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Fishman v. Daines

United States District Court, E.D. New York

March 29, 2017

Neil Fishman, by his legal guardian, Selma Fishman, and Suruj Sirikeshun, individually and on behalf of all others similarly situated, Plaintiffs,
v.
Richard F. Daines, M.D., as Commissioner of the New York State Department of Health, and John Paolucci, as Deputy Commissioner of the Office of Temporary and Disability Assistance of the New York State Department of Family Assistance, Defendants.

          MEMORANDUM AND ORDER

          JOSEPH F. BIANCO United States District Judge.

         Plaintiffs Neil Fishman, through his legal guardian (“Fishman”), and Suruj Sirikeshun (“Sirikeshun”) (collectively, “plaintiffs”) bring this class action pursuant to 42 U.S.C. §§ 1983 and 1396a(a)(3) against the Commissioner of the New York State Department of Health (“DOH”)[1] and the Commissioner of the Office of Temporary and Disability Assistance of the New York State Department of Family Assistance (“OTDA”)[2] (collectively, “defendants”).

         By Memorandum and Order dated September 16, 2014, the Court denied plaintiffs' motion for a preliminary injunction requiring defendants to mail a “default notice” to members of the plaintiff class before their Medicaid appeals are deemed abandoned because they missed a scheduled hearing. The Court found that plaintiffs failed to make a clear showing that they were likely to succeed on the merits of their due process or statutory claims. Plaintiffs appealed this decision, and by Summary Order dated October 15, 2015, the Second Circuit reversed this Court's denial of the preliminary injunction and remanded the case for further proceedings. The Court subsequently granted plaintiffs' motion for a preliminary injunction by Memorandum and Order dated March 4, 2016, as amended on March 10, 2016.

         Thereafter, on April 20, 2016, plaintiffs moved for partial summary judgment, seeking to make the preliminary injunction permanent. Defendants oppose the motion on the sole ground that plaintiffs lack standing to bring this action. For the reasons discussed below, the Court finds defendants' position to be without merit, grants plaintiffs' motion for partial summary judgment in its entirety, and hereby orders that defendants are permanently enjoined from dismissing administrative appeals of defaulting Medicaid appellants ho are not given at least ten (10) days to respond to a written notice from defendants inquiring as to whether they would like their hearings rescheduled.

         I. Background

         A. Facts and Legal Framework

         Because defendants' opposition is restricted to standing, the Court limits its analysis to those facts set forth in the parties' Rule 56.1 statements, as well as the parties' affidavits and exhibits, pertaining to that issue.[3] Upon consideration of the motion for partial summary judgment, the Court will construe the facts in the light most favorable to defendants as the nonmoving party, and it will resolve all factual ambiguities in their favor. See Capobianco v. New York, 422 F.3d 47, 50 n.1 (2d Cir. 2001).

         The background facts of this case, including an overview of the Medicaid system and appeals process, are set forth in this Court's opinions (1) denying, in large part, defendants' motion to dismiss, see Fishman v. Daines, 743 F.Supp.2d 127 (E.D.N.Y. 2010) (“Fishman I”); (2) denying the preliminary injunction, see Fishman ex rel. Fishman v. Daines, No. 09-CV-5248 JFB ARL, 2014 WL 4638962, (E.D.N.Y. Sept. 16, 2014) (“Fishman II”), vacated and remanded sub nom. Fishman v. Paolucci, 628 F. App'x 797 (2d Cir. 2015); and (3) granting the preliminary injunction following remand, see Fishman v. Daines, 164 F.Supp.3d 409 (E.D.N.Y. 2016) (“Fishman III”). In addition, the Second Circuit summarized the contours of the Medicaid program in its order remanding this action. See Fishman, 628 F. App'x at 797. Because defendants do not contest either this Court's or the Second Circuit's analysis of the relevant legal scheme (see Defs.' Opp'n Br., ECF No. 159, at 12 n.6), the Court will briefly outline the law and regulations at issue.

         In short, this case involves the procedures by which defendants determine that a Medicaid appeal is abandoned. After defendants conclude that a claimant is no longer entitled to Medicaid benefits, they inform the claimant by letter and advise him that he may request a fair hearing. See Fishman II, 2014 WL 4638962, at *1-2. If the request is timely made, the claimant may continue to receive “aid-continuing” Medicaid coverage pending the outcome of the hearing, and defendants send two additional letters: first, an acknowledgement that a fair hearing has been requested; and second, a notice that the fair hearing has been scheduled, which includes instructions for requesting adjournments. Id.

         If a claimant does not attend his fair hearing, whether because he did not receive a notice or for any other reason, he is considered to have defaulted his hearing, and risks having his appeal deemed abandoned. See 18 N.Y.C.R.R. § 358-5.5(a). It is possible to restore a defaulted hearing to the calendar, but the timing of the request to do so affects the continuing provision of Medicaid coverage. See Id. § 358-5.5(c). Plaintiffs contend that many class members lost aid-continuing coverage, at least temporarily, because they did not realize that they missed their fair hearing. Fishman II, 2014 WL 4638962, at *2. The default notice requested by plaintiffs, and temporarily put in place by the Court when it granted the preliminary injunction, would inquire as to whether the defaulting Medicaid appellant wanted his or her hearing rescheduled and would give the appellant at least ten (10) days to respond to the notice before dismissal of the administrative appeal. Id.; see also Fishman III, 164 F.Supp.3d at 418.

         B. Procedural Background

         After the Court issued its opinion on the motion to dismiss in 2010, see Fishman I, 743 F.Supp.2d at 127, the parties reached a comprehensive stipulation, which the Court ordered effective on April 6, 2011 (ECF No. 61). Among other things, the stipulation certified this case as a class action, on behalf of “[a]ll past, present, and future applicants and recipients of Medical Assistance . . . in New York State who: (a) requested or will request an administrative fair hearing . . . (b) failed or will fail to appear in-person . . . and (c) suffered or will suffer dismissal of their administrative appeal without defendants' prior written inquiry.”[4] (Id. ¶ 1.) The stipulation also required defendants to begin issuing letters to prospective class members who defaulted their fair hearings. (Id. ¶ 3(b).) The letters asked class members if their hearing request was abandoned, and advised them that if they intended to reschedule their hearing, they must provide good cause for having defaulted. (Id.) The letter also required the class members to respond within ten (10) days of the letter's mailing date, or else their hearing request would be deemed abandoned. (Id.) The letters were issued for approximately two years, between the date the Court so-ordered the stipulation on April 6, 2011, and the date it was vacated on September 16, 2013.

         The stipulation also included a provision exempting prospective class members from the requirements of 18 N.Y.C.R.R. § 358-5.5. (Id. ¶ 3(f).) At that time, Section 358-5.5 required defaulting Medicaid appellants to request that their hearing be rescheduled within 15 days of default, and to show good cause, or to establish within 45 days that they had not received the initial notice of the hearing. Fishman II, 2014 WL 4638962, at *3. Under the terms of the stipulation, the class members were not bound by the 15-and 45-day timelines, but instead by the single timeline of ten days from the mailing date of the default notice. Section 358-5.5 did not, and still does not, address the issuance of a written default notice.

         The 15- and 45-day requirements were eliminated when Section 358-5.5 was amended, effective October 23, 2012. Medicaid appellants now have one year to request that their hearings be rescheduled, but are also subject to a new timeline. They must request that their hearing be rescheduled within 60 days of the date of default, or they will be unable to recover retroactive benefits for any period of lost coverage after they defaulted. See 18 N.Y.C.R.R. § 358-5.5(c)(1). If their request to reschedule the hearing is made 60 days or more after the default, they will only receive medical coverage prospectively, from the date of their request. Id. § 358-5.5(c)(2).

         After Section 358-5.5 was amended, plaintiffs moved to alter the stipulation so that the plaintiff class could benefit from the longer one-year timeline, and from the provision addressing retroactive and prospective coverage, which was not addressed by the terms of the stipulation. (ECF No. 91.) Defendants opposed the motion. Ultimately, the Court vacated the stipulation, pursuant to Fed.R.Civ.P. 60(b)(5), concluding that it was not equitable to bind defendants to both the stipulation and the amended regulation at the same time, because defendants had negotiated the stipulation with the former regulation in mind. (See ECF No. 101.) If defendants were required to extend the new regulation to the prospective class members, the Court held that they should receive the opportunity to litigate the necessity of a written default notice in light of the new regulation. (Id.)

         On September 16, 2014, the Court denied plaintiffs' motion for a preliminary injunction, which would have prohibited defendants from dismissing the administrative appeals of defaulting Medicaid appellants who were not given at least ten days to respond to a post-hearing notice. See Fishman II, 2014 WL 4638962, at *11. The Court concluded that plaintiffs failed to make a clear showing that they were likely to succeed on their due process or statutory claims. Id. Plaintiffs appealed that decision, and by Summary Order dated October 15, 2015, the Second Circuit reversed this Court's denial of the preliminary injunction and remanded the case for further proceedings consistent with its Summary Order. See Fishman, 628 F. App'x at 797. Specifically, the Second Circuit found that this Court “did not separately conduct an analysis of 42 U.S.C. § 1396a(a)(3)” and remanded the motion “to provide [this Court] with the opportunity to do so in the first instance.” Id. at 802. The Second ...


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