Bethphage Lutheran Service, Inc. v. Weicker

965 F.2d 1239, 1992 U.S. App. LEXIS 13063
Court of Appeals for the Second Circuit·Decided June 2, 1992·No. 949·Published·Cited by 10 cases

Opinion

965 F.2d 1239

37 Soc.Sec.Rep.Ser. 458, Medicare & Medicaid Guide
P 40,323,
3 NDLR P 55

BETHPHAGE LUTHERAN SERVICE, INC., Plaintiff-Appellant,
v.
Lowell P. WEICKER, Jr., in his official capacity as Governor
of the State of Connecticut; Toni Richardson, Commissioner,
Department of Mental Retardation; Audrey Rowe,
Commissioner, Department of Income Maintenance, Defendants-Appellees.

No. 949, Docket 91-9052.

United States Court of Appeals,
Second Circuit.

Argued Feb. 28, 1992.
Decided June 2, 1992.

Richard P. Nelson, Lincoln, Neb. (Rochelle Shana Wood, Mark R. Kravitz, Wiggin & Dana, New Haven, Conn.; Nelson Morris Holdeman & Titus, Lincoln, Neb., on the brief), for plaintiff-appellant.

Arnold I. Menchel, Asst. Atty. Gen., Hartford, Conn. (Richard Blumenthal, Atty. Gen., Richard J. Lynch, James P. Welsh, Asst. Atty. Gens., Hartford, Conn., on the brief), for defendants-appellees.

Before: LUMBARD, NEWMAN and WINTER, Circuit Judges.

JON O. NEWMAN, Circuit Judge:

Bethphage Lutheran Service, Inc. ("Bethphage"), a Connecticut not-for-profit corporation providing residential and day-care services to persons with mental retardation and other disabilities, appeals from the August 27, 1991, judgment of the United States District Court for the District of Connecticut (Alan H. Nevas, Judge) dismissing its complaint against various Connecticut officials on the ground that abstention was appropriate pursuant to the Burford doctrine. See Burford v. Sun Oil Co., 319 U.S. 315, 63 S.Ct. 1098, 87 L.Ed. 1424 (1943). Bethphage provides services under contract with the Connecticut Department of Mental Retardation ("DMR"). The services are funded jointly by the U.S. Department of Health and Human Services and the State of Connecticut. Bethphage contended that the defendants propose to fund Bethphage's 1991-92 fiscal year service contracts at a level that is inconsistent with the standards of efficiency, economy, and quality of care mandated by federal statute. Bethphage challenges the District Court's abstention decision, contending, among other things, that state law does not afford it an adequate state court remedy and instead remits it to binding arbitration. We disagree with that view of state law and affirm the District Court's decision to abstain.

Background

A. Medicaid. Medicaid, 42 U.S.C. § 1396 et seq., is a cooperative federal-state program through which the federal government provides financial assistance to the states so that the states may furnish medical, rehabilitation, and other services to certain low-income persons. Participation in Medicaid is voluntary, but participating states must comply with certain requirements imposed by the Medicaid Act and regulations promulgated by the Secretary of Health and Human Services ("the Secretary"). For a state to qualify for federal assistance, the Secretary, customarily acting through the Health Care Finance Administration ("HCFA"), must approve a State Plan for medical assistance, 42 U.S.C. § 1396a(a), that contains a comprehensive statement describing the nature and the scope of the state's program. 42 C.F.R. § 430.10 (1989). The plan must designate a single state agency to supervise or administer the State Plan. 42 U.S.C. § 1396a(a)(5).

By enacting the Home and Community Based Services Waiver Act ("Waiver Act"), 42 U.S.C. § 1396n(c), Congress has authorized persons with mental retardation or other developmental disabilities to receive Medicaid services in a community setting. The Waiver Act excuses states from satisfying all requirements of the Medicaid Act. To qualify for a waiver, a state must develop alternative regulatory schemes aimed at lowering the cost of medical assistance while at the same time maintaining the level of care. Although the Waiver Act authorizes the Secretary to waive certain requirements of the Medicaid Act, see 42 U.S.C. § 1396n(c)(3), it does not authorize the Secretary to waive any sections of the Medicaid Act governing the health, safety, or welfare of Medicaid recipients. Indeed, the Secretary is not authorized to grant a waiver unless the state provides additional assurances that its waiver plan includes necessary safeguards to protect the health and welfare of individuals provided services under the waiver. 42 U.S.C. § 1396n(c)(2).

Since July 1, 1987, the State of Connecticut has funded services for persons with mental retardation or other developmental disabilities under a waiver. The Connecticut Waiver was approved by HCFA and is administered by the Connecticut Department of Mental Retardation ("DMR"). As part of the health and welfare assurances required by the Waiver Act, the defendants have incorporated by reference numerous standards and protections afforded Connecticut residents under state law. The assurances and standards incorporated include Conn.Gen.Stat. § 17a-238(b), which provides that each person placed under the direction of the Commissioner of Mental Retardation shall be protected from harm and receive humane and dignified treatment adequate for that person's needs and for the development of that person's full potential at all times, and Conn.Gen.Stat. 17a-227(b), which requires that DMR regulations insure the comfort, safety, adequate medical care, and treatment of persons with mental retardation or other developmental disabilities in residential facilities.

Waiver providers are reimbursed for residential and day program services by DMR pursuant to Conn.Gen.Stat. § 17-313b and Conn. Agencies Regs. §§ 17-313b-1 through 17-313b-18. The residential and day service contracts result from negotiations between DMR and the certified provider, here Bethphage. An operations plan ("OP"), which estimates the provider's expenditures for the fiscal year and serves as the total authorized yearly expenditures, is incorporated into the signed contract. At the close of the contract year, each provider prepares and files an Audited Consolidated Operation Report ("ACOR"), which details actual expenditures. Incurred costs that exceed the contract amount are not reimbursed. Conn. Agencies Regs. § 17-313b-8(1)(i). On the other hand, if the provider has spent less than the estimated cost, the provider is required to return most or all of the difference to DMR. Conn. Agencies Regs. § 17-313b-8(1)(ii). Under the state regulations, negotiations for provider contracts must be based upon information contained in the most recent ACOR, the provider's OP, and other relevant information. Conn. Agencies Regs. § 17-313b-8(v)(5).

B. The Bethphage contracts. Bethphage currently serves approximately 154 mentally retarded and developmentally disabled persons. Bethphage's programs have been licensed by DMR and certified by the Department of Income Maintenance ("DIM") for participation as a Waiver Act provider. In 1989 Bethphage entered into its first contract with DMR to provide residential and day services. In the first year of operation, Bethphage instituted cost containment measures which, compared with the previous provider, reduced costs on an annualized basis by $1,185,000.

Free access — add to your briefcase to read the full text and ask questions with AI

Bethphage Lutheran Service, Inc. v. Weicker, 965 F.2d 1239, 1992 U.S. App. LEXIS 13063 (2d Cir. 1992).

965 F.2d 1239 (Bethphage Lutheran Service, Inc. v. Weicker) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

Related

Value Manufactured Homes, LLC v. Key Bank, N.A.
919 F. Supp. 2d 303 (W.D. New York, 2013)
Providence Pediatric Medical Daycare, Inc. v. Alaigh
799 F. Supp. 2d 364 (D. New Jersey, 2011)
Lopez v. Smiley
375 F. Supp. 2d 19 (D. Connecticut, 2005)
Nicholson v. Williams
203 F. Supp. 2d 153 (E.D. New York, 2002)
Community Health Care Ass'n of New York v. Mahon
106 F. Supp. 2d 523 (S.D. New York, 2000)
Dittmer v. County of Suffolk
146 F.3d 113 (Second Circuit, 1998)
Findley v. Falise
78 F.3d 764 (Second Circuit, 1996)
Farkas v. D'OCA
857 F. Supp. 300 (S.D. New York, 1994)