Court Opinion

ID: 3040638
Source: CourtListenerOpinion
Date Created: 2015-10-13 23:03:33.547887+00
Date Added: 2024-06-11T12:16:45.177107
License: Public Domain

United States Court of Appeals
                         FOR THE EIGHTH CIRCUIT
                                 ___________

                                 No. 05-3587
                                 ___________

Susan Lavon Lankford; Rachel            *
Ely; Joseph Everett, by next            *
friend, Jan Everett; Donald Eugene      *
Brown; Laura Lee Greathouse;            *
Kimberly Vogelpohl; Adam Daniel         *
Thomason,                               *
                                        *
      Appellants,                       * Appeal from the United States
                                        * District Court for the Western
The National Council on Independent * District of Missouri.
Living; The United States Society       *
for Augmentative and Alternative        *
Communication; The American             *
Language-Hearing Association;           *
The National Disability Rights          *
Network,                                *
                                        *
      Amici on Behalf of Appellants, *
                                        *
      v.                                *
                                        *
Gary Sherman, in his official capacity *
as Director of the Missouri Department *
of Social Services,                     *
                                        *
      Appellee.                         *
                                   ___________

                           Submitted: April 17, 2006
                              Filed: June 22, 2006
                               ___________
Before WOLLMAN, BEAM, and BENTON, Circuit Judges.
                          ___________

BENTON, Circuit Judge.

       Plaintiffs – disabled adult Medicaid recipients – seek a preliminary injunction
prohibiting Missouri's Director of Social Services from enforcing a state regulation
curtailing the provision of durable medical equipment ("DME") to most categorically-
needy Medicaid recipients. See Mo. Code Regs. Ann. tit. 13, § 70-60.010 (2005).
Invoking 42 U.S.C. § 1983 and the Supremacy Clause, U.S. Const. Art. VI, cl. 2, they
allege that the regulation violates Medicaid's comparability and reasonable-standards
requirements. See 42 U.S.C. §§ 1396a(a)(10)(B), (a)(17). The district court denied
a preliminary injunction, finding the regulation consistent with the Medicaid Act.
Plaintiffs appeal. Having jurisdiction under 28 U.S.C. § 1292(a)(1), this court vacates
the order of the district court, and remands for further proceedings.

                                           I.

       Before the 2005 legislative session, Missouri provided DME as a stand-alone
Medicaid benefit to all recipients. Under the DME program, plaintiffs received
wheelchairs, wheelchair batteries and repairs, orthotics, orthopedic devices, parenteral
nutrition, augmentative communication devices, hospital beds, bed rails, lifts, and
other prosthetics. See Mo. Rev. Stat. § 208.152.1(15) (repealed August 28, 2005).
Citing budget constraints, the General Assembly passed a new statute eliminating the
DME program as a covered Medicaid service, except for recipients who are blind,
pregnant, or needy children, or for those who receive home health care services under
the state plan. See Mo. Rev. Stat. § 208.152.2 (Supp. 2005) (providing an exception
for wheelchairs, prosthetics, and orthopedic devices to these individuals). Under the
revised statute, Medicaid recipients may not receive DME as a stand-alone benefit,
unless they fall within one of the statutory groups.

                                          -2-
       Plaintiffs have never challenged the statute's elimination of the DME program.
Rather, plaintiffs contest a September 2005 emergency regulation, which reinstates
coverage of certain DME items for all Medicaid recipients, while specifically defining
the statutorily-provided DME items for the blind, pregnant, and needy children, and
those receiving home health care. See Mo. Code Regs. Ann. tit. 13, § 70-60.010
(2005).1

       Under the regulation, the blind, pregnant, needy children, and individuals who
receive home health care may receive Medicaid coverage for DME items that include,
but are not limited to:

      Prosthetics; orthotics; oxygen and respiratory care equipment; parenteral
      nutrition; ostomy supplies; diabetic supplies and equipment; decubitus
      care equipment; wheelchairs; wheelchair accessories and scooters;
      augmentative communication devices; and hospital beds.

Id. § 70-60.010.6. All other adult Medicaid recipients cannot receive Medicaid-
funded DME, except for:

      Prosthetics, excluding an artificial larynx; ostomy supplies; diabetic
      supplies and equipment; oxygen and respiratory equipment, excluding
      CPAPs, BiPAPs, nebulizers, IPPB machines, humidification items,
      suction pumps and apnea monitors; and wheelchairs, excluding
      wheelchair accessories and scooters.

Id.

       The regulation further clarifies that, for all DME recipients, "DME is equipment
that can withstand repeated use, is primarily and customarily used to serve a medical

      1
       The validity of the emergency regulation in light of the revised statute has not
been raised in this litigation.

                                          -3-
purpose, generally is not useful to a person in the absence of an illness or injury, and
is appropriate for use in the home." Id. § 70-60.010(4). Even if an item is classified
as DME, it is not covered unless it both meets the DME definition and "is reasonable
and necessary for treatment of the illness or injury, or to improve the functioning of
a malformed or permanently inoperative body part." Id. § 70-60.010(6).

        Plaintiffs, adult Medicaid recipients, have disabilities ranging from paralysis to
cardiopulmonary disease. Before the new regulation, they received medically-
prescribed DME from Medicaid. Under the new regulation, however, plaintiffs claim
they are ineligible to receive DME items that are necessary for their medical care and
independence (which they cannot afford). Compared to the repealed DME program,
they argue, the new regulation excludes (for most recipients) orthotics, parenteral
nutrition, catheters, augmentative communication devices, hospital beds, bed rails,
lifts, and wheelchair batteries and repair items.

       Rather than attack the revised statute, plaintiffs seek to enjoin the DME
regulation. Plaintiffs agree that Missouri may lawfully provide additional benefits
only to needy children and pregnant women. See 42 U.S.C. § 1396a(a)(10)(G)(V),
42 C.F.R. § 440.250(p) (pregnant women); 42 U.S.C. §§ 1396a(a)(4)(B), 1396d(r),
42 C.F.R. § 440.250(b) (needy children). Plaintiffs contend that Missouri may not
provide additional DME benefits to blind recipients (unless Missouri provides those
benefits to all adult recipients). Plaintiffs assert violations of federal comparability
and reasonable-standards requirements that the State treat Medicaid recipients equally
and with reasonable, non-discriminatory standards.                 See 42 U.S.C. §§
1396a(a)(10)(B), (a)(17). See also 42 C.F.R. § 440.230. They also claim that the
state regulation conflicts with these federal requirements, and is preempted by the
Supremacy Clause. U.S. Const. Art. VI, cl. 2.

      In the district court, the State defended the DME regulation primarily by
arguing that it had applied to the Centers for Medicare and Medicaid Services

                                           -4-
("CMS") for a waiver of the federal comparability requirement, which would permit
additional benefits for the blind. See 42 U.S.C. § 1396n(b). The State argued that the
waiver application defeated plaintiffs' likelihood of success on the merits. The State
also claimed that plaintiffs can still obtain necessary DME if they (1) qualify for home
health care, or (2) seek an exception for non-covered DME items through the
exceptions process. Due to these options, said the State, the DME regulation did not
harm plaintiffs enough to justify an injunction.

       The district court denied a preliminary injunction. The court focused entirely
on plaintiffs' comparability claim, and did not discuss the reasonable-standards claim.
Specifically, the court determined that, because plaintiffs had other options to receive
necessary DME, they could not establish irreparable harm. Moreover, the court
agreed that Missouri's pending waiver application precluded a likelihood of success
on the merits. The court noted, however, that if the waiver were not obtained,
Missouri could not provide additional items of DME to the blind (without providing
them to all adult recipients). Plaintiffs appeal.2

                                           II.

       Before addressing the merits, this court must resolve the issue of mootness –
a jurisdictional issue raised in the State's supplemental brief and at oral argument. See
Ali v. Cangemi, 419 F.3d 722, 723-24 (8th Cir. 2005) (en banc) ("If an issue is moot
in the Article III sense, we have no discretion and must dismiss the action for lack of
jurisdiction"). The record has significantly changed since plaintiffs first appealed.
CMS has now denied Missouri's request for a comparability waiver. While CMS
recommended a number of alternatives that may allow Missouri to provide additional

      2
       The parties' motions to supplement the record are granted, and the exhibits are
considered in this appeal. See Dakota Indus., Inc. v. Dakota Sportswear, Inc., 988
F.2d 61, 63 (8th Cir. 1993).

                                           -5-
DME services to the blind, Missouri chose to submit an amended Medicaid plan that
deletes any reference to federal financial participation for additional services to the
blind. To date, CMS has not approved or rejected the amended plan; negotiations are
ongoing. While the revised Missouri statute and DME regulation have not changed,
the State contends that it provides additional DME to the blind only with state tax
funds, with no federal funding.

       The State argues that its decision to fund the DME program for blind recipients
only with state dollars makes the amended plan comply with all Medicaid rules,
rendering this case moot. It is well-settled that "a defendant's voluntary cessation of
a challenged practice does not deprive a federal court of its power to determine the
legality of the practice." City of Mesquite v. Aladdin's Castle, Inc., 455 U.S. 283,
289 (1982). See also Young v. Hayes, 218 F.3d 850, 852 (8th Cir. 2000). If it did,
the courts would be compelled to allow the defendant to return to its old practices
without fear of reprisal. See United States v. W.T. Grant Co., 345 U.S. 629, 632
(1953). The defendant faces a heavy burden of showing that "the challenged conduct
cannot reasonably be expected to start up again." Friends of the Earth, Inc. v.
Laidlaw Envt'l Servs., Inc., 528 U.S. 167, 189 (2000), quoting United States v.
Concentrated Phosphate Exp. Ass'n, 393 U.S. 199, 203 (1968).

       The State does not meet the "heavy burden" to show mootness. Despite the
claim of voluntary cessation, the State may reinstate a Medicaid plan that uses federal
funding for additional assistance to the blind. See Charleston Hous. Auth. v. U.S.
Dep't of Ag., 419 F.3d 729, 740 (8th Cir. 2005) ("The possibility of this recurrence
is not so remote or speculative that our jurisdiction is lacking"). Not only has CMS
neither approved nor rejected the amended plan, Missouri may seek further
amendment at any time. See, e.g., Ark. Med. Soc., Inc. v. Reynolds, 6 F.3d 519, 529
(8th Cir. 1993). Moreover, as discussed below, Missouri's claim of voluntary
cessation only addresses plaintiffs' comparability claim, not their reasonable-standards
claim. As jurisdiction is proper, this court addresses the merits.

                                          -6-
                                          III.

       A motion for preliminary injunction requires the district court to consider four
factors: (1) the probability of success on the merits, (2) the threat of irreparable harm
to the movant, (3) the balance between the harm and the injury that granting the
injunction will inflict on other interested parties, and (4) the public interest. See
Dataphase Sys. v. C L Sys., Inc., 640 F.2d 109, 114 (8th Cir. 1981) (en banc). The
party seeking injunctive relief bears the burden of proving these factors. See Watkins,
Inc. v. Lewis, 346 F.3d 841, 844 (8th Cir. 2003). No single factor is dispositive, as
the district court must balance all factors to determine whether the injunction should
issue. See Baker Elec. Co-op., Inc. v. Chaske, 28 F.3d 1466, 1472 (8th Cir. 1994),
citing Modern Banking Sys., Inc., 871 F.2d 734, 737 (8th Cir. 1989) (en banc),
superceded by Minn. Stat. § 80C.21 (1989).

       The district court has broad discretion when ruling on preliminary injunctions.
See Manion v. Nagin, 255 F.3d 535, 538 (8th Cir. 2001). This court reverses only for
abuse of that discretion. See Pediatric Specialty Care, Inc. v. Ark. Dep't of Human
Servs., 444 F.3d 991, 994 (8th Cir. 2006); United Indus. Corp v. Clorox Co., 140
F.3d 1175, 1179 (8th Cir. 1998). An abuse of discretion occurs where the district
court rests its conclusion on clearly erroneous factual findings or erroneous legal
conclusions. See Wedow v. City of Kansas City, Mo., 442 F.3d 661, 666 (8th Cir.
2006), quoting Layton v. Elder, 143 F.3d 469, 472 (8th Cir. 1998). When purely legal
questions are presented, however, this court owes no special deference to the district
court. See Bell v. Sellevold, 713 F.2d 1396, 1399 (8th Cir. 1983), quoting Chu Drua
Cha v. Noot, 696 F.2d 594, 599-600 (8th Cir. 1982) (vacating denial of preliminary
injunction).

                                           -7-
                                           IV.

        The Medicaid Act is a federal aid program designed to help the states provide
medical assistance to financially-needy individuals, with the assistance of federal
funding. See Schweiker v. Hogan, 457 U.S. 569, 572 (1982); Hodson v. Bd. of
County Comm'rs, 614 F.2d 601, 606 (8th Cir. 1980). Participation is voluntary, but
if a state decides to participate, it must comply with all federal statutory and regulatory
requirements. See Schweiker v. Gray Panthers, 453 U.S. 34, 37 (1981); Bowlin v.
Montanez, 446 F.3d 817, 818 (8th Cir. 2006), citing Kai v. Ross, 336 F.3d 650, 651
(8th Cir. 2003). To participate, a state submits a plan to the Secretary of the
Department of Health and Human Services that meets the requirements of 42 U.S.C.
§ 1396a(a). See Reynolds, 6 F.3d at 522, citing Wilder v. Va. Hosp. Ass'n, 496 U.S.
498, 503 (1990). Once the plan is approved, the federal government subsidizes the
state's medical-assistance services. See 42 U.S.C. § 1396; Alexander v. Choate, 469
U.S. 287, 289 n.1 (1985).

       Participating states must furnish medical assistance to the "categorically needy,"
a group that includes financially-needy blind, aged, and disabled individuals, pregnant
women, and children. See 42 U.S.C. § 1396a(a)(10)(A). A state may also choose to
provide medical assistance to the "medically needy" – those who do not qualify under
a federal program, but lack the resources to obtain adequate medical care. See id. §
1396(a)(10)(C); Gray Panthers, 453 U.S. at 37. Missouri elects to provide medical
assistance only to the categorically needy. See Mo. Rev. Stat. § 208.151.

       Once a state decides which groups will receive medical assistance under the
plan, it then determines which services it will provide. See 42 U.S.C. § 1396d(a). To
receive federal approval, the Medicaid Act mandates that a plan include only seven
enumerated medical services. See id. §§ 1396a(a)(10), 1396d(a)(1)-(5), (17), (21)
(including as mandatory: inpatient hospital, outpatient hospital, laboratory and x-ray,
nursing facility, physician, nurse-midwife, and nurse-practitioner services).

                                            -8-
       A state may also elect to provide optional medical services, such as dental
services, prosthetics, and prescription drugs. See id. §§ 1396(a)(10)(A), 1396(d)(a)
(listing 27 categories of medical assistance, only seven of which are mandatory).
Once the state offers an optional service, it must comply with all federal statutory and
regulatory mandates. See Ellis v. Patterson, 859 F.2d 52, 54 (8th Cir. 1988).

       DME is an optional service under the Medicaid Act, unless the recipient
qualifies for home health care. See 42 U.S.C. § 1396a(a)(10)(D). The provision of
home health care is a mandatory requirement of the state plan, if the individual is
entitled to nursing facility services. See id.; 42 C.F.R. § 440.210(a)(1). Under the
federal regulations, "home health services" are medically-prescribed services provided
to a Medicaid recipient at his or her place of residence. 42 C.F.R. § 440.70(a). If a
recipient receives home health services, the state also must provide "medical supplies,
equipment, and appliances suitable for use in the home" as part of the program. See
id. §§ 440.70(b)(3), 441.15(a)(3). Federal law does not define these terms for
purposes of Medicaid. See DeSario v. Thomas, 139 F.3d 80, 88-89 (2d Cir. 1998)
(noting the lack of federal definition), vacated sub nom. by Slekis v. Thomas, 525
U.S. 1098 (1999).

       Missouri funds home health care to Medicaid recipients who meet certain
requirements. See Mo. Rev. Stat. § 208.152.2(10) (Supp. 2005). Specifically, the
recipient must (1) require intermittent nursing care or therapy, (2) be confined to the
home, (3) have a prescription for home health services from a physician, and (4)
receive the services in the home from a qualified provider. Mo. Code Regs. Ann. tit.
13, § 70-90.010(1). "A recipient may be considered homebound even if s/he
occasionally leaves home for non-medical purposes, as long as these absences are
infrequent, or relatively short duration, and do not indicate that the recipient has the
capacity to obtain the needed care on an outpatient basis." Id. § 70-90.010(3). If the
individual qualifies for home health care under Missouri's regulation, prescribed items
of DME are covered. See id. § 70-90.010(4). The State asserts that the provision of

                                          -9-
DME items under Missouri's home health care program is not limited to the items
prescribed under the new DME regulation. Compare id. § 70-60.010(6) (2005), with
id. § 70-90.010(4).

       In this case, no plaintiff receives home health care under the state plan. As
plaintiffs are not blind, pregnant, or children, the list of DME items that Missouri will
reimburse is curtailed. See id. § 70-60.010(6). As the State points out, if a DME item
is prescribed that is not covered under the DME regulation, plaintiffs have two
options. First, they can seek qualification for home health care under the state plan.
See id. § 70-90.010. Second, they can seek an exception for non-covered items
through the exceptions procedure. See id. § 70-2.100. As these options do not treat
plaintiffs the same as blind recipients under the state plan, and do not afford an
opportunity to obtain non-covered DME items, plaintiffs allege that the DME program
does not meet federal Medicaid requirements.

                                   A. Comparability

       The new regulation eliminates coverage of most DME items for the
categorically-needy who are aged or disabled. The regulation maintains full DME
coverage for categorically-needy recipients who are blind. Plaintiffs claim this
violates Medicaid's comparability requirement that states provide an equal "amount,
duration, [and] scope" of medical assistance to all categorically-needy. See 42 U.S.C.
§ 1396a(a)(10)(B)(i); 42 C.F.R. §§ 440.240(a), (b)(1); Hogan, 457 U.S. at 573 n.6;
White v. Beal, 555 F.2d 1146, 1149 (3d Cir. 1977). As the comparability mandate
prevents discrimination against or among the categorically needy, it applies equally
to mandatory and optional medical services. See Smith v. Rasmussen, 249 F.3d 755,
757-59 (8th Cir. 2001); Rodriguez v. City of New York, 197 F.3d 611, 615 (2d Cir.
1999) ("states may not provide benefits to some categorically needy individuals but
not to others").

                                          -10-
       The district court found that the DME regulation complies with Medicaid's
comparability requirement, primarily because Missouri had a comparability waiver
pending with CMS. The record has significantly changed. CMS denied the waiver.
The Director of Social Services and the Missouri Attorney General represent to this
court that Missouri has now deleted the part of its state plan that calls for federal
funding of additional services to the blind. As the current state plan provides an equal
amount, duration, and scope of DME services to all categorically-needy recipients,
and Missouri uses only state funding to provide additional DME services to the blind,
the State contends that its program is consistent with the comparability requirement.

       While a state plan must comply with all federal statutory and regulatory
requirements, a state may give additional medical assistance under its own legislation,
independent of federal reimbursement. See Harris v. McRae, 448 U.S. 297, 311 n.16
(1980) ("A participating State is free, if it so chooses, to include in its Medicaid plan
those medically necessary abortions for which federal reimbursement is unavailable");
Townsend v. Swank, 404 U.S. 282, 291 (1971) (Burger, J., concurring) (noting that
the proper inquiry is whether the state has used federal funds in support of its
cooperative aid program); Rosado v. Wyman, 397 U.S. 397, 420 (1970) (states are "in
no way prohibited from using only state funds" to fund an independent plan, providing
it does not violate the Constitution); Neb. Health Care Ass'n, Inc. v. Dunning, 778
F.2d 1291, 1294 (8th Cir. 1985) ("the state had no right to put this [non-compliant]
portion of its plan into effect, unless, of course, it chose to do so solely with its own
funds"); Winters v. Lavine, 574 F.2d 46, 70 (2d Cir. 1978), quoting Dallas v. Lavine,
358 N.Y.S.2d 297, 302 (N.Y. Sup. Ct. 1974).

       As Missouri represents to this court that it does not accept federal assistance,
and uses only state funds, to provide additional DME benefits to blind Medicaid
recipients, this court finds that the DME regulation (as currently funded) does not
violate the federal comparability requirement.

                                          -11-
                               B. Reasonable Standards

       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 (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 (1977); Weaver v. Reagan, 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).

       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 (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.

                                           -12-
       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.

                                           1.

       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).

      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.

                                           2.

       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 (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

                                         -13-
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.
DeBueno, 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").

       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).

       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 (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 (1987) (Federal Housing
Act supports a cause of action under section 1983); Wilder v. Va. Hosp. Ass'n, 496
U.S. 498, 510 (1990) (Medicaid providers had an individual right to reasonable
reimbursement rates under the now-repealed Boren Amendment). Still, the Court has

                                           -14-
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 (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 (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 (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).

        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. If the
legislation meets this test, there is a presumption it is enforceable under section 1983.
Id. at 341. 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.

      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. 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
("where a statute does not include this sort of explicit 'right- or duty-creating language'

                                           -15-
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.

        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. 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.
This is insufficient to establish an individual right to reasonable standards under the
first prong of the three-part test.

       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

                                           -16-
not have a private right of action to enforce Medicaid's reasonable-standards provision
under section 1983.

                                           3.

       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 (1989), quoting Chapman v. Houston Welfare
Rights Org., 441 U.S. 600, 613 (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 ("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 ("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 ("Preemption concerns the federal structure of the
Nation rather than the securing of rights, privileges and immunities to individuals").

       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 (1991), quoting Gibbons v. Ogden, 22
U.S. 1, 9 (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 (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

                                          -17-
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 (1963) and Hines v.
Davidowitz, 312 U.S. 52, 67 (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 (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").

       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.

      When a state receives federal matching funds, its medical assistance program
must comply with all federal statutory and regulatory requirements. See Meyers v.

                                          -18-
Reagan, 776 F.2d 241, 243-44 (8th Cir. 1985). See also Blum v. Bacon, 457 U.S.
132, 145-46 (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.

       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).

       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

      3
        The plan also provides that home parenteral nutrition services, electric
wheelchairs, electric hospital beds, and back-up ventilators may be provided upon
prior authorization. It is unclear whether these services are available to all Medicaid
recipients, or only those who qualify for home health care. While neither party
provides guidance on the implementation of this provision, the DME regulation
appears to limit these services to home health care recipients. See Mo. Code Regs.
Ann. tit. 13, § 70-60.010(6) (2005).

                                          -19-
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.

       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; 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). Becaause Missouri has
elected to cover DME as an optional Medicaid service, it cannot arbitrarily choose
which DME items to reimburse under its Medicaid policy.

       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

                                         -20-
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 (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).

       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.

       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

                                          -21-
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).

       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 (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.

       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-

                                           -22-
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).

       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.

       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.

                                           V.

       Likelihood of success on the merits is only one of the four factors determining
whether a preliminary injunction should issue. See Dataphase, 640 F.2d at 114. The
district court did not make findings on the other three factors regarding the
reasonable-standards challenge. The district court is in the best position to evaluate

                                          -23-
all of the evidence and weigh the factors to determine whether the injunction should
issue. See Blue Moon Entm't, LLC v. City of Bates City, 441 F.3d 561, 566 (8th Cir.
2006) (remanding denial of preliminary injunction to allow the district court to further
develop the evidentiary record). This rule is especially relevant in this case, where
many facts have changed since the original hearing, and it is unclear on the present
record what DME items, if any, Missouri will cover for adult Medicaid recipients if
the DME regulation is enjoined. Accordingly, this court vacates the order of the
district court, and remands for further proceedings. See id. at 566 (vacating and
remanding district court's denial of preliminary injunction where the court did not
address critical Dataphase factors).
                        ______________________________

                                         -24-