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Shakhnes v. Eggleston

September 30, 2010

BORIS SHAKHNES BY HIS NEXT FRIEND ALLA SHAKHNES, MIKHAIL FELDMAN, FEI MOCK, CHAIO ZHANG, AND MAYRA VALLE BY HER NEXT FRIEND, SHIRLEY CAMPOS-VALLE, INDIVIDUALLY AND ON BEHALF OF ALL OTHERS SIMILARLY SITUATED, PLAINTIFFS,
v.
VERNA EGGLESTON, AS COMMISSIONER OF THE NEW YORK CITY HUMAN RESOURCES ADMINISTRATION, ROBERT DOAR, AS COMMISSIONER OF THE NEW YORK STATE OFFICE OF TEMPORARY AND DISABILITY ASSISTANCE; AND ANTONIA C. NOVELLO, AS COMMISSIONER OF THE NEW YORK STATE DEPARTMENT OF HEALTH, DEFENDANTS.
MARIE MENKING, BY HER ATTORNEY-IN-FACT WILLIAM MENKING, ON BEHALF OF HERSELF AND ALL OTHERS SIMILARLY SITUATED, PLAINTIFF,
v.
RICHARD F. DAINES, M.D., IN HIS OFFICIAL CAPACITY AS COMMISSIONER, NEW YORK STATE DEPARTMENT OF HEALTH, AND DAVID A. HANSELL, IN HIS OFFICIAL CAPACITY AS COMMISSIONER, NEW YORK STATE OFFICE OF TEMPORARY AND DISABILITY ASSISTANCE: DEFENDANTS.



The opinion of the court was delivered by: Richard J. Holwell, District Judge

MEMORANDUM OPINION AND ORDER

This opinion disposes of five motions filed in two related actions. Plaintiffs in both Shakhnes v. Eggleston, No. 06 Civ. 04778 ("Shakhnes") and Menking v. Daines, No. 09 Civ. 04103 ("Menking") allege procedural deficiencies in the processing of Medicaid appeals by the New York agencies responsible for Medicaid administration. In both, the plaintiffs assert that the agencies are legally obligated to resolve appeals from adverse determinations within ninety days after those appeals are made, and in both, the plaintiffs contend that the agencies systematically fail to meet that ninety-day deadline. The agency defendants in both actions have moved to dismiss the plaintiffs' claims, primarily on the grounds that there is no cause of action for the alleged deficiencies in Medicaid Fair Hearing procedures. (06-cv-04778 [84]; 09-cv-04103 [12].) The Court consolidates the actions solely for the purposes of this opinion because both motions are largely disposed of by the Court's holding, set forth below, that there is a cause of action under 42 U.S.C. § 1983 for failure to resolve Medicaid appeals within ninety-days after they are filed. Fed. R. Civ. P. 42(a)(3).

The principal differences between the Shakhnes and Menkingcases are their procedural posture, the scope of their claims, and the breadth of the classes that they wish to certify. Shakhnes, filed in 2006, has completed discovery and has (in addition to the motion to dismiss), a pending motion for class certification and pending cross-motions for summary judgment. (06-cv-04778 [86], [88], [93].) The Shakhnes complaint asserts causes of action for ninety-day violations as well as failures to provide either adequate notice of the right to appeal or temporary interim services pending a decision by the fair hearing officer. Moreover the putative Shakhnes class includes only a subset of Medicaid recipients-those who request home health services and who are not challenging decisions merely relating to their financial eligibility for Medicaid. On the other hand Menking, filed in 2009, is only at the motion to dismiss stage, states claims only for ninety-day violations (that is, excluding claims for inadequate notice and failure to provide interim services), and seeks to represent a class including all types of Medicaid recipients, home health service and otherwise.

For the reasons that follow the motion to dismiss in Menking is denied in its entirety, and the motion to dismiss in Shakhnes is denied in part and granted in part. Additionally as to the Shakhnes action: (1) plaintiff's motion for class certification is granted and a class is certified pursuant to Federal Rule of Civil Procedure 23(b)(2); (2) plaintiffs' motion for partial summary judgment is granted in part; and (3) the New York City Human Resources Administration's motion for summary judgment is denied.

I. BACKGROUND

The following undisputed facts are provided for background purposes only. Because this opinion addresses several motions carrying different standards of factual review, the Court addresses material disputes and their relevant review standards as necessary in the body of the opinion.

A. Medicaid Fair Hearings

Medicaid is a joint federal-state program, established under Title XIX of the Social Security Act, 42 U.S.C. §§ 1396 et seq., which supplies federal funding for State programs that provide medical assistance to certain qualified individuals. States are not required to participate in the program, but if they elect to participate they must comply with federal law and regulations in order to remain qualified for federal financial support under the program. Id. Among other things a participating state must adopt an approved State plan that meets certain statutory and regulatory requirements, and must administer its program through a "single State agency." In New York, that single State agency is the New York State Department of Health ("DOH"), a defendant in both actions. N.Y. Soc. Serv. Law § 363-a(1).

As occurs in any social service system, there are times when the Medicaid administrating agency issues a decision adverse to the interests of a particular participant. The Medicaid system permits the appeal of those decisions: the statute States that "[a] State plan for medical assistance must provide for granting an opportunity for a fair hearing before the State agency to any individual whose claim for medical assistance under the plan is denied or is not acted upon with reasonable promptness." 42 U.S.C. § 1396a(a)(3). Although as the "single State agency" responsible for Medicaid administration the DOH has ultimate responsibility with respect to fair hearings, it has delegated aspects of the process to other agencies. The DOH has delegated the responsibility to schedule, conduct, and decide fair hearings to the New York State Office of Temporary and Disability Assistance, also a defendant in this action ("OTDA" or, collectively with the DOH, the "State" or "State defendants"). After they are issued decisions after fair hearing ("DAFHs") are returned to DOH, which forwards them to the relevant local social services district for implementation. 42 U.S.C. § 1396a(a)(1); N.Y. Soc. Serv. Law § 365(1). The New York City Human Resources Administration ("HRA" or "City"), also a defendant, is the local social services administrator for New York City, and thus has been delegated the responsibility for implementing DAFHs for applicants in this area. The State and City agencies have a policy in place for implementing DAFHs within ninety days of an applicants' request: OTDA is allocated sixty days in which to hold the hearing and issue a decision, and HRA is allocated thirty days in which to implement it. (Hauser Decl., Ex. H, HRA Memorandum, dated March 8, 1994.)

B. Shakhnes

The Shakhnes named plaintiffs all fall within a subset of Medicaid recipients: they are individuals who assert a need for home health services, for example assistance with eating, toileting, ambulating, food shopping, or turning over in bed. (Pltfs. SJ Mem. 5.) Their complaint states four causes of action. Three are brought against the OTDA, the DOH, and the New York City HRA. They allege: (1) a custom and practice of failing to take and/or ensure final administrative action within ninety days after fair hearing requests in home health cases; (2) a custom and practice of failing to provide and/or ensure the provision of timely and adequate notice of denials, reductions, or terminations of home health services; and (3) a custom and practice of failing to provide, and/or ensure the provision of home health services pending decisions on fair hearings for individuals who request hearings. Each of these first three causes of action asserts claims, which plaintiffs seek to enforce through 42 U.S.C. § 1983, under the Medicaid statute and its implementing regulations, the Due Process Clause of the Fourteenth Amendment to the United States Constitution, and state law. The fourth cause of action is brought against only the State defendants, the OTDA and the DOH; it alleges an unlawful custom and practice of failing to properly oversee and supervise City defendants' performance of their notice, ninety-day, and aid-continuing objections.

Defendants have moved against all four causes of action. State defendants' motion to dismiss asserts that: (1) the Eleventh Amendment bars aspects of this action, (2) there is no § 1983 cause of action for the rights plaintiffs seek to vindicate, (3) plaintiffs have received due process of law, (4) the State cannot be held vicariously liable for the City's misconduct, and (5) plaintiffs have failed to demonstrate the elements of an inadequate supervision claim. Additionally the City has moved for summary judgment, asserting that: (1) plaintiffs lack standing to bring certain claims against the City, (2) there is no § 1983 cause of action for the rights plaintiffs seek to vindicate, and (3) plaintiffs' claims lack evidentiary support.

Plaintiffs have cross moved only with respect to their ninety-day claim. Notably, plaintiffs seek certification of a class of Medicaid home health recipients only with respect to the ninety-day claims. Furthermore plaintiffs have moved for partial summary judgment against both the City and the State only with respect to those claims, asserting that: (1) there is a § 1983 cause of action for the ninety-day claims, and (2) data produced through discovery reveals both City and State defendants' systemic noncompliance with the ninety-day requirement.

The court addresses each of these issues below.

C. Menking

Plaintiff Marie Menking alleges that she applied for Medicaid assistance to help pay for her nursing home care for a period from 2005 through 2006, but her application was denied in August 2007. (Menking Compl. ¶ 1.) She filed a timely request for a fair hearing on October 03, 2007, (Id.), a hearing was noticed for 127 days later on February 07, 2008, (Id. ¶ 16) and at the time her Complaint was filed in April 2009 no decision had issued (although a decision has since been issued). (Id. ¶ 18.) Menking seeks to represent a class of:

All current and future New York City applicants for, or recipients of Medicaid who have requested or will request Fair Hearings, for whom Defendants have not rendered and implemented or will not render and implement a Fair Hearing decision within 90 days from the date of the request. (Id. ¶ 21.)

Her complaint asserts two causes of action, one under 42 U.S.C. § 1983 for violations of the Medicaid statute and its implementing regulations, and a second under 42 U.S.C. § 1983 for violations of the Due Process Clause of the Fourteenth Amendment to the United States Constitution. Both causes of action are brought jointly against the DOH and OTDA. No City agency is a defendant in the Menking case.

The State defendants have moved to dismiss the complaint on the grounds that: (1) plaintiffs' causes of action have been mooted because she has received a decision after fair hearing since filing the Complaint, (2) the Eleventh Amendment bars the Court from issuing relief based on evidence of past conduct, (3) plaintiff lacks a § 1983 cause of action for her ninety-day claim, (4) plaintiff has received due process, and (5) plaintiff has not demonstrated prejudice as a result of delay.

These issues are also addressed below.

II. THRESHOLD ISSUES

A. Eleventh Amendment

In both the Shakhnes and Menking cases the State defendants correctly argue that the Eleventh Amendment prohibits suits in federal court against state officials on the basis of state law. Pennhurst State School and Hospital v. Halderman, 465 U.S. 89, 100 (1984). Thus to the extent the Shakhnes and Menking complaints state claims under the New York State Constitution, New York Social Services Law, and state agency regulations, those claims must be dismissed as against the State defendants. See Meachem v. Wing, 77 F. Supp. 2d 431, 437-38 (S.D.N.Y. 1999) (dismissing nearly identical state law claims).*fn1 Unfortunately for defendants those are only a small part of the plaintiffs' claims; the principal requirements they seek to enforce arise under federal law enforceable against state officials.

Under the doctrine of Ex Parte Young, 209 U.S. 123 (1908), "a state official . . . may be sued in a federal forum to enjoin conduct that violates the federal Constitution, notwithstanding the Eleventh Amendment bar." Dube v. State University of New York, 900 F.2d 587, 595 (2d Cir. 1990). That doctrine extends to suits against a state official in violation of any federal law. See Kostok v. Thomas, 105 F.3d 65, 68 (2d Cir. 1997). Accordingly, plaintiffs' claims based on federal law, specifically the fair hearing requirement in 42 U.S.C. § 1396a(a)(3) and its implementing regulations, are not subject to the Eleventh Amendment bar on suits against state officials. See Meachem, 77 F.Supp.2d at 437 ("[C]laims under federal statutory law such as.the Medicaid Act are also not barred by the Eleventh Amendment.").

The State defendants also argue that any "declaratory relief" sought by plaintiffs "may not be based upon evidence describing State defendants' past conduct" because the Eleventh Amendment "does not permit judgments against State officers declaring that they violated federal law in the past." (State Def. Shakhnes MTD 11; State Def. Menking MTD 12 (asserting that "the Complaint must be dismissed.for lack of subject matter jurisdiction" because any "determination as to whether Defendants violated federal law.involves a retrospective declaration".)) They therefore think that plaintiffs cannot prove their claims, which have as their evidentiary basis the past conduct of State officials. Defendants are incorrect in stating that the Court is limited by the Eleventh Amendment as to what evidence it can consider, but correct that the Court is limited thereby in the relief it can grant. "[W]hen a plaintiff sues a state official alleging a violation of federal law, the federal court may award an injunction that governs the official's future conduct, but not one that awards retroactive monetary relief." Pennhurst, 465 U.S. at 102-03 (citing Edelman v. Jordan, 415 U.S. 651 (1974)). But the Eleventh Amendment does not prevent the Court from considering evidence of past events, only from granting retroactive declaratory relief, since "the general criterion for determining when a suit is in fact against the sovereign is the effect of the relief sought." Id. at 109 (emphasis in original). If courts could not consider past evidence, there could never be an evidentiary basis for the kind of prospective relief that has been generally available since the Supreme Court decided Ex Parte Young in 1908. Every federal court to issue prospective relief against state officials in the 102 years since has relied upon an evidentiary record reflecting a defendant's past conduct. This Court is unwilling to part ways from their approach. Accordingly the Court declines to limit the evidence it will consider; the Court will limit itself to prospective relief if and when such a judgment is entered.

B. Mootness

The State defendants assert that the Menking action is moot because Menking, the named plaintiff, has had a fair hearing since this litigation commenced. However, "[w]here class claims are inherently transitory, 'the termination of a class representative's claim does not moot the claims of the unnamed members of the class.'" Robidoux v. Celani, 987 F.2d 931, 938-39 (2d Cir. 1993) (quoting Gerstein v. Pugh, 420 U.S. 103, 110 n.11, 95 S.Ct. 854, 861 n. 11, 43 L.Ed. 2d 54 (1975)); See Mental Disability Law Clinic v. Hogan, No. 06 CV 6320, 2008 WL 4104460, at *9 (E.D.N.Y. Aug. 29, 2008) (noting that "some claims are 'so inherently transitory that the trial court will not have even enough time to rule on a motion for class certification before the proposed representative's individual interest expires.'" (quoting County of Riverside v. McLaughlin, 500 U.S. 44, 52, 111 S.Ct. 1661, 1667, 114 L.Ed. 2d 49 (1991)). This is such a case. Menking's claims allege a failure to take final administrative action within a ninety-day deadline. However in the crowded federal courts, simply having a motion decided sometimes takes more than twice that long. See 28 U.S.C. § 476(a)(1) (requiring a semiannual report (colloquially known as the "six month list") disclosing the motions pending for more than six months on each judicial officer's docket). In that time even a delinquent fair hearing system is likely to render final action and moot a potential named plaintiff's particular case. Thus assuming arguendo that Menking has received final administrative action-a disputed proposition that the Court need not now address-the Court declines to dismiss this action as moot. See Finch v. New York State Office of Children and Family Services, 252 F.R.D. 192, 200 (S.D.N.Y. 2008) (although class representatives alleging undue delay had received fair hearings, action not moot because "delays in administrative hearings are inherently transitory").

C. Availability of Article 78 Proceedings

In both Shakhnes and Menking the State defendants argue that the existence of a State administrative mandamus procedure known as Article 78 defeats aspects of the plaintiffs' case. (State SJ Opp. 4-5 (failure to pursue Article 78 proceedings constitutes waiver of named plaintiffs' claims); State Shakhnes MTD Mem. 18-19 (availability of Art. 78 proceedings defeats due process claim as a matter of law); State Menking MTD Mem. 21-23 (same); State Class Cert. Opp. 4-5 (representation of counsel combined with availability of Article 78 proceedings defeats typicality).)

Defendants contend that "[f]ailure of a person represented by counsel to pursue available judicial remedies constitutes waiver of a future claim based on purported harm that might have been eliminated by use of those remedies." (State SJ Opp. 4.) This proposition has no support in the case law. Rather, for purposes of § 1983, "[a] plaintiff is not required to exhaust state remedies before commencing an action pursuant to 42 U.S.C. § 1983." Meachem v. Wing, 77 F. Supp. 2d 431, 436 (S.D.N.Y. 1999) (citing Patsy v. Board of Regents, 457 U.S. 496, 516, 102 S.Ct. 2557, 2568, 73 L.Ed. 2d 172 (1982) ("[W]e conclude that exhaustion of state administrative remedies should not be required as a prerequisite to bringing an action pursuant to §1983."); Horowitz v. Bane, 833 F. Supp. 1054, 1068 (S.D.N.Y. 1993) ("Defendants' argument that New York allows its fair hearing decisions to be challenged through an Article 78 proceeding is . misplaced. The availability of state administrative procedures . does not foreclose resort to § 1983 . [nor] [does] the failure to exhaust state administrative and judicial remedies."). Thus plaintiffs did not waive their § 1983 claims arising out of the Medicaid statute by declining to bring Article 78 proceedings.

On the other hand in the Fourteenth Amendment due process context the availability of state remedies can defeat a claim if (and only if) those remedies are constitutionally adequate. See New York State National Organization for Women v. Pataki, 261 F.3d 156, 167-69 (2d Cir. 2001). Thus in Pataki the Second Circuit determined, after a bench trial below, that the Article 78 remedy was constitutionally adequate and defeated the N.O.W.'s due process claim. But due process may not be satisfied if hearings come months after a deprivation, Krimstock v. Kelly, 306 F.3d 40 (2d Cir. 2002), or where delays are egregious and without rational justification, Kraebel v. New York City Dept. of Housing Preservation & Development, 959 F.2d 395, 405 (2d Cir. 1992) (reversing lower court's grant of motion to dismiss), or if it is "the established state procedure that destroys [plaintiff's] entitlement without according him proper procedural safeguards", Id. Take, for example, the claims of named plaintiff Mikhail Feldman, who suffers from diabetes, hypertension, arthritis, and severe dizziness. (Hauser Decl., Ex. M.) He had to delay two hernia surgeries while waiting over seven months for a fair hearing. (Hauser Decl., Ex. M.) No post-deprivation remedy could correct the months that Mr. Feldman's hernias went uncorrected. Plaintiff's due process claims are not necessarily barred by the state remedy, then, because they allege systematic failures that are not adequately remedied by a post-deprivation proceeding. Moreover the efficacy of the state remedy is questionable here where the injury is delay and Article 78 proceedings are likely to take time themselves. Accordingly the Court declines to dismiss either the Shakhnes or Menking plaintiffs' due process claims based on the availability of Article 78 proceedings.*fn2

III. FAILURE TO STATE A CLAIM

Both Shakhnes and Menking raise the question of whether there exists a private cause of action under 42 U.S.C. § 1983 for failure to resolve fair hearings within ninety days of appeals. The Court concludes that such a cause of action exists, and identifies its precise contours below.

42 U.S.C. § 1983 provides a civil cause of action for the deprivation of certain federal rights. The statute imposes liability upon "[e]very person who, under color of any [law] of any State . subjects, or causes to be subjected, any citizen of the United States or other person within the jurisdiction thereof to the deprivation of any rights, privileges, or immunities secured by the Constitution and laws [of the United States].." 42 U.S.C. § 1983. There are no disputes here as to causation or whether the defendants acted under color of law. Accordingly the operative question is whether some form of ninety-day administrative action requirement qualifies as among the "rights, privileges, or immunities secured by the Constitution and laws" enforceable through § 1983.

A § 1983 cause of action can be supported by nothing "short of an unambiguously conferred right." Gonzaga Univ. v. Doe, 536 U.S. 273, 283 (2002). Plaintiffs contend that congress unambiguously conferred such a right in the Medicaid statute at 42 U.S.C. § 1396a(a)(3), which requires that a Medicaid plan "must provide for granting an opportunity for a fair hearing before the State agency to any individual whose claim for medical assistance under the plan is denied or is not acted upon with reasonable promptness."

The § 1983 cause of action "inquiry requires 'a determination as to whether or not Congress intended to confer individual rights upon a class of beneficiaries'.." Loyal Tire & Auto Center, Inc. v. Town of Woodbury, 445 F.3d 136, 149 (2d Cir. 2006) (quoting Gonzaga, 536 U.S. at 285-86). To determine whether Congress intended to confer individual rights upon a class of beneficiaries, courts look to: (1) "whether the statutory text is phrased in terms of the person benefited", (2) whether "the right assertedly protected by the statute is [] so vague and amorphous that its enforcement would strain judicial competence", and (3) whether the statute "unambiguously impose[s] a binding obligation on the States." Id. at 149-50 (quoting Gonzaga, 536 U.S. at 284; Blessing, 520 U.S. 329, 117 S.Ct. 1353, 137 L.Ed. 2d 569 (1997)). Each of these inquiries supports a § 1983 cause of action for 1396a(a)(3) violations: (1) the statutory text is literally phrased in terms of the "individual" aggrieved, (2) the right protected- fair hearings-is easily administered by judicial institutions, which are intimately familiar with issues of process, and (3) the statute unambiguously imposes a binding obligation: the fair hearing "must" be provided for. Accordingly the Court agrees with the other courts to have reviewed the issue and finds that the fair hearing requirement expressed in 42 U.S.C. § 1396a(a)(3) is enforceable through a 42 U.S.C. § 1983 cause of action. See Gean v. Hattaway, 330 F.3d 758, 772-73 (6th Cir. 2003); D.W. v. Walker, 2009 WL 1393818 (S.D.W. Va. 2009); McCartney v. Cansler, 608 F. Supp. 2d 694, 699 (E.D.N.C. Mar. 16, 2009).*fn3

A. Ninety-day Claims

Having determined that § 1396a(a)(3) confers a federal right enforceable through § 1983, the Court turns to the content of that right. The Federal Medicaid regulation at 42 C.F.R. § 431.244 mandates certain deadlines for taking final administrative action after requests for § 1396a(a)(3) fair hearings. At 42 C.F.R. § 431.244(f) the regulation States:

(f) The agency must take final administrative action as follows:

(1) Ordinarily, within 90 days from the earlier of the following:

(i) The date the enrollee filed an MCO or PIHB appeal, not including the number of days the enrollee took to subsequently file for a State fair hearing; or

(ii) If permitted by the State, the date the enrollee filed for direct access to a State fair hearing.

(2) As expeditiously as the enrollee's health condition requires, but no later than 3 working days after the agency receives, from the MCO or PIHP, the case file and information for any appeal of a denial of a service that, as indicated by the MCO or PHIP-

(i) Meets the criteria for expedited resolution as set forth in § 438.410(a) of this chapter, but was not resolved within the timeframe for expedited resolution; or

(ii) Was resolved within the timeframe for expedited resolution, but reached a decision wholly or partially adverse to the enrollee.

(3) If the State agency permits direct access to a State fair hearing, as expeditiously as the enrollee's health condition requires, but no later than 3 working days after the agency received, directly from an MCO or PIHP enrollee, a fair hearing request on a decision to deny a service that it determines meets the criteria for expedited resolution, as set forth in § 438.410(a) of this chapter.

42 C.F.R. § 431.244(f) (emphases added).

Thus the regulation demands that "final administrative action" be taken "ordinarily, within 90 days" after a request for a fair hearing, and in some circumstances justifying expedited resolution that it be taken "not later than 3 working days after" receipt of the individual's file or her request for a fair hearing. Id. Such regulations can define the scope of a § 1983 cause of action for enforcement of the underlying statutory right so long as they merely define or flesh out the content of that right. See D.D. v. New York City Board of Ed., 465 F.3d 503, 513 (2d Cir. 2006) ("[S]o long as the statute itself confers a specific right upon the plaintiff, and a valid regulation merely further defines or fleshes out the content of that right, then the statute-in conjunction with the regulation-may create a federal right as further defined by the regulation.") (quoting with approval Harris v. James, 127 F.3d 993, 1009 (11th Cir. 1997)). In D.D., the Second Circuit analyzed the statutory right of disabled children to a "free appropriate public education," a right which provided for individualized education programs (IEPs), but "[did] not provide a time frame for implementing an IEP after its development." Id. at 507-09. The circuit court determined that because an administrative regulation required that IEPs be implemented "as soon as possible," that standard governed D.D.'s § 1983 cause of action. Id. at 512-14.

Defendants argue that a §1983 cause of action defined by 431.244(f) would impermissibly create a new regulatory right rather than simply interpret the scope of the statutory "fair hearing" right.*fn4 The Court disagrees. The "ordinarily, within 90 days" requirement in 42 C.F.R. ยง 431.244(f) is materially indistinguishable from the "as soon as possible" requirement in D.D.. In both, a formal administrative regulation specifies the time limit for a government action mandated by the statute. The Second Circuit held in D.D. that the time limit did not create a new right but rather merely fleshed out the content of its statutory counterpart, and this Court draws the same conclusion with respect to the 90 day requirement in 431.244(f). It stands to reason that placing a time limit on government action merely fleshes ...


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