Himes v. Shalala

999 F.2d 684, 1993 U.S. App. LEXIS 19490, 1993 WL 282670
CourtCourt of Appeals for the Second Circuit
DecidedJuly 28, 1993
DocketNo. 1384, Docket 92-6295
StatusPublished
Cited by40 cases

This text of 999 F.2d 684 (Himes v. Shalala) is published on Counsel Stack Legal Research, covering Court of Appeals for the Second Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Himes v. Shalala, 999 F.2d 684, 1993 U.S. App. LEXIS 19490, 1993 WL 282670 (2d Cir. 1993).

Opinion

ALTIMARI, Circuit Judge:

Plaintiffs-appellants, Medicaid applicants or recipients suing on behalf of themselves and all similarly situated persons, appeal from a judgment entered in the United States District Court for the Western District of New York (Larimer, Judge) granting defendants-appellees’ motion for summary judgment and denying plaintiffs-appellants’ cross-motion for summary judgment. Plaintiffs-appellants brought a class action challenging the recent modification of N.Y.Soc. Serv.Law § 366(2)(a)(7) (McKinney 1992). See Act of Dec. 21, 1990, eh. 938, § 38, 1990 N.Y.Laws 2034, 2065. The new statute and the regulations promulgated thereunder treat certain categories of payments as available income for purposes of determining Medicaid eligibility that had not been included in the past. Plaintiffs-appellants argue that these new rules violate their rights under the Federal Medicaid Act and that the processes used to implement the new rules violate certain New York State regulations.

For the reasons set forth below, we affirm the judgment of the district court.

[686]*686BACKGROUND

Plaintiffs-appellants (“plaintiffs”) brought a class action on behalf of Medicaid applicants or recipients who have been informed that their benefits will be reduced or discontinued because their “available income,” as calculated under the newly amended N.Y.Soc.Serv. Law, § 366(2)(a)(7) (McKinney 1992), exceeds allowable limits. The new regulations include the following four categories of payments as “available income” for purposes of determining Medicaid eligibility or benefits under 42 U.S.C. § 1396a(a)(17)(B) (1988): (1) court-ordered support payments; (2) income taxes; (3) Social Security contributions; and (4) state disability insurance contributions. Previously, those categories of payments were disregarded in calculating a recipient’s available income. Plaintiffs challenged the recent inclusion of these categories in the calculation of “available income” for eligibility purposes. They brought their claim against the Secretary of the United States Department of Health and Human Services1 (the “Secretary”), the Commissioner of the New York State Department of Social Services, and various other commissioners of local departments of Social Services (collectively herein the “Defendants”).

A. Statutory and Regulatory Framework

The Medicaid program was enacted in 1965 as Title XIX of the Social Security Act, 42 U.S.C. §§ 1396, 1396a-u (1988) (“Medicaid Act” or “the Act”), as a cooperative federal-state program designed to provide health care to needy individuals. Although a state is not required to participate in the Medicaid program, once it chooses to do so it must develop a plan that complies with the Medicaid statute and the Secretary’s regulations. See New York v. Sullivan, 894 F.2d 20, 21-22 (2d Cir.1990).

A state, in administering its Medicaid program, must set reasonable standards for assessing an individual’s income and resources in determining eligibility for, and the extent of, medical assistance under the program. See 42 U.S.C. § 1396a(a)(17). Those standards must take into account “only such income and resources as are, as determined in accordance with standards prescribed by the Secretary, available to the applicant or recipient.” 42 U.S.C. § 1396a(a)(17)(B) (emphasis added).

States that accept Medicaid funds are obligated to provide coverage to the “categorically needy.” See 42 U.S.C. § 1396a(a)(10)(A)(i). These are persons whose income levels allow them to qualify for cash assistance under either the Supplemental Security Income for the Aged, Blind, and Disabled (“SSI”) program or the Aid to Families with Dependent Children (“AFDC”) program. States also have the option of providing medical benefits to the “medically needy.” See 42 U.S.C. § 1396a(a)(10)(A)(ii). These are individuals who satisfy the eligibility requirements of AFDC or SSI but whose income exceeds the maximum income levels permitted under the various cash assistance programs. “Medically needy” persons qualify for Medicaid only after they have incurred medical expenses reducing their income to the eligibility level of “categorically needy” persons. In Medicaid parlance this is referred to as “spending down.”

After many states chose to provide coverage to the “medically needy,” Congress realized that it was “fiscally improvident to rely exclusively on the States to set income limits for both aspects of the Medicaid program.” Schweiker v. Hogan, 457 U.S. 569, 575-76, 102 S.Ct. 2597, 2602, 73 L.Ed.2d 227 (1982). Consequently, in 1968 Congress enacted § 1396b(f) (the “FFP cap” or the “FFP limits”), which limits federal financial participation in Medicaid by providing:

the applicable income limitation with respect to any family is the amount determined, in accordance with standards prescribed by the Secretary, to be equivalent to 133/é percent of the highest amount which would ordinarily be paid to a family [687]*687of the same size without any income or resources.

42 U.S.C. § 1396b(f)(1)(B)(i).

New York has chosen to participate in the Medicaid program and has elected to provide benefits to the “medically needy.” Prior to January 1, 1991, New York calculated eligibility by using an income methodology that expressly disregarded court-ordered support payments and mandatory payroll deductions in the calculation of countable income. New York has recently changed that policy and no longer disregards those payments in calculating available income for eligibility purposes. See Act of Dec. 21, 1990, ch. 938, § 38, 1990 N.Y.Laws 2034, 2065. The following series of events is relevant to understanding why New York reversed its policy.

In September 1985, the New York State Department of Social Services (“NYSDSS”), the agency that runs the state’s Medicaid program, submitted amendments to its State Plan (“SPA 85-25”) to the Federal Health Care Financing Administration (“HCFA”) for approval. SPA 85-25 contained a proposed list of “income disregards,” including the court-ordered support payments and mandatory payroll withholdings at issue in this ease.

In March 1989 the HCFA issued State Medicaid Manual (“SMM”) Transmittal No. 33 addressing states’ use of more liberal income and resource methods for determining Medicaid eligibility. HCFA stated that in order for it to assure compliance with FFP limits, it “has elected to disapprove plan policies which will result in FFP limits being exceeded.” Health Care Financing Administration, State Medicaid Transmittal No. 33, at 2 (March 1989).

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Bluebook (online)
999 F.2d 684, 1993 U.S. App. LEXIS 19490, 1993 WL 282670, Counsel Stack Legal Research, https://law.counselstack.com/opinion/himes-v-shalala-ca2-1993.