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From Health Law Daily, June 9, 2017

Providers and patients seeking injunction against HFS director overcome dismissal motion,

By Jessica Y. Washington, J.D.

In seven related cases, the owners of several Illinois nursing home facilities and some of the elderly and disabled patients who reside in those facilities sought declaratory and injunctive relief against Felicia Norwood, in her capacity as the director of the Illinois Department of Healthcare and Family Services (HFS), to ensure the latter’s future compliance with the Medicaid statute. The providers and their patients (who are either awaiting Medicaid eligibility determinations or who despite receiving approval, are still awaiting Medicaid benefits) claimed that the HFS director failed to provide medical care services to eligible Illinois residents as required by the Medicaid Act. The providers and patients substantiated their claims and succeeded in overcoming the HFS director’s motion to dismiss for lack of subject matter jurisdiction and failure to state a claim (Doctors Nursing and Rehabilitation Center, LLC v. Norwood, June 7, 2017, Bucklo, E.).

Background. The health care providers, acting as authorized representatives of their patients, and the patients, themselves, alleged that: (1) the HFS director failed to process Medicaid applications, render eligibility determinations, and provide benefits with reasonable promptness; (2) the HFS director exceeded the forty-five days or ninety days that Medicaid regulations permit to determine applicant eligibility; (3) the HFS director failed to provide benefits to patients whose Medicaid applications were approved; (4) HFS’s inaction violates 42 U.S.C. sections 1396a(a)(10)(A), 1396(a)(4)(A), and 1396(a)(8), and that this inaction constitutes violations of the Americans with Disabilities Act (ADA), Section 504 of the Rehabilitation Act, and the Equal Protection Clause of the Fourteenth Amendment. The HFS director moved to dismiss the seven complaints on Eleventh Amendment grounds, arguing that the court lacked subject matter jurisdiction to hear the cases.

The HFS director further contended that the complaints failed to state claims because: (1) the providers are not the real parties in interest and do not have statutory authority to sue on behalf of the patients; (2) the providers and patients failed to sufficiently plead concerning the provision of required medical assistance; and (3) with regard to the prompt delivery of Medicaid benefits, the providers and patients failed to state a claim because the applicable provision of the Medicaid statute does not create enforceable rights, and even if it did, the parties did not provide sufficient allegations.

Lack of subject matter jurisdiction. The HFS director contended that the providers’ and patients’ claims (with the exception of those brought under the Rehabilitation Act) are barred by the Eleventh Amendment and the doctrine of state sovereign immunity, because the parties were seeking an order compelling payments for services already rendered. The providers and patients countered, arguing that they were seeking only prospective injunctive and declaratory relief to ensure HFS’s compliance with the federal law in the future. The court acknowledged that pursuant to the Eleventh Amendment, federal jurisdiction does not extend to suits against a state by a citizen of another state or foreign country, and that the Eleventh Amendment incorporates the doctrine of sovereign immunity.

However, the court noted several exceptions that allow parties to pursue claims against a state or its agents. Specifically, the court stated that the Eleventh Amendment does not preclude claims against state officials for prospective violations of federal law. It further noted that although a federal court cannot order a state to pay retroactive damages, it can require a state officer to prospectively comply with federal law, even when that compliance requires the state to expend funds. The court found that the providers and patients were not requesting monetary damages for past violations, nor attempting to bring state claims against a state actor in federal court. Rather, the parties sought to stop HFS’s ongoing inaction, which they alleged violated federal law, and requested that the court declare HFS’s conduct unlawful and issue an injunction requiring HFS to arrange for medical assistance and nursing facility services for the patients. Accordingly, the court held that the prospective equitable relief that the providers and patients sought against the HFS director is permitted, and, thus, the court has jurisdiction to hear the matter.

Real party in interest. The court held that HFS’s argument failed because it ignores the fact that in addition to the providers, the patients—the real parties in interest—are also parties to the litigation. Moreover, the court found that based on the Medicaid statute and regulations, the patients were within their rights to authorize their representatives—the providers—to pursue litigation to secure Medicaid benefits. The court noted the "catch-all" language of the regulations, which permit authorized representatives to perform certain tasks for Medicaid applicants and beneficiaries, including acting on their behalf in "all other matters with the agency." The court stated that the language should be construed broadly to include litigation, contrary to the HFS director’s argument that the language should be read to exclude litigation against the agency. Therefore, the court held that as long as the patients provided express authorization to the providers, Medicaid regulations permit the authorized providers to initiate litigation on behalf of the patients.

Failure to provide medical assistance. The providers and patients alleged that HFS failed to comply with Medicaid’s requirement that certain medical assistance, including nursing facility services be made available to Medicaid-eligible individuals. The HFS director argued that the complaints did not allege that the HFS director failed to authorize nursing facility services. The HFS director further argued that the complaints failed to allege that the patients were denied these services. The court found that HFS misstated the parties allegations and that, in fact, the complaints do contain patient-specific allegations that are sufficient to substantiate their claims that HFS failed to timely process the Medicaid applications, which prevented Medicaid-eligible individuals from receiving necessary medical assistance.

Failure to provide timely medical services. The court noted that in order to determine whether a federal statute creates individual rights appropriate for Section 1983 enforcement, it must contain unambiguous "rights-creating language." The court found that the reasonable promptness provision of the Medicaid statute contains the necessary rights-creating language for the purposes of Section 1983 enforcement, and, therefore, an enforceable right under section 1983 exists. Further, the court found that the parties properly alleged HFS’s violation of 42 U.S.C. section 1396(a)(8), depriving them of their federally-protected rights to reasonable promptness. The court also found that the parties identified specific Medicaid-eligible patients who had not received timely eligibility determinations or timely assistance; that they had identified the medical services required; and that they provided the application dates for these individuals and alleged that they had not received the timely public assistance to which they are entitled. Accordingly, the court held that the providers and patients provided enough factual allegations to support their Section 1983 claims.

The case is Nos. 1:16-cv-9837, 1:16-cv-9842, 1:16-cv-9922, 1:16-cv-10255, 1:16-cv-10614, 1:17-cv-0104, 1:17-cv-0640.

Attorneys: Katie Z. Van Lake (Law Office of Katie Z. Van Lake) for Doctors Nursing and Rehabilitation Center, LLC and Evergreen Nursing & Rehabilitation Center, LLC. Brian Franklin Kolp, Office of the Illinois Attorney General, for Felicia F. Norwood.

Companies: Doctors Nursing and Rehabilitation Center, LLC; Evergreen Nursing & Rehabilitation Center, LLC

MainStory: TopStory CaseDecisions IPPSNews CMSNews CoPNews MedicaidNews EligibilityNews MedicaidPaymentNews ProviderNews SNFNews IllinoisNews

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