Opinion ID: 4707402
Heading Depth: 3
Heading Rank: 2

Heading: Meaningfully Channeled Discretion

Text: As explained above, determining the extent to which decision-makers’ discretion is channeled demands a careful examination of the required decision-making process. In Barrows v. Burwell, for example, this Court considered whether Medicare beneficiaries have a constitutionally protected property interest in being admitted to hospitals on an inpatient basis as opposed to being placed on observation status, a decision that substantially alters their responsibility under Medicare for the cost of their treatment. 17Both the State and RiverSpring’s briefs could be read to imply that MLTCs are never under an obligation to provide a particular number of personal care services hours—that they possess the sort of “ultimate” discretion that absolutely precludes a constitutionally protected property interest. Upon closer examination, however, both parties’ arguments are simply variations on their claims that the relevant personal care services hours criteria are too fluid and subjective to create a constitutionally protected property interest in any particular number of hours. For example, RiverSpring suggests in passing that under New York regulations “the conferral of the benefit . . . never becomes mandatory.” RiverSpring Br. 32. Yet, in support of this contention, RiverSpring cites the facts that “a nurse conducting a [uniform assessment] considers numerous data points,” that “two individuals with the same [uniform assessment] score may” receive different assessments, and that “different plans may assess the required number of hours differently for [different] individuals.” RiverSpring Br. 32. In much the same way, the State highlights “precatory language throughout the statutory and regulatory framework,” but in the end argues only that this language “reinforces the absence of a predetermined outcome.” State Br. 53. Neither party argues that the MLTC has the option under its contract with the State to deny providing a given level of personal care services altogether to an individual who qualifies for that level of care. 20 777 F.3d 106, 107-09 (2d Cir. 2015). The district court held that because the decision whether to admit a patient was a “complex medical judgment” committed to the discretion of hospital physicians, beneficiaries have no constitutionally protected property interest in being admitted. Id. at 114. In support of this conclusion, it pointed to the Medicare Policy Manual, published by the Centers for Medicare & Medicaid Services (“CMS”), which specifically stated that the decision whether to admit a patient was a “complex medical judgment” based on a physician’s application of various factors. Id. This Court held that the district court’s dismissal of the action for failure to state a claim was premature. The Barrows plaintiff alleged that, despite the CMS guidance, admissions decisions were in fact made “through rote application of ‘commercially available screening tools,’” which, in practice, “substitute[d] for the medical judgment of treating physicians.” Id. In light of this allegation, we explained, the district court could not fairly rely on the Medicare Policy Manual to serve as an accurate representation of the admissions procedures. Otherwise stated, whether the plaintiffs had a constitutionally protected property interest “turn[ed] on facts that [were], at th[at] stage, contested.” Id. at 115. The Barrows Court recognized that a protected property interest can arise in a number of ways and that it is important for district courts to consider the details of the administrative scheme—and the allegations regarding those details— before relying on general discretion-granting regulations to dismiss procedural due process claims. Accordingly, although “[t]he issue of whether an individual has such a property interest is a question of law,” Gagliardi v. Vill. of Pawling, 18 F.3d 188, 192 (2d Cir. 1994), Barrows and other precedents make clear that when a complaint plausibly alleges discretion is meaningfully channeled based on the relevant sources, including 21 informal institutional policies and practices, the case should not be dismissed at the Rule 12(b)(6) stage. 18 In this case, the district court dismissed Bellin’s due process claims after examining the New York regulations that describe—at the highest level of generality— the criteria MLTCs must consider in making initial hours determinations for personal care services. See N.Y. Comp. Codes R. & Regs. tit. 18, § 505.14(a). In the district court’s view, the fact that MLTCs were directed to apply criteria that “require medical judgment and administrative decision making” established that MLTCs’ discretion was not meaningfully channeled. Bellin, 457 F. Supp. 3d at 423. But whether Bellin plausibly alleged that MLTCs’ discretion is meaningfully channeled cannot be answered simply by an examination of the highest-level generally applicable regulations. The relevant regulations, which are incorporated by reference into the complaint, do not establish as a matter of law that the discretion of the MLTCs is not meaningfully channeled. The State and RiverSpring argue that because 18 N.Y.C.R.R. § 505.14(b), which sets forth criteria the MLTCs must consider, contains a physician’s evaluation, a social assessment, and a nursing assessment that each require subjective judgments, the criteria are too open-ended to be meaningfully channeled. For example, the State contends that “[u]nder state law, an MLTC plan may provide personal care services only to the extent those services are ‘determined to meet the patient’s needs for assistance,’ and ‘when’ those services are also ‘cost effective and appropriate.’” State Br. 50 (emphasis omitted). Although the criteria involve professional and subjective 18To be clear, we do not mean to suggest that anytime a plaintiff alleges a due process claim, the case should move on to discovery because there may be sources that could be uncovered during discovery that would help determine whether discretion is meaningfully channeled. The complaint, documents incorporated by reference into the complaint, and matters of which the court may take judicial notice must in totality raise a plausible inference that plaintiffs are entitled to relief and that the case should therefore proceed to discovery. 22 determinations, many of the criteria are also objective and fixed. For instance, the nursing assessment must by regulation include six specific factors, including more objective ones such as “the primary diagnosis code from the ICD-9-CM.” 18 N.Y.C.R.R. § 505.14(b)(3)(iii)(b)(2). Even with the cost-effectiveness criteria, the regulation delineates the considerations and alternatives that should be taken into consideration; it does not just leave the assessment of cost-effectiveness to the MLTCs without providing any substantive guidance. See id. § 505.14(b)(3)(iv); see also Fleury v. Clayton, 847 F.2d 1229, 1232 (7th Cir. 1988) (“[T]he inclusion of elastic items in a list of criteria does not destroy a property interest.”). As a result, this case is different from Yale Auto Parts, Inc. v. Johnson, 758 F.2d 54 (2d Cir. 1985), upon which the State relies in support of the view that “this Court and others [] reject claims of constitutionally protected entitlements” when “the regulatory scheme involves both professional judgment and open-ended criteria.” State Br. 48. In Yale Auto Parts, the Court held that the plaintiff businesspeople had no constitutionally protected property interest in approval by the West Haven Zoning Board of Appeals of the location for an auto junkyard. 758 F.2d at 60. The Court highlighted the appellate zoning board’s statutory duty to take into account highly subjective considerations such as “the health, safety and general welfare of the public,” and, citing this substantial “discretion,” concluded that the plaintiffs lacked the requisite property interest. Id. at 59. 19 19In addition, the Yale Auto Parts court did not affirm dismissal of the complaint simply because the Zoning Board of Appeals applied subjective criteria. The court emphasized that the plaintiff in that case did not allege that “but for the” alleged due process violation, the Zoning Board of Appeals “would have been required to award them the requested” approval. Id. at 60. The presence of highly subjective criteria confirmed that there was no “certainty or a very strong likelihood that,” absent the alleged denial of due process, plaintiff’s “application would have been granted.” Id. at 59. In Bellin’s case, by contrast, the Commissioner’s designee has already 23 In her complaint, Bellin plausibly alleged that “MLTCs’ decisions regarding the appropriateness and amount of personal care services to provide to Medicaid recipients are not independent professional judgments because those decisions are governed by, and must conform with Federal and New York State statutes, regulations, manuals and transmission letters.” Jt. App’x 20. She pointed out that they must by contract provide sufficient services “to reasonably be expected to achieve the purpose for which the services are furnished,” and that they must be furnished at levels “no less . . . than [those] furnished to beneficiaries under fee-for-service Medicaid.” Id. at 17 (quoting 42 C.F.R. § 438.210(a)). She further alleged that, when certain regulatory criteria are satisfied, “MLTC plans are required to provide medically necessary in-home personal care services up to and including 24 hours per day.” Id. (citing 18 N.Y.C.R.R. §§ 505.14(a)(3), (5), 505.28(b)(4), (8)). As explained above, the criteria outlined in 18 N.Y.C.R.R. § 505.14(b) place substantive limitations on the MLTCs’ decision-making. In addition, the complaint identifies the MLTC Policy, which incorporates the Uniform Assessment System, a special tool that all parties discuss in their briefing and as Bellin argues “generates the answers to certain questions about functional impairments.” Bellin Reply Br. 22. Although Bellin’s complaint was not a model of specificity, it included these plausible, relatively specific allegations that MLTCs’ decision-making is determined that RiverSpring’s May 2019 assessment supported her entitlement to 24-hour, livein personal care services. Absent the denial of her right to appeal, then, RiverSpring would almost certainly have been required to offer Bellin that care as part of its initial care services hours determination. We also read the Yale Auto Parts case to be concerned about applying federal due process review to state administrative decision-making. In light of the substantial federal role in overseeing and regulating state Medicaid programs, we see no similar risk here of “open[ing] a Pandora’s Box of unnecessary federal-state conflict.” Yale Auto Parts, 758 F.2d at 59. 24 not unbounded; rather, it is meaningfully channeled, and on this basis she claimed a constitutionally protected property interest in a particular level of care. Other aspects of the record in the district court reinforce the plausibility of Bellin’s due process claim. In opposing the motion to dismiss, Bellin filed with the district court the initial decision and portions of the record in her fair hearing appeal in which she sought reimbursement for the days she went without full-time care before RiverSpring determined she was entitled to care at that level. See Declaration of Aytan Y. Bellin, Exs. A, B, Bellin v. Zucker, 457 F. Supp. 3d 414 (S.D.N.Y. 2020) (No. 19-cv-5694 (AKH)), ECF No. 45. 20 She also included records of another fair hearing decision made publicly available in a redacted format, in light of the privacy interests in the medical information it necessarily contains. 21 Id., Ex. D. In deciding Bellin’s fair hearing appeal (as described above), the Commissioner’s designee reviewed RiverSpring’s evaluations of Bellin’s condition and concluded that they conclusively established her entitlement to 24-hour, live-in care. This fair hearing decision lends plausibility to Bellin’s allegation that the MLTCs are required to provide a particular level of personal care services upon finding that beneficiaries satisfy certain criteria. Contrary to the district court’s suggestion that the regulatory scheme merely authorizes a certain level of care when certain criteria are met, Bellin, 457 F. Supp. 3d at 423, and does not require that care be offered, the fair hearing record plausibly establishes that upon finding certain criteria satisfied, MLTCs must provide 24-hour 20 The record did not include the amended fair hearing decision, which was issued after Bellin filed her opposition to the motion to dismiss. Because it concerned the date on which an entitlement began rather than the entitlement and record itself, it is not relevant to our discussion at this point. 21As discussed in note 10, supra, these fair hearing decisions are matters of public record properly subject to judicial notice. 25 personal care services, see Appellant’s Reply Br. 25 (“The fair hearing decisions indicate unequivocally that upon satisfying the criteria for a particular number of home care hours, the hours must be awarded.”). Critically, Bellin’s fair hearing decision does not appear to be unique in this aspect. She cites several other fair hearing decisions that reflect an apparent practice in the Department of Health of reviewing MLTCs’ assessments and concluding based on the satisfaction of certain criteria that beneficiaries are entitled to a specific number of personal care services hours. See Appellant’s Br. 48-49; Appellant’s Reply Br. 26. For instance, in one case, the Commissioner’s designee ruled that an MLTC had wrongly denied a 99-year-old recipient’s request to increase her personal care services from 12 hours per day to 24-hour, live-in care. The Commissioner’s designee reached this conclusion based on the MLTC’s assessment, which indicated that the recipient could not walk or use a toilet without support. See Decision After Fair Hearing, No. 8110102H (State of N.Y. Dep’t of Health Aug. 12, 2020), https://otda.ny.gov/fair%20hearing%20images/2020-8/Redacted_8110102H.pdf (last visited July 9, 2021); see also Decision After Fair Hearing at 21-22, No. 8171784M (State of N.Y. Dep’t of Health July 13, 2020) (directing MLTC to increase appellant’s personal care services hours from 10 hours per day to 24-hour, live-in care based in part on “skilled services nurse[‘]s notes contained in the Plan’s evidence”), https://otda.ny.gov/fair%20hearing%20images/2020-8/Redacted_8171784M.pdf (last visited July 12, 2021). The fact that administrative review is possible for such similar claims supports Bellin’s claim that beneficiaries have a property interest in the initial determination of their personal care services hours. Our decision in Furlong v. Shalala, 156 F.3d 384 (2d Cir. 1998), is instructive in this regard. In Furlong, plaintiff anesthesiologists challenged the denial of the right of non-assigned physicians to appeal Medicare adverse payment 26 decisions. The anesthesiologists asserted that they were denied a constitutionally protected property interest when they were prevented from appealing insurance carriers’ decisions to deem certain of their services “surgical,” resulting in lower reimbursement rates. Id. at 389, 393. The Court first explained that federal regulations left insurance carriers with considerable discretion in deciding whether a service was “surgical,” and so did not provide a basis for identifying a protected property interest. Id. at 394. But the Court then considered the fact that, when assigned physicians—who had appeal rights—appealed the designation of the same services as the non-assigned plaintiff anesthesiologists performed, ALJs repeatedly reversed the carriers’ decisions. Id. Recognizing that these ALJ decisions were “persuasive authority in interpreting Medicare law,” and ruling that the “constant, consistent pattern of ALJ decisions” was sufficient to create a property interest in the designation of services, the Court held that the plaintiff anesthesiologists had a protected property interest in receiving the higher reimbursement amount. Id. at 395-96. In the same way, the fair hearing appeal decisions Bellin identifies lend support to her assertion of a constitutionally protected property interest. 22 Bellin therefore plausibly alleges a property interest in MLTCs’ initial care services hours determinations. We appreciate the State’s argument that the regulations introduce sufficiently “open-ended considerations” into these determinations that 22The State and RiverSpring are largely silent about the relevance of the State fair hearing decisions to Bellin’s due process claims. RiverSpring argues that “the fact . . . that fair hearing decisions include descriptions of the standards and procedures MLTCs must utilize when making home-care-hour determinations . . . (which are nothing more than recitations of the guidelines) . . . does not demonstrate that a plan is required to authorize a specific level of personal care services upon rote application of such standards and procedures.” RiverSpring Br. 34. However, “rote” application is not required to establish that discretion is meaningfully channeled. 27 Bellin cannot have a constitutionally protected property interest in a particular level of care, even at the full-time, live-in level, where one might imagine few would differ on the level of need. State Br. 51. Yet, to survive the motions to dismiss, it was not Bellin’s burden to make anything more than a plausible allegation that MLTCs’ discretion is channeled so as to create a property interest in initial hours determinations, and the district court was obligated to draw all reasonable inferences from Bellin’s allegations in her favor. Bellin carried this burden. On remand, the parties will likely have the opportunity to develop the record concerning how these personal care services hours determinations are made and what the applicable regulations require of both the MLTC and the State. This includes the various forms of guidance that may be non-public and may limit MLTCs’ discretion to which Bellin alluded in her complaint. See Jt. App’x 20 (“MLTCs’ decisions regarding the appropriateness and amount of personal care services to provide to Medicaid recipients are not independent professional judgments because those decisions are governed by, and must conform with . . . manuals and transmission letters.” (emphasis added)). It also includes the way MLTCs’ discretion is channeled in practice. Given the review of assessment records that occurs in fair hearing appeals, the way the Uniform Assessment System works in practice may be particularly relevant on remand. RiverSpring acknowledges that “the [Uniform Assessment System] assigns a numbered [nursing facility level of care] score based on the various data collected.” RiverSpring Br. 32. Although RiverSpring submits on appeal that this data includes “the subjective observations of the assessor,” and that two beneficiaries may receive the same score and yet receive different levels of care, id., the fair hearing appeal decisions suggest that these assessments at least sometimes support an obvious entitlement to a particular number of personal care services hours. The evaluation of this and other relevant issues will benefit from further factual development on remand. 28