York, ROSS PRINZO, JR., Commissoner of the Albany County Department of Social Services, and RICHARD STASZAK, Commissioner of the Schenectady County Department of Social Services, Defendants.


The opinion of the court was delivered by: MCAVOY

 I. BACKGROUND

 This case challenges the validity of a New York State Department of Social Service regulation, 18 N.Y.C.R.R. 360-7.5(a)(5) (the "Regulation"), limiting a Medicaid recipient to reimbursement of medical costs incurred three months prior to their application and receipt of a medical card (the "retroactive period") to medical care provided by a Medicaid-enrolled provider.

 Plaintiffs are Medicaid recipients who were denied reimbursement for medical expenses incurred during their respective retroactive periods because they did not obtain medical care from a Medicaid-enrolled provider. Plaintiffs commenced the instant action by filing a class-action complaint, seeking to declare the Regulation invalid insofar as it limits reimbursement of medical expenses incurred during the retroactive period to medical care provided by Medicaid-enrolled providers; enjoining defendants from further enforcement of the Regulation; and directing defendants to reimburse plaintiffs for medical expenses incurred by plaintiffs and the proposed class during their respective retroactive periods. Plaintiffs also assert a claim against defendants in their official capacity, pursuant to 42 U.S.C. § 1983, for allegedly violating plaintiffs' rights to equal protection and due process of law under the Fourteenth Amendment.

 Presently before the Court are motions by both parties for summary judgment pursuant to Rule 56 of the Federal Rules of Civil Procedure. Both sides agree that this case may be decided on summary judgment as there are no disputed issues of material fact. Plaintiffs also move for class certification pursuant to Rule 23(c) of the Federal Rules of Civil Procedure.

 II. DISCUSSION

 A. Standard For Summary Judgment

 The standard for summary judgment is well-settled. A party seeking summary judgment must demonstrate that "there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." FED. R. CIV. P. 56(c). The moving party bears the initial burden of "informing the . . . court of the basis for its motion, and identifying those portions of 'the pleadings, depositions, answers to interrogatories, and admissions on file, together with affidavits, if any,' which it believes demonstrate the absence of a genuine issue of material fact." Celotex Corp. v. Catrett, 477 U.S. 317, 323, 91 L. Ed. 2d 265, 106 S. Ct. 2548 (1986) (quoting FED. R. CIV. P. 56(c)). The initial burden is to demonstrate "that there is an absence of evidence to support the nonmoving party's case." Id. at 325.

 The nonmoving party may defeat the summary judgment motion by producing sufficient evidence to establish a genuine issue of material fact for trial. See id. at 322. The test for existence of a genuine dispute is whether a reasonable juror could find for the nonmoving party; that is, whether the nonmovant's case, if proved at trial, would be sufficient to survive a motion for judgment as a matter of law. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250-51, 91 L. Ed. 2d 202, 106 S. Ct. 2505 (1986).

 In ruling on a motion for summary judgment, a court is required to resolve all ambiguities and draw all reasonable inferences in favor of the nonmoving party. See Donahue v. Windsor Locks Bd. of Fire Comm'rs., 834 F.2d 54, 57 (2d Cir. 1987). The nonmoving party, however, "must do more than simply show that there is some metaphysical doubt as to material facts." Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586, 89 L. Ed. 2d 538, 106 S. Ct. 1348 (1986). Indeed, the nonmoving party's opposition may not rest on mere allegations or denials of the moving party's pleading, but "must set forth specific facts showing that there is a genuine issue for trial." FED. R. CIV. P. 56(e). "The non-movant cannot escape summary judgment merely by vaguely asserting the existence of some unspecified disputed material facts, or defeat the motion through mere speculation or conjecture." Western World Ins. Co. v. Stack Oil, Inc., 922 F.2d 118, 121 (2d Cir. 1990) (citations and quotations omitted).

 It is with the foregoing standards in mind that the Court turns to the issues presented.

 B. Medicaid Statutory and Regulatory Framework

 Medicaid, enacted in 1965 as Title XIX of the Social Security Act, is a cooperative federal-state program providing medical assistance to indigent people. 42 U.S.C. § 1396. While state participation in the Medicaid program is purely voluntary, a state that participates must comply with the Medicaid laws and implementing regulations. See 42 U.S.C. § 1396; 42 U.S.C. §§ 1396a(a)(1)-1396a(a)(62); Himes v. Shalala, 999 F.2d 684, 686 (2d Cir. 1993) (citing New York v. Sullivan, 894 F.2d 20, 21-22 (2d Cir. 1990)); Dental Soc. of the State v. Carey, 61 N.Y.2d 330, 474 N.Y.S.2d 262, 264, 462 N.E.2d 362 (1984). A participating state must submit a Medicaid plan to the federal Department of Health and Human Services ("HHS") for approval. See 42 U.S.C. § 1396 et seq. Once the plan is approved, the federal government reimburses a state for a percentage of the state's payments to Medicaid providers caring for Medicaid recipients.

 The State of New York has chosen to participate in the Medicaid program. Until October 1, 1996, the New York State Department of Social Services ("DSS") supervised New York's Medicaid program. Presently, the New York State Department of Health administers the State Medicaid program. As part of its duties, the Department of Health (and formerly the DSS) is authorized to "make such regulations, not inconsistent with law, as may be necessary to implement [the Medicaid program.]" N.Y. Soc. Servs. Law § 363-a(2) (McKinney's 1992).

 C. The Challenged Regulation

 The present action challenges the validity of a state regulation adopted by the DSS, 18 N.Y.C.R.R. § 360-7.5(a)(5), which provides:

 
(a) Payment for medical care provided under the [Medicaid] program will be made to the person or institution supplying the care. However, payment for services or care may be made at the [Medicaid] rate or fee in effect at the time such services or care were provided, to the following:
 
(5) a recipient or his/her representative for paid medical bills for medical expenses incurred during the period beginning three months prior to the month of application for [Medicaid] and ending with the recipient's receipt of his/her [Medicaid] identification card, provided that the recipient was eligible in the month in which the medical care and services were received and that the medical care and services were furnished by a provider enrolled in the Medicaid program (emphasis added).

 18 N.Y.C.R.R. § 360-7.5(a)(5)

 According to plaintiffs, the Regulation, insofar as it restricts reimbursement for medical expenses incurred during the retroactive period to care provided by a Medicaid-enrolled provider, is invalid because it violates federal Medicaid laws and regulations. Plaintiffs further assert that the Regulation, by limiting reimbursement to recipients receiving care from a Medicaid-enrolled provider, imposes an unreasonable classification in violation of the Equal Protection Clause of the Fourteenth Amendment. Lastly, plaintiffs contend that defendants failed to provide plaintiffs with notice of their right to reimbursement of medical expenses incurred during the retroactive period, in violation of federal and state statutes and plaintiffs' rights to due process under the Constitution. Defendants, in turn, assert that the Regulation is entirely consistent with and implements the express conditions set forth in the federal Medicaid laws.

 i) Standard of Review

 Both sides posit that the standard of review the Court should apply in examining the Regulation is whether it is arbitrary, capricious or manifestly contrary to federal Medicaid law. See Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 844, 81 L. Ed. 2d 694, 104 S. Ct. 2778 (1984) ("Chevron "). While the Court agrees that the Chevron standard governs, further comment is required.

 The Supreme Court, in Chevron, articulated a two-step analysis in determining whether an agency interpretation complies with federal law. First, "a court must . . . determine whether the plain language of the statute speaks directly to the issue. If Congress has directly addressed the matter, the court as well as the agency must give effect to congressional intent. [Second], if . . . Congress has not directly addressed the matter at issue, then the court must determine whether the ...


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