Opinion ID: 794677
Heading Depth: 2
Heading Rank: 2

Heading: Reasonable Standards

Text: 30 Plaintiffs next allege that the DME regulation violates Medicaid's requirement that the state create reasonable standards for determining the extent of medical assistance under the plan, which are consistent with Medicaid's objectives. 42 U.S.C. § 1396a(a)(17). See Wis. Dep't of Health & Family Servs. v. Blumer, 534 U.S. 473, 479, 122 S.Ct. 962, 151 L.Ed.2d 935 (2002). While a state has considerable discretion to fashion medical assistance under its Medicaid plan, this discretion is constrained by the reasonable-standards requirement. See Beal v. Doe, 432 U.S. 438, 444, 97 S.Ct. 2366, 53 L.Ed.2d 464 (1977); Weaver v. Reagen, 886 F.2d 194, 197 (8th Cir.1989) (interpreting the reasonable-standards provision to require states to provide medically necessary treatment to comply with Medicaid's objectives). Each service the state elects to provide must be sufficient in amount, duration, and scope to reasonably achieve its purpose. 42 C.F.R. § 440.230(b). Additionally, a state may not arbitrarily reduce the amount, duration, or scope of a required service . . . solely because of the diagnosis, type of illness, or condition. Id. § 440.230(c). 31 While optional DME programs are not explicitly subject to these requirements, CMS (the agency that administers Medicaid) maintains that the reasonable-standards provisions apply to all forms of medical assistance, including a state's provision of DME. See Slekis v. Thomas, 525 U.S. 1098, 1099, 119 S.Ct. 864, 142 L.Ed.2d 767 (1999) (remanding based on September 4, 1998, CMS letter to state Medicaid directors, which advised that DME is subject to the federal reasonable-standards requirements). See also St. Mary's Hosp. of Rochester v. Leavitt, 416 F.3d 906, 914 (8th Cir.2005); Cmty. Health Ctr. v. Wilson-Coker, 311 F.3d 132, 138 (2d Cir.2002) (according considerable deference to CMS's interpretations due to the complexity of the statute and the considerable expertise of the agency), citing Wis. Dep't of Health & Family Servs., 534 U.S. at 479, 122 S.Ct. 962. 32 Plaintiffs argue that the limited DME services in the Missouri regulation are inconsistent with these mandatory reasonableness requirements, because they discriminate on the basis of diagnosis, do not provide a sufficient amount of DME services to meet Medicaid's objectives, and fail to establish a procedure for recipients to obtain non-covered DME items. Citing conflicts between the Missouri regulation and the federal reasonable-standards requirements, they also contend that the state regulation is preempted under the Supremacy Clause. The district court did not address these arguments, focusing solely on comparability.
33 Plaintiffs' discrimination argument is very similar to their comparability claim, as it is based on the provision of additional DME services to blind recipients. Specifically, they contend that the regulation is facially unreasonable, because it discriminates on the basis of a medical condition or diagnosis — blindness — in violation of 42 C.F.R. § 440.230(c). 34 Like plaintiffs' comparability claim, this argument is foreclosed by Missouri's recent amendment to its plan. Because the State represents that it is independently funding the provision of additional DME services to the blind, the amended plan complies with the federal regulation. See, e.g., Neb. Health Care Ass'n, 778 F.2d at 1294. Thus, Missouri's DME regulation cannot be enjoined on this basis.
35 The State asserts that there is no individualized federal right to reasonable Medicaid standards, enforceable under 42 U.S.C. § 1983. See, e.g., Gonzaga Univ. v. Doe, 536 U.S. 273, 283-84, 122 S.Ct. 2268, 153 L.Ed.2d 309 (2002). The State raised this argument to the district court in a motion to dismiss the complaint for lack of jurisdiction and failure to state a claim, which the district court denied. The State concedes that it did not raise this issue in its appellee's brief, because the denial of a motion to dismiss is generally not subject to immediate appeal. See Prescott v. Little Six, Inc., 387 F.3d 753, 755 (8th Cir. 2004); 28 U.S.C. § 1291 (only final orders are immediately appealable). The State also appears to acknowledge that this is not a jurisdictional issue that may be raised at any time. See Angela R. v. Clinton, 999 F.2d 320, 324 (8th Cir.1993). See also Price v. City of Stockton, 390 F.3d 1105, 1108 (9th Cir.2004); Rodriguez v. DeBuono, 175 F.3d 227, 233 (2d Cir.1999) (noting that the issue is more aptly viewed as a question of whether the plaintiffs have failed to state a claim upon which relief may be granted). 36 The State argues that, because this legal issue decreases the likelihood that plaintiffs will succeed on the merits of their reasonable-standards claim, it is reviewable by this court. As this issue directly affects plaintiffs' probability of success — a critical factor in whether a preliminary injunction should issue — and the district court did not discuss this claim in denying the injunction, this court agrees. See, e.g., S. Camden Citizens in Action v. N.J. Dep't of Envtl. Protection, 274 F.3d 771, 777, 790-91 (3d Cir.2001) (reversing preliminary injunction where plaintiffs had no private right of action). 37 For legislation enacted pursuant to Congress's spending power, like the Medicaid Act, a state's non-compliance typically does not create a private right of action for individual plaintiffs, but rather an action by the federal government to terminate federal matching funds. See Pennhurst State Sch. & Hosp. v. Halderman, 451 U.S. 1, 28, 101 S.Ct. 1531, 67 L.Ed.2d 694 (1981). While the Supreme Court has rarely found enforceable rights in spending clause legislation, it has not foreclosed the possibility that individual plaintiffs may sue to enforce compliance with such legislation. See Wright v. City of Roanoke Redevelopment & Hous. Auth., 479 U.S. 418, 430, 107 S.Ct. 766, 93 L.Ed.2d 781 (1987) (Federal Housing Act supports a cause of action under section 1983); Wilder v. Va. Hosp. Ass'n, 496 U.S. 498, 510, 110 S.Ct. 2510, 110 L.Ed.2d 455 (1990) (Medicaid providers had an individual right to reasonable reimbursement rates under the now-repealed Boren Amendment). Still, the Court has since limited the circumstances where a private right of action is found under section 1983. See Suter v. Artist M., 503 U.S. 347, 363, 112 S.Ct. 1360, 118 L.Ed.2d 1 (1992) (no private right of action under the Adoption Assistance and Child Welfare Act, which requires states to make reasonable efforts to keep children out of foster homes); Blessing v. Freestone, 520 U.S. 329, 344-45, 117 S.Ct. 1353, 137 L.Ed.2d 569 (1997) (no private right of action under Title IV-D of the Social Security Act, which requires states to substantially comply with requirements designed to ensure timely payment of child support); Gonzaga, 536 U.S. at 290, 122 S.Ct. 2268 (no private right of action under the Family Educational Rights and Privacy Act, which prohibits federal funding of educational institutions that have a policy of releasing confidential records to unauthorized persons). 38 A three-part test determines whether Spending Clause legislation creates a right of action under 42 U.S.C. § 1983:(1) Congress intended the statutory provision to benefit the plaintiff; (2) the asserted right is not so vague and amorphous that its enforcement would strain judicial competence; and (3) the provision clearly imposes a mandatory obligation upon the states. Blessing, 520 U.S. at 340-41, 117 S.Ct. 1353. If the legislation meets this test, there is a presumption it is enforceable under section 1983. Id. at 341, 117 S.Ct. 1353. The presumption is rebutted if Congress explicitly or implicitly forecloses section 1983 enforcement. Id. (noting that implied foreclosure occurs if Congress creates a comprehensive enforcement scheme that is incompatible with individual enforcement). The availability of administrative mechanisms alone, however, cannot defeat the plaintiff's ability to invoke section 1983, so long as the other requirements of the three-part test are met. See id. at 347, 117 S.Ct. 1353. 39 In Gonzaga University v. Doe, the Supreme Court clarified the first prong, holding that anything short of an unambiguously conferred right does not support an individual right of action under section 1983. Gonzaga, 536 U.S. at 283, 122 S.Ct. 2268. As section 1983 enforces rights, as opposed to benefits or interests, the statutory language must clearly evince an intent to individually benefit the plaintiff. Id. at 284, 122 S.Ct. 2268 (where a statute does not include this sort of explicit `right- or duty-creating language' we rarely impute to Congress an intent to create a private right of action). Accordingly, the statute must focus on an individual entitlement to the asserted federal right, rather than on the aggregate practices or policies of a regulated entity, like the state. Id. at 287-88, 122 S.Ct. 2268. 40 Medicaid's reasonable-standards requirement provides that a state Medicaid plan must include reasonable standards. . . for determining eligibility for and the extent of medical assistance under this plan. 42 U.S.C. § 1396a(a)(17). Like the Ninth Circuit — the only other circuit to address this issue — this court finds the statutory language insufficient to evince a congressional intent to create individually-enforceable federal rights. See Watson v. Weeks, 436 F.3d 1152, 1162 (9th Cir.2006). First, the statute is not phrased in terms of the individuals it intends to benefit, as it lacks any reference to individuals or persons. Id. (noting this omission is fatal under Gonzaga to the existence of a section 1983 right), citing Gonzaga, 536 U.S. at 284, 122 S.Ct. 2268. Rather than focusing on an individual entitlement to medical services, the reasonable-standards provision focuses on the aggregate practices of the states in establishing reasonable Medicaid services. See, e.g., Gonzaga, 536 U.S. at 287-88, 122 S.Ct. 2268. This is insufficient to establish an individual right to reasonable standards under the first prong of the three-part test. 41 Even if the statute referenced the individuals benefitted, the right it would create is too vague and amorphous for judicial enforcement. Watson, 436 F.3d at 1162. The reasonable-standards provision focuses on the income/resources of potential beneficiaries, as the statute orders the states to base Medicaid eligibility on financial need. See id. at 1163 (Congress provided no meaningful instruction for the interpretation of `reasonable standards' in terms of medical need). The only guidance Congress provides in the reasonable-standards provision is that the state establish standards consistent with [Medicaid] objectives — an inadequate guidepost for judicial enforcement. See id. As the statute sets forth only broad, general goals, which the states have broad discretion to implement, this court holds that plaintiffs do not have a private right of action to enforce Medicaid's reasonable-standards provision under section 1983.
42 Plaintiffs claim that the Missouri DME regulation is preempted by the Supremacy Clause, because it directly conflicts with Medicaid's reasonable-standards requirements. U.S. Const. Art. VI, cl. 2. The Supremacy Clause is not the direct source of any federal right, but secures federal rights by according them priority whenever they come in conflict with state law. Golden State Transit Corp. v. City of Los Angeles, 493 U.S. 103, 107, 110 S.Ct. 444, 107 L.Ed.2d 420 (1989), quoting Chapman v. Houston Welfare Rights Org., 441 U.S. 600, 613, 99 S.Ct. 1905, 60 L.Ed.2d 508 (1979). Preemption claims are analyzed under a different test than section 1983 claims, affording plaintiffs an alternative theory for relief when a state law conflicts with a federal statute or regulation. Id. at 108, 110 S.Ct. 444 (it would obviously be incorrect to assume that a federal right of action pursuant to § 1983 exists every time a federal rule of law preempts state regulatory authority); id. at 108 n. 4, 110 S.Ct. 444 (a Supremacy Clause claim based on a statutory violation is enforceable under § 1983 only when the statute creates `rights, privileges, or immunities' in the particular plaintiff); id. at 117, 110 S.Ct. 444 (Preemption concerns the federal structure of the Nation rather than the securing of rights, privileges and immunities to individuals). 43 Under the preemption doctrine, state laws that interfere with, or are contrary to the laws of congress, made in pursuance of the constitution are preempted. Wis. Pub. Intervenor v. Mortier, 501 U.S. 597, 604, 111 S.Ct. 2476, 115 L.Ed.2d 532 (1991), quoting Gibbons v. Ogden, 9 Wheat. 1, 22 U.S. 1, 9, 6 L.Ed. 23 (1824). Where Congress has not expressly preempted or entirely displaced state regulation in a specific field, as with the Medicaid Act, state law is preempted to the extent that it actually conflicts with federal law. Pac. Gas & Elec. Co. v. State Energy Res. Conservation & Dev. Comm'n, 461 U.S. 190, 203-04, 103 S.Ct. 1713, 75 L.Ed.2d 752 (1983). An actual conflict arises where compliance with both state and federal law is a physical impossibility, or where the state law `stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress.' Id., quoting Fla. Lime & Avocado Growers, Inc. v. Paul, 373 U.S. 132, 142-43, 83 S.Ct. 1210, 10 L.Ed.2d 248 (1963) and Hines v. Davidowitz, 312 U.S. 52, 67, 61 S.Ct. 399, 85 L.Ed. 581 (1941). While Medicaid is a system of cooperative federalism, the same analysis applies; once the state voluntarily accepts the conditions imposed by Congress, the Supremacy Clause obliges it to comply with federal requirements. See Jackson v. Rapps, 947 F.2d 332, 336 (8th Cir.1991) (applying conflict preemption doctrine to state AFDC law, analogous to Medicaid's system of cooperative federalism). See also King v. Smith, 392 U.S. 309, 316, 326-27, 88 S.Ct. 2128, 20 L.Ed.2d 1118 (1968); Planned Parenthood of Houston & Se. Tex. v. Sanchez, 403 F.3d 324, 337 (5th Cir.2005) (once a state has accepted federal funds, it is bound by the strings that accompany them). 44 In this case, plaintiffs claim that Missouri's DME regulation conflicts with the federal regulations that implement Medicaid's reasonable-standards requirement. See 42 C.F.R. § 440.230(b). Federal regulations can preempt state laws. . . if the agency, acting within the scope of its delegated authority, intends them to. Wuebker v. Wilbur-Ellis Co., 418 F.3d 883, 887 (8th Cir.2005) (applying the same conflict-preemption analysis), citing Chapman v. Lab One, 390 F.3d 620, 624-25 (8th Cir.2004). As with their section 1983 claim, plaintiffs allege that the state regulation is unreasonable, because it does not provide a sufficient amount of DME services to meet Medicaid's basic objectives and fails to establish a procedure for recipients to obtain non-covered DME items. Importantly, these arguments differ from those involving claims of discrimination, as they do not facially attack the provision of additional DME services to the blind as compared to other adult Medicaid recipients. Rather, they allege that the limited list of DME items that the state provides to all Medicaid recipients — with the assistance of federal funding — is so limited that it fails Medicaid's objectives. The district court did not address these claims. 45 When a state receives federal matching funds, its medical assistance program must comply with all federal statutory and regulatory requirements. See Meyers v. Reagan, 776 F.2d 241, 243-44 (8th Cir.1985). See also Blum v. Bacon, 457 U.S. 132, 145-46, 102 S.Ct. 2355, 72 L.Ed.2d 728 (1982). Missouri admits that, with the exception of DME services to the blind, it accepts federal matching funds to finance its DME program for adult Medicaid recipients. See 69 Fed Reg. 68370, 68372 (Nov. 24, 2000) (61.93 cents in federal funding is appropriated for each dollar Missouri spends on medical assistance under its state plan). Accordingly, the federally-funded DME program must comply with Medicaid's reasonable-standards requirement, and its implementing regulations. 46 Missouri's amended plan includes only three categories of prosthetic devices available to all adult Medicaid recipients: ostomy supplies, oxygen and respiratory equipment, and wheelchairs. 3 The DME regulation says that adult Medicaid recipients are also entitled to diabetic supplies and equipment, but not artificial larynxes, CPAPs, BiPAPs, IPPB machines, humidification items, suction pumps, apnea monitors, wheelchair accessories, or scooters. Mo.Code Regs. Ann. tit. 13, § 70-60.010(6) (2005). Plaintiffs argue that these limitations make Missouri's amended Medicaid plan unreasonable in light of the purposes of Medicaid. See 42 U.S.C. §§ 1396, 1396a(a)(17); 42 C.F.R. § 440.230(b). 47 Plaintiffs contend that the limited DME items available to all adult Medicaid recipients are insufficient in amount and scope to reasonably achieve the purpose of the DME program. See 42 C.F.R. § 440.230(b). For example, the regulation covers wheelchairs, but excludes funding for the batteries, filters, accessories, repairs, and other types of replacement parts necessary to keep the equipment functioning. It covers oxygen and other limited respiratory equipment, but not other equipment, such as suction pumps, apnea monitors, and humidification devices that is medically necessary to assist in breathing. Moreover, the regulation completely excludes items like augmentative communication devices, catheters, and parenteral nutrition supplies. Given these limits, plaintiffs claim that the regulation does not meet Medicaid's goals of providing medically-necessary services, rehabilitation, or the capability of independence and self-care. See 42 U.S.C. § 1396. 48 While a state has discretion to determine the optional services in its Medicaid plan, a state's failure to provide Medicaid coverage for non-experimental, medically-necessary services within a covered Medicaid category is both per se unreasonable and inconsistent with the stated goals of Medicaid. See Meusberger v. Palmer, 900 F.2d 1280, 1282 (8th Cir.1990) (organ transplants); Weaver, 886 F.2d at 198 (AZT coverage), citing Beal, 432 U.S. at 444-45, 97 S.Ct. 2366; Meyers, 776 F.2d at 243-44 (augmentative communication devices); Pinneke v. Preisser, 623 F.2d 546, 548 n. 2 (8th Cir.1980) (transsexual reassignment surgery). Other courts agree. See Hern v. Beye, 57 F.3d 906, 911 (10th Cir.1995) (abortion); Dexter v. Kirschner, 984 F.2d 979, 983 (9th Cir.1992) (bone marrow transplants); White, 555 F.2d at 1151-52 (eyeglasses). Contra Rodriguez, 197 F.3d at 617 (state may exclude safety monitoring as part of optional personal care services, based on administrative concerns). Because Missouri has elected to cover DME as an optional Medicaid service, it cannot arbitrarily choose which DME items to reimburse under its Medicaid policy. 49 The State responds that pre-approved lists of DME are acceptable under Medicaid's reasonable-standards provisions. See 42 C.F.R. § 440.230(d) (allowing utilization controls as a means of administrative convenience). While a state may use a pre-approved list, CMS has directed that the state must include specific criteria for the extent of DME coverage under the plan, and a mechanism for recipients to request timely reimbursement for non-covered, medically-necessary items. See Letter from Sally K. Richardson, Director of the Center for Medicaid and State Operations, to State Medicaid Directors 1 (Sept. 1, 1998). According to CMS, a policy without a meaningful procedure for requesting non-covered items is inconsistent with the reasonable-standards requirement and the objectives of Medicaid. Id. While these requirements are not explicit in the federal Medicaid regulations, CMS's interpretation is entitled to considerable deference. See Slekis, 525 U.S. at 1099, 119 S.Ct. 864 (relying on the September 4, 1998, letter to state Medicaid directors in remanding a DME case for consideration of CMS's instructions). See also St. Mary's Hosp., 416 F.3d at 914; Pharm. Research & Mfrs. Am. v. Thompson, 362 F.3d 817, 821-22 (D.C.Cir.2004); Rabin v. Wilson-Coker, 362 F.3d 190, 197 (2d Cir.2004) (according some significant measure of deference to CMS's statutory interpretation contained in letter to State Medicaid Directors). 50 The State contends that it meets these federal mandates, as all Medicaid recipients have two options for receiving non-covered DME items under the state Medicaid plan. First, recipients can qualify for home health care services, requiring necessary DME items to be provided. See Mo. Code Regs. Ann. tit. 13, § 70-90.010(4). Second, recipients can seek reimbursement for non-covered items through the established exceptions process. See id. § 70-2.100. Plaintiffs respond that neither option is a meaningful procedure for requesting non-covered items. 51 Plaintiffs aver — although the state questions — that they do not qualify for home health care under Missouri's plan, because it is available only to individuals who both require skilled-nursing services and are confined to the home. See id. §§ 70-90.010(1). While the federal regulation requires that DME items be suitable for use in the home, it does not mandate that an individual recipient be homebound or receive skilled-nursing services to receive DME as part of home health care. See 42 C.F.R. § 440.70(b)(3). In fact, CMS specifically instructs that a homebound requirement is an improper restriction for the provision of any home health care service. See Letter from the Center for Medicaid and State Operations, to State Medicaid Directors 1 (July 25, 2000), Letter from James G. Scott, Associate Regional Administrator for Medicaid and Children's Health, to Gary Sherman, Director of the Missouri Department of Social Services 2 (Nov. 21, 2005) (Missouri may not institute a homebound requirement or mandate that recipients receive skilled nursing services to receive home health services). See also Skubel v. Fuoroli, 113 F.3d 330, 337 (2d Cir.1997) (home health care nursing services cannot be limited to the recipient's home). 52 As CMS recognizes, restricting home health care to the homebound ignores the consensus among health care professionals that community access is not only possible, but desirable for individuals with disabilities. See Letter from the Center for Medicaid and State Operations, at 1. See also Olmstead v. L.C., 527 U.S. 581, 596-97, 119 S.Ct. 2176, 144 L.Ed.2d 540 (1999) (noting the importance of community access for individuals with disabilities under the ADA). Missouri's regulation says that a recipient may still be considered homebound if he or she leaves the home infrequently or for short durations. See Mo. Code Regs. Ann. tit. 13, § 70-90.010(3). However, this Missouri regulation — approved as part of the state plan in 2000 — is inconsistent with CMS's directive that any homebound requirement is specifically prohibited. CMS has directly told Missouri that its homebound requirement . . . is out of compliance with CMS policy. E-mail from Megan K. Buck, Centers for Medicare and Medicaid Services, to Karen A. Lewis, Division of Medical Services Executive Assistant (April 5, 2006, 11:58:00 CST). See also Letter from James G. Scott, at 2; Letter from the Center for Medicaid and State Operations, at 1. Because no plaintiff appears to qualify for home health care under Missouri law, and Missouri's home health plan does not comply with CMS policy, the home-health option does not afford a meaningful opportunity to obtain non-covered DME items. 53 Plaintiffs also assert that Missouri's exceptions process does not provide them with an adequate mechanism to obtain non-covered DME items. To qualify for an exception, a Medicaid provider must demonstrate that: (1) the item is needed to sustain life; (2) the item will substantially improve the qualify of life for a terminally-ill patient (3) the item is necessary as a replacement due to an act of nature; or (4) the item is necessary to prevent a higher level of care. Mo.Code Regs. Ann. tit. 13, § 70-2-100(2)(J). Even if the provider makes this demonstration, no exception can be made where requested items or services are restricted or specifically prohibited under state or federal law. Id. § 70-2.100(1). 54 The State clarified the exceptions process for non-covered DME items in an August 29, 2005, notice to providers. The notice advises that the exceptions process is available to recipients with respiratory conditions who require use of pre-approved BiPAP, CPAP, or nebulizer machines, even though such items are technically prohibited under the revised DME regulation. See id. § 70-60.010(6) (2005). The notice also identifies as not covered other DME items, such as hospital beds, wheelchair batteries and repairs, and leg braces, and makes no reference to an available exception for them. As the regulation allows no exception for items that are restricted under state law — and the DME regulation specifically restricts all non-covered DME items — the exceptions process does not appear to provide a reasonable opportunity to obtain non-covered items. 55 Because the DME regulation restricts available DME, and plaintiffs have no other procedure to obtain it, the regulation — on the present record — appears unreasonable under directives from both CMS and this court. See, e.g., Meusberger, 900 F.2d at 1282. Plaintiffs have established a likelihood of success on the merits of their preemption claim as it relates to Medicaid's reasonable-standards requirement.