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From Health Law Daily, September 4, 2014

Volunteer State must resume responsibility for eligibility, hearings

By Michelle L. Oxman, JD, LLM

A federal court has certified a class action and entered a preliminary injunction ordering Tennessee Medicaid officials to make eligibility determinations and provide hearings on delayed determinations beginning immediately. The court rejected the state’s arguments that the federal government bore sole responsibility for the delays and denials because it allowed the state to use the federally facilitated Marketplace (FFM),, to determine eligibility until it could bring the new computer system online. The class comprises all individuals who have applied for Medicaid, not received a timely eligibility determination, and have not been given the right to a hearing (Wilson v Gordon, September 2, 2014, Campbell, T).

The state’s technology issues. In order to implement the requirement of the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148) to use the modified adjusted gross income method to determine Medicaid eligibility for nondisabled beneficiaries, Tennessee needed to make extensive changes to its computer system. When state officials realized that the new Tennessee Eligibility Determination System (TEDS) would not be operative on October 1, 2013, they prevailed upon CMS to allow Medicaid eligibility determinations to be made by the FFM. According to the plaintiffs and CMS, Tennessee essentially stopped processing applications for Medicaid on October 1, 2013. Agency staff allegedly referred all potential applicants to the FFM and made no effort to resolve the pending applications.

Statutory and regulatory requirements. Soc. Sec. Act sec. 1902(a)(8) requires that states allow anyone who wishes to apply for Medicaid to do so and to provide assistance to eligible individuals with reasonable promptness. The regulations at 42 CFR sec. 435.912 require the agency to make eligibility determinations within 45 days of receipt of an application (90 days when applicants claim eligibility based on disability). If the deadline is not met, the regulation and Soc. Sec. Act sec. 1902(a)(3) require that the applicant be given an opportunity for a hearing.

Tennessee’s arguments. State officials argued that the plaintiffs had no standing. Because the entire eligibility determination system was in the hands of the federal government, the court could not provide relief with an injunction that applied only to state officials. Similarly, the officials contended that they were excused from compliance because of the technological difficulties that made it impossible. They also argued that the regulations and statute did not impose a clear duty enforceable in a civil rights action.

The court’s findings. First, the court determined that there was no need to join the federal government as a defendant because the state was ultimately responsible for the administration of its Medicaid program; it could not avoid its obligations through delegation to the federal government, contractors, or anyone else. Nothing in the ACA changed that aspect of the law. Therefore, an injunction against state officials would afford complete relief. The deadlines in the regulations made the agency’s duties sufficiently clear.

The court also considered the state officials’ conduct since October 2013. When they requested CMS’ help through use of the federal Marketplace, state officials told CMS that their TennCare Eligibility Determination Systems (TEDS) should be up and running by January. Not only is the system still not functional, but Darin Gordon, Deputy Commissioner of the Tennessee Division of Finance and Administration, stated in his Declaration that “the state is not currently formally forecasting a date when TEDS will be operational. He expects to have an auditor’s report on the issue in December, and he told a committee of the state legislature that he had “the slightest bit of confidence” that the contractor would produce a system that met state requirements.

The plaintiffs’ evidence established that they applied for Medicaid but received no word for several months, for example, from February to July or August. When they contacted the agency about their right to a hearing because of the delay, agency staff told them, “we don’t do those hearings” or that they had to have an eligibility determination in order to ask for a hearing.

Finally, the state officials’ claims were undermined by their actions; they managed to make eligibility determinations for the named plaintiffs and other specific individuals after they received information about them

Requirements for injunction. The court ruled that the requirements for an injunction were met because the plaintiffs had shown they were likely to succeed at trial, that irreparable harm to applicants had already occurred, and the public interest supported a requirement that the state agency comply with the law.

The case number is 3-14-1492.

Attorneys: Christopher E. Coleman, Tennessee Justice Center, for Melissa Wilson. Brian Barnes (Cooper & Kirk) for Darin Gordon, Deputy Commissioner of the Tennessee Department of Finance and Administration and Director of the Division of Health Care Finance and Administration, Larry B. Martin, Commissioner, Tennessee Department of Finance and Administration, and Dr. Raquel Hatter, Commissioner, Tennessee Department of Human Services.

Companies: Tennessee Department of Finance and Administration; Health Care Finance and Administration; Tennessee Department of Human Services

MainStory: TopStory EligibilityNews MedicaidNews HealthCareReformNews HealthReformNews TennesseeNews

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