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Espinosa v. Shah

United States District Court, Southern District of New York

December 5, 2014

JEFFREY ESPINOSA, by his next friend JULY ESPINOSA, on behalf of himself and of all others similarly situated, Plaintiffs,
NIRAV R. SHAH, M.D., in his official capacity as Commissioner, New York State Department of Health and KRISTIN M. PROUD, in her official capacity as Commissioner, New York State Office of Disability Assistance, Defendants.


LORETTA A. PRESKA, Chief United States District Judge:

Plaintiff Jeffrey Espinosa, on behalf of himself and a class of similarly situated persons, brings this action against the New York State Department of Health ("DOH") and the New York State Office of Temporary and Disability Assistance (“OTDA") (collectively, "Defendants"), to enjoin Defendants' allegedly routine failure to provide final administrative action to Medical Assistance ("Medicaid") applicants and recipients who request administrative hearings within ninety days of the date of that request, as required by 42 C.F.R. § 431.244(f)(1).

By Memorandum and Order dated September 21, 2012, this Court granted Plaintiff's motion for class certification and certified a class pursuant to Federal Rule of Civil Procedure 23(b)(2)("Espinosa Class", each a "Class Member").[1] (See Order, Sept. 21, 2012 [dkt. no. 67] ("Class Certification Order").) That same day, this Court issued a separate order denying Defendants' motion for summary judgment and granting Plaintiff's motion for partial summary judgment. (See Order, dated Sept. 21, 2 012 [dkt. no. 68] ("Summary Judgment Order").) On September 27, 2013, this Court partially granted and partially denied Defendants' motion for reconsideration and granted Plaintiff's motion to substitute the class representative.[2] (See Order, dated Sept. 27, 2013 [dkt. no. 90].) Thereafter, this Court denied Plaintiff's application to amend the class definition. (See Order, dated Apr. 4, 2014 [dkt. no. 103].) The net result of this Court's Orders is that Defendants are responsible for providing a final decision after fair hearing ("DAFH") to Class Members within ninety days from the date the Class Member requests a fair hearing, not counting days that result from adjournments requested by the Class Member.

Litigation was stayed while counsel engaged in settlement negotiations in an attempt to arrive at a jointly agreed-upon proposed injunction. However, settlement negotiations proved unsuccessful, [3] and this Court granted the parties' request to present proposed orders for this Court's approval. (See Order, dated June 3, 2014 [dkt. no. 109].) For the reasons set forth below, Plaintiff's motion to approve its proposed order [dkt. 115] is DENIED, and Defendant's motion to approve its proposed order [dkt. 110] is GRANTED in part.


A. The Administrative Fair Hearing Process[5]

Public benefit programs provide the recipient of the benefit the opportunity to request an administrative fair hearing before an impartial hearing officer to challenge a notice issued by, or some other determination of, the agency that provides the benefit to the recipient. N.Y. Soc. Services Law § 22. In New York, Medicaid-related notices and determinations are issued by the New York City Human Resources Administration ("NYC HRA") and the fifty-seven county social services departments, managed care and managed long term care providers, and other agencies (collectively "social services districts") . (Amiraian Decl. ¶ 5.)

The Office of Administrative Hearings ("OAH") schedules, conducts, and decides fair hearings on behalf of DOI-I as part of Medicaid. (Id. ¶ 7.) The scheduling and holding of fair hearings, as well as final administrative action, must occur within ninety days following fair hearing requests. 42 U.S.C. § 1396a(a)(3); 32 C.F.R. § 431.244(f); State Medicaid Manual §§ 2903.2(A), 2902.10. Issuance of the DAFH is considered final administrative action. (Amiraian Decl. ¶ 10.) In calendar year 2013, Class Members made 56, 702 fair hearing requests, had 75, 779 fair hearings scheduled, and received 16, 060 DAFS.[6] (Id ¶ 9.)

B. Initial Settlement Negotiations

In a joint status update dated October 29, 2013, the parties stated their "hope to resolve this case through entry of an injunction without further litigation." (See Joint Status Update Letter to the Court, dated Oct. 31, 2013 [dkt. no. 96].) To that end, the parties held an in-person meeting on November 18, 2013, during which Plaintiff requested certain statistical information regarding Medicaid applicant requests. (See Joint Status Update Letter to the Court, dated Dec. 19, 2013 [dkt. no. 99].) Defendants provided those statistics and responded to Plaintiff's supplemental and subsequent inquiries. (See id.) hereafter, the parties agreed that all litigation deadlines be stayed pending the conclusion of settlement efforts.

C. The "Backlog"

The majority of Plaintiff's inquiries related to the so-called "backlog"—any unscheduled, or behind schedule, requests made by a Class Member. (See Amiraian Decl. ¶13; First Keilin Decl. ¶ 2.) This raw number reflects the number of fair hearing requests by Espinosa Class Members in which the OTDA has exceeded the ninety day statutory limit. According to the Fair Hearing Information System ("FHIS"), [7] as of November 18, 2013, there were 6, 511 requests from Class Members residing in New York City that had not been scheduled for a hearing[8] and an additional 1617 unscheduled cases state-wide. (See Amiraian Decl. ¶¶ 22-23; Statistical Summary January 2013 - March 2014, First Keilin Decl. Exs . A, D ("Class Statistics"); Email from Robert L. Kraft, dated Dec. 17, 2013, First Keilin Decl. Ex. C. ("Dec. 2013 Kraft Email").)

At the November 2013 meeting, David B. Amiraian, Principal Administrative Law Judge for the OAH (Amiraian Decl. ¶ 2), informed Plaintiff's counsel ("Class Counsel") that "elimination of the backlog [is] essential to achieving timely final administrative action, and that it would take approximately one year (i.e., until approximately November 2014) to reduce the backlog to a point at which OAH could be fairly subject to monitoring for timeliness." (Id. ¶ 23.)

To that end, during the November 2013 meeting, Plaintiff suggested that Defendants hire outside experts to assist in reducing the backlog. (First Keilin Decl. ¶ 2 .) In response, Defendants cited a number of on-going reforms and proposals intended to reduce the backlog, and advised Plaintiff that these efforts were "highly likely" to eliminate the extant backlog by November 2014. (Amiraian Decl. ¶15.) Moreover, Defendants framed these as preemptive measures against future surges in hearing request volume. (Id.) As a result, Plaintiff agreed to allow Defendants a reasonable amount of time to demonstrate progress in eliminating the backlog. (First Keilin Decl. ¶3.)

1. Defendants' Efforts to Eliminate the Backlog

The Summary Judgment Order makes clear that Defendants are responsible for meeting the ninety day deadline for issuing a DAFH. Measuring timeliness of a final administrative action is the sum of two separate time periods: (i) the time from fair hearing request to the date of the hearing excluding adjournment time requested by the Espinosa Class Member and (ii) the time from the final date of the hearing to decision issuance. (Amiraian Decl. ¶11.) Failure to meet the ninety day deadline is sometimes attributable to challenges within the first time period; namely, the volume of hearing requests, weather, and other factors not necessarily within OAH's control. (Id.) The second time period, from the date of the hearing until the Administrative Law Judge ("ALJ") drafts a decision and the OAH issues a DAFH, is much more within OAH's ability to monitor and expedite, when necessary. (Id. ¶ 14.)

It is therefore unsurprising that most of Defendants' active and proposed remedial efforts focus on monitoring and shortening the time period between a Class Member's fair hearing and DAFH issuance. Specifically, Defendants have increased both the number of cases per calendar for certain ALJs and the number of calendars total. (Id. ¶¶ 18-20.) Defendants also hope to promulgate regulations providing for the use of video fair hearings, thereby allowing ALJs to be deployed across the state as needed. (Id. ¶ 21.)

Defendants have also attempted to improve the initial time period-from request to hearing. The cornerstone of that effort is the newly-implemented Pre-Hearing Disposition ("PHD") process. (Id. ¶16.) Under the PHD process, the OAH periodically sends lists of cases to the social services districts with the largest backlogs, affording those agencies the opportunity to review those matters and inform OAH of the cases on which they intend to withdraw their action. (Id.) Such withdrawal moots any administrative appeal and therefore obviates the need to schedule a fair hearing. The OAH proposed a financial incentive for social service districts to use the PHD process and, more generally, to use good judgment in making Medicaid determinations. (Id. ¶17.) That proposal became law earlier this year and took effect April 1, 2014. (Id.) It essentially functions as a penalty for social services districts that are responsible for a disproportionate number of statewide fair hearing requests if a certain number of those requests are either withdrawn after scheduling a fair hearing or reversed on appeal. (See Part I of Chapter 58 of the Laws of 2014, Amiraian Decl. ¶17, Ex. 1.)

2. The Parties Disagree on Backlog Reduction

December 2013 is the last point the parties partially agree on backlog statistics. At that time, Plaintiff and Defendants agree the backlog of fair hearing requests originating in New York City was 5, 969, and that there were an additional 1, 617 unscheduled cases state-wide. (See First Keilin Decl. ¶ 4; Dec. 2013 Kraft Email.) Plaintiff therefore concludes the state-wide December 2013 backlog numbered the sum of 5, 969 and 1, 617, equal to 7, 586.[9] (First Keilin Decl. ¶ 4 .) Defendants, meanwhile, maintain that "unscheduled" does not necessarily mean "backlogged, " and does not include the 1, 617 figure in the backlog total.[10] (See Amiraian Decl. ¶¶ 25.) Using the December 2013 statistics-and opposing calculations-as a point of departure, the parties advance divergent arguments with respect to compliance with the Summary Judgment Order.

Defendants cite several statistics as proof of progress. Per FHIS, backlogged requests originating from New York City decreased from 5, 970[11] as of November 18, 2013, to 1, 548 as of July 12, 2014. (Id ¶ 25.) Of those 1, 548 backlogged cases, approximately 900[12] are either unscheduled prior to the initial hearing date at appellant's—the Class Member's—request or involve rescheduled hearings due to appellant-requested adjournments. (Id.) Subtracting those cases from the total backlog yields a backlog of 655, reflecting a reduction of approximately 550 per month since November 2013. (Id. ¶¶ 25-26; Statistical Chart, Ex. 2.) For the month of June 2014, Defendants state that OAH provided final administrative action to Class Members within ninety days in 86% of fair hearing requests in the most consequential cases, those without aid-continuing, [13] and 82% of aid-continuing cases. (Id. ¶ 27.)

To the contrary, Plaintiff states the backlog has increased. (First Keilin Decl. ¶ 4-5.) For example, according to Plaintiff, there was a backlog of 6, 721 as of March 2014. (Id. 1(4.) It should be noted that this number appears to include backlogged New York City cases and all unscheduled cases state-wide, just as Plaintiff interpreted the December 2013 statistics. Rather than predict that the backlog will be eliminated by November 2014 (see Amiraian Decl. ¶ 23-24), Plaintiff describes the current state of affairs as a "seemingly-intractable continuation of delay" which will remain unsolved without outside guidance (First Keilin Decl. ¶ 5) .

D. Proposed Orders

After the parties were unable to agree on a settlement, this Court granted their request to present proposed orders providing for injunctive relief. On July 18, 2014, Plaintiff [dkt. no. 115] and Defendant [dkt. no. 110] each ...

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