Court Opinion

ID: 2659902
Source: CourtListenerOpinion
Date Created: 2014-04-03 03:50:24.074288+00
Date Added: 2024-06-11T12:58:26.824780
License: Public Domain

UNITED STATES DISTRICT COURT
                             FOR THE DISTRICT OF COLUMBIA

OSCAR SALAZAR, et al.,

              Plaintiffs,

       v.                                                 Civil Action No. 93-452 (GK)

DISTRICT OF COLUMBIA, et al.,

              Defendants.

                             MEMORANDUM OPINION AND ORDER

       On Sept.       20,    2013,     Defendants filed a Motion to Modify the

January 25,         1999 Consent Order and Related Order of August                                     8,

2000    [Dkt.       No.     1870].     Upon      consideration            of       the    Motion,    the

Opposition       [Dkt.      No.   1876],        the Reply !Dkt.              No.    1879],    the oral

argument      held October           15,       2013,   and the        entire         record herein,

and    for    the     following        reasons,           the     Court      grants        Defendants'

Motion.

I .    BACKGROUND

       This     class       action         lawsuit        filed     in       1993        alleged    that

Defendants,         among     other      claims,         denied      Medicaid            beneficiaries

due    process      of    law     in     the     recertification              of    their     Medicaid

eligibility.         On October          16,     1996,      the    Court       issued an Amended

Findings of Fact and Conclusions of Law granting some claims and

denying      others       [Dkt.    No.      402].      In    1997,       the       Court     entered    a

comprehensive remedial order                     [ Dkt.     Nos.    4 4 4,     4 93] .    The parties
        On Sept.       20,     2013,      Defendants filed their Motion to Modify

the January 25,            1999 Consent Order and Related Order of August

8,    2000    [Dkt.    No.     1870].      They seek to modify the Consent Order

so as to no longer be bound by Section III,                                 arguing that they

cannot simultaneously comply with both Section III and the ACA.

        Plaintiffs           have      also      filed       two     related           motions.     On

September 30,          2013,        Plaintiffs filed a Motion to Partially Stay

the Recertification Provisions in the Settlement Order [Dkt. No.

1875]. On October 1, 2013, Plaintiffs filed a Motion for Limited

Discovery Related to Medicaid Renewal and Redetermination Under

the    Affordable          Care     Act    [Dkt.     No.     1877].       Defendants          included

their Opposition to those two Motions in their Reply of October

7,    2013   [Dkt.     No.     1879]. Plaintiffs'            Replies in support of both

motions are due October 17, 2013.

II.     STANDARD OF REVIEW

        Defendants move to modify Section III under Federal Rule of

Civil    Procedure           60 (b) (5)    and     60 (b) (6).      Rule    60   (b)   (5)   provides

that a court may vacate an order if "applying it prospectively

is no longer equitable." Fed. R. Civ. P. 60(b) (5). As to consent

decrees,      the moving party bears the burden of proving its need

for    modification           by     establishing          that    "'a     significant          change

either       in   factual           conditions       or     in     law'    renders           continued

enforcement           of      the      judgment        'detrimental          to        the     public

                                                 -3-
        On Sept.          20,    2013,       Defendants filed their Motion to Modify

the January 25,             1999 Consent Order and Related Order of August

8,    2000    [Dkt.       No.     1870].      They seek to modify the Consent Order

so as to no longer be bound by Section III,                                    arguing that they

cannot simultaneously comply with both Section III and the ACA.

        Plaintiffs              have     also       filed       two     related      motions.     On

September 30,             2013,       Plaintiffs filed a Motion to Partially Stay

the Recertification Provisions in the Settlement Order [Dkt. No.

1875]. On October 1, 2013, Plaintiffs filed a Motion for Limited

Discovery Related to Medicaid Renewal and Redetermination Under

the    Affordable          Care        Act    [Dkt.     No.     1877].       Defendants     included

their Opposition to those two Motions in                               thei~    Reply of October

7,    2013        [Dkt.    No.        187~ aint"ffs ~~r                                 replies   in

support of both            mot~,              Octo er 17, 2013.

II.     STANDARD OF REVIEW

        Defendants move to modify Section III under Federal Rule of

Civil    Procedure          60(b) (5)         and     60(b) (6).      Rule     60(b) (5)    provides

that a court may vacate an order if "applying it prospectively

is no longer equitable." Fed. R. Civ. P. 60(b) (5). As to consent

decrees,      the moving party bears the burden of proving its need

for   modification              by     establishing           that    "'a    significant      change

either       in     factual           conditions       or      in     law'    renders      continued

enforcement           of        the      judgment         'detrimental          to    the     public

                                                    -3-
interest."' Horne ·v. Flores, 557 U.S.                    433,       453    (2009)       ("Flores")

(quoting Rufo v.          Inmates of Suffolk Cty. Jail, 502 U.S. 367, 384

(1992)).

        The Supreme Court has made it clear that courts should use

a "flexible approach" when ruling on Rule 60 (b) (5) motions which

address        institutional          reform    decrees,       such        as     this     one,     to

ensure         that     "'responsibility          for     discharging              the      State's

obligations is returned promptly to the State and its officials'

when     the     circumstances          warrant."       Flores,            502    u.s.     at      450

(quoting Frew v.           Hawkins,       540 U.S.      431,        442    (2004));       see also

Petties ex rel. Martin v.                Dist. of Columbia,               662 F. 3d 564,          568-

69     (D.C.     Cir.     2011)        (quoting       Rufo,     502        U.S.      at     380-81)

("district courts must employ 'a flexible modification standard'

because such decrees            'often remain in place for extended periods

of     time'     such    that     'the     likelihood          of     significant          changes

occurring during the life of the decree is increased.'").

        Rule 60(b) (6) provides that a court may vacate an order for

"any    other     reason       that     justifies      relief"       provided        the    movant

demonstrates          "extraordinary           circumstances."             Fed.    R.     Civ.      P.

60 (b) ( 6); see also Salazar ex rel. Salazar v. Dist. of Columbia,

633 F.3d 1110,          1119    (D.C.    Cir.    2011).       Our Court of Appeals has

noted      that         even      though         "[t]he        phrase             'extraordinary

                                                -4-
circumstances' does not appear in the text of Rule 60 (b) ( 6) ,

. the Supreme Court has added this gloss to the rule." Id.

III. ANALYSIS

       Upon   consideration          of     the    submissions       of    counsel,       the

extremely long record in this case that was filed in 1993, and

the    applicable   case     law,     the    Court    concludes      that    Defendants'

Motion shall be granted for the following reasons.

       The ACA, effective March 23, 2010, and its related Medicaid

regulations    have       created     a     vast   new   statutory        framework       for

ensuring health care insurance for virtually every person in the

United    States.    It    is   an    extraordinarily          complex      law    and    one

which presents many technological and logistical challenges.                               It

will, if successful, bring enormous benefits to Americans of all

income    levels.    To    implement        this    statute     in   the    District       of

Columbia will be a massive undertaking requiring the resources,

creativity,    and attention to detail of many people within the

District of Columbia Government.

       The Court concludes, pursuant to Fed.                   R. Civ.      P.    60(b) (5),

that   passage of     the ACA has           created a        "significant        change    in

circumstances"      that    justifies termination of the provisions of

Section III of the Consent Order.                  Indeed,    there has been almost

a seismic change in the areas of health insurance,                           healthcare,

procedures for verifying Medicaid eligibility,                       and financing of

                                            -5-
Medicaid.     As   Defendants       point out         in their papers,               passage of

the ACA has        introduced enormous              systemic and legal                changes      in

our healthcare system. There is simply no comparison between the

statutory framework that existed at the time this Court made its

factual     findings    in    1996      and    what       implementation             of    the    ACA

envisions -- even though that implementation will undoubtedly be

both rocky and fairly long in coming.                           As    Defendants argued at

oral argument, in comparing the two systems we are talking about

"apples and oranges."

       Defendants     also    argue     that Section             III    directly conflicts

with    provisions      of      the     ACA,        and     therefore          its        continued

enforcement would be "detrimental to the public interest." Rufo,

502 U.S. at 384. The Court agrees.

       For example,     the ACA regulations implementing a brand new

recertification        procedure        are     in        direct       conflict           with    the

renewal process set forth in Section III. Defendants are correct

and Plaintiffs do not disagree.                     The regulations establish that

"an agency must make            a   redetermination of                 eligibility without

requiring information from the individual if able to do so [.]"

42   C.F.R.    §    435.916(a) (2).           Thus,       the        various    notices          that

Defendants     must     send,       pursuant         to     Section          III,     warning       a

Medicaid      beneficiary             about         their            failure        to       submit

recertification       forms     and     information             or    lose     their       benefits

                                              -6-
will     now      be     inaccurate,          confusing,              and    unnecessary.         Were

Defendants to try to comply with both Section III and the ACA,

there would be massive confusion,                        as well as additional expense

and use of resources at a time when Defendants are pouring money

and     staff     time     into     their         efforts        to    comply      with     the    new

statute.

        Plaintiffs concede that the provisions of Section III are

either       in   conflict       with       the   ACA    or      are       outdated   and    are    no

longer relevant.           See Opp' n at 7-10               (noting that paragraphs 17,

19-21, 21A,        25,    25A,    and 26-27 must be deleted or modified; and

that paragraphs 22-24              and 28         are no longer operative and must

also be deleted) . In sum, Plaintiffs acknowledge that there is a

conflict       between     Section          III    and     the    ACA,       and   therefore       the

District government can not continue to comply with Section III

in     light      of     the     statutory         language           of     the   ACA      and    its

implementing regulations.

       Plaintiffs' primary argument is not that Section III should

remain       in   effect,        but    that        they       should        be    provided       with

additional        "discovery"          so    that       they     can        suggest      appropriate

modifications to Section III in order to fully protect the due

process rights of the plaintiff class they represent during this

time    of     transition.        While       their      concern            over   the     continued

protection of the due process rights of their clients,                                       members

                                                  -7-
of the plaintiff class,                 is commendable,               Plaintiffs'       counsel has

failed to identify any tangible fact or law that suggests those

rights     will       not   be    adequately         protected          in    this      transitional

year.

        Plaintiffs' fear is that the statutory and regulatory "safe

harbor"        that     protects         individuals            who     must       be    recertified

between        January and March              of    2014      from     losing      their Medicaid

eligibility       before         the    end    of     March       will       not   be    applied       to

individuals       evaluated between October                       2013       and   December 2013.

Opp'n     at    15-16       (citing      42   U.S.C.          § 1396a(e) (14) (D) (v)          and     42

C.F.R.     §435.603).            Defendants'             counsel        represented           at     oral

argument that the             "safe harbor" provisions apply to all those

who will be evaluated between October 2013                                   and December 2013,

thus providing Plaintiffs with the "binding representation" they

sought     in     their       Opposition            that      the      regulations           would     be

interpreted       and       applied      in    that        fashion       by    the      District       of

Columbia government.

        Moreover,       the regulations specifically require agencies to

provide    due    process         rights      to     those      whose        eligibility may be

reevaluated           before       the        end        of     this         year:       42        C.F.R.

§ 435.1205(b) (4) (i) (c)              (requiring          state       agencies         to    "furnish

Medicaid to individuals determined eligible under this clause or

provide    notice       and      fair    hearing         rights                    if    eligibility

                                                   -8-
effective in 2013 is denied"). Thus, the ACA regulations provide

multiple safeguards to ensure that no members of the plaintiff

class whose eligibility must be renewed in 2013 will be denied

due process. 1

       As to the due process rights of the class members between

March 2014 and October 2014,                     Plaintiffs acknowledge that the ACA

"continues and reinforces                              due process protections." Opp'n

at 4     (citing regulations setting forth procedural protections) .

The regulations require an agency to provide any individual with

"notice       of    the       agency's           decision        concerning        renewal      of

eligibility,"        42    C.F.R.      §    435.916(a) (3) (i) (C),          and to       "provide

notice    and      fair      hearing       rights                    for   those     determined

ineligible for Medicaid," id.                    §    435. 1205 (b) ( 2) (iii) .

       Plaintiffs         identify no difference between the due process

rights    guaranteed by the                ACA and its           implementing       regulations

and those contained in Section III. In fact,                             the ACA regulations

are    more    protective       of     due           process    rights     than    the    current

Consent       Order.       Compare         Consent         Order     Section       III,         17

(permitting        Defendants          to        terminate        benefits        after    giving

beneficiaries          ten     days         to        provide      requested       information,
1
  Defendants note that the District of Columbia has created a list of trained
and federally-approved attorneys and advocacy organizations who are available
to provide free legal assistance to individuals with "Medicaid Applications,
Renewals, Questions, and Legal Assistance Regarding the Affordable Care Act
Effective October 1, 2013." Reply, Ex. 1. Moreover, members of the plaintiff
class can also contact Plaintiffs' counsel, as they have been doing over the
years, to obtain legal assistance. Consent Order~ 64.
                                                     -9-
provided the beneficiary receives a notice fifteen days prior to

the       actual      termination              of     benefits)        with        42      C.F.R.

§    435.916 (a) (3) (i) (B)       (requiring that            the beneficiary be               given

"[a]t least 30 days from the date of the renewal form to respond

and provide any necessary information").

        Rule 60(b) (5)      provides that a court may vacate an order if

"applying it is no longer equitable." The District of Columbia

has clearly pointed out why applying Section I I I would not only

be     inequitable,        but     would      cause     great     confusion,        additional

cost,     and   place      even       greater       burdens     on    what    is    already        a

limited      staff    at     the       Department       of    Human     Services         and     the

Department      of    Health          Care    Finance.       Obviously,       it    is    in     the

public      interest       to      avoid       violating        federal      law        (the     new

provisions of the ACA),                 cause confusion,         and waste the limited

and precious resources of the District o:f Columbia Government.

Requiring the District of Columbia to attempt to comply with two

contradictory procedural regimes is clearly "detrimental to the

public      interest."          The     District        of    Columbia        Government          is

burdened      with    orchestrating            a     comprehensive        overhaul        of     its

Medicaid program.           For all          the    reasons    just stated,         the public

interest     will    be    served       if     that    massive       overhaul      proceeds       as

smoothly as humanly possible.

                                               -10-
         For all these reasons, it is this               ft~y         of October, 2013,

    hereby

         ORDERED, that the Motion is granted; and it is further

         ORDERED,    that     Defendants are        relieved from complying with

    Section III of the January 25, 1999 Consent Order, as amended by

    Paragraphs 21A,    25A,    25B,   and 27 of the Court's Order of August

8, 2000; and it is hereby

        ORDERED,     that Plaintiffs' Motion for a Partial Stay of the

Recertification        Provisions      in    the    Settlement        Order    of       January

25,     1999    and the Order of August             8,   2000       [Dkt.   No.     1875]    is

denied as moot; and it is hereby

        ORDERED,      that     Plaintiffs'     Motion      for       Limited       Discovery

Related        to   Medicaid     Renewal      and    Redetermination              Under     the

Affordable Care Act [Dkt. No. 1877] is denied as moot. 2

                                                                J

                                                    rq~~~~
                                                                        I           }

                                                   Gladys KeSie~
                                                   United States District Judge

Copies to: attorneys on record via ECF

2
  The Plaintiffs' request to take discovery lacks merit. The discovery they
have requested relates to implementation of the ACA and its regulations;
Defendants are correct that Plaintiffs' discovery is quite broad (they seek
"statements under oath" and correspondence between the District of Columbia
and the United States Department of Health and Human Services) . Plaintiffs
are simply not entitled to this information.
                                            -11-