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From Health Law Daily, March 30, 2017

Injunction finally sticks in 8-year Medicaid notice case

By Bryant Storm, J.D.

The state of New York is permanently enjoined from dismissing administrative appeals of defaulting Medicaid appellants before those appellants are given ten days to respond to a post-default notice from the state asking whether they would like their hearings rescheduled. The court granted a permanent injunction in favor of a class of Medicaid appellants after finding that the state’s sole argument in opposition—the appellants lacked standing—was without merit (Fishman v. Daines, March 29, 2017, Bianco, J.).

Fair hearing requirement. Under 42 U.S.C. §1396(a)(3) Medicaid plans must grant an opportunity for a fair hearing before the state agency to any individual whose claim for medical assistance under the plan is denied or not acted upon with reasonable promptness. When New York determines that a claimant is no longer entitled to Medicaid benefits, the claimant is notified by letter advising the individual of his or her right to request a fair hearing. While the appeal is pending, the claimant may receive "aid continuing" Medicaid coverage. If, for any reason, the claimant does not attend the fair hearing, New York considers the absence a default and an abandonment of the appeal, which leads to a loss of aid-continuing coverage.

Class action. A class of New York Medicaid beneficiaries brought a class action lawsuit against the New York Medicaid agencies—New York State Department of Health and the Office of Temporary and Disability Assistance of the New York State Department of Family Assistance—challenging the circumstances that give rise to an abandoned appeal. The class members contended that they lost aid-continuing coverage, at least temporarily, because they did not realize they missed their fair hearing. The district court denied the class’s first request for a preliminary injunction to require additional notices prior to abandonment of an appeal (see Three’s a crowd: court rejects class demand for fourth default notice, September 18, 2014). The Second Circuit, via summary order (Fishman v. Paolucci, October 15, 2015). rejected the district court’s reasoning, asserting that the Medicaid fair hearing right is a broader than usual due process right. The Second Circuit ordered the district court to conduct a new analysis with that understanding.

Preliminary injunction. On reconsideration, the court held that the class was likely to succeed on the merits and entered a preliminary injunction enjoining New York from dismissing administrative appeal or defaulting Medicaid applicants unless they have been given 10 days to respond to a written notice regarding whether they want to reschedule their hearing (see On second thought, extra notice is required before Medicaid appeal abandonment, March 7, 2016).

Standing. Subsequently, the class members moved for summary judgment to make the injunction permanent. The state challenged the motion on standing grounds, asserting that none of the class members established an injury-in-fact as a result of a lack of a post-default notice for the state. The court found "concrete injury" for standing purposes because "deeming a Medicaid appeal abandoned without providing prior notice of default would irreparably injure the ‘survival of these [plaintiffs] and those class members’ that they represent." The court held that the class members also had adequate proof of medical expenses for the dates between the termination and reinstatement of their Medicaid benefits. Thus, the court granted the permanent injunction.

The case is No. 2:09-cv-05248-JFB-ARL.

Attorneys: Peter Vollmer (The Law Offices of Vollmer & Tanck, LLP) for Neil Fishman. Susan M. Connolly, Office of the New York State Attorney General, for Richard F. Daines.

Companies: New York State Department of Health; Office of Temporary and Disability Assistance of the New York State Department of Family Assistance

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