Davis v. Schrader

687 N.E.2d 370, 1997 Ind. App. LEXIS 1546, 1997 WL 680976
CourtIndiana Court of Appeals
DecidedOctober 30, 1997
DocketNo. 49A02-9602-CV-00087
StatusPublished
Cited by4 cases

This text of 687 N.E.2d 370 (Davis v. Schrader) is published on Counsel Stack Legal Research, covering Indiana Court of Appeals primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Davis v. Schrader, 687 N.E.2d 370, 1997 Ind. App. LEXIS 1546, 1997 WL 680976 (Ind. Ct. App. 1997).

Opinion

OPINION

KIRSCH, Judge.

The Indiana Department of Family and Social Services appeals a summary judgment in which the trial court invalidated a State Medicaid regulation. The parties present four issues, which we restate as:

I. Whether the Indiana Medicaid regulation excluding coverage for orthopedic shoes violates federal Medicaid law.
II. Whether the above-referenced Indiana Medicaid regulation violates state Medicaid law.
III. Whether the above-referenced Indiana Medicaid regulation creates an unconstitutional irrebuttable presumption.
IV. Whether the above-referenced Indiana Medicaid regulation violates the Americans with Disabilities Act.1

We affirm, based on our resolution of Issues I and II.2

[372]*372FACTS AND PROCEDURAL HISTORY

Medicaid recipients James Schrader and Jerry Yarboro have medical problems that cause foot pain so severe they cannot walk without assistance. If, however, they wear orthopedic shoes or shoes with corrective features, Schrader and Yarboro can walk unassisted. Their health care providers prescribed special shoes for them, and both men requested Medicaid coverage for the shoes. The State refused to pay for the shoes, based on a December 1, 1993 regulatory amendment excluding coverage for most orthopedic shoes and corrective features. See 405 LAC 1 — Y—27(h)(9)—(11) (1996). Prior to the amendment, the State covered orthopedic shoes and corrective features. 405 IAC 1-7-27(f) (1992).

Schrader and Yarboro sought to enjoin the State from eliminating the shoe coverage and sought a declaratory judgment to invalidate the regulatory amendment. They then filed a summary judgment motion, based in part on affidavits in which their, health care providers attested that the disputed shoes were medically necessary. The trial court concluded that the federal Medicaid regulations and the State Medicaid laws require the State Medicaid program to pay for medically necessary items, and granted summary judgment. Record at 281-82 (Conclusion Nos. 10-11). The trial court also concluded that “[t]he decision of whether or not certain treatment or devices are medically necessary rests with the recipient’s physician.” Record at 282 (Conclusion No. 12). The State now appeals.

DISCUSSION AND DECISION

This appeal presents issues analogous to those described in Thie v. Davis, et al., 688 N.E.2d 182 (Ind.Ct.App. October 30, 1997) and Coleman v. Indiana Family and Social Serv. Admin., 687 N.E.2d 366 (Ind.Ct.App.1997). The State described the issues succinctly: “[t]his case is about the limits on Medicaid coverage and who gets to set them.” Schrader Reply Brief at 1. The trial court in this case invalidated the State’s efforts to limit orthopedic shoe coverage, holding that the State must cover medically necessary treatments; conversely, the trial courts in Thie and Coleman upheld similar limits and determined that the State could exclude medically necessary treatments from Medicaid coverage. We reversed the trial courts in Thie and Coleman and held that the State may establish coverage limitations, but may not exclude medically necessary treatments within' covered categories. Here, we again hold that the State must cover medically necessary treatments in service areas in which the State opts to provide coverage.

The Thie opinion explains the analysis applicable to our decision here. Rather than reiterate, we summarize the analysis as follows:

Indiana participates in the federal Medicaid program. To receive the federal financial, assistance available through the program, Indiana must comply with the applicable federal Medicaid laws. The federal statute mandates that the State program cover certain medical services; the statute lists other services that the State may cover at its option. 42 U.S.C. § 1396a.3 If the State chooses to provide coverage in an optional service area, the coverage must be “sufficient in amount, duration and scope to reasonably achieve its purpose.” 42 C.F.R. § 440.230(b). The State may limit coverage based on “such criteria as medical necessity or on utilization control procedures.” 42 C.F.R. § 440.230(d). To be sufficient in amount, duration, and scope, the State Medicaid program must cover medically necessary treatments and equipment. See Beal v. Doe, 432 U.S. 438, 97 S.Ct. 2366, 53 L.Ed.2d 464 (1977); Allen v. Mansour, 681 F.Supp. 1232 (E.D.Mich.1986).

The applicable State law requires that the State coverage regulations establish “limitations that are consistent with medical necessity concerning the amount, scope and duration of the services and supplies to be provided.” IC 12-15-21-3(3). Like the [373]*373federal statute and regulation,, the State statute indicates that the State must cover medically necessary treatments and equipment. ■■

Given that the State must cover medically necessary treatments, the next question is whether the State may define “medical necessity” as it applies to Medicaid coverage. The trial court in this case concluded that the State’ may not define the term; instead, the trial court held that the recipient’s health care provider is the sole arbiter of whether a particular item or treatment is “medically necessary.” We disagree. As explained in Thie, the federal laws delegate the authority to define medical necessity to the State. See Cowan v. Myers, 187 Cal.App.3d 968, 232 Cal.Rptr. 299 (1986), cert. denied, 484 U.S. 846, 108 S.Ct. 140, 98 L.Ed.2d 97 (1987). The State may define medical necessity in a manner that is practicable for the State, so long as the definition comports with the federal Medicaid laws.

Based on the above-summarized analytical framework, an individual who challenges a State Medicaid exclusion must: (1) identify the State definition of medical necessity applicable to the challenged exclusion;4 and (2) prove that the excluded equipment or treatment is medically necessary as defined by the State. If the individual proves that the equipment or treatment is medically necessary according to the State definition, the regulatory exclusion is invalid and the State Medicaid program must cover the equipment or treatment.5

In Thie, the regulatory section at issue contained no definition of medical necessity, so we based our analysis on the general definition of “medically reasonable and necessary” set out in 405 IAC l-6-2(h) (1996). Here, in contrast, the regulation at issue contains a working definition of medical necessity.

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687 N.E.2d 370, 1997 Ind. App. LEXIS 1546, 1997 WL 680976, Counsel Stack Legal Research, https://law.counselstack.com/opinion/davis-v-schrader-indctapp-1997.