Fisher v. Oklahoma Health Care Authority

F I L E D
United States Court of Appeals
Tenth Circuit

JUL 15 2003
PUBLISH

UNITED STATES COURT OF APPEALS PATRICK FISHER
Clerk
TENTH CIRCUIT

KATHERINE FISHER; EARLEE
HEATH; KAROL LOY, on behalf of
themselves and all others similarly
situated,

Plaintiffs - Appellants,

v.
No. 02-5192
OKLAHOMA HEALTH CARE
AUTHORITY, Sued as: State of
Oklahoma, Oklahoma Health Care
Authority and Mike Fogarty, in his
capacity as CEO of the Oklahoma
Health Care Authority; MIKE
FOGARTY,

Defendants - Appellees,
__________________

OKLAHOMA DISABILITY LAW
CENTER, INC.,

Amicus Curiae.

Appeal from the United States District Court
for the N. District of Oklahoma
(D.C. No. 02-CV-762-P)
Stephen F. Gold (Morris Bernstein, University of Tulsa Boesche Legal Clinic,
Tulsa, Oklahoma, with him on the briefs), Philadelphia, Pennsylvania for the
Plaintiffs-Appellants.

Andrew J. Tevington, Deputy General Counsel, Oklahoma Health Care Authority,
Oklahoma City, Oklahoma for the Defendants-Appellees.

Kayla A. Bower and Joy J. Turner, Oklahoma Disability Law Center, Inc.,
Oklahoma City, Oklahoma, filed a brief for the Amicus-Curiae.

Before LUCERO, BALDOCK, and O’BRIEN, Circuit Judges.

LUCERO, Circuit Judge.

Plaintiffs, three disabled individuals receiving state-funded medical care as

part of Oklahoma’s Home and Community-Based Services (“HCBS”) Waiver

Program, the “Advantage Program,” ask us to decide whether the defendants, the

Oklahoma Health Care Authority (“OHCA”)—the state agency that administers

the Medicaid program for Oklahoma—and Mike Fogarty, in his official capacity

as CEO of the OHCA, are violating federal law by the manner in which they

operate their HCBS program. Specifically, plaintiffs object to the defendants’

recent decision to limit prescription medications for participants in the waiver

program to five per month, irrespective of medical necessity, and seek declaratory

and injunctive relief against the imposition of the five-prescription cap. Plaintiffs

assert that due to their precarious medical and financial circumstances, imposition

of the five-prescription cap will force them out of their communities and into

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nursing homes in order to obtain the care that is medically necessary. The district

court granted summary judgment to the defendants, holding that the plaintiffs

could not maintain a claim under the Americans with Disabilities Act (“ADA”),

42 U.S.C. § 12101 et seq., because they are not presently institutionalized and

face no risk of institutionalization. Because we conclude that the plaintiffs may

have a meritorious ADA claim, we exercise jurisdiction under 28 U.S.C. § 1291,

and reverse and remand for further consideration.

I

Medicaid is a joint federal-state program designed to provide medical

assistance to low-income families and individuals “to help such families and

individuals attain or retain capability for independence or self-care.” 42 U.S.C.

§ 1396. Once a state enters into a partnership with the federal government,

Congress requires the state to provide a minimum level of benefits known as the

mandatory program. § 1396a(10)(A)(i); 42 C.F.R. §§ 440.210, .220. Mandatory

services include nursing home care. 42 U.S.C. § 1396a(10)(A) (incorporating §

1396d(a)(4)(A)). Pharmacy benefits, the focus of the instant case, are not part of

the mandatory program, and are considered an optional program under Title XIX.

§§ 1396a(a)(10), 1396d(a)(12). Along with every other state, Oklahoma has

elected to provide prescription drugs as part of its Medicaid program. Persons

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institutionalized in nursing homes receive all the prescriptions that are medically

necessary. Okla. Admin. Code. § 317:35-3-2(15)(B).

As an alternative to institutionalization, Congress provides for home and

community-based services as part of an optional waiver program. 1 42 U.S.C.

§ 1396n(c)(1). Once a state obtains a waiver, this program allows individuals

who meet the level of care required for institutionalization in a nursing facility to

live at home and receive state-funded medical care. Id. “[T]he department of

Heath and Human Services (HHS) has a policy of encouraging States to take

advantage of the waiver program, and often approves more waiver slots than a

State ultimately uses.” Olmstead v. Zimring, 527 U.S. 581, 601 (1999) (quotation

omitted). To obtain a waiver, a state must certify that placement of an individual

in a waiver program will be cost-neutral, meaning that costs for persons in the

waiver program will be less than if those persons were in an institution. 2

§ 1396n(c)(2)(D). Oklahoma obtained such a waiver from the federal government

for its Advantage Program. Okla. Admin. Code. § 317:30-5-760.

1
The program is referred to as a “waiver” because, with express
authorization by a federal agency, the state is exempted from certain Title XIX
statutory requirements.
2
In Oklahoma, it costs approximately $28,000 per year to provide care to a
disabled individual in a nursing home, and $14,000 to provide care through the
Home and Community Based Waiver program.

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 Oklahoma has elected to provide prescription benefits to Advantage

participants as well as residents in nursing homes. Until recently, Advantage

participants were entitled to an unlimited number of medically necessary

prescriptions paid for by the state. However, in September 2002, the state

notified participants that it would impose a cap of five prescriptions per month on

Advantage participants, effective October 1, 2002, while continuing to provide

unlimited prescriptions to patients in nursing facilities. This decision was based

on a budgetary shortfall; defendants anticipated that capping the number of

prescriptions available would save the state $3.2 million.

On the same day that the five-prescription cap came into effect, plaintiffs

Katherine Fisher, Earlee Heath, and Karol Loy, participants in Oklahoma’s

Advantage program, filed suit in federal court against the OHCA and its CEO,

Mike Fogarty. In their complaint, plaintiffs allege that defendants’ five-

prescription cap violates the integration requirements of the ADA, 42 U.S.C.

§ 12101 et seq., and section 504 of the Rehabilitation Act (“RA”), 29 U.S.C.

§ 794, because it will force them out of their communities and into nursing homes

in order to obtain the care that is medically necessary. 3 Plaintiffs further assert

3
Plaintiffs’ RA claim is essentially the same as their ADA claim.
Regulations under both sections require defendants to administer “programs, and
activities in the most integrated setting appropriate to the needs” of qualified
individuals with disabilities. 28 C.F.R. § 35.130(d) (ADA); 28 C.F.R. § 41.51(d)
(continued...)

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that the cap violates Title XIX of the Social Security Act, 42 U.S.C. § 1396 et

seq. All three plaintiffs meet the medical and financial requirements for nursing

facility care and would be eligible for admission to a nursing home.

Earlee Heath is 73 years old, uses a wheelchair, and suffers from insulin-

dependant diabetes, hypertension, asthma, congestive heart failure, residual

bilateral paresis and deep-vein thrombosis. She uses a portable oxygen machine

to assist her in breathing. She takes approximately sixteen prescription

medications that cost a total of $839 per month, all of which are prescribed by her

doctors, who monthly review and monitor them. Assuming that defendants pay

for the five most expensive medications, plaintiffs contend that Heath will have to

pay $256 per month for the remainder out of her monthly income of $313.

Katherine Fisher is 48 years old, uses a wheelchair, has suffered from

cerebral palsy since birth, and has had two strokes that required hospitalization.

Fisher takes approximately twenty-one medications that cost a total of $858 per

month. Her treating physicians re-evaluate her medications on a monthly basis.

Assuming that defendants pay for the five most expensive medications, plaintiffs

3
(...continued)
(RA). Because plaintiffs have asserted no right under the RA that is not equally
protected by the ADA, and because the district court focused its analysis on the
ADA claim, we primarily address the plaintiffs’ ADA claim.

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assert that Fisher, whose monthly income is $725, will have to pay $274 per

month for the remainder.

Karol Loy is 46 years old, has difficulty walking and standing, and has

acute mixed connective tissue disease with seizure disorder, residual from a

stroke and cardiac malfunction. She has been hospitalized for two strokes and a

heart attack. Loy takes twenty-four prescriptions daily that cost a total of $2,808

per month. Assuming that defendants pay for the five most expensive

medications, plaintiffs claim that Loy will have to pay $644 per month, out of a

monthly income of $547, for the remainder.

Defendants contest these figures. According to defendants, adjusting the

schedule under which medication is purchased and eliminating drug interactions

could reduce the amount plaintiffs would have to pay under the cap. 4 By

rescheduling and eliminating drugs that have adverse interactions with other

drugs defendants argue that Fisher’s monthly cost could be reduced to $45–60 per

month; Heath’s monthly cost could be reduced to $25 per month; and Loy’s

monthly cost could be reduced to “an admittedly still high two hundred dollars.”

4
Defendants’ assertion is that, because the Oklahoma Medicaid plan
allows participants to obtain either one hundred units (pills) or a thirty-four day
supply, plaintiffs could obtain three months’ worth of pills at once by electing the
one-hundred-units option, and stagger their prescriptions. This “rescheduling”
would effectively allow plaintiffs to obtain three times as many prescriptions,
assuming their most expensive drugs are taken no more than once a day.

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(Appellees’ Br. at 6.) Because the plaintiffs do not contest these projected cost

savings, we assume that defendants’ projections are correct.

Plaintiffs filed a motion for a preliminary injunction, which the district

court converted into a motion for a permanent injunction. After receiving

briefing and conducting a hearing on the matter, the district court granted

summary judgment to the defendants, concluding that the plaintiffs could not

maintain a claim under the ADA because they are not presently institutionalized

and face no risk of institutionalization. This appeal followed.

II

“We review the district court’s grant of summary judgment de novo,

applying the same legal standard used by the district court.” Simms v. Okla. ex

rel. Dep’t of Mental Health & Substance Abuse Servs., 165 F.3d 1321, 1326 (10th

Cir. 1999). Summary judgment is appropriate “if the pleadings, depositions,

answers to interrogatories, and admissions on file, together with the affidavits, if

any, show that there is no genuine issue as to any material fact and that the

moving party is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(c).

“When applying this standard, we view the evidence and draw reasonable

inferences therefrom in the light most favorable to the nonmoving party.” Simms,

165 F.3d at 1326.

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 A party requesting a permanent injunction bears the burden of showing: (1)

actual success on the merits; (2) irreparable harm unless the injunction is issued;

(3) the threatened injury outweighs the harm that the injunction may cause the

opposing party; and (4) the injunction, if issued, will not adversely affect the

public interest. Fed. Lands Legal Consortium ex rel. Robart Estate v. United

States, 195 F.3d 1190, 1194 (10th Cir. 1999); Amoco Prod. Co. v. Gambell, 480

U.S. 531, 546 n.12 (1987).

A

Under Title II of the ADA, a public entity may not discriminate against

qualified individuals based on a disability:

[N]o qualified individual with a disability shall, by reason of such
disability, be excluded from participation in or be denied the benefits
of the services, programs, or activities of a public entity, or be
subjected to discrimination by any such entity.

42 U.S.C. § 12132. 5 Pursuant to congressional authority, the Attorney General

issued regulations implementing provisions of Title II, including the

discrimination proscription of § 12132. Olmstead, 527 U.S. at 591–92. Central

to the instant case are two such regulations. The first, known as the “integration

regulation” or “integration mandate,” provides that “[a] public entity shall

administer services, programs, and activities in the most integrated setting

5
There is no dispute in the instant case as to whether the plaintiffs are
qualified individuals with disabilities.

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appropriate to the needs of qualified individuals with disabilities,” 28 C.F.R.

§ 35.130(d) (emphasis added). 6 In Olmstead, the Supreme Court construed the

ADA’s integration mandate and concluded that the discrimination forbidden under

Title II of the ADA includes “[u]njustified isolation” of the disabled. 527 U.S. at

597. Thus, “the ADA and its attendant regulations clearly define unnecessary

segregation as a form of illegal discrimination against the disabled.” Helen L. v.

DiDario, 46 F.3d 325, 333 (3d Cir. 1995).

Although public entities are required to “make reasonable modifications in

policies, practices, or procedures” in order to avoid the discrimination inherent in

the unjustified segregation of the disabled, the second regulation at issue, the so-

called “fundamental alteration regulation,” relieves a public entity of its duties

under the ADA’s integration mandate if “the public entity can demonstrate that

making the modifications would fundamentally alter the nature of the service,

program, or activity.” 28 C.F.R. § 35.130(b)(7) (emphasis added); see Townsend

v. Quasim, 328 F.3d 511, 517–18 (9th Cir. 2003). Thus, under Olmstead and the

applicable ADA regulations, when treatment professionals have determined that

community placement is appropriate for disabled individuals, those individuals do

6
Similarly, the RA prohibits discrimination by entities receiving federal
funds. See 29 U.S.C. § 794 and 28 C.F.R. § 41.51(d) (providing that programs
and activities shall be administered “in the most integrated setting appropriate”).

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not oppose the placement, and the provision of services would not constitute a

“fundamental alteration,” states are required to place those individuals in

community settings rather than institutions. 7 527 U.S. at 601–03.

Arguing that the integration regulation, as interpreted in Olmstead, renders

the imposition of the five-prescription cap a violation of the ADA because it will

force them to enter nursing facilities in order to obtain necessary prescriptions,

the plaintiffs sought declaratory and injunctive relief before the district court.

Rejecting this argument, the district court held that Olmstead is “factually and

materially distinguishable” from the instant case, in that, unlike the plaintiffs in

Olmstead, Fisher, Heath, and Loy are not presently living in an institution and are

free to remain in the community. Fisher v. Okla. Health Care Authority, No.

02CV-762P(C), slip op. at 6 (N.D. Okla. Oct. 31, 2002).

Upon de novo review, we conclude that the district court was incorrect in

its reading of Olmstead and the integration mandate. First, there is nothing in the

plain language of the regulations that limits protection to persons who are

currently institutionalized. The integration regulation simply states that public

entities are to provide “services, programs, and activities in the most integrated

setting appropriate” for a qualified person with disabilities. 28 C.F.R.

7
There is no dispute in the instant case as to whether community
placement is appropriate for the plaintiffs.

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§ 35.130(d). Those protections would be meaningless if plaintiffs were required

to segregate themselves by entering an institution before they could challenge an

allegedly discriminatory law or policy that threatens to force them into segregated

isolation. Second, while it is true that the plaintiffs in Olmstead were

institutionalized at the time they brought their claim, nothing in the Olmstead

decision supports a conclusion that institutionalization is a prerequisite to

enforcement of the ADA’s integration requirements. Although no circuit court

appears to have addressed the issue, we find Makin v. Hawai’i, 114 F. Supp. 2d

1017 (D. Haw. 1999), to be instructive. In Makin, the district court rejected the

argument that Olsmstead is inapplicable in situations where the plaintiffs are not

institutionalized, observing that this argument is “misplaced since the only

alternative for Plaintiffs presently is institutionalization if they seek treatment

under the statute.” Id. at 1033. We agree, and conclude that Olmstead does not

imply that disabled persons who, by reason of a change in state policy, stand

imperiled with segregation, may not bring a challenge to that state policy under

the ADA’s integration regulation without first submitting to institutionalization.

As we have elaborated, under Olmstead, the failure to provide Medicaid

services in a community-based setting may constitute a form of discrimination.

Because the OHCA does not allow the plaintiffs to receive services for which

they are qualified unless they agree to enter a nursing home, the plaintiffs have

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presented a genuine issue of material fact as to whether they can prove that the

defendants have violated the integration requirement of Title II of the ADA.

However, our conclusion that the five-prescription cap may violate the ADA’s

integration regulation does not end our inquiry, for “[t]he State’s responsibility,

once it provides community-based treatment to qualified persons with disabilities,

is not boundless,” Olmstead, 527 U.S. at 603, and states are permitted “to resist

modifications that entail a ‘fundamenta[l] alter[ation]’ of the State’s services and

programs,” id. (quoting 28 C.F.R. § 35.130(b)(7)).

In expounding upon the meaning of “fundamental alteration,” the Olmstead

Court rejected a construction of the fundamental-alteration defense that required

only a comparison of the cost of the community services for the plaintiffs with the

state’s budget. Rather, courts are to consider whether “in the allocation of

available resources, immediate relief for the plaintiffs would be inequitable, given

the responsibility the State has undertaken for the care and treatment of a large

and diverse population of persons with . . . disabilities.” Id. at 603–04. With this

standard in mind, we proceed to consider whether the plaintiffs have created a

genuine issue of material fact as to whether elimination of the five-prescription

cap would constitute a fundamental alteration.

Recognizing that the fundamental-alteration regulation can serve as a

defense to the requirements of the integration regulation, the district court noted

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two things: (1) the waiver program is optional; and (2) “[g]iven . . .the State

financial crisis, . . . [d]efendants have made a reasonable move to reduce the

optional program rather than eliminate it altogether as the State could.” Fisher,

No. 02CV-762P(C), slip op. at 7. Regarding the fact that the Advantage waiver

program is optional, we note that, under Title II of the ADA, a state may not

amend optional programs in such a way as to violate the integration mandate.

See, e.g., Helen L., 46 F.3d. at 336,339 (requiring the requested community-based

service, attendant care, even though it is an optional Medicaid service). Thus, the

mere fact that a program is optional does not support a fundamental-alteration

defense; rather, it merely begs the question whether provision of that service

would constitute a fundamental alteration.

As to the second fundamental-alteration factor cited by the district court,

that the decision “to reduce the optional program rather than eliminate it

altogether” was “reasonable” because of the reality of Oklahoma’s financial

crisis, Fisher, No. 02CV-762P(C), slip op. at 7, we note that public entities have

a defense when a modification “would fundamentally alter the nature of the

service, program, or activity,” 28 C.F.R. § 35.130(d); that their actions were

merely “reasonable” does not constitute a defense. Moreover, the fact that

Oklahoma has a fiscal problem, by itself, does not lead to an automatic conclusion

that preservation of unlimited medically-necessary prescription benefits for

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participants in the Advantage program will result in a fundamental alteration. See

Townsend, 328 F.3d at 520. In passing the ADA, Congress was clearly aware that

“[w]hile the integration of people with disabilities will sometimes involve

substantial short-term burdens, both financial and administrative, the long-range

effects of integration will benefit society as a whole.” H.R. Rep. No. 101-485,

pt.3, at 50, reprinted in 1990 U.S.C.C.A.N. 445, 473. If every alteration in a

program or service that required the outlay of funds were tantamount to a

fundamental alteration, the ADA’s integration mandate would be hollow indeed.

The district court appears to have found Oklahoma’s decision “reasonable,”

and, by implication, that the elimination of the five-prescription cap would

constitute a fundamental alteration, because the alternative to the imposition of

the five-prescription cap was to eliminate the entire HCBS Waiver program.

However, there is no evidence in the record to suggest that the state considered

eliminating the entire program. Fogarty testified that “[the] agency is absolutely

committed to [the waiver] program . . . It’s a program that’s needed.” (Joint App.

at 124.) Given that the cost of institutional care is nearly double that of

community-based care, it seems unlikely that the option cited by the district court,

elimination of the waiver program, would have solved Oklahoma’s fiscal crisis,

because it could have served only to drive participants into nursing homes.

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 In opposing summary judgment below, the plaintiffs proffered a number of

alternatives to the five-prescription-cap, such as requiring prior authorization for

prescriptions or reducing nursing home payments by $160 per year per patient, as

examples that would allow the state to save money while preserving unlimited

prescription benefits for participants in the Advantage program. Thus, it is not

clear from the record or the district court’s summary analysis that the expenses

involved in preserving unlimited prescriptions under the Advantage program will

“in fact, compel cutbacks in services to other Medicaid recipients,” Townsend,

328 F.3d at 520, or be “inequitable, given the responsibility the State has

undertaken for the care and treatment of a large and diverse population of persons

with . . . disabilities,” Olmstead, 527 U.S. at 604. Nor is it clear why the

preservation of a program as it has existed for years and as approved by the

federal government would “fundamentally alter the nature” of the program. 28

C.F.R. § 35.130(b)(7). Plaintiffs are simply requesting that a service for which

they would be eligible under an existing state program, unlimited medically

necessary prescriptions, be provided in a community-based setting rather than a

nursing home. They are not demanding a separate service or one not already

provided by the state. See Townsend, 328 F.3d at 517 (noting the distinction

between whether services will be provided and where services will be provided).

Given that Oklahoma has, until recently, provided unlimited prescriptions to

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participants in the Advantage program, and continues to do so for those living in

nursing homes, receiving medically necessary prescriptions is clearly in the nature

of Oklahoma’s HCBS program. 8 The district court’s cursory fundamental-

alteration analysis cannot stand up to logical inquiry.

In sum, in granting summary judgment to the defendants on the plaintiffs’

ADA claim, the district court made errors of law and ignored disputed issues of

material fact. There are genuine issues of material fact concerning whether

reasonable modifications to Oklahoma’s program must be made under the ADA.

If reasonable modifications are required, there are genuine issues of material fact

concerning whether they would fundamentally alter the program. Thus, we

remand the matter for further consideration.

B

The state argues on appeal that the plaintiffs are not entitled to declaratory

or injunctive relief because they cannot show that they will be harmed by the five-

prescription cap. Because plaintiffs can reduce the cost of their prescriptions

through scheduling and discontinuance of drugs with harmful interactions, the

OHCA argues, the plaintiffs will not suffer irreparable harm absent the issuance

8
An inescapable irony of the decision to cap prescriptions for participants
in the Advantage program is that, given that the cost of institutional care is
approximately twice as high as community-based care, if the plaintiffs are indeed
forced to enter a nursing home to obtain necessary medical services, any cost
savings achieved by the prescription cap will be quickly eroded.

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of an injunction. On this point, the district court observed that “with appropriate

scheduling of drug purchases, management of prescriptions to avoid drug

interactions, and alternative community resources, Plaintiffs could completely

avoid institutional care.” Fisher, No. 02CV-762P(C), slip op. at 6.

Under defendants’ figures, plaintiff Loy will face out-of-pocket expenses of

$200 per month, which defendants acknowledge to be “admittedly still high.”

(Appellees’ Br. at 6.) Given that Loy’s income is limited to $547 per month, an

extra $200 per month—36.6% of her income—in drug costs will place a severe

burden on her finances and could easily force her to enter a nursing home. Thus,

there can be no question that plaintiff Loy will be irreparably harmed absent the

issuance of an injunction.

Whether plaintiffs Fisher and Heath will be irreparably harmed under

defendants’ figures is a closer question. Defendants assert that Fisher’s expenses

will be reduced to $60 per month, 9 and Heath’s costs can be reduced to $25 per

month. Fisher’s income is $725 a month, which means that her prescription

expenses will constitute 8.28% of her income under defendants’ projections.

Although Heath’s costs will be small under defendants’ projections, so too is her

9
Because this is an appeal from a summary judgment motion, we must
view the facts in the light most favorable to the plaintiff; thus we assume that
Fisher’s expenses will fall at the high end of the $45–60 range projected by
defendants.

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income—$313 per month. Her prescription expenses will constitute about 8% of

her income under defendants’ projections. This may not be devastating, but it

will likely have a real effect on Fisher’s and Heath’s finances given their poverty.

The state further argues that the plaintiffs cannot show that they will be

harmed by the five-prescription cap because all three plaintiffs stated at a hearing

conducted by the district court either that they would rather die than be placed in

a nursing home, or that they would not enter a nursing home because they feared

they “wouldn’t last long” due to the fact that “they don’t take care of people

[there] any more.” (Joint App. at 30.) By their own admission, the state argues,

the plaintiffs do not face the segregation and isolation from the community that

constitutes discrimination under the ADA. We note, however, that given the

plaintiffs’ precarious health and finances, the five-prescription cap places them at

“high risk for premature entry into a nursing home.” (Id. at 70.) That they have

emphatically stated their desire to remain in the community does not mean that

they do not face a substantial risk of harm. An expert witness testified that under

the prescription cap, “some . . . would just choose to stay at home and die a

premature death. Others will wait until their health has deteriorated and then

there will be a hospital admission. Some will eventually end up in a nursing

home.” (Id. at 76.)

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 We conclude that plaintiffs have raised a genuine issue of material fact as

to irreparable harm even if their expenses can be lowered as suggested by

defendants.

C

Plaintiffs make several arguments based on the Medicaid Act that were not

included in their initial or amended complaint and were raised for the first time in

their “Memorandum of Law in Opposition to Defendants’ Motion to Dismiss and

Supplemental Memorandum of Law in Support of their Motion for Injunctive and

Declaratory Relief.” 10 (Joint App. at 316.) Plaintiffs claim: (1) that defendants

are bound by the terms of their HCBS waiver to offer equal prescription benefits

to Advantage participants; 11 (2) that the Medicaid Act does not authorize a

limitation on the number of prescriptions offered to HCBS participants; (3) that

the five-prescription cap violates the Medicaid Act’s “reasonable” and “medical

10
In their initial complaint, plaintiffs raised a single Medicaid Act claim:
that defendant Fogarty “violated Title XIX by failing to give plaintiffs adequate
notice of their opportunity to request a hearing and continue to receive the same
level of services if they file a timely appeal.” (Joint App. at 142.) This notice
argument is not now before us. Plaintiffs subsequently amended their complaint,
but did not add any new Medicaid Act claims. Only after defendants moved to
dismiss did plaintiffs make the Medicaid Act arguments that are now made to this
court.
11
The waiver states that “[t]he prescription drug policy for waiver
recipients shall be the same as that for Medicaid clients needing Nursing Facility
Level of Care and who are receiving that care in a Nursing Facility.”
(Appellants’ Br., App. B.)

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necessity” standards; and (4) that the cap violates the Act’s “choice” and “health

and welfare” requirements.

None of these arguments were ruled upon by the district court in its order. 12

Because plaintiffs did not make these claims in their initial complaint, raising

them only in a subsequent “Supplemental Memorandum of Law,” (Joint App. at

316), it is not clear that these arguments were properly raised in the district court.

However, even if they were properly raised, we see no reason “to depart from the

12
The district court observed in a footnote that, generally speaking, “when
medical assistance is provided under the Medicaid program . . . benefits must be
comparable among recipients. 42 U.S.C. § 1396a(a)(10)(B).” Fisher, No. 02CV-
762P(C), slip op. at 5, n.2. However, noted the district court, the “Secretary of
Health and Human Services . . . can waive the comparability requirement for
programs such as the Home and Community-Based Waiver Program . . . [and] the
Secretary waived this requirement for the State of Oklahoma. 42 U.S.C
§ 1396n(c)(3).” Id. Citing no authority, the defendants essentially argue that this
waiver of comparability forecloses all of the plaintiffs’ arguments under the
Medicaid statute because the prescription benefits under the waiver program are
not required to be comparable to those outside of the waiver program.
While the district court did not state what, if any, legal consequences flow
from its observation, to the extent that the district court implicitly concluded that
plaintiffs’ arguments under the Medicaid statute are precluded by the waiver of
comparability, that conclusion was incorrect. Simply put, comparability is not at
issue. The plaintiffs’ Medicaid claims do not hinge upon a comparison of
benefits in and outside of the waiver program. Rather, they allege violations of
the Medicaid statute in absolute terms. Although courts have understood the
waiver of comparability to allow for “more stringent eligibility requirements for
the waiver program than for Medicaid as a whole,” Boulet v. Cellucci, 107 F.
Supp. 2d 61, 76 (D. Mass. 2000) (emphasis added) (citing Skandalis v. Rowe, 14
F.3d 173, 181 (2d Cir. 1994)), we do not understand the waiver of comparability
to give the state virtual carte blanche to disregard all the requirements of the
Medicaid statute as to participants in a waiver program, or to amend the waiver
program unilaterally once it has been approved by the federal government.

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general rule that ‘a federal appellate court does not consider an issue not passed

upon below.’” Walker v. Mather, 959 F.2d 894, 896 (10th Cir. 1992) (quoting

Singleton v. Wulff, 428 U.S. 106, 120 (1976)). We therefore remand to the

district court to consider (1) whether these claims were properly raised, and, if so

(2) whether plaintiffs are entitled to a permanent injunction on these claims.

III

In sum, in granting summary judgment to the defendants on the plaintiffs’

ADA claim, the district court relied on incorrect legal assumptions and ignored

genuine issues of material fact. We therefore REVERSE the judgment of the

district court granting summary judgment to the defendants and REMAND the

matter for further proceedings consistent with this opinion.

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