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From Health Law Daily, April 6, 2017

Immigrants’ challenge to improper Medicaid benefits reductions survives

By Sarah E. Baumann, J.D.

Two immigrants who were improperly transferred to emergency-only Arizona Medicaid benefits due to computer and worker errors have standing to proceed with their claims for declaratory and injunctive relief; one immigrant may also seek relief based upon her allegations of a due process violation resulting from a deficient notice. A district court judge determined that the immigrants sufficiently alleged a threat of impending injury for standing purposes, rejecting a magistrate judge’s recommendation that the district judge rule for the state. The district court dismissed one immigrant’s due process claim without prejudice, but denied the state’s motion to dismiss in all other respects (Darjee v. Betlach, March 31, 2017, Marquez, R.).

Background. Immigrants who entered the United States after August 22, 1996, are not eligible for Medicaid benefits until they have been "qualified aliens," as defined at 8 U.S.C. § 1641, for five years (8 U.S.C. § 1613). Exceptions to the five-year rule apply to certain groups, including refugees and certain victims of domestic battery. The Arizona Health Care Cost Containment System (AHCCCS), the state Medicaid agency, admitted that it improperly transferred more than 3,500 immigrants from full Medicaid benefits to emergency-only benefits as a result of computer and worker errors; the improper transfers continue. Federal regulations require states’ notices to those being transferred to state the action being taken, "a clear statement of the specific reasons" underlying the action, specific regulations or changes in law that apply, and an explanation of the hearing process (42 C.F.R. § 431.210).

A Nepali refugee, her husband, and her minor child qualified for full Medicaid benefits. In 2016, their benefits were improperly reduced to emergency-only benefits, but later restored. When a doctor’s office called to cancel her husband’s appointment, the refugee discovered that her benefits had been reduced a second time; she did not receive any notice from the state. At the time she filed her complaint, restoration of her benefits was "imminent if not complete." However, she and her family were concerned that they would lose their benefits in their future and be unable to receive necessary medical services and medications.

A second plaintiff immigrant who entered the U.S. before 1996 and was a victim of domestic battery also received full benefits. In 2016, she received a notice stating that her "Medical Assistance Changed," her "full medical services" would "stop," and "Federal Emergency Services" would "start." The notice further stated, "your immigration status does not let you get full medical services." Upon calling a number listed on the form, a state representative incorrectly told her that she was ineligible because she had not been a legal permanent resident for five years and also incorrectly stated that the law changed in January 2016. At the time she filed her complaint, her full-scope services had not been restored. However, they were restored later during litigation.

Restored services. The immigrant plaintiffs filed a complaint alleging that AHCCCS violated both the requirement that state plans provide services to eligible individuals "with reasonable promptness" (42 U.S.C. § 1396a(a)(8)) and the Due Process Clause of the U.S. Constitution by providing the immigrants with deficient notices. A magistrate judge recommended that the district court dismiss the suit after determining that the Nepali refugee did not have standing to bring her claims and that the battered immigrant’s claims became moot when her services were restored. Alternatively, he found that plaintiffs failed to state claims upon which relief could be granted. Because the plaintiffs objected to many of the magistrate judge’s conclusions, the district court reviewed the case de novo.

The court determined that it owed a presumption of standing, discussed in case law, to the refugee on her reasonable promptness claim because she was the subject of unlawful government actions, was injured by them, and the injuries could be redressed by a judgment preventing the action. Specifically, she was the subject of unlawful policies or practices that injured her by reducing her benefits, and a judgment requiring the AHCCCS to comply with federal law could prevent future harm. Furthermore, while her benefits had been restored, she had twice suffered a reduction in benefits, the most recent of which occurred after the state acknowledged its prior error, causing the court to conclude that she alleged a sufficient threat of impending injury.

However, the court determined that the refugee lacked standing with respect to her Due Process claim because she never received a notice informing her that her benefits were improperly reduced. Although it appeared "especially unfair" to deny her standing when the absence of the notice itself is a due process violation, she based her claim on the faulty content of the notice, rather than the lack of receipt. The court dismissed the claim without prejudice and stated that she may be able to state a new claim based on the lack of notice.

The battered immigrant’s claims were not moot, although her benefits were ultimately restored, because she still remained subject to a risk of future reductions caused by the state’s ongoing policies and practices and is therefore at risk of receiving a deficient notice in the future. The court thus denied the state’s motion to dismiss as to all claims except for the refugee’s due process claim.

The case is No. CV-16-00489-TUC-RM (DTF).

Attorneys: Ellen Sue Katz (William E. Morris Institute for Justice) for Aita Darjee. Logan T. Johnston (Johnston Law Offices, P.L.C.) for Thomas Betlach, Director, Arizona Health Care Cost Containment System.

Companies: Arizona Health Care Cost Containment System

MainStory: TopStory CaseDecisions CMSNews EligibilityNews ArizonaNews

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