Daniels v. Wadley

926 F. Supp. 1305, 1996 U.S. Dist. LEXIS 11007, 1996 WL 284884
CourtDistrict Court, M.D. Tennessee
DecidedMay 15, 1996
Docket3:79-3107-NA-CV
StatusPublished
Cited by13 cases

This text of 926 F. Supp. 1305 (Daniels v. Wadley) is published on Counsel Stack Legal Research, covering District Court, M.D. Tennessee primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Daniels v. Wadley, 926 F. Supp. 1305, 1996 U.S. Dist. LEXIS 11007, 1996 WL 284884 (M.D. Tenn. 1996).

Opinion

MEMORANDUM

JOHN T. NIXON, Chief Judge.

At issue in the above-styled action are (1) Plaintiffs’ Motion to Modify Second Consent Decree and/or for Further Relief (Doc. No. 323); (2) Plaintiffs’ Motion for Further Injunctive Relief (Doc. No. 325); (3) Plaintiffs’ Motion to Investigate the Defendants’ Apparent Contempt of Court (Doc. No. 326); (4) Plaintiffs’ Request for Opportunity to Reply to Defendants’ Responses Including Proposed Modifications and Regulations (Doc. No. 339); and (5) Plaintiffs’ Renewed Motion to Investigate the Defendants’ Apparent Contempt of Court (Doc. No. 363).

I. Background

The Court has jurisdiction over this action pursuant to 28 U.S.C. § 1331 (1988), which confers original jurisdiction over all civil suits arising under the Constitution or laws of the United States, and 28 U.S.C. §§ 1343(a)(3) and (4), which provide for original jurisdiction in this court for suits authorized by 42 U.S.C. § 1983 to redress the deprivation under color of state law of any rights, privileges, and immunities guaranteed by the Constitution of the United States or by acts of Congress.

This ease is the continuation of a class action started in 1979 regarding the provision of medical assistance under Tennessee’s pre1994 Medicaid program. Plaintiffs in the current action are Medicaid-eligible enrollees of the Tennessee Medicaid Demonstration *1307 Project Number ll-C-99638/4-03 (“Tenn-Care”). 1

Plaintiffs seek to modify the Second Consent Decree in this action, which this Court entered on September 2,1992 (Doc. No. 278), in order to prevent the denial, delay, reduction, suspension or termination of medical assistance or other adverse action to enrollees without due process and a timely fair hearing in accordance with Title XIX of the Social Security Act, 42 U.S.C. § 1396 et seq. (the “Medicaid Act”), the conditions imposed under TennCare, and the Equal Protection and Due Process Clauses of the Fourteenth Amendment to the United States Constitution.

Defendants agree that the Second Consent Decree should be modified as a result of changes to Tennessee’s Medicaid Program, which took effect as of January 1,1994, when Tennessee implemented TennCare. Defendants assert, however, that Plaintiffs’ proposed modifications are inappropriate. Defendants propose their own modifications and Plaintiffs object to Defendants’ proposal.

The parties agree that Defendants have not received waivers from the U.S. Department of Health and Human Services (“HHS”), which oversees the TennCare program, regarding any of Defendants’ obligations to provide for review of coverage disputes outlined in 42 U.S.C. § 1396a(a)(3), 42 C.F.R. § 431.205 and Goldberg v. Kelly, 397 U.S. 254, 90 S.Ct. 1011, 25 L.Ed.2d 287 (1970). 2

For the reasons discussed below, the Court concludes that the existing TennCare hearing procedures violate the Medicaid Act and the Due Process Clause of the Fourteenth Amendment. Accordingly, the Court orders Defendants to submit proposed modifications to the Second Consent Decree within ninety days.

II. Analysis

A. The Appropriateness of Modifying the Proposed Consent Decree

Under TennCare, Tennessee’s current program for providing health care to Medicaid eligible individuals, Managed Care Organizations (“MCOs”) have financial incentives to deny enrollees health care even when such health care is medically appropriate. These incentives arise out of significant changes to Tennessee’s Medicaid Program, which took effect with the inception of TennCare. Based on these changes, the Court finds that it is appropriate to modify the Second Consent Decree. Rufo v. Inmates of Suffolk County Jail, 502 U.S. 367, 393-95, 112 S.Ct. 748, 765, 116 L.Ed.2d 867 (1992).

The Tennessee Medicaid program in place at the time that the Second Consent Decree was negotiated permitted a recipient to choose his or her provider. The program required providers, for the most part, to directly bill the state for services rendered. Recipients could be denied medical assistance if a particular provider refused to accept the recipient’s Medicaid card or otherwise refused to participate in the Medicaid program. 3 In such circumstances the recipient simply went to another provider to obtain services. Once the recipient located a provider willing to accept Medicaid, the service was provided, and the provider billed Medicaid for payment.

If the Medicaid Bureau denied a provider’s claim for payment, the provider could sometimes directly bill the recipient. A Medicaid recipient could be directly billed if the recipient was ineligible at the time that the service was provided, if the service was not covered, or if limits for a particular service had been exceeded. If payment was denied due to provider error, the provider was prohibited *1308 from seeking any payment from the recipient.

In many situations prior authorization for medical care was not required under the Tennessee Medicaid program. Where prior authorization was required, the Medicaid Act permitted the recipient to request a fair hearing, comporting with the requirements set forth in Goldberg v. Kelly, 397 U.S. 254, 90 S.Ct. 1011, 25 L.Ed.2d 287 (1970), 42 C.F.R. § 431.205(d), to appeal a denial of authorization. The Medicaid Act required that such hearings take place before an impartial hearing officer. § 431.240(a)(3). The Medicaid Act required that the coverage dispute be resolved within ninety days of the recipient’s request for a hearing. § 431.244(f). In many circumstances, the Medicaid Act mandated that services to the recipient continue until the coverage dispute was resolved through a fair hearing. § 431.230(a).

The system for providing health care to Medicaid eligible citizens and resolving coverage disputes is different under TennCare than under Tennessee’s pre-1994 Medicaid program. Under TennCare enrollees are not free to choose their own providers. To obtain services from specialists, enrollees must obtain a referral from their primary care physician who is under contract with an MCO. TennCare forms contracts with MCOs to pay for enrollees’ health care.

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Bluebook (online)
926 F. Supp. 1305, 1996 U.S. Dist. LEXIS 11007, 1996 WL 284884, Counsel Stack Legal Research, https://law.counselstack.com/opinion/daniels-v-wadley-tnmd-1996.