Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-4_16-cv-00489/USCOURTS-azd-4_16-cv-00489-0/pdf.json

Parties Involved:
Thomas Betlach
Defendant
Aita Darjee
Plaintiff
Alma Sanchez Haro
Plaintiff
N.D.
Plaintiff

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IN THE UNITED STATES DISTRICT COURT 

FOR THE DISTRICT OF ARIZONA 

Aita Darjee, et al., 

Plaintiffs, 

v. 

Thomas Betlach, 

Defendant. 

No. CV-16-00489-TUC-RM (DTF)

REPORT AND 

RECOMMENDATION 

 Before the Court are, inter alia, (1) Plaintiff’s Motion for Class Certification (Doc. 

5); (2) Plaintiffs’ Motion for Preliminary Injunction (Doc. 15); and (3) Defendant’s 

Motion to Dismiss (Doc. 35). The Court heard oral argument on the motions on October 

4, 2016. It is recommended that the District Court, after an independent review of the 

record, grant Defendant’s Motion to Dismiss and deny as moot Plaintiffs’ motions 

seeking class certification and a preliminary injunction. Also before the Court are 

motions to strike filed by both Plaintiffs and Defendant (Docs. 59, 62 and 65), all of 

which relate to portions of arguments made in, or evidence submitted in support of, the 

motions for class certification and preliminary injunction. Because the Court 

recommends that the motions seeking class certification and a preliminary injunction be 

denied as moot, the Court recommends the motions to strike be denied as moot as well. 

... 

... 

... 

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Background

 This case concerns a reduction in the scope of Arizona Health Care Cost 

Containment System (“AHCCCS”) benefits that are provided to eligible immigrant 

residents of Arizona. Sometime in mid-to-late 2015 a computer error at AHCCCS 

occurred that caused some immigrant-recipients’ full-scope AHCCCS benefits to be 

incorrectly reduced to emergency-only scope AHCCCS benefits. Doc. 1. After learning 

of the computer problem, in or around October 2015 AHCCCS restored some 3,500 

immigrant-recipients’ benefits to full-scope AHCCCS. Doc. 35 at p. 3, ll. 4. At oral 

argument Defendant’s counsel reported that the number has risen to 4,200. See Doc. 69 at 

p. 12, ll. 7-10. 

 Despite the large scale reinstatement efforts, on July 22, 2016, Plaintiffs filed suit 

against Thomas Betlach in his official capacity as the Director of AHCCCS contending 

that errors in the reduction in benefits were a result of his unlawful policies and practices. 

(Doc. 1) In Count I of the Complaint Plaintiffs challenge Defendant’s reduction of the 

health coverage of immigrants from full-scope AHCCCS to emergency-only AHCCCS 

when they were recertified pursuant to an annual recertification requirement. In Count II, 

Plaintiffs contend that the notice AHCCCS sends to inform the immigrants of the change 

in AHCCCS eligibility violates the immigrant-recipients’ right to due process.1

 

 As set forth herein, because the Plaintiffs lack standing it is recommended that the 

Complaint be dismissed with prejudice. Alternatively, it is recommended that the 

Complaint be dismissed for failure to state a claim. 

 

1

 Contemporaneously with the Complaint Plaintiffs moved for class certification 

pursuant to Rule 23(b), Fed. R. Civ. P., asking the Court to certify as a class immigrant residents of Arizona eligible for full-scope AHCCCS benefits who will recertify their eligibility on or after January 2015 and who will be or have been improperly reduced to emergency only AHCCCS. See Doc. 6, p. 1-2, ll. 28-4. Plaintiffs also asked the Court to 

enter a preliminary injunction that would prohibit Defendant from, inter alia, transferring refugees and other qualified immigrants who have been found eligible for full-scope AHCCCS benefits to emergency-only AHCCCS when they renew their eligibility. See

Doc. 20 at p. 2, ll. 14-18. Plaintiffs also seek entry of an order that commands Defendant 

to “prospectively reinstate all immigrants who were sent or received the improper eligibility notice until a lawful proper notice is sent to each person.” Id. at ll. 19-21. It is 

recommended that these two motions be denied as moot. 

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Medicaid and AHCCCS 

 In 1965 Congress created the Medicaid program by adding Title XIX to the Social 

Security Act, 42 U.S.C. §§ 1396-1396w-5. The purpose of Medicaid is stated as to enable 

States “to furnish ... medical assistance on behalf of families with dependent children 

and of aged, blind, or disabled individuals, whose income and resources are insufficient 

to meet the costs of necessary medical services.” See 42 U.S.C. § 1396-1. To participate 

in Medicaid, a state must operate its program through a state plan which has been 

submitted to and approved by the Secretary of the U.S. Department of Health and Human 

Services. See 42 U.S.C. §§ 1396-1 and 1396a(b). The state must provide methods of 

administration necessary for the proper and effective operation of the state plan. 42 

U.S.C. § 1396a(a)(4). 

 Arizona participates in Medicaid through the program known as AHCCCS. 

A.R.S. §§ 36-2901 through 36-2972. Section 1396a(a)(8), 42 U.S.C., requires AHCCCS 

to furnish medical assistance “with reasonable promptness to all eligible individuals.” 42 

U.S.C. § 1396a(a)(8). Regulations implementing AHCCCS require that AHCCCS 

“continue to furnish Medicaid regularly to all eligible individuals until they are found to 

be ineligible.” 42 C.F.R. § 436.930(b). Once a person is found eligible to receive 

AHCCCS the eligibility determination must be renewed every 12 months. See 42 C.F.R. 

§ 435.916(a). 

 Plaintiffs Aita Darjee and Alma Sanchez Haro

 Plaintiff Aita Darjee (“Darjee”) is a 30-year old woman living in Tucson with her 

husband and young children. The Darjees are refuges from Nepal. The Complaint alleges 

that the Darjee’s AHCCCS full-scope benefits were reduced to emergency-only 

AHCCCS benefits twice in one year. Doc. 1 at ¶¶ 58, 59. Darjee’s husband suffers from 

multiple medical conditions such as uncontrolled diabetes, asthma, high blood pressure 

and high cholesterol. His medical conditions require regular medication. The reduction in 

the Darjee’s AHCCCS benefits from full-scope to emergency-only caused them a great 

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deal of stress. The Complaint alleges that at the time of filing the restoration of the 

Darjee’s benefits was “imminent if not complete.” Id. at ¶ 59.2

 Plaintiff Alma Sanchez Haro (“Sanchez Haro”) is a 48-year old woman living in 

Tucson. Sanchez Haro entered the U.S. prior to 1996 and was a victim of domestic 

violence while in this country. Sanchez Haro has several medical conditions for which 

she takes medications, such as include severe depression, anxiety, diabetes and high 

blood pressure. When her AHCCCS benefits were reduced she could not pay to see her 

doctors or pay for her medications. She reports going without her medications for three 

weeks and that it was “horrible.” Id. at ¶¶ 78-82. Sanchez Haro’s full-scope AHCCCS 

benefits were reinstated on or before August 22, 2016. See Doc. 35 at p. 12, n. 4. Sanchez 

Haro received the notice informing her of the reduction in her AHCCCS benefits but she 

reports that she did not understand the notice. Id. at ¶ 75. She reports contacting someone 

at AHCCCS and being advised that her benefits were reduced because she had not been a 

legal permanent resident for five (5) years. Id. at ¶ 76. Plaintiffs contend that this 

information was incorrect as this legal permanent resident requirement does not apply to 

Sanchez Haro because she entered the United States before 1996. 

Defendant’s Motion to Dismiss

 Defendant moved to dismiss the Complaint on several grounds. First, Defendant 

argues that Plaintiffs have not stated a claim under the “reasonable promptness” provision 

of 42 U.S.C. § 1396a(a)(8). See Doc. 35 at p. 4. Defendant argues that the plain language 

of 42 U.S.C. § 1396a(a)(8) does not provide Plaintiffs with a cause of action because 

Plaintiffs complain about errors made upon recertification rather than delay in initially 

applying for AHCCCS. Id. Defendant also argues that the Complaint lacks plausibility 

because the 2015 computer error has been fixed and the remaining allegations are lacking 

sufficient factual content, are conclusory, and fail to state a claim that it is Defendant’s 

policy or practice to improperly cause Plaintiffs’ AHCCCS benefits to be reduced. For 

instance, Defendant points out that while the Complaint alleges that “AHCCCS policy 

 

2

 There is no dispute that Darjee’s benefits have been restored to full scope. 

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and practice fails to process re-certifications for immigrants pursuant to the [federal] ex 

parte process [42 C.F.R. § 435.916(a) and (b)], there are no factual allegations that 

support the conclusory statement as neither named Plaintiff states that she was, inter alia, 

subject to the ex parte process.” Id. at pp. 6-7, ll. 12-4. 

 Second, Defendant argues that Plaintiffs have failed to state a due process claim. 

Defendant argues that the Complaint “merely makes the conclusory allegation that 

‘Defendant Beltach’s written eligibility notice, as described herein, violates’ due process 

and 42 U.S.C. § 1396a(a)(3).” Id. at p. 9, ll. 16-19. Defendant explains that there are no 

facts which would support a due process violation as to Plaintiff Darjee because she did 

not receive a notice. Id. at ll. 24-25. With respect to Plaintiff Sanchez Haro, Defendant 

contends that the Complaint does not allege that the notice failed to comply with federal 

regulations and the most that the Complaint alleges is that Plaintiff Sanchez Haro “didn’t 

understand the notice” and all this means is that “she believed she was entitled to full 

benefits and she couldn’t understand the notice because it was a mistake.” Id. at p. 10, ll. 

10-12. 

 Third, Defendant argues that the Court lacks jurisdiction because Plaintiffs’ lack 

standing and their claims have become moot. Id. at p. 11. With respect to Plaintiff Darjee, 

Defendant points to ¶ 59 of the Complaint that states the restoration of her benefits was 

“imminent if not complete” at the time the Complaint was filed. Id. at p. 11, ll. 17. With 

respect to Plaintiff Sanchez Haro, Defendant argues that since her benefits have been 

restored her claim has become moot. With respect to the due process count, Defendant 

argues the Complaint fails to allege that Plaintiff Darjee received a notice and fails to 

allege a corresponding harm. With respect to Plaintiff Sanchez Haro, Defendant argues 

that the Complaint merely alleges that she received a notice but did not understand the 

notice. This, Defendant contends, is insufficient to establish standing. 

 Plaintiffs oppose Defendant’s motion on all grounds raised therein. See Doc. 38. 

First, Plaintiffs contend that for the Director to comply with the reasonable promptness 

statute the Director must make correct eligibility determinations (in addition to making 

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them timely). See Doc. 38 at p. 4, ll. 2-6. Plaintiffs object to the Court’s consideration 

that the 2015 computer problem was fixed because they haven’t specifically pled that 

fact. Plaintiffs also argue that their Complaint does contain sufficient factual allegations 

to support their claim that Defendant is failing to make recertification decisions properly. 

For example, Plaintiffs argue that they have properly stated that the Director is failing to 

check the case files and databases for accurate immigration status information in 

violation of 42 C.F.R. § 435.916. Id. at p. 7, ll. 3-5. Plaintiffs also argue that they have 

stated a claim that the notice AHCCCS provided Plaintiffs violates due process. With 

respect to standing and mootness, Plaintiffs argue that both Plaintiffs have standing 

because both suffered improper reduction in benefits and both continue to receive 

AHCCCS. Plaintiffs assert that neither claim is moot because the exception to the 

mootness doctrine - capable of repetition yet evading review - applies. Id. at p. 16, ll. 3-4. 

 The Court concludes that there is no case or controversy because Plaintiffs lack 

standing or their claims are moot. The Complaint also fails to state a claim under both 

counts. Dismissal of the Complaint is recommended. 

 There is No Case or Controversy 

 Article III of the Constitution limits the jurisdiction of the federal courts to “cases” 

or “controversies” U.S. Parole Commission v. Geraghty, 445 U.S. 388, 396, 100 S.Ct. 

1202, 63 L.Ed.2d 479 (1980). When a defendant challenges subject matter jurisdiction, 

the plaintiff must bear the burden of establishing jurisdiction. See Lujan v. Defenders of 

Wildlife, 504 U.S. 555, 561, 112 S.Ct. 2130, 2136, 119 L.Ed.2d 351 (1992). 

Standing 

Plaintiffs must demonstrate standing separately for each form of relief sought. 

Friends of the Earth, Inc. v. Laidlaw Environmental Services (TOC), Inc., 528 U.S. 167, 

185, 120 S.Ct. 693, 706, 145 L.Ed.2d 610 (2000). There are three requirements a plaintiff 

must establish in order to show that she had standing. See Lujan v. Defenders of Wildlife, 

504 U.S. at 560-61, 112 S.Ct. 2130, 119 L.Ed.2d 351 (setting forth the three requirements 

a plaintiff must establish to demonstrate standing). Relevant here, Plaintiffs must 

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establish that it must be likely (as opposed to merely speculative) that their injury will be 

redressed by a favorable decision. Id. 

Darjee: With respect to Count I, Darjee did not have standing at the time the 

Complaint was filed. See Doc. 1 at ¶ 59 (“... The restoration of his benefits and those for 

his wife and son are imminent if not complete.”) With respect to Count II, Darjee learned 

of the reduction in benefits when her husband when to the doctor’s office for a visit. Id.

The Complaint does not allege that Darjee received a notice prior to this office visit and 

the only substantive mention of notice concerning Darjee in the Complaint states, “The 

notices they received from AHCCCS and DES do not have any information in Nepali.” 

Id. 1 at ¶ 71. This allegation is insufficient to establish Darjee’s standing with respect to 

Count II. Moreover, while Darjee alleges that she (along with her husband) were harmed 

by the alleged improper reduction of AHCCCS benefits, Darjee has not alleged any 

injury from the AHCCCS notice and has specifically pled that she did not receive one. 

Sanchez Haro: With respect to Count I, Sanchez Haro had standing to assert a 

claim for improper AHCCCS benefit reduction at the time the Complaint was filed. Since 

that time, however, her full-scope AHCCCS benefits have been reinstated. Accordingly, 

her claim has become moot. With respect to Count II, Sanchez Haro alleges that she 

received an AHCCCS notice regarding the reduction in benefits and she alleges that she 

did not understand it (even though she took action on the notice). Doc. 1 at ¶¶ 75, 76. As 

with her claim under Count I, the Court determines that she had standing to assert a due 

process claim at the time the Complaint was filed but because her benefits have been 

restored to full scope her claim notice has become moot. 

Mootness 

The doctrine of mootness, which is embedded in Article III’s case or controversy 

requirement, requires that an actual, ongoing controversy exist at all stages of federal 

court proceedings. See Pitts v. Terrible Herst, Inc., 653 F.3d 1081, 1086 (9th Cir. 2011) 

(citing Burke v. Barnes, 479 U.S. 361, 363, 107 S.Ct. 734, 93 L.Ed.2d 732 (1987)). 

Generally, if events subsequent to the filing of the case resolve the parties’ dispute, the 

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court must dismiss the case as moot because courts do not have the constitutional 

authority to decide moot cases. Id. at 1087, (citing Foster v. Carson, 347 F.3d 742, 747 

(9th Cir. 2003)). In a lawsuit brought to force compliance, it is the plaintiff’s burden to 

establish standing by demonstrating that, if unchecked by the litigation, the defendant’s 

allegedly wrongful behavior will likely occur or continue, and that the “threatened injury 

[is] certainly impending.” Friends of the Earth, Inc., 528 U.S. at 190 (quoting Whitmore 

v. Arkansas, 495 U.S. 149, 158, 110 S.Ct. 1717, 109 L.Ed.2d 135 (1990)). 

Darjee: Darjee’s claim did not exist at the time of the filing of the Complaint and 

any exceptions to the mootness doctrine are inapplicable to her claim. See Friends of the 

Earth, Inc., 528 U.S. at 191 (“[I]f a plaintiff lacks standing at the time the action 

commences, the fact that the dispute is capable of repetition yet evading review will not 

entitled the complainant to a federal judicial forum.”) (Additional citations omitted.)

Sanchez Haro: Defendant argues that Sanchez Haro’s claims are moot since 

benefits have been restored to full-scope. See Doc. 35 at p. 12, n. 1. Plaintiffs argue that 

Sanchez Haro’s claims are not moot since she continues to receive AHCCCS benefits. 

See Doc. 38 at p. 15, ll. 12-14. Alternatively, Plaintiffs argue that if the Court determines 

that her claims are moot they argue that the capable of repetition yet evading review 

exception to the mootness doctrine applies. Id. at p. 16, ll. 3-4.

 Plaintiffs have not cited any authority for their position that because Sanchez Haro 

continues to receive AHCCCS benefits her claims are not moot. With respect to 

Plaintiffs’ argument that the capable of repetition yet evading review exception to 

mootness applies, the Court concludes otherwise. The capable of repetition exception to 

the mootness doctrine applies only in exceptional situations where two circumstances are 

simultaneously present: (1) the challenged action is too short in duration to be fully 

litigated prior to cessation or expiration and (2) there is a reasonable expectation that the 

same complaining party will be subject to the same action again. Spencer v. Kemna, 523 

U.S. 1, 17, 118 S.Ct. 978, 988, 140 L.Ed.2d 43 (1998). 

 Assuming that the challenged action in this case is so short in duration that it will 

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not be fully litigated prior to cessation or expiration, with respect to the second 

requirement the Court concludes that Plaintiffs have not established that there is a 

reasonable expectation that they will be subject to the same action again. In Wilson v. 

Gordon, 822 F.3d 934 (6th Cir. 2016), the United States Court of Appeals for the Sixth 

Circuit determined that since Medicaid recipients’ eligibility must be reassessed every 

twelve months, 42 C.F.R. § 435.916(a)(1), and federal regulations implementing 

Medicaid required the state continue to provide Medicaid to applicants while their 

applications for renewal are considered, the plaintiffs did not have a reasonable 

expectation that they will be subject to delays that may result in the loss of Medicaid 

coverage while the redetermination process is ongoing. 822 F.3d at 951-52. As such, the 

court held that it was error for the district court to have relied upon the capable of 

repetition yet evading review exception to the mootness doctrine. Id. 

 Similarly, here, Plaintiffs’ eligibility to receive AHCCCS must be renewed by 

AHCCCS every 12 months. The Director is bound by the requirement that benefits must 

continue while the redetermination process is ongoing. As more fully discussed below, 

because the Court concludes that Plaintiffs’ have not pled that Defendant has a policy or 

practice of improperly reducing Plaintiffs’ benefits at recertification, the Court 

determines that Plaintiffs do not have a reasonable expectation that they will be subject to 

the improper reduction of Medicaid benefits in the future. See Wilson, 882 F.3d at 952 

(“Speculation based only on problems with initial enrollment in Medicaid does not give 

Plaintiffs a reasonable expectation that they will be subject to delays that will result in the 

loss of Medicaid coverage while the redetermination process is ongoing.”) Accordingly, 

this Court determines that the capable of repetition yet evading review exception to the 

mootness doctrine does not apply to save the mooted claims. 

 For the reasons set forth above, the Court recommends that the District Court grant 

Defendant’s motion to dismiss because Plaintiffs lack Article III standing. As set forth 

below, the Court alternatively recommends the Complaint be dismissed for failure to 

state a claim under Rule 12(b)(6), Fed. R. Civ. P. 

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 Plaintiffs Have Failed to State a Claim 

 A complaint must contain a “short and plain statement of the claim showing that 

the pleader is entitled to relief” to give the defendant “fair notice” of what the claims are 

and the grounds upon which they rest. See Fed. R. Civ. P. 8(a)(2). Under Federal Rule of 

Civil Procedure 12(b)(6), a district court must dismiss a complaint if it fails to state a 

claim upon which relief can be granted. Anderson v. Dooley, 2016 WL 3162167, *2 

(N.D. Cal. June 7, 2016). To survive a Rule 12(b)(6) motion to dismiss, the plaintiff must 

allege “enough facts to state a claim to relief that is plausible on its face.” Id., (quoting 

Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). This “facial plausibility” standard 

requires the plaintiff to allege facts that add up to “more than a sheer possibility that a 

defendant has acted unlawfully.” Id., (quoting Ashcroft v. Iqbal, 556 U.S. 662, 678 

(2009)). A plaintiff must provide “more than labels and conclusions, and a formulaic 

recitation of the elements of a cause of action will not do.” Id., (quoting Twombly, 550 

U.S. at 555). On a motion to dismiss, the court accepts as true a plaintiff’s well-pleaded 

factual allegations and construes all factual inferences in the light most favorable to the 

plaintiff. Id., (citing Manzarek v. St. Paul Fire & Marine Ins. Co., 519 F.3d 1025, 1031 

(9th Cir. 2008)). But, the plaintiff must allege facts sufficient to “raise a right to relief 

above the speculative level.” Id., (quoting Twombly, 550 U.S. at 555). 

 Count I - Reasonable Promptness Under 42 U.S.C. § 1396a(a)(8) 

The Plain Language of 42 U.S.C. § 1396a(a)(8): As mentioned above, Count I 

alleges a violation of the so-called reasonable promptness statute. Under the reasonable 

promptness statute a state plan for medical assistance (such as AHCCCS), “must ... 

provide that all individuals wishing to make application for medical assistance under the 

plan shall have the opportunity to do so, and that such assistance shall be furnished with 

reasonable promptness to all eligible individuals.” See 42 U.S.C. § 1396a(a)(8). 

Corresponding regulations which implement § 1396a(a)(8) provide, in relevant part, that 

“[t]he agency must – (a) [f]urnish Medicaid promptly to beneficiaries without any delay 

caused by the agency’s administrative procedures; (b) [c]ontinue to furnish Medicaid 

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regularly to all eligible individuals until they are found to be ineligible; and (c) [m]ake 

arrangements to assist applicants and beneficiaries to get emergency medical care 

whenever needed [...].” See 42 C.F.R. § 435.930. 

 Defendant argues that the reasonable promptness statute by its plain language does 

not apply to Plaintiffs’ claim in Count I. Defendant contends that the reasonable 

promptness statute applies to initial eligibility determinations and was designed to 

prevent waiting lists. Defendant points out that in this case Plaintiffs have previously 

been approved for and have been receiving AHCCCS and they allege an improper 

reduction in AHCCCS benefits upon recertification. Plaintiffs argue in opposition that 

implied within the reasonable promptness statute is the requirement that eligibility 

decisions – including renewal determinations - are to be made correctly. Plaintiffs posit 

that Defendant’s failure to make correct recertification decisions violate the reasonable 

promptness statute. 

 The parties have not cited any case that is directly on point. Defendant cites to 

Sobky v. Smoley, 855 F.Supp. 1123 (N.D. Cal. 1994), a case that looked to the reasonable 

promptness provision in the Aid to Families with Dependent Children program (42 

U.S.C. § 602(a)(10)(A)), to hold, in relevant part, 

...[T[he Medicaid Act’s reasonable promptness requirement, set forth as § 

1396a(a)(8), prohibits states from responding to budgetary constraints in 

such a way as to cause otherwise eligible recipients to be place on waiting 

lists for treatment. 

855 F.Supp. at 1149. (Citations omitted.) Sobky granted summary judgment in favor of 

the plaintiffs where the undisputed evidence established that insufficient funding by the 

state and counties of methadone maintenance treatment caused providers of methadone 

maintenance to improperly place eligible individuals on waiting lists. Id. 

 Defendant also relies upon Crippen v. Kheder, 741 F.2d 102, 104 (6th Cir. 1984), a 

class action case where plaintiffs sued seeking relief against the defendant’s policy of 

automatically terminating individuals from Medicaid solely based upon information that 

SSI benefits had been terminated and without making a prior determination of whether an 

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individual may have otherwise been entitled to Medicaid benefits. Crippen held 

... [T]he Department’s policy of automatically terminating the benefits of 

Medicaid recipients solely because their SSI benefits have been terminated 

without determining whether they qualify as medically needy individuals 

violates the regulations promulgated under the Social Security Act. The 

regulations require instead that, upon receipt of notice that an individual has 

been terminated from the SSI program, the Department must promptly 

determine ex parte the individual’s eligibility for Medicaid independent of 

his eligibility for SSI benefits. While this determination is being made, the 

state must continue to furnish benefits to such individuals. 

Crippen, 741 F.2d at 106-07. Defendant argues that Sobky and Crippen support the 

conclusion that the reasonable promptness provision was only enacted to prevent eligible 

individuals from being placed on waiting lists and that regulations promulgated under the 

reasonable promptness provision prohibit termination (a term of art under the Medicaid 

statutes) from services in certain circumstances. As this case is not a waiting list case nor 

is it a termination case, Defendant posits there is no cause of action under the reasonable 

promptness provision for the alleged acts Plaintiffs complain of. 

 Plaintiffs rely upon Romano v. Greenstein, 2012 WL 1745526 (E.D. La. 2012), 

which determined that the Louisiana department of health and hospital’s failure to 

“follow the seven-step process for determining whether Romano had a continuing 

disability,” violated the reasonable promptness statute. In so holding, Romano looked to 

a regulation which implements the reasonable promptness statute and held 

‘[t]he agency must ... continue to furnish Medicaid regularly to all eligible 

individuals until they are found to be ineligible.’ 42 C.F.R. § 435.930(b). 

This provision implies that assistance may not be terminated until an 

individual is properly found ineligible. 

Romano, 2012 WL 1745526 at * 8. (Emphasis in original.) (Footnote omitted.) The 

United States Court of Appeals for the Fifth Circuit affirmed the district court’s 

determination that § 1983 afforded the plaintiff in Romano a private right of action but 

did not address the merits of the district court’s decision. See Romano v. Greenstein, 721 

F.3d 373 (5th Cir. 2013) (“On appeal, DHH does not challenge the merits of the district 

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court’s decision to grant summary judgment in favor of Romano.”) Plaintiffs argue 

Romano compels the conclusion that an improper reduction in benefits upon 

recertification is a violation of the reasonable promptness statute. 

 Plaintiffs’ claim in Count I is not covered by the plain language of the reasonable 

promptness statute and the Court is not inclined to recommend that Count I proceed as 

such a recommendation would amount to a recommendation that the scope of 42 U.S.C. § 

1396a(a)(8) be expanded beyond its plain language. Neither party has cited a case that is 

on point. The Court finds Sboky helpful as it provides some guidance regarding what the 

reasonable promptness statute was enacted to prevent - waiting lists. As mentioned 

above, neither Plaintiff in this case was placed on a waiting list. Rather, Plaintiffs 

received AHCCCS full scope benefits for a number of years and, as set forth in the 

Complaint, it was only recently that Plaintiffs allege they suffered an improper reduction 

in benefits upon recertification. 

 The Court finds that this case is unlike both Crippen and Romano, as the plaintiffs 

in those cases saw their Medicaid benefits terminated completely upon either the 

termination of SSI benefits (as in Crippen) or the determination that the plaintiff was no 

longer under a continuing disability (as in Romano). Here, Plaintiffs were never 

terminated from AHCCCS. Instead, at all times Plaintiffs were covered with some

amount of AHCCCS benefits. The regulation discussed in Romano, 42 C.F.R. § 435.930 

speaks to, in relevant part, “furnishing Medicaid” (1) promptly to beneficiaries without 

delay caused by an agency’s administrative procedures and (2) to eligible individuals 

until found ineligible. See 42 C.F.R. § 435.930. Again, there is no agency delay at issue 

here and it is undisputed that some scope of Medicaid was at all times furnished to 

Plaintiffs. 

 Regardless, however, as explained below the Court also determines that Plaintiffs 

have failed to sufficiently alleged facts that support the theory that the reduction in 

AHCCCS benefits was a result of a policy or practice of the Director as opposed to being 

attributable to something else, such as worker errors. Stated another way, Plaintiffs have 

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failed to sufficiently show, as they must under Twombly/Iqbal, that they are entitled to 

relief. 

Policy or Practice of the Director: As mentioned above, to survive a Rule 12(b)(6) 

motion to dismiss, the plaintiff must allege enough facts to state a claim to relief that is 

plausible on its face. Twombly, 550 U.S. at 570. As Defendant points out, under Twombly

the Complaint must be both “well pled” and the allegations must be “plausible.” Id. at 

556. 

To survive a motion to dismiss, a complaint must contain sufficient factual 

matter, accepted as true, to state claim to relief that is plausible on its face. 

A claim has facial plausibility when the plaintiff pleads factual content that 

allows the court to draw the reasonable inference that he defendant is liable 

for the misconduct alleged. The plausibility standard is not akin to a 

probability requirement, but it asks for more than a sheet possibility that a 

defendant has acted unlawfully. 

Ashcroft v. Iqbal, 556 U.S. at 678. 

 Defendant admits that in mid-to-late 2015 it had a computer problem that caused a 

number of AHCCCS immigrant recipients to suffer an improper reduction in benefits. 

The Complaint alleges that errors “were” caused by computer systems. See Doc. 1 at ¶ 

40. The wording suggests knowledge that the computer problem had been fixed and 

Defendant reported at oral argument as having done so. When questioned on whether 

Plaintiffs were in agreement that the 2015 computer problem was remedied, Plaintiffs’ 

counsel reported that they did not intend for the Complaint to say that errors were only 

caused by the computer problem. Analyzing Defendant’ motion to dismiss based solely 

upon the allegations contained in the Complaint the Court determines that Plaintiffs have 

not sufficiently alleged that a previously admitted 2015 computer problem is currently on 

going. Indeed, the Complaint (filed in 2016) alleges that errors “were” caused by the 

computer system. Id. (Emphasis added.) 

 Accordingly, the Complaint, if it should proceed, is left to allege an unlawful 

policy or practice by the Director based upon something else. Drawing from the 

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Complaint, that something else may be “other processing errors” alleged to be: (1) the 

failure of AHCCCS to renew eligibility without requiring information from the individual 

if able to do so based on other reliable information (Doc. 1 at ¶ 46); (2) the failure of the 

Director to implement federal law on ex parte renewals (Doc. 1 at ¶ 48, 51); and (3) 

AHCCCS’s “routinely” asking about immigration status for “all immigrants” at 

recertification thereby causing errors (Doc. 1 at ¶ 49). 

 However, the Complaint does not link Plaintiff Darjee’s benefit reduction to any 

of the three mentioned alleged policies or practices of the Director. See Doc. 1 at ¶¶ 56-

71. This is also the case with Plaintiff Sanchez Haro. See Id. at ¶¶ 72-85. In other words, 

neither Plaintiff Darjee nor Sanchez Haro alleges that AHCCCS asked either of them for 

their immigration numbers, immigration status, or that they were sent a request for 

further information under the ex parte process. The most that Plaintiffs have done is 

allege, primarily upon information and belief, that the Director does the three things set 

forth above. Neither Plaintiff has alleged that they have been injured by the Directors’ 

alleged actions. Given the absence of an allegation of injury and the absence of any 

factual allegations to support Plaintiffs’ contention that Defendant has a policy or practice 

of not following the Medicaid laws, the Court concludes that Plaintiffs have alleged, but 

have not “shown,” as they are required to under Towmbly/Iqbal, that they are entitled to 

relief. 

 The Court recommends dismissal of Count I. 

Count II – Due Process 

 The Due Process Clause of the Fourteenth Amendment to the United States 

Constitution prohibits the State from terminating a beneficiary’s health services without 

first providing the individual adequate notice and an adequate hearing. See Goldberg v. 

Kelly, 397 U.S. 254 (1970). The Medicaid Act requires AHCCCS to provide “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). Regulations provide, inter alia, that any time 

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AHCCCS takes an action that affects a claim for medical assistance, it must provide a 

written notice that includes a statement of what action AHCCCS intends to take, the 

reasons for that action, the specific legal authority for that action, the right to a hearing to 

challenge that action and an explanation of the right to continued benefits if a hearing is 

requested. See 42 C.F.R. § 431.210. 

 Defendant argues that the Complaint fails to state a due process violation because 

there are no factual allegations that the notice AHCCCS sent in this case was defective as 

a matter of due process and the Complaint fails to specify any rule that Defendant 

violated. See Doc. 35 at p. 10, ll. 13-14. Defendant also argues that if the Complaint 

states a due process claim the only Plaintiff who has such a claim is Sanchez Haro. Id. at 

p. 9, ll. 24-26. Plaintiffs argue to the contrary asserting that they have pled sufficient facts 

to state a claim. See Doc. 38 at pp. 8-11. 

 The Court agrees with Defendant that if the Complaint is going to state a due 

process notice claim the only way it could do so is through Plaintiff Sanchez Haro. While 

the Complaint does allege that “the Darjees” received “notices,” the Complaint is devoid 

of any facts that speak to when the notice(s) were received or the content of these 

notice(s) with the exception that the notice(s) did not contain any information in Nepali. 

See Doc. 1 at ¶ 71. Plaintiffs appear to concede that only Sanchez Haro may have a due 

process/notice claim. See Doc. 38 at p. 9, ll. 11-24 (discussing the practical effects of the 

eligibility notice with respect to Sanchez Haro yet mentioning that the Darjees did not 

receive a notice). 

 The Complaint fails to allege that any notice sent to Sanchez Haro did not contain 

the information required by 42 C.F.R. §§ 431.210 or 431.230. See Doc. 1 at ¶¶ 52-53, 55, 

56-71, and 72-85. While the Complaint mentions the federal regulation regarding notice 

contents (Id. at ¶ 36), the Complaint does not go on to allege that the notice sent in this 

case to Sanchez Haro actually failed to contain the required information. Id. at ¶¶ 75-76. 

 Moreover, Plaintiffs’ allegations that there is “no meaningful explanation of the 

change [in benefits]” (Id. at ¶ 55), and that certain language of the notice is “confusing” 

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(Id. at ¶ 53) are, at bottom, legal conclusions. For example, the Complaint states that 

“[i]nformation about ‘Options to Continue Benefits is confusing.[,]” but fails to set forth 

what the actual language in the “Options to Continue Benefits Section” is. Id. at ¶ 53. 

Without adequate supporting factual allegations, the Court is not bound to accept legal 

conclusions as true. 

 The law requires an explanation for a change in benefits and directs that a 

participant is entitled to know the change so she can determine whether to challenge the 

proposed action. K.W. ex rel. D.W. v. Armstrong, 298 F.R.D. 479, 490 (D. Idaho 2014) 

(citing Goldberg, supra). The Complaint alleges that Sanchez Haro contacted AHCCCS 

after receipt of the notice so it is the case that she was given enough information in the 

notice to take that action. While the Complaint alleges that she did not understand the 

notice, which the Court will accept as true, her allegation of not understanding the notice 

– without any factual details underpinning what was contained in the notice that she did 

not understand - is insufficient to plead a violation of due process. 

 Cases cited by Plaintiffs in their response to Defendant’s motion to dismiss do not 

convince the Court otherwise. The cases mentioned by Plaintiffs address the merits of a 

party’s due process notice claim after the pleading stage. See, e.g., K.W. ex rel. D.W., 298 

F.R.D. at 483 (ruling, inter alia, on defendant’s second motion to approve its form of 

notice); Rodriguez by and through Corella v. Chen, 985 F.Supp. 1189, 1190 (D. Ariz. 

1996) (ruling on motion for summary judgment). At this stage, the Court is concerned 

with the sufficiency of the allegations set forth in the Complaint. 

 It may be the case that the notice that AHCCCS sends out when a benefits 

reduction upon recertification is contemplated does not comply with due process. It is 

clear from Plaintiffs’ response to the motion to dismiss and Plaintiffs’ counsel’s oral 

argument that Plaintiffs’ firmly believe such. The Court must leave that for another day, 

however, because at this juncture the Court is limited to the four corners of the Complaint 

and it is on this basis that the Court concludes that Plaintiffs have failed to sufficiently 

plead their claim under Count II. 

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 The Court recommends dismissal of Count II. 

Recommendation 

 The Court determines that Plaintiffs lack Article III standing. Additionally, 

Plaintiffs’ Count I claim is not authorized by the plain language of the reasonable 

promptness statute and, even if it were, the Court determines that it is not sufficiently 

pled. With respect to Count II, the Court determines that Plaintiffs’ have failed to 

sufficiently plead a due process/notice claim. 

 Accordingly, it is recommended that, after an independent review of the record, 

the District Court grant Defendant’s Motion to Dismiss (Doc. 35), dismiss the Complaint 

with prejudice, and deny as moot Plaintiffs’ Motion for Class Certification (Doc. 5), 

Plaintiffs’ Motion for Preliminary Injunction (Doc. 15), and the related motions to strike 

(Docs. 59, 62, and 65). 

 Pursuant to Federal Rule of Civil Procedure 72(b)(2), any party may serve and file 

written objections within 14 days of being served with a copy of the Report and 

Recommendation. A party may respond to the other party’s objections within fourteen 

days. No reply brief shall be filed on objections unless leave is granted by the district 

court. If objections are not timely filed, they may be deemed waived. If objections are 

filed, the parties should use the following case number: 16-CV-00489-RM. 

 Dated this 25th day of October, 2016. 

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