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MEJIA v. CITY OF NEW YORK

United States District Court, S.D. New York


December 10, 2004.

NOEL MEJIA, An Infant, by his Mother and Natural Guardian, EUFEMIA RAMIREZ, DANIEL BENITEZ, An Infant, by his Mother and Natural Guardian, TERESA BENITEZ, and ANTHONY PENA, An Infant, by his Mother and Natural Guardian, OFELIA PENA, Plaintiffs,
v.
THE CITY OF NEW YORK, by its Human Resources Administration Defendant.

The opinion of the court was delivered by: GEORGE DANIELS, District Judge

OPINION

Plaintiffs, by their mothers, bring suit against defendant alleging violations of their federal rights under 42 U.S.C. §§ 1396k and 1396a(a)(25) and of their constitutional rights under the New York State Constitution and the Fourteenth and Fifth Amendments. Defendants move to dismiss pursuant to Fed.R. Civ. P. 12(b)(6) for failure to state a claim and under Fed.R. Civ. P. 12(b)(1) for lack of subject matter jurisdiction. For the reasons stated below, defendant's motion to dismiss is granted in part and denied in part.

I. Background

  Plaintiffs Noel Mejia, Daniel Benitez and Anthony Pena are infant recipients of Medicaid assistance from defendant New York City. Medicaid, a jointly funded federal and state medical assistance program, pays the medical costs of qualifying indigent individuals whose income and resources are insufficient to meet the costs of their medical care. Established under Title XIX of the Social Security Act, 42 U.S.C. § 1396 et seq. and implemented in New York State by the Social Services Law § 267 et seq., Medicaid is administered in New York City by the Human Resources Administration ("HRA") under the supervision of the New York State Department of Health.

  Under Title XIX, New York State is obligated to develop its own Medicaid plan and establish a rates-and-methods schedule. The State must also "take all reasonable measures to ascertain the legal liability of third parties . . . to pay for care and services available under the plan" and must seek reimbursement from such third parties. 42 U.S.C. § 1396a(a)(25)(A) and (B). This requirement furthers the ultimate goal that Medicaid "be the payer of last resort." Sen. Rep. No. 146, 99th Cong., 2d Sess., 312, reprinted in 1986 U.S. Code Cong. & Admin.News 42, 279; see Matter of Steuben County Dept. of Social Servs. v. Deats, 76 N.Y.2d 451, 455, 560 N.Y.S.2d 404, 560 N.E.2d 760 (N.Y. 1990). Pursuant to this goal, Medicaid recipients are required to assign to New York State the right to seek reimbursement from any third party up to the amount of medical assistance paid. 42 U.S.C. § 1396k(a)(1)(A); N.Y.S. Social Services Law § 366(4)(h)(1); 18 NYCRR 360-7.4(a)(4).

  In New York State, therefore, the local social services district is subrogated, to the extent of its expenditures for medical care furnished, to any rights a Medicaid recipient may have to third party reimbursement. N.Y.S. Social Services Law § 367-a (2)(b); 18 NYCRR 360-7.4(a)(6). Pursuant to this assignment and subrogation scheme, New York State "obtains all of the rights that the recipient has as against the third party to recover for medical expenses, including the ability to immediately pursue those claims against the third party." Cricchio v. Pennisi, supra, 90 N.Y.2d 296, 307, 660 N.Y.S.2d 679, 683 N.E.2d 301 (N.Y. 1997).

  As an alternative to suing the responsible third party directly, the State, through the appropriate agency, may pursue reimbursement by placing a lien on personal injury suits brought by a Medicaid recipient against the responsible party. See N.Y.S. Social Services Law § 104-b. Under N.Y.S. Social Services Law § 104-b(3) and (7), a Medicaid lien "shall attach to any verdict, decision, decree, judgment, award or final order in any suit, action or proceeding in any court or administrative tribunal of this state respecting such injuries, as well as the proceeds of any settlement thereof," and continues until discharged by the public welfare official.*fn1

  In the present case, plaintiffs suffer from long term physical and mental disabilities for which they received Medicaid assistance that covered the costs of their medical care. In individual state court actions, plaintiffs brought medical malpractice lawsuits that resulted in settlement offers. Subsequent to these settlements, HRA, pursuant to N.Y.S. Social Services Law § 104-b, asserted liens against the settlement amounts received by each plaintiff. In their complaint, plaintiffs do not contest the assignment of their right to third party reimbursement to the Social Services agency. Nor do they question the propriety of Medicaid's lien against their settlement recovery. Plaintiffs challenge, however, the amount that the City alleges is owed to them for the cost of medical care. Specifically, plaintiffs claim that when the City reimburses certain health care providers, the City also pays these providers additional amounts, called allowances and/or surcharges, in excess of the actual cost of the medical care pursuant to N.Y.S. Public Health Law §§ 2807-c et seq., including a Graduate Medical Education ("GME") Surcharge, a Bad Debt and Charity Care ("BDCC") Surcharge, and charges for educational services including "assistive technology services" and "related services."*fn2 Plaintiffs argue that the GME and BDCC surcharges are not medical care expenditures and, therefore, should not be included in the amount sought by HRA in their lien. Plaintiffs further argue that defendant wrongly includes in their lien the cost of educational services. Plaintiff claims that this cost must be provided free of charge under the Individuals with Disabilities Education Act ("IDEA").

  Plaintiffs allege that after Benitez recovered $2,250,000 in settlement proceeds before the Justice Joseph Levine of the New York State Supreme Court, HRA placed a lien against Benitez's settlement in the amount of $443, 437.68. Complaint at 7, ¶ 36. Plaintiffs dispute this amount, alleging that it includes a GME surcharge, a BDCC surcharge and charges for educational and related services that are not "medical care" and, therefore, should be exempt from HRA's asserted lien. See Complaint at 4-8, ¶¶ 18, 35-41. "On February 16, 2001, Justice Joseph Levine of the Supreme Court of the State of New York entered an order directing that, inter alia, a portion of the Benitez Settlement funds, equal to the amount of the disputed lien asserted by HRA, be paid into an escrow account pending final adjudication of the lien dispute." Id. at 8, ¶ 42.*fn3 Benitez seeks a determination of the amounts asserted by HRA for the GME surcharge, the BDCC surcharge and the cost of the educational and related services. Id. at 19, ¶¶ 1, m.

  Plaintiff Pena recovered $3,000,000 in his medical malpractice lawsuit from which HRA claimed a lien in the amount of $358,271.63. Id. at 8, ¶ 35. On December 6, 2000, Justice Gerald Esposito of the Supreme Court of the State of New York signed an Order directing that $225,000.00 be paid to HRA in full payment of its claim for Medicaid. Justice Esposito further ordered that the "amount of $139,407.79 was to be held in trust and invested in United States Treasury Bonds for a three-year period, to be paid to HRA, if, within the said three-year period (i) a Supplemental Needs Trust were established or (ii) an application for Medicaid benefits were filed on behalf of Anthony Pena; otherwise, the amount would be added to the corpus of the "Anthony Pena Structured Settlement Pour Over Trust." Id. at 9, ¶ 46.*fn4 Pena seeks a rescission of the portion of this agreement that includes amounts asserted by HRA for the GME surcharge, the BDCC surcharge and the cost of the educational and related services. Id. at 19, ¶¶ l-o.

  Plaintiff Mejia settled his lawsuit for $3,000,000 from which HRA asserted a lien in the amount of $311,424.89. Complaint at 6, ¶¶ 28-29.*fn5 Mejia also seeks a determination of the amount of the GME surcharge, the BDCC surcharge and the cost of educational and related services that is included in HRA's asserted lien.

  Plaintiffs allege that by asserting these liens in the amounts in question, defendant violated their federal and constitutional rights under 42 U.S.C. § 1983. Plaintiffs claim that "[t]he defendant's collection of the Surcharges from class members' recoveries deprives class members of property without due process of law, in violation of the Fourteenth Amendment to the Constitution of the United States and in violation of 42 U.S.C. §§ 1396a(a)(25) & 1396k." Id. at 14, ¶ 68. Plaintiffs maintain that the "defendant's collection of the Surcharges from class members' recoveries takes class members' property for public use without just compensation, in violation of the Fifth and Fourteenth Amendments to the Constitution of the Unites States." Id. at 14, ¶ 69. Plaintiffs further allege that the defendant's collection of the cost of educational services, including related services, from the plaintiffs' recoveries violates the Individuals with Disabilities Education Act, 20 U.S.C. § 1400(c), the Rehabilitation Act, 29 U.S.C. § 794, as well as the Fifth and Fourteenth Amendments.

  Plaintiffs also claim that the defendant's actions deprive them of state constitutional rights guaranteed under Article I, §§ 6, 7 and Article XVII, § 1 of the New York State Constitution. Furthermore, plaintiffs allege that the defendant has "been unjustly enriched" and "[i]n equity and good conscience, defendant should not be allowed to retain or seek that money." Complaint at 17, ¶¶ 88-89. Lastly, plaintiffs claim that in making representations that the amounts claimed are the actual cost of the health care provided, defendant committed fraud because "the amounts claimed include the Surcharges and the cost of educational services, including related services, to which children with disabilities are entitled under the IDEA." Id. at 17, ¶ 92.

  Plaintiffs seek: (1) a determination of the amount of Surcharges included in defendant's subrogation claims; (2) a determination of the amounts included in the subrogation claims which defendant asserts against the representative plaintiffs which represent the cost of educational services, related services, assistive devices or any other goods or services to which they are entitled under the provisions of the IDEA; (3) a determination of the amount the defendant is entitled to collect; (4) rescission of that part of the Pena-HRA Compromise involving payment to HRA above and beyond the actual cost of medical care. Complaint at 19, ¶¶ l-p.

  Defendant does not deny the collection of these surcharges or allowances. Rather, defendant argues that: (1) the plaintiffs have no private right of action under the provisions cited in the Medicaid statute, namely 42 U.S.C. §§ 1396a(a)(25) and 1396k; (2) there has been no violation of the 14th Amendment because the plaintiffs have an adequate remedy at state law; and (3) plaintiffs have failed to state a claim under IDEA.*fn6 Furthermore, the defendant moves to dismiss the complaint by plaintiffs Benitez and Pena for lack of subject matter jurisdiction under the Rooker-Feldman and/or Younger abstention doctrines.

  II. Discussion

  Federal Rule of Civil Procedure 12(b)(6) allows a party to move to dismiss a complaint where the complaint "fail[s] . . . to state a claim upon which relief can be granted[.]" FED. R. CIV. P. 12(b)(6). In reviewing a motion to dismiss, this Court accepts the allegations in the complaint as true and draws all reasonable inferences in favor of the non-moving party. See Patel v. Searles, 305 F.3d 130, 134-35 (2d Cir. 2002). A motion to dismiss will only be granted if the plaintiff can prove no set of facts in support of its claim that would entitle it to relief. See Citibank, N.A. v. K-H Corp., 968 F.2d 1489, 1494 (2d Cir. 1992). A court may look at the complaint and any documents attached to, or incorporated by reference in, the complaint. See Dangler v. New York City Off Track Betting Corp., 193 F.3d 130, 138 (2d Cir. 1999).

  A. Plaintiff's § 1983 Claims

  In order to be entitled to relief under § 1983, a plaintiff must allege: (i) a violation of a Constitutional right and (ii) must show that the alleged deprivation was committed by a person "acting under the color of state law." See West v. Atkins, 487 U.S. 42, 48, 108 S.Ct. 2250, 101 L.Ed.2d 40 (1988); Flagg Bros., Inc. v. Brooks, 436 U.S. 149, 155, 98 S.Ct. 1729, 56 L.Ed.2d 185 (1978). Plaintiff asserts five claims under § 1983: a violation of his property rights under the Fifth Amendment's Takings Clause; a violation of his due process rights under the Fourteenth Amendment; and a violation of his federal rights under 42 U.S.C. §§ 1396a(a)(25) and 1396k, under 20 U.S.C. § 1400(c) and under 29 U.S.C. § 794.

  1. Fifth Amendment

  The Takings Clause of the Fifth Amendment provides "nor shall private property be taken for public use, without just compensation." U.S. CONST. AMEND. V. The purpose of the Takings Clause is to prevent the government "from forcing some people alone to bear public burdens which, in all fairness and justice, should be borne by the public as a whole." Armstrong v. United States, 364 U.S. 40, 49, 80 S.Ct. 1563, 4 L.Ed.2d 1554 (1960). The Clause is applicable to the states through the Fourteenth Amendment. See, e.g., Webb's Fabulous Pharmacies, Inc. v. Beckwith, 449 U.S. 155, 160, 101 S.Ct. 446, 450, 66 L.Ed.2d 358 (1980). In order to state a claim under the Takings Clause, a plaintiff must first demonstrate that he possesses a property interest that is constitutionally protected. See Ruckelshaus v. Monsanto Co., 467 U.S. 986, 1000-01, 104 S.Ct. 2862, 81 L.Ed.2d 815 (1984); see also Penn Central Transp. Co. v. New York, 438 U.S. 104, 125, 98 S.Ct. 2646, 57 L.Ed.2d 631 (1978).

  Plaintiffs allege that the defendant's collection of surcharges from their settlement proceeds constitutes a taking of their private property in violation of the Fifth Amendment. Complaint at 14, ¶ 69. Defendant argues, however, that plaintiffs' takings claim must be dismissed for failing to demonstrate the deprivation of a protected property interest. Specifically, defendant argues that under 42 U.S.C. § 1396a(a)(25), the New York State Social Services Law §§ 366(4)(h)(1) and 366-a(2)(b) and New York State caselaw, plaintiffs "do not have a property right in the settlement proceeds and the amount of the liens asserted thereto. In fact, any rights they did have in the settlement against the third party were assigned to Medicaid as a condition of the receipt of benefits." Defendant's Brief at 13.

  Defendant's point to Cricchio v. Pennisi, 90 N.Y.2d 296 (N.Y. 1997) for the proposition that "settlement proceeds are not the resources or the property of the Medicaid recipient." Defendant's Brief at 13. In Cricchio, the New York State Court of Appeals found that the Department of Social Services ("DSS") was entitled to the satisfaction of its Medicaid liens before settlement proceeds could be transferred to plaintiff's supplemental needs fund. The Court of Appeals holding, however, is not inconsistent with plaintiffs' asserted possession of a protected property interest in the disputed amounts. In the present case, it is undisputed that plaintiffs' right to their settlement proceeds were assigned to Medicaid as a condition of the receipt of their benefits and that they had no protected property interest in the amount used for medical care. HRA's lien, however, is limited to the recovery for "medical expenses," nothing more, nothing less. "As the Medicaid recipient's assignee . . ., DSS obtains all of the rights that the recipient has as against a third party to recover medical expenses. . . ." Id. at 307 (emphasis added). Taking as true for the purposes of this motion plaintiffs' allegation that the additional amounts deemed surcharges are not "medical expenses," plaintiffs did not assign that money to Medicaid. Rather, they retained their property interests in the disputed amounts. Plaintiffs, therefore, have properly claimed the deprivation of a protected property interest.

  Given their interest in that portion of the settlement proceeds, the Court must next examine whether plaintiffs' taking claims are ripe for review. The ripeness doctrine is drawn both from Article III limitations on judicial power and from prudential reasons for refusing to exercise jurisdiction. Reno v. Catholic Social Services, Inc. 509 U.S. 43, 58 n. 18, 113 S.Ct. 2485, 125 L.Ed. 2d 38 (1993). In Williamson County Regional Planning Comm'n v. Hamilton Bank, 473 U.S. 172, 105 S.Ct. 3108, 87 L.Ed.2d 126 (1985), the Supreme Court set forth a two-pronged test for assessing the ripeness of takings-type claims. First, plaintiff must allege that the government entity charged with enforcing the regulations at issue rendered a "final decision." Id. at 185-186, 105 S.Ct. 3108. Second, plaintiff must allege that he sought compensation if the state provides a "reasonable, certain and adequate provision for obtaining compensation." Id. at 194, 195, 105 S.C.t. 3108. On this basis, plaintiffs have failed to state a Takings claim under the Fifth Amendment.

  First, as to plaintiff Mejia, plaintiffs have failed to allege that a taking has even occurred. Plaintiffs make no allegation that any money was taken from Mejia by New York State. Defendant, without challenge from Mejia, asserts that "[n]o payment has yet been made by plaintiff [Mejia or his mother, Eufemia] Ramirez. Defendant's Memorandum of Law in Support of their Motion to Dismiss ("Defendant's Brief") at 4. Plaintiff Mejia's Taking claim, therefore, is dismissed as unripe for judicial review. See Long Island Lighting Co. v. Cuomo, 666 F.Supp. 370, 395 (N.D.N.Y. 1987) (finding that "[u]ntil an actual taking has occurred, an action under the takings clause does not lie.") Id.

  Similarly, plaintiff Benitez, who was ordered by Justice Levine to pay $443, 437.68 into an escrow account "pending final adjudication of the lien dispute," Complaint at 8, ¶ 42, has also failed to state a Taking claim. It is undisputed that there has not been a final resolution of the defendant's claim to the disputed amount of plaintiff Benitez's settlement funds. Plaintiffs themselves aver that the "insurance representatives for the defendants in the Benitez Tort Action have, to date, not yet made the court-ordered payment." Id. at 8, ¶ 43. Plaintiff Benitez's Taking claim, therefore, is also dismissed as unripe for judicial review.

  Plaintiff Pena, however, has sufficiently pled that a final decision has been reached in his case. Plaintiffs allege that

On December 6, 2000, an Infant's Compromise Order (the "Order") was signed by the Hon. Gerald Esposito. The Order compromised HRA's claim as follows. It directed that $225,000.00 be paid to HRA in full payment of its claim for Medicaid. The amount of $139,407.79 was to be held in trust and invested in United States Treasury Bonds for a three-year period, to be paid to HRA, if, within the said three-year period (i) a Supplemental Needs Trust were established or (ii) an application for Medicaid benefits were filed on behalf of Anthony Pena; otherwise, the amount would be added to the corpus of the "Anthony Pena Structured Settlement Pour Over Trust."
Id. at 9, ¶ 46. Pena, therefore, has satisfied the first prong of the Williamson test and alleged a claim that is ripe for judicial review. The Court must next examine whether Pena satisfies the second prong of the Williamson test requiring that plaintiff seek compensation if the state provides a "reasonable, certain and adequate provision for obtaining compensation." Williamson, 473 U.S. at 194, 195, 105 S.Ct. 3108.

  Defendants assert that plaintiffs have not pursued state procedures to seek just compensation. "The nature of the constitutional right requires that a property owner utilize state procedures for obtaining compensation before bringing a 1983 action." Lake Minnewaska Mountain Houses, Inc. v. Lehman, 1988 WL 142769, *8 (N.D.N.Y. 1988) (citing Williamson, 473 U.S. at 195, 105 S.Ct. 3108, n. 13). "[I]f a state provides an adequate procedure for seeking just compensation, the property owner cannot claim a violation of the Just Compensation Clause until it has used the procedure and been denied just compensation." Williamson, 473 U.S. at 195, 105 S.Ct. 3108.*fn7 Defendant argues that "New York law provides a sufficient post-deprivation remedy for the alleged violation, in the form of an Article 78 proceeding." Defendant's Brief at 13. Indeed, Article 78 proceedings have been instituted by plaintiffs claiming governmental takings under the Fifth Amendment. See Brusco v. New York State Div. of Housing and Community Renewal, 181 A.D.2d 514, 580 N.Y.S.2d 360 (App.Div. 1992) (Article 78 proceeding filed by landlord alleging violation of Fifth Amendment takings clause); see also Gazza v. New York State Dept. of Environmental Conservation, 89 N.Y.2d 603, 679 N.E.2d 1035, 657 N.Y.S.2d 555 (N.Y. 1997) (landowner brought Article 78 proceeding alleging a taking under the Fifth Amendment). Plaintiffs, however, do not allege that they have initiated any post-deprivation procedures to recover their lost property. Plaintiffs' complaint is devoid of any allegation that plaintiffs sought and were denied just compensation for the alleged taking under New York State's available procedures. Furthermore, plaintiffs make no allegation that these available state procedures were unreasonable, uncertain or inadequate. Plaintiffs, therefore, have failed to satisfy the second prong of the Williamson test and their taking claims under the Fifth Amendment must be dismissed as unripe for judicial review.

  2. Fourteenth Amendment

  The Fourteenth Amendment provides, in pertinent part, "No person shall . . . be deprived of life, liberty, or property without due process of law." An essential principle of due process is that a deprivation of life, liberty, or property, "be preceded by notice and an opportunity for a hearing appropriate to the nature of the case." Mulane v. Central Bank of Hanover & Trust Co., 339 U.S. 306, 313, 70 S.Ct. 652, 656 (1950). In order to state a Fourteenth Amendment claim, therefore, plaintiff must allege the essential elements: a deprivation of his property interest without notice and the opportunity to be heard.

  Plaintiffs allege that the defendant's collection of surcharges deprives them of property without due process of law in violation of the Fourteenth Amendment. Defendant, however, reiterates that plaintiffs do not possess a property right in the settlement proceeds. Secondly, defendant claims that even assuming that plaintiffs possessed a property right, plaintiffs' Fourteenth Amendment claims should be dismissed under the rule set forth by the Supreme Court in Hudson v. Palmer, 468 U.S. 517, 104 S.Ct. 3194, 82 L.Ed.2d 393 (1984). Having previously determined that plaintiffs do, in fact, possess a property interest in the disputed amount of the settlement proceeds, the Court now turns its attention to defendant's second argument.

  In Parratt v. Taylor, 451 U.S. 527, 101 S.Ct. 1908, 68 L.Ed.2d 420 (1981), the Supreme Court found that the due process clause of the Fourteenth Amendment is not violated when a state employee negligently deprives an individual of property, provided that the state makes available a meaningful post-deprivation remedy. The Court, in Hudson v. Palmer, 468 U.S. 517, 104 S.Ct. 3194, extended its finding in Parratt to intentional deprivations of property, finding that an unauthorized intentional deprivation of property by a state employee did not constitute a violation of the due process clause because meaningful post-deprivation remedies for the loss were available under state law. Id. 468, U.S. at 534, 104 S.Ct. 3194. Defendant argues that the Hudson/Parratt rule applies to the present case, arguing that "plaintiffs could have challenged the lien amounts asserted by the defendant in an Article 78 proceeding." Defendant's Brief at 15 (internal quotations omitted). Defendant asserts that because a meaningful post-deprivation remedy existed, plaintiffs' due process claims must be dismissed.

  Defendant's argument, however, proves unavailing. "The underlying rationale of Parratt is that when deprivations of property are effected through random and unauthorized conduct of a state employee, predeprivation procedures are simply "impracticable" since the state cannot know when such deprivations will occur. . . . Arguably, intentional acts are even more difficult to anticipate. . . ." Hudson, 468 U.S. at 533, 104 S.Ct. 3194. Plaintiffs' allegations, however, do not suppose random and unauthorized acts by state employees depriving them of their property. Indeed, plaintiffs' claims are based on "a systematic practice of seizing money to which the City is not entitled." Plaintiffs' Brief at 18, See Complaint at 5-6, ¶¶ 21-27. Furthermore, plaintiff alleges that the defendant collects the surcharges pursuant to a municipal policy or custom. Id., Complaint at 14, ¶ 71. Defendant does not deny these allegations. Rather, defendant argues that

the decision regarding the amount of lien asserted against a third-party is a decision which is made on a case-by-case basis. . . . The decision about whether to reduce or discharge a lien is not based upon City policy or custom. Instead, for each lien, a decision is made by the local public welfare official whether to seek full reimbursement or partial reimbursement. . . . Clearly, such discretion by a local public welfare official gives rise to a random act. Defendant's Reply Brief at 7. Plaintiffs' allegations, however, are directed toward HRA's practice of asserting liens that include not only medical costs, but also additional surcharges. Plaintiffs' allegations do not question the individual decisions made by a local public welfare official, they question the alleged and undisputed practice by HRA to charge Medicaid recipients for additional surcharges. The Hudson/Parratt rule cited by the defendant does not apply in the present case and, therefore, defendant's motion to dismiss plaintiffs' Fourteenth Amendment claims is denied. See Pangburn v. Culbertson, 200 F.3d 65, 71 (2d Cir. 1999) (finding that Hudson and Parratt apply only where the deprivation complained of is random and unauthorized); see also Alexandre v. Cortes, 140 F3d. 406, 411 (2d Cir. 1998) (finding that an adequate post-deprivation remedy is a defense to a Section 1983 due process claim only where the deprivation is random and unauthorized and not where the deprivation complained of results from the operation of established state procedures). Id.
3. Federal Rights
  In addition to asserting Fifth and Fourteenth Amendment claims under 42 U.S.C. § 1983, plaintiffs also assert a violation of rights created by 42 U.S.C. §§ 1396a(a)(25) and 1396k. These sections of the Medicaid statute, inter alia, provide for the recoupment of Medicaid costs by participating states. As discussed supra, Congress intended the Medicaid program to be "be the payer of last resort." Sen. Rep. No. 146, 99th Cong., 2d Sess., 312, reprinted in 1986 U.S. Code Cong. & Admin.News 42, 279. Pursuant to this goal, Section 1396a(a)(25) mandates that the State "take all reasonable measures to ascertain the legal liability of third parties . . . to pay for care and services available under the plan" and then to seek reimbursement from such third parties. 42 U.S.C. § 1396a(a)(25). Section 1396k, meanwhile, outlines the conditions and requirements Medicaid recipients must agree to prior to receiving Medicaid assistance. Mainly, Section 1396k requires recipients to assign to the State any rights to support and payment for medical care from any third party and provides for the enforcement and collection of these rights. Plaintiffs argue that these sections confer upon them a federal right, the violation of which is actionable under 42 U.S.C. § 1983. Defendants, however, challenge whether Sections 1396a(a)(25) and 1396k confer upon the plaintiffs any federal rights for which plaintiffs can assert a private right of action.

  Section 1983 provides a cause of action to a plaintiff against anyone who, under the color of state law, deprives a person "of any rights, privileges, or immunities secured by the Constitution and laws" of the United States. 42 U.S.C. § 1983. Section 1983 claims, however, can only be instituted by plaintiffs asserting a "violation of a federal right, not merely a violation of federal law." Blessing v. Freestone, 520 U.S. 329, 340, 117 S.Ct. 1353, 1359, 137 L.Ed.2d 569 (1997).

  The Supreme Court in Wilder v. Virginia Hospital Ass'n, 496 U.S. 498, 110 S.Ct. 2510, 110 L.Ed.2d 455 (1990) and Blessing v. Freestone, 520 U.S. 329, 117 S.Ct. 1353, applied a three-part test to determine whether a plaintiff's claims involve violations of federal rights as opposed to violations of federal law.

 

First, Congress must have intended that the provision in question benefit the plaintiff. Second, the plaintiff must demonstrate that the right assertedly protected by the statute is not so "vague and amorphous" that its enforcement would strain judicial competence. Third, the statute must unambiguously impose a binding obligation on the States. In other words, the provision giving rise to the asserted right must be couched in mandatory, rather than precatory terms.
Blessing, 520 U.S. at 340-41, 117 S.Ct. 1353 (citations omitted); see also Wilder, 496 U.S. at 509, 110 S.Ct. 2510. Furthermore, in applying the Blessing test, a plaintiff must point to a specific provision within a statute and clearly articulate the rights they claim are provided under that provision. See Golden State Transit Corp. v. Los Angeles, 493 U.S. 103, 106, 110 S.Ct. 444, 448, 107 L.Ed.2d 420 (1989) (asking whether the "provision in question" was designed to benefit the plaintiff); see also Blessing, 520 U.S. at 342, 110 S.Ct. 2510 (stating that plaintiffs must "identify with particularity the rights they claimed, since it is impossible to determine whether [the statute in question], as an undifferentiated whole, gives rise to undefined rights.") Id. (internal quotations omitted). Furthermore, once a plaintiff establishes an allegation involving a violation of a federal right, "there is only a rebuttable presumption that the right is enforceable under § 1983," because Congress may have expressly or impliedly foreclosed a remedy under § 1983. Blessing, 520 U.S. at 341, 117 S.Ct. 1353. The burden to demonstrate that Congress has expressly withdrawn the remedy is on the defendant.*fn8 Golden State Transit Corp. v. City of Los Angeles, 493 U.S. at 107, 110 S.Ct. 444.

  A review of Section 1396a(a)(25) shows that the intended beneficiary is the federal government. Section 1396a(a)(25), on its face, requires states to pursue remedies against responsible third parties, instead of relying on the federal government's assistance in paying citizens' medical bills. The Second Circuit, in Wesley Health Care Center, Inc. v. DeBuono, M.D., 244 F.3d 280, 284 (2d Cir. 2001), held that 42 U.S.C. § 1396a(a)(25) was intended to benefit the Medicaid program itself.

  [O]n its face, the statute seeks to protect the Medicaid program from paying for health care in situations where a third party has a legal obligation to pay for the care. . . . If any doubt remained over who the beneficiary of the statute and its regulations is, the [Health Care Financing Administration] states: "The overall purpose of State Medicaid third party liability . . . programs is to ensure that Federal and State funds are not misspent for covered services to eligible Medicaid recipients when third parties exist that are legally liable to pay for those services."

  Id. at 284, 285 (quoting Medicaid Programs: State Plan Requirements and Other Provisions Relating to State Third Party Liability Programs, 55 Fed. Reg. 1423, 1424 (1990). Other Courts that have reviewed this provision have concurred. See Barton v. Summers, 293 F.3d 944, 953 (6th Cir. 2002) (finding that the focus of §§ 1396a(a)(25) 1396k is facilitating federal recoupment of Medicaid costs and concluding that the intended beneficiary is the federal government), Id.; see also Harding v. Summit Medical Center, 41 Fed.Appx. 83 (9th Cir. 2002) (finding that Medicaid recipient had no private right of action under § 1396a(a)(25)(C)). Plaintiffs, however, cite Mallo v. The Public Health Trust of Dade County, Florida, 88 F.Supp.2d 1376 (S.D. Fla. 2000) which held that 42 U.S.C. § 1396a(a)(25)(C) confers a benefit upon Medicaid recipients. The issue before the District Court was whether Congress intended to benefit the Medicaid recipient in the event they settle with a third-party tortfeasor for an amount in excess of the amount Medicaid disbursed to the health care provider for the patient's care. Finding in favor of the Medicaid recipient, the District Court found that § 1396a(a)(25)(C) limits health care providers from seeking reimbursement from plaintiff or third party tortfeasors in excess of the amount paid to them by Medicaid. The issue sub judice is whether Medicaid can seek from recipients amounts for specific surcharges which plaintiffs claim is in excess of their medical care costs.

  A review of § 1396k, however, supports plaintiff's position. Section 1396k mandates the assignment, enforcement and collection of claims, specifically outlining that after recovering from a third party under such an assignment, the State must first distribute that recovery to itself to pay for its share of "medical assistance payments" and, next, to the federal government to pay "its participation in the financing of such medical assistance." The statute then clearly mandates that "the remainder of such amount collected shall be" paid to the Medicaid recipient. Therefore, although § 1396k was meant to benefit both the state and the federal government, this section also explicitly requires that the Medicaid recipient receive their share of whatever is leftover. Construing plaintiffs' allegations as true, if the portion kept by the state agency for themselves and the federal government exceeds its share of "medical assistance payments," then defendant is violating § 1396k by reimbursing plaintiffs with less than "the remainder of such amount." As such, § 1396k was intended to benefit Medicaid recipients as well as the federal government.

  The second Blessing step requires that the rights sought to be enforced by the plaintiff be neither vague nor amorphous. Id., 520 U.S. at 340-41, 117 S.Ct. 1353. Defendant submits no argument to support its contention that plaintiffs' claims do not satisfy this step. The Court finds that plaintiffs have clearly articulated a clear set of rights they seek to be enforced. Their complaint alleges a violation of their federal rights by seeking to enforce, and in plaintiff Pena's case, actually receiving, lien amounts against the plaintiffs' settlements in excess of that allowed by law.

  The third step in the Blessing analysis is to determine whether the statute imposes a binding requirement on the States. Blessing, 520 U.S. at 340-41, 117 S.Ct. 1353. This step is undisputed as the Medicaid Act is binding on the states once they have agreed to participate. The Court therefore grants defendant's motion to dismiss plaintiffs' claims under 42 U.S.C. § 1396a(a)(25), but denies their motion to dismiss plaintiffs' claims under 42 U.S.C. § 1396k.

  B. Rooker-Feldman

  Defendant also claims that the Rooker-Feldman doctrine operates to deprive this Court of subject matter jurisdiction over the claims alleged by plaintiffs Benitez and Pena. Specifically, defendant argues that plaintiffs' action is a direct challenge to the decisions of the New York State Supreme Court ordering either the payment of the lien or placement of lien funds in escrow.

  Under the Rooker-Feldman doctrine, District Courts lack subject matter jurisdiction over actions that: (1) directly challenge a state court holding or decision; or (2) indirectly challenge a state court holding or decision by raising claims in federal court that are inextricably intertwined with the state court judgment. District of Columbia Court of Appeals v. Feldman, 460 U.S. 462, 486, 103 S.Ct. 1303, 75 L.Ed.2d 206 (1983); Rooker v. Fidelity Trust, 263 U.S. 413, 44 S.Ct. 149, 68 L.Ed. 362 (1923); Moccio v. New York State Office of Court Administration, 95 F.3d 195 (1996).

  The pertinent allegation in plaintiffs' complaint states that "[o]n February 16, 2001, the Hon. Joseph Levine entered an order directing that, inter alia, a portion of the Benitez Settlement funds, equal to the amount of the disputed lien asserted by HRA, amounting to $443,437.68, be paid into an escrow account pending final adjudication of the lien dispute." Complaint at 8, ¶ 42. Defendant does not indicate which state court holding or decision is being challenged by this allegation. In fact, plaintiff's allegation, which defendant does not dispute, is clearly that there has not been a final adjudication as to the amount of the lien owed to Medicaid. With regards to plaintiff Benitez, therefore, the Rooker-Feldman doctrine does not apply. Plaintiff Pena, however, specifically asks this Court for "rescission of that part of the Pena-HRA Compromise involving payment to HRA above and beyond the actual cost of medical care and collection by HRA of the cost of educational services and related services which Anthony Pena was entitled to receive free of charge." Complaint at 19, ¶ o. Under the Rooker-Feldman Doctrine, however, this Court cannot provide plaintiff Pena with the relief he seeks. Justice Esposito's Infant's Compromise Order explicitly directs Pena to pay "$225,000.00 to the New York City Human Resources Administration in full payment of its claim for Medicaid reimbursement." If plaintiff desires a review of that order, he must seek relief through the appropriate forum, the New York State court system.*fn9 See Fariello v. Campbell, 860 F.Supp 54, 65 (S.D.N.Y. 1994) (finding that a plaintiff may not "seek a reversal of a state court judgment simply by recasting his complaint in the form of a civil rights action pursuant to 42 U.S.C. § 1983").*fn10 III. Conclusion

  Defendant's motion to dismiss plaintiff's 42 U.S.C § 1983 claims under the Fifth Amendment and 42 U.S.C § 1396a(a)(25) is granted. Defendant's motion to dismiss plaintiffs' Fourteenth Amendment claim and claims under 42 U.S.C § 1396k is denied. Defendant's motion to dismiss plaintiff Pena's claims for lack of subject matter jurisdiction based on the Rooker-Feldman doctrine is granted. Defendant's motion to dismiss plaintiff Benitez's claims for lack of subject matter jurisdiction based on the Rooker-Feldman doctrine is denied.

  SO ORDERED.


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