UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF NEW YORK
April 1, 1998
K & A RADIOLOGIC TECHNOLOGY SERVICES, INC. and DIAGNOSTIC X-RAY SERVICES, INC., Plaintiffs,
BRIAN J. WING, individually and as Acting Commissioner of Social Services of the State of New York, Defendant.
The opinion of the court was delivered by: SCULLIN
MEMORANDUM- DECISION AND ORDER
This action was brought pursuant to 42 U.S.C. § 1983 seeking to remedy a deprivation of the Plaintiffs' right to receive payments under the Medicaid Act, 42 U.S.C. § 1396a(a)(10) and (a)(37), and the Medicare Act, 42 U.S.C. § 1395ccc(a)(2)(A), for services rendered to Medicaid and Medicare recipients. The Plaintiffs, K&A Radiologic Technology Services, Inc. ("K&A") and Diagnostic X-Ray Services, Inc. ("Diagnostic X-Ray"), are two small businesses which provide, upon the request of a physician, portable x-ray and other services to individuals who reside in New York and who are Medicare and/or Medicaid recipients.
The Defendant, Brian J. Wing, is the Acting Commissioner of the Department of Social Services of the State of New York ("DSS"), which is the state agency in charge of the state Medicaid program.
The Plaintiffs are suing the Defendant both in his individual capacity and official capacity.
In their Second Amended Complaint, the Plaintiffs request that the Defendant be enjoined from withholding the 20% Medicare co-insurance payments for portable x-ray services rendered to Qualified Medicare Beneficiaries ("QMBs") and for an order directing the Defendant to reimburse all Medicare co-insurance amounts for past-rendered portable x-ray services to QMBs, as well as a declaration that such x-ray services are covered under the Medicaid Act.
This case concerns the interplay between the Medicare Act and the Medicaid Act, which set up two separate federal health care programs. The Medicare Act, 42 U.S.C. §§ 1395-1395ddd, was enacted to provide medical care to individuals sixty-five years of age or older and certain disabled individuals. All Medicare-eligible individuals are automatically enrolled in Medicare Part A.
Medicare Part B provides Medicare-eligible individuals with the option of receiving supplementary insurance for medical services Part A does not cover. To enroll in Part B, the individual must pay insurance premiums. See id. §§ 1395o-1395s. Once enrolled, the federal government pays 80% of the reasonable costs and charges for the service, and the individual patient pays the remaining 20% of the Medicare services they receive plus an annual deductible, or the "co-insurance" amount. See 42 U.S.C. § 1395cc(a)(2)(A).
The Medicaid Act, 42 U.S.C. §§ 1396-1396v, is a joint federal and state funded program which provides medical care for poor people, regardless of age. A state is not mandated to participate in the joint system. However, if the state chooses to participate, the state must adopt a Medicaid plan which meets enumerated minimum requirements. See 42 U.S.C. § 1396d.
Certain individuals meet the eligibility criteria for both Medicare and Medicaid, and thus are termed "dual eligible." See New York City Health & Hosps. Corp. v. Perales, 954 F.2d 854, 856 (2d Cir. 1992). Individuals who qualify for Medicare and who have incomes below the federal poverty line but are not poor enough to qualify for Medicaid are referred to as "pure QMBs." Both "pure QMBs" and "dual eligible" are considered to be QMBs under the Medicare Act. See 42 U.S.C. § 1396d(p)(1). A state must make funds available for the 20% co-insurance amounts on behalf of such QMBs. See 42 U.S.C. § 1396a(a)(10)(E).
This lawsuit was filed on January 16, 1996. On February 14, 1996, the parties entered into a court-approved settlement ("Stipulation") in which the Defendant agreed to be permanently enjoined from withholding the 20% co-insurance payments for all portable x-ray services that the Plaintiffs would render to QMBs prospectively as of February 12, 1996. As a result of this settlement, only two claims remained: (a) the Plaintiffs' request for an order directing Defendant to reimburse them for the services rendered prior to February 12, 1996, both in his official and/or individual capacity; and (b) the Plaintiffs' request for an order declaring that portable x-ray services were covered under the Medicaid Act and that they are entitled to be enrolled as Medicaid providers. Presently before the Court are cross-motions for summary judgment on these remaining claims, and the Plaintiffs' renewed motion to hold the Defendant in contempt of the Stipulation.
I. Cross-Motions for Summary Judgment
Under Rule 56(c) of the Federal Rules of Civil Procedure, summary judgment is warranted if, when viewing the evidence submitted in the light most favorable to the non-moving party, the court determines that there is no genuine issue of material fact and the movant is entitled to judgment as a matter of law. See Fed. R. Civ. P. 56(c); Eastman Kodak Co. v. Image Tech. Servs., Inc., 504 U.S. 451, 457, 119 L. Ed. 2d 265, 112 S. Ct. 2072 (1992); Commander Oil v. Advance Food Serv. Equip., 991 F.2d 49, 51 (2d Cir. 1993). A genuine issue of fact is one that could be decided in favor of either party. See Anderson v. Liberty Lobby, 477 U.S. 242, 250, 91 L. Ed. 2d 202, 106 S. Ct. 2505 (1986). Where, as here, the Court is faced with cross-motions for summary judgment, a court is not obligated to grant either motion. Instead, each motion must be evaluated on its own merits, "'taking care in each instance to draw all reasonable inferences against the party whose motion is under consideration.'" Heublein Inc. v. United States, 996 F.2d 1455, 1461 (2d Cir. 1993) (quoting Schwabenbauer v. Board of Educ., 667 F.2d 305 (2d Cir. 1981)).
A. Reimbursement for Prior Services
As stated, the Plaintiffs seek payment from the Defendant in his official capacity and individual capacity for the portable x-ray services they rendered to QMBs during the period of 1988 to February 12, 1996.
1. Official Capacity
The Plaintiffs contend that they are not barred by the Eleventh Amendment from suing the Defendant in his official capacity because the relief being sought is prospective in nature. The Plaintiffs argue that the Defendant's obligation to pay did not arise until they submitted their claims and that had not occurred at the time they filed this lawsuit.
The Defendant argues that the obligation to pay for the services accrued on the date the services were rendered, thereby categorizing the relief as retroactive and barred by the Eleventh Amendment.
"Official capacity suits brought in federal court against a state, state agencies, or state officials must overcome the immunity accorded the states under the Eleventh Amendment." Yorktown Med. Lab., Inc. v. Perales, 948 F.2d 84, 87 (2d Cir. 1991); see Edelman v. Jordan, 415 U.S. 651, 664, 39 L. Ed. 2d 662, 94 S. Ct. 1347 (1973). The Eleventh Amendment permits a federal court to order prospective relief even if such relief does have some effect on the state treasury. See Edelman, 415 U.S. at 663-68; Association of Surrogates & Supreme Court Reporters v. New York, 940 F.2d 766, 774 (2d Cir. 1991). However, a federal court is deprived of jurisdiction to award retroactive monetary relief. See id.
In this case, the Plaintiffs seek reimbursement for the portable x-ray services rendered to QMBs prior to the date the parties executed, and the Court approved the Stipulation. This type of relief is properly categorized as retroactive relief, and, as such, the Court is barred from granting such relief by the Eleventh Amendment. See New York City Health & Hosp. Corp. v. Perales, 50 F.3d 129 (2d Cir. 1995); see also Edelman, 415 U.S. at 663-68; Yorktown Med. Lab., Inc., 948 F.2d at 86 (citing Tekkno Lab., Inc. v. Perales, 933 F.2d 1093, 1097-98 (2d Cir. 1991)). Thus, the Court grants the Defendant's motion for summary judgment on this issue.
2. Individual Capacity
The Plaintiffs argue that the Defendant, Brian Wing, was primarily responsible for the administration of the New York State Medicaid program. The Plaintiffs further assert that through his attorney, the Defendant entered into a Stipulation which imposed an injunction against him personally, and then subsequently agreed to pay for the Plaintiffs' attorney's fees.
The Defendant argues that he cannot be held responsible for the DSS's withholding of 20% co-insurance amounts before he became Acting Commissioner in April 1995. Moreover, Defendant maintains that the only "personal involvement" he had pertaining to this lawsuit while he was Acting Commissioner was through his attorney.
Personal involvement on the part of a state official being sued in his individual capacity is a prerequisite to an award of damages under 42 U.S.C. § 1983. See Wright v. Smith, 21 F.3d 496, 501 (2d Cir. 1994) (quoting Moffitt v. Town of Brookfield, 950 F.2d 880, 885 (2d Cir. 1991)). An individual who occupies a supervisory position may be found personally involved by: (1) direct participation in the infraction; (2) failure to remedy the wrong after learning of the violation through a report or appeal; (3) creation of the policy or custom under which the violation occurred, or allowing the policy or custom to continue; or (4) gross negligence in managing the subordinates whose conduct caused the violation. See Wright, 21 F.3d at 501.
Defendant Wing is neither alleged nor supported by the evidence to be a direct participant in the deprivation of the Plaintiff's rights. While serving as Acting Commissioner of the DSS, Defendant Wing did not implement any regulation regarding portable x-ray services. Prior to his tenure, however, the DSS was aware that the state was required to pay the 20% co-insurance amounts for all Medicare services, including those services "not covered under Medicaid." (Def. Letter dated Sept. 23, 1997, Ex. A.) Believing that the state would not have to pay the co-insurance amount if there were questions regarding the credentials of the service provider, the DSS implemented a regulation which set forth qualifications that x-ray service providers had to meet before being eligible to receive the co-insurance amount. (See Def. Letter dated Nov. 23, 1997.) Under this regulation, the Plaintiffs were ineligible to receive the co-insurance amounts. While the DSS did enforce this regulation during the Defendant's tenure, there is no evidence that he was personally aware of any problems surrounding the enforcement of the regulation. See Adams v. Galletta, 966 F. Supp. 210, 212 (S.D.N.Y. 1997) (stating that overall responsibility for the operation of a facility will not establish personal involvement). Furthermore, there was no evidence that such enforcement was grossly negligent or clearly contrary to the existing decisional law.
While presumably he did authorize the settlement of the prospective relief portion of this lawsuit, there is no other evidence of his personal involvement in the conduct complained of. See Bomani v. Artuz, 1998 U.S. Dist. LEXIS 2053, No. 96 Civ. 4465, 1998 WL 82694, at *2 (S.D.N.Y. Feb. 26, 1998). The Court finds that the Plaintiffs have failed to establish the requisite personal involvement on the part of Defendant Wing, and therefore grants his motion for summary judgment on this issue.
B. Portable X-Ray Services under the Medicaid Act
The Plaintiffs argue that they should be enrolled as Medicaid providers and reimbursed for the portable x-ray services rendered to Medicaid patients because a state's Medicaid plan must include "other laboratory and x-ray services." The Defendant asserts that while the state must provide for "other laboratory and x-ray services," the state has broad discretion in implementing qualifications that service providers must meet before they are eligible to be Medicaid providers. See 42 C.F.R. § 431.51(c)(2); Nutritional Support Servs., L.P. v. Miller, 830 F. Supp. 625, 627 (N.D. Ga. 1993). The Defendant asserts that the state has exercised such discretion by allowing reimbursement for portable x-ray services only when rendered by a physician.
A state's Medicaid plan must "include at least the care and services listed in paragraphs (1) through (5) . . . of section 1396d(a)." 42 U.S.C. § 1396a(a)(10)(A). Section 1396d(a)(3) specifically mentions "other laboratory and x-ray services." Other laboratory and x-ray services are defined as "professional and technical laboratory and radiological services (a) ordered and provided by or under the direction of a physician or other licensed practitioner . . . or ordered by a physician but provided by [a] referral laboratory." 42 C.F.R. § 440.30.
Under the plain language of the Medicaid Act, a state that chooses to participate in the Medicaid program must implement a medical assistance plan which at least provides for "other" x-ray services. The Medicaid Act itself does not mandate that these "other" x-ray services be rendered by a physician.
While New York State has the discretion to set reasonable qualification standards for x-ray providers, the state is obligated to provide recipients with certain minimum services, which include "other" x-ray services rendered by either a physician, licensed practitioner, or referral laboratory when ordered by a physician.
See 42 U.S.C. § 1396a(a)(10)(A); 42 U.S.C. § 1396d(a)(3); 42 C.F.R. § 440.30; see also Granato v. Bane, 74 F.3d 406, 408 (2d Cir. 1996) (noting that states "must comply with the federal Medicaid statute and regulations"). The Plaintiffs are licensed practitioners
and referral laboratories
who perform "other," i.e., portable, x-ray services either in nursing homes or other private residences only when ordered by a physician. The Plaintiffs clearly fall within the federal statutory and regulatory framework. In light of this framework, to deny the Plaintiffs enrollment as providers would unfairly discriminate against them and constitute an abuse of discretion. The Court, therefore, finds that the Plaintiffs are entitled to be enrolled as Medicaid providers and grants the Plaintiffs' motion for summary judgment.
II. Contempt Motion
The Court has authority to enforce a clear and unambiguous stipulation agreement entered into by the parties through a contempt order. See United States v. Int'l Bhd. of Teamsters, Chauffeurs, Warehousemen and Helpers of Am., AFL-CIO, 899 F.2d 143, 146 (2d Cir. 1990); Vari-O-Matic Mach. Corp. v. New York Sewing Mach. Attachment Corp., 629 F. Supp. 257, 258 (S.D.N.Y. 1986). The Plaintiffs' motion for contempt is based on the Defendant's failure to perform under the Stipulation agreement. The Stipulation provides that:
3. The Deputy Commissioner of the New York State Department of Social Services in charge of Health and Long Term Care shall, on or about February 16, 1996 . . . recommend to Defendant that Plaintiffs be provided a mechanism pursuant to which they may obtain the 20% Medicare co-insurance amounts, as set forth and defined in 42 U.S.C. §§ 1396a(a)(10)(E), 1396a(p)(1) [sic], for all portable x-ray services rendered by Plaintiffs to Qualified Medicare Beneficiaries prospectively as of February 12, 1996, as sought in their Application for a Preliminary Injunction.
The Defendant contends that pursuant to this Stipulation, it is only obligated to pay the 20% co-insurance amounts to those patients actually enrolled in the QMB program. The Defendant argues that to be found eligible to be a QMB, a patient must fill out an application to enroll in the QMB program so that the state can be assured that the individual does in fact meet the three criteria necessary. The Plaintiffs assert that the federal statute does not require enrollment and, therefore, the failure of an individual to fill out an application and become enrolled does not divest the individual of his or her QMB status.
Neither the federal statute nor federal regulation requires an individual to apply or be enrolled to obtain QMB status. QMB status is acquired once an individual meets the necessary requirements criteria
regardless of whether or not he or she is enrolled as such by the state. The state, however, is entitled to verify that individuals applying for benefits are in fact QMB qualified.
Thus, the Court finds that an individual must fill out an application and be enrolled as a QMB before receiving the 20% co-insurance payment. However, the Court also finds that pursuant to the Stipulation, once the Plaintiffs' patients apply and are found eligible and are enrolled, the Defendant is obligated to reimburse the Plaintiffs for the co-insurance payments from the time the patient was qualified as a QMB, whether or not enrolled, or from February 12, 1996, whichever is later.
The Plaintiffs contend that the Defendant should be found in contempt of the Stipulation because they have not been reimbursed for the portable x-ray services rendered to patients who meet the QMB criteria but have not applied for enrollment.
A contempt order is warranted only if the moving party establishes that "(1) the order the contemptor failed to comply with is clear and unambiguous, (2) the proof of noncompliance is clear and convincing, and (3) the contemptor has not diligently attempted to comply in a reasonable manner." King v. Allied Vision, Ltd., 65 F.3d 1051, 1058 (2d Cir. 1995).
Whether the Defendant has diligently attempted to abide by the terms of the Stipulation is a very close question. In the Stipulation, the Defendant agreed to pay the 20% co-insurance amounts for all portable x-rays services the Plaintiffs rendered to QMBs after February 12, 1996. Nearly two years after the Stipulation was executed, only roughly 20% of the Plaintiffs' claims have been paid. At oral argument held on September 15, 1997, the Defendant was directed to provide the basis for the state's determination that most of the Plaintiffs' patients were not QMBs. Since that time, the Defendant has asserted several different bases for concluding that the individuals were not QMBs,
the last being that most of the patients had never applied for enrollment. This final assertion was not made until after the Plaintiffs conducted a sample of fourteen randomly selected patients and found that each met the three QMB requirements. While the contempt issue is close, the Court finds that the Defendant has made a good faith effort, albeit a rather slow one, to comply with the Stipulation, and therefore does not find the Defendant in contempt at this time.
Therefore, after carefully examining the entire file in this matter, the submissions and arguments of counsel, and the applicable law, it is hereby
ORDERED that Defendant's motion for summary judgment is GRANTED with respect to Plaintiffs' retroactive reimbursement claim; it is further
ORDERED that Plaintiffs' summary judgment motion is GRANTED with respect to their claim regarding portable x-ray services under the Medicaid Act; and finally it is further
ORDERED that Plaintiffs' motion to hold Defendant in contempt is DENIED.
IT IS SO ORDERED.
Dated: April 1, 1998
Syracuse, New York
Frederick J. Scullin, Jr.
United States District Court Judge