Opinion ID: 2805947
Heading Depth: 2
Heading Rank: 1

Heading: Likelihood of Success on the Plaintiffs’ Claim

Text: under the Medicaid Act Fair Hearing Provisions To assess whether the district court abused its discretion in holding that the Plaintiffs were likely to prevail on their claim under the Medicaid Act, we must first “determine de novo whether the [district court] identified the correct legal rule to apply to the relief requested.” United States v. Hinkson, 585 F.3d 1247, 1262 (9th Cir. 2009). We find that it did. The fair hearing requirements of the Medicaid Act are defined both by statute and by regulation. The Medicaid Act requires 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.” 42 U.S.C. § 1396a(a)(3). Medicaid regulations in turn require state agencies to provide notice to participants of their right to a hearing under some circumstances. See 42 C.F.R. § 431.206. The regulations provide that an agency must “inform every applicant or beneficiary in writing . . . [o]f his right to a hearing . . . [a]t the time of any action affecting his or her 2 The notice requirements of the Medicaid Act are triggered by an “action,” see 42 C.F.R. § 431.206(c)(2), a term defined by regulation, see id. § 431.201. By contrast, the protections of the Due Process Clause are triggered by deprivations of constitutionally protected liberty or property interests. See Bd. of Regents of State Colls. v. Roth, 408 U.S. 564, 569 (1972). 16 K.W. V. ARMSTRONG claim.” Id. § 431.206(b)–(c)(2). The notice must contain, among other information, “[t]he reasons for the intended action.” Id. § 431.210(b). The regulations define an “action” as a “termination, suspension, or reduction of Medicaid eligibility or covered services,” or other specified adverse determinations. Id. § 431.201. The district court applied the correct standard to the Plaintiffs’ claim when it inquired whether the Department’s calculation of new budgets was an “action” under the Medicaid regulations. See id. § 431.206(c)(2). As the district court recognized, this question turns on whether calculating a lower budget amounts to a “reduction of . . . covered services.” See id. § 431.201. The court concluded that calculating a lower budget is an “action” because “the practical effect is a reduction in the amount of services the participant receives.” Under the second step of our abuse of discretion test, we must assess whether the district court’s conclusion on this point was “(1) ‘illogical,’ (2) ‘implausible,’ or (3) without ‘support in inferences that may be drawn from the facts in the record.’” Hinkson, 585 F.3d at 1262 (quoting Anderson v. City of Bessemer City, 470 U.S. 564, 577 (1985)). We find that it was not. The district court reasonably found that participants’ services are capped by their individual budgets under Idaho law. Idaho Code § 56-255(3)(e)(ii) provides that “[t]he department shall allow budget modifications only when needed to obtain or maintain employment or when health and safety issues are identified and meet the criteria as defined in department rule.” And, Idaho Administrative Code rule K.W. V. ARMSTRONG 17 16.03.10.513 provides that a participant’s “plan of service is based on the individualized participant budget.” There was ample evidence in the record that, absent an appeal, the cost of a participant’s service plan could not exceed the calculated budget. Service plans must be reviewed by a care manager, who may authorize the plan only if it is within the calculated budget. If the plan exceeds the calculated budget, the care manager must either authorize only services within the budget or deny the plan altogether. It does not appear that a participant may craft a service plan that exceeds the calculated budget specified in the initial Budget Notice without appealing either his budget determination or the decision of a care manager to reject his service plan. It was therefore reasonable for the district court to conclude that, as a practical matter, calculating a lower budget decreases a participant’s Medicaid services, thereby triggering the notice requirements of the Medicaid regulations. The district court also did not abuse its discretion in holding that the Plaintiffs were likely to show that the 2011 Budget Notices did not comply with the notice requirements of the Medicaid regulations. “A notice required under [42 C.F.R.] § 431.206(c)(2), (c)(3), or (c)(4) . . . must contain . . . [t]he reasons for the [State’s] intended action.” 42 C.F.R. § 431.210(b). The 2011 Budget Notices did not specify why individual budgets had decreased.3 3 We assume, without deciding, that there is a private right of action under section 1983 to enforce the fair hearing requirements of the Medicaid Act. Compare Gonzaga Univ. v. Doe, 536 U.S. 273, 280 (2002) (“[U]nless Congress ‘speak[s] with a clear voice,’ and manifests an ‘unambiguous’ intent to confer individual rights, federal funding 18 K.W. V. ARMSTRONG