Opinion ID: 457907
Heading Depth: 2
Heading Rank: 1

Heading: The Granville Litigation.

Text: 7 Granville House, Inc., a nonprofit corporation operating three residential chemical dependency treatment programs, filed this action in May, 1980, against HHS and the Minnesota Commissioner of the Department of Public Welfare. 2 Granville sought a declaration that the classification of alcoholism 3 as a mental disease is arbitrary and capricious, and that the treatment of alcoholism in a certified ICF qualifies for federal financial participation in Medicaid. Granville did so because under 42 U.S.C. Sec. 1396d(a), there is no federal financial participation for medical services provided to persons age twenty-one to sixty-five in an IMD. Granville's underlying motivation is its frustration with its inability since the late 1970's to meet its primary mission--to treat indigent victims of alcoholism. See Granville, 715 F.2d at 1294-95. 8 The State of Minnesota initially defended the lawsuit, but then filed a cross-claim against HHS and moved that Granville be consolidated with Minnesota. The State also sought a declaration that HHS's interpretation of the Medicaid statute to preclude coverage for alcoholism treatment provided to otherwise eligible Medicaid recipients in ICFs on the basis that the facilities are IMDs is contrary to the Social Security Act and other HHS regulations. The district court consolidated the cases and then issued separate opinions. 9 In Granville, the district court ruled that HHS's classification of alcoholism as a mental disease is arbitrary and capricious, saving the issue posed by the State's cross-claim for its opinion in Minnesota. HHS then appealed to this Court. We held that HHS had not adequately considered the nature of alcoholism as a mental disease, but that, nevertheless, the district court had acted prematurely because there had been no final decision by HHS on the issue. Granville, 715 F.2d at 1303. We remanded to the district court with instructions to remand to the Grant Appeals Board of HHS to determine whether otherwise-eligible residents of Granville's facilities (which have been certified as intermediate care facilities) are eligible for Medicaid under 42 U.S.C. Sec. 1396 et seq. Id. at 1304. We specified that the Grant Appeals Board could conduct further hearings and that the district court would retain jurisdiction pending the outcome of the Board's decision. We also specified that the district court would, after reviewing the Board's decision, make such further rulings as it deemed necessary which would be appealable to our Court. Id. 10 The Grant Appeals Board on remand allowed the State to participate in the proceedings as an interested party. The Board specified, however, that the broader ICF-IMD issue of Minnesota was not to be litigated in that proceeding; only the narrower question of whether alcoholism is a mental disease would be addressed, although it would be considered in light of this Court's opinion in Minnesota (discussed infra ). After conducting further hearings with expert testimony from Granville and HHS, the Board concluded that: 11 HCFA [the Health Care Financing Administration of HHS] may not reasonably categorize Granville's facilities as IMDs based merely on the predominance in those institutions of persons diagnosed and treated for alcoholism. Given the uniqueness and complexity of the disease and its treatment, we conclude that HCFA may determine IMD status for an institution treating alcoholism only on the basis of more definitive rules or guidelines which enable HCFA and its constituents to better evaluate what types of alcoholism treatment are, and are not, conclusive of IMD status. Nothing in our decision precludes HCFA from deciding that Granville's facilities are ineligible for Medicaid assistance on bases other than IMD status. 12 The case then came back to the district court, with the State again intervening. The district court adopted the Grant Appeals Board's decision, but went further and enjoined HHS from denying Medicaid funds to any ICF in Minnesota on the grounds that it is an IMD, until HHS promulgates rules under the notice and comment procedures of the Administrative Procedure Act (APA) which establish meaningful standards which can be used to determine whether the facilities of Granville House or any other ICFs are IMDs. 13