Blanchard v. Forrest

United States Court of Appeals,

Fifth Circuit.

No. 95-30168.

Myrtle W. BLANCHARD and Patrice A. Dumas, on behalf of themselves
and others similarly situated, Plaintiffs-Appellees,

v.

Rose FORREST, in her capacity as Secretary of the Louisiana
Department of Health and Hospitals, Defendant-Appellant.

Jan. 8, 1996.

Appeal from the United States District Court for the Eastern
District of Louisiana.

Before REYNALDO G. GARZA, KING and HIGGINBOTHAM, Circuit Judges.

PER CURIAM:

Rose Forrest, as Secretary of the Louisiana Department of

Health and Hospitals, appeals from the district court's partial

summary judgment for the plaintiffs. Finding no error, we affirm.

I. BACKGROUND

Myrtle W. Blanchard ("Blanchard") and Patrice A. Dumas

("Dumas") brought this class action on behalf of Louisiana Medicaid

applicants to challenge certain policies of the Louisiana

Department of Health and Hospitals ("LDHH")—the state agency that

administers Louisiana's Medicaid plan. Specifically, the

plaintiffs argued that LDHH's retroactive coverage policy violates

the federal Medicaid statute. That statute requires that Medicaid

assistance be made available to an eligible Medicaid applicant for

covered medical services furnished to the applicant during the

three months preceding the month in which he or she applied for

Medicaid, if the applicant had been eligible for Medicaid when the

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services were furnished. 42 U.S.C. § 1396(a)(34). LDHH's

retroactive coverage policy limits Medicaid coverage for medical

expenses incurred during the retroactive coverage period, and

initially paid out-of-pocket by the applicant, to instances where

the medical provider voluntarily refunds the Medicaid applicant's

payment, and then submits a claim evidencing the refund to LDHH.

The experiences of the named plaintiffs exemplify the dilemma

created by Louisiana's retroactive coverage policy. Blanchard is

a 65-year-old insulin-dependent diabetic who has a fixed income of

$477 per month in Social Security benefits. In February 1994, she

was found eligible for retroactive Medicaid coverage for the period

from February 20, 1993 to April 1993. Thereafter, Blanchard

requested that the pharmacy from which she had purchased medication

refund her payments totaling $197.28 and submit a claim to

Medicaid. The pharmacy refused to do so. Similarly, in July 1994,

Dumas's minor son was found eligible for Medicaid effective

February 1, 1992. Dumas then sought refunds from pharmacies from

which she had purchased $40 worth of medications for her son during

the retroactive coverage period. The pharmacies denied her

requests, and explained to her that such a denial was their

standard policy when Medicaid clients had paid for supplies before

the clients were found eligible for Medicaid.

On May 8, 1995, the district court granted the plaintiffs'

motion for partial summary judgment1, concluding that LDHH's

1
The remainder of the plaintiffs' claims, involving delays
in LDHH's processing of medicaid applications and appeals in
violation of the federal Medicaid statute, have been resolved by

2
retroactive coverage policy violates 42 U.S.C. §§ 1396a(a)(10)(B)

and (34).2 The district court ordered LDHH to "establish a

mechanism to provide coverage for bills for medical care, supplies

and services during the retroactive coverage period established by

42 U.S.C. § 1396a(a)(34) where applicants have paid for such care,

supplies or services in whole or in part." In its Order and

Reasons, the district court noted that LDHH may remedy its

violation either by requiring "providers to refund payments

received for services provided during the retroactive eligibility

period and to then submit their claims to Medicaid, or [by]

reimburs[ing] recipients directly for these expenses." Forrest

appeals the grant of summary judgment, arguing, along with amicus,

the Louisiana State Medical Society, that genuine issues of

material fact exist, and that the district court's proposed

"required refund and submit" remedy infringes the providers' right,

required by federal regulations, to willingly choose Medicaid

patients, and violates the Contracts Clauses of the United States

and Louisiana Constitutions.

II. STANDARD OF REVIEW

We review a grant of summary judgment de novo, applying the

the parties' agreement to a Consent Judgment, which is currently
awaiting approval by the district court, and which is not made
part of this appeal.
2
The plaintiffs additionally argued that Louisiana's
retroactive coverage policy violated due process and equal
protection. However, the district court did not reach these
arguments in granting summary judgment, and the plaintiffs' have
withdrawn their due process and equal protection arguments on
appeal. Thus we shall not address these arguments.

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same criteria used by the district court in the first instance.

Norman v. Apache Corp., 19 F.3d 1017, 1021 (5th Cir.1994);

Conkling v. Turner, 18 F.3d 1285, 1295 (5th Cir.1994). Summary

judgment is proper "if the pleadings, depositions, answers to

interrogatories, and admissions on file, together with the

affidavits, if any, show that there is no genuine issue of material

fact and that the moving party is entitled to judgment as a matter

of law." Fed.R.Civ.P. 56(c).

III. DISCUSSION

Medicaid, enacted as Title XIX of the Social Security Act

(codified at 42 U.S.C. §§ 1396, 1396a-u (1988)), is a joint

federal-state program through which the federal government provides

financial assistance to States to aid them in furnishing medical

care to certain low-income or medically needy individuals. Wilder

v. Virginia Hosp. Ass'n, 496 U.S. 498, 502, 110 S.Ct. 2510, 2513-

14, 110 L.Ed.2d 455 (1990). A State's participation in the

Medicaid program is voluntary; however, if a State chooses to

participate, its Medicaid plan must comply with the federal

Medicaid statute and regulations promulgated by the Health Care

Financing Administration, the federal agency responsible for

overseeing state Medicaid plans. Id.; Abbeville Gen. Hosp. v.

Ramsey, 3 F.3d 797, 800 (5th Cir.1993), cert. denied, --- U.S. ----

, 114 S.Ct. 1542, 128 L.Ed.2d 194 (1994).

Under federal Medicaid law, a state plan must provide that

"the medical assistance made available to any individual ... shall

not be less in amount, duration, or scope than the medical

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assistance made available to any other individual...." 42 U.S.C.

§ 1396a(a)(10)(B). "Medical assistance" is defined as "payment of

part or all of the cost of the [covered] care and services (if

provided in or after the third month before the month in which the

recipient makes application for assistance ...)...." 42 U.S.C. §

1396d(a). The federal Medicaid statute also mandates that a state

Medicaid plan must make available medical assistance for covered

medical services furnished to the Medicaid recipient within the

three months prior to the month in which the recipient applied for

Medicaid ("the retroactive coverage period") if the recipient would

have been eligible for Medicaid at the time the medical services

were furnished. 42 U.S.C. § 1396a(a)(34).3 This requirement is

commonly referred to as the "retroactive coverage requirement", and

the federal regulations implementing it proclaim that it mandates

that all state Medicaid plans:

make eligibility for Medicaid effective no later than the
third month before the month of application if the individual—

(1) Received Medicaid services, at any time during
that period, of a type covered under the plan; and

3
Section 1396a(a)(34) provides:

[I]n the case of any individual who has been determined
to be eligible for medical assistance under the
plan, such assistance will be made available to
him for care and services included under the plan
and furnished in or after the third month before
the month in which he made application (or
application was made on his behalf in the case of
a deceased individual) for such assistance if such
individual was (or on application would have been)
eligible for such assistance at the time such care
and services were furnished.

42 U.S.C. § 1396a(a)(34).

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 (2) Would have been eligible for Medicaid at the
time he received the services if he had applied (or
someone had applied for him), regardless of whether the
individual is alive when application for Medicaid is
made.

42 C.F.R. § 435.914(a).

LDHH is the state agency which administers Louisiana's state

Medicaid plan. LDHH's policy on retroactive coverage, purporting

to implement the requirements of 42 U.S.C. § 1396a(a)(34), provides

as follows:

When retroactive payment shall not be made

(1) for services received in any period prior to the
third month preceding that of application.

(2) for services for which payment has already been made
[by] a source other than the Division of Family Services
(predecessor to the Louisiana Medicaid Program), even
though the person was eligible at the time of the
service, except when the provider refunds all payment
received and accepts the division's payment as payment in
full (except in long term care facilities). The refund
must be clearly established on the bill the provider
submits to state office (now UNISYS).

This policy provides coverage for Medicaid-coverable bills paid

privately (by the recipient, not an insurer), in whole or in part,

during the retroactive coverage period, only if the medical

provider first, before submitting the claim to LDHH's Medicaid

program, voluntarily refunds the money paid by the recipient, and

then after making the refund, submits the bill to LDHH for payment

at Medicaid rates. Because Medicaid rates are usually much lower

than the rates providers charge private patients, Medicaid

providers in Louisiana have a disincentive to provide voluntary

refunds to patients determined to be Medicaid-eligible after the

services or supplies were furnished. Even if a recipient has only

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partially paid the medical provider for a service rendered during

the three-month retroactive coverage period, LDHH will not pay the

provider the balance unless the provider first voluntarily refunds

the recipient's payment. Ironically, a Medicaid applicant who

fails or refuses to pay for services rendered during the three

month retroactive coverage period, will receive medical assistance

from LDHH for that period, because LDHH will pay directly a

provider who submits a claim for the full amount.

In sum, federal law requires state Medicaid plans to make

available medical assistance during the retroactive coverage

period. Under the federal statute and regulations, a Medicaid

recipient must meet three requirements to obtain retroactive

medical assistance: (1) medical services or supplies covered under

the Medicaid plan must have been furnished; (2) during the three

months prior to the month in which the recipient filed his Medicaid

application; and (3) the recipient must have been eligible for

Medicaid at the time the services or supplies were furnished. For

Medicaid applicants who pay the provider at the time of service4,

the Louisiana policy adds a fourth requirement—that the medical

provider first voluntarily refund payments made by the Medicaid

applicant, and then submit a claim to LDHH for repayment at the

lower Medicaid rate. Undoubtedly, few medical providers seeking to

maximize their profits will volunteer such charity, as evidenced by

4
Medicaid applicants needing prescription medicines during
the retroactive coverage period do not have the choice of
refusing to pay, because most pharmacists require direct payment
when supplies are purchased.

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the experiences of Blanchard and Dumas.

The district court concluded that Louisiana's retroactive

coverage policy violated the requirements of 42 U.S.C. §§

1396a(a)(10)(B) and (34):

Nothing in either provision permits a state to refuse to make
assistance available for such care and services if the
recipient has already paid for them. The statutory intent of
these two provisions is to make Medicaid coverage during this
period just as effective as it would have been if the
individual had already been certified for Medicaid. The
defendant's policy of leaving the availability of such
coverage to the discretion of the medical provider who has
interests adverse to the recipient's, clearly violates this
intent.

We agree with the district court's reasoning. Under Louisiana's

policy, Medicaid applicants who fail to pay their medical bills

incurred during the retroactive period receive a greater amount of

medical assistance than Medicaid applicants who privately pay for

medical supplies or services during the retroactive coverage

period. This unequal treatment violates the requirement of 42

U.S.C. § 1396a(a)(10) that a state plan must provide that "the

medical assistance made available to any individual ... shall not

be less in amount, duration, or scope than the medical assistance

made available to any other individual...." Id. Additionally, the

Louisiana policy fails to comply with 42 U.S.C. § 1396a(a)(34), by

failing to make available medical assistance to all Medicaid

applicants who incur covered medical expenses during the three

months prior to the month of application, when the applicants were

Medicaid-eligible at the time the medical services or supplies were

furnished. See Cohen by Cohen v. Quern, 608 F.Supp. 1324, 1330-

1332 (N.D.Ill.1984) (concluding that the Illinois state Medicaid

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plan retroactive coverage policy, identical to Louisiana's policy,

falls short of the state's duty, identified in 42 U.S.C. §

1396a(a)(34) and 42 C.F.R. § 435.914, to make medical assistance

available and effective during the three months prior to the month

of application).

LDHH, and amicus the Louisiana State Medical Society, argue

that: (a) genuine issues of material fact exist precluding summary

judgment; (b) Louisiana's current policy is fair and equitable;

(c) the remedy requested by the plaintiffs and ordered by the

district court—that providers be required to refund private payment

and obtain substitute payment from Medicaid—violates 42 C.F.R. §

431.51(b)(1)(ii); and (d) the district court's remedy impairs the

obligations of contracts in violation of the Contracts Clauses of

the United States and Louisiana Constitutions. We find these

arguments to lack merit.

LDHH argues that a material fact dispute exists as to "whether

the Louisiana Medicaid plan for providing retroactive coverage for

medical services provided to Medicaid eligible recipients is in

violation of the [E]qual [P]rotection [C]lause of the Fourteenth

Amendment." However, the district court's grant of summary

judgment did not rest upon the Equal Protection Clause; rather,

the district court concluded that Louisiana's policy conflicted

with the statutory requirements of 42 U.S.C. §§ 1396a(a)(10)(B) and

(34). Furthermore, the parties stipulated a long list of

"Uncontested Material Facts as to Which There is No Genuine Issue

to be Tried." These stipulated facts included all relevant facts

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describing Louisiana's retroactive coverage policy, as well as the

facts regarding the particular experiences of the named plaintiffs

Blanchard and Dumas. Although LDHH asserts that genuine issues of

material fact exist, it fails to point out to this court a single

disputed fact issue relevant to the question whether Louisiana's

retroactive coverage policy complies with the requirements of the

federal Medicaid statute.

LDHH additionally argues that the district court erred in

granting summary judgment because its current retroactive coverage

policy is fair and equitable. LDHH asserts that Medicaid

applicants are notified, both in a flyer given to all applicants

and in the "Notice of Decision" letter sent to eligible applicants,

that Medicaid cannot reimburse applicants for payments already made

to a medical provider in the three months prior to the month of

application, unless the provider first refunds their payment and

then submits a claim. LDHH apparently misapprehends the relevant

question. A State's Medicaid plan need not only be fair and

equitable, it must comply with federal statutes and regulations.

See Wilder, 496 U.S. at 502, 110 S.Ct. at 2513-14. Even if LDHH

provides notice to applicants that they cannot obtain retroactive

assistance unless their provider chooses to refund payment, the

voluntary refund policy still fails to make available and effective

medical assistance to all Medicaid applicants for supplies and

services furnished during the retroactive coverage period, as

required by section 1396a(a)(34).

Additionally, LDHH, mistakenly believing that the district

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court ordered it to "require providers to refund payments ... and

to then submit their claims to Medicaid," contends, for the first

time on appeal (although this remedy was recommended by the

plaintiffs in their motion for partial summary judgment), that this

remedy "interfere[s] with the contract between the patient and the

health care provider." Indeed, only the amicus, Louisiana State

Medical Society, presented argument and authority in its appellate

brief that the remedy violates the Contracts Clauses of the United

States and Louisiana Constitutions. Additionally, LDHH argued at

oral argument, although not in its appellate brief, that this

remedy also violates 42 C.F.R. § 431.51(b)(1)(ii), which requires

that a state plan must provide that a recipient may obtain Medicaid

services from any provider that is "willing to furnish [the

services] to that particular recipient." We will not consider on

appeal matters not presented to the district court. Quenzer v.

United States (In re Quenzer), 19 F.3d 163, 165 (5th Cir.1993).

Nor will we consider issues or arguments not raised in the

appellant's brief. Pan E. Exploration Co. v. Hufo Oils, 855 F.2d

1106, 1124 (5th Cir.1988).

Finally, in light of LDHH's apparent misunderstanding, we wish

to clarify what the district court ordered. The district court's

Judgment orders that LDHH "shall establish a mechanism to provide

coverage for bills for medical care, supplies and services during

the retroactive coverage period established by 42 U.S.C. §

1396a(a)(34) where applicants have paid for such care, supplies or

services in whole or in part." This order operates only

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prospectively from the date of judgment—May 8, 1995. In its Order

and Reasons, the district court suggests two alternative ways in

which LDHH could establish the ordered mechanism: "The defendant

can remedy its violation by choosing to either require providers to

refund payments received for services provided during the

retroactive eligibility period and to then submit their claims to

Medicaid, or to reimburse recipients directly for these expenses."

LDHH argues at length that the first suggested

remedy—requiring providers to refund private payments and submit

claims to Medicaid—is unfair to medical providers because it limits

their ability to choose which Medicaid patients to treat. However,

it must be remembered that this suggested remedy would affect only

those medical providers who have already elected to participate in

the Medicaid program, as only their services would be "covered"

under the Medicaid plan. See 42 U.S.C. § 1396a(a)(34); 42 C.F.R.

§ 435.914(a). Moreover, the district court's Order and Reasons,

although not entirely clear on this point, apparently does not

limit LDHH to consideration of its two suggested remedies. The

district court's Judgment only orders that LDHH "shall establish a

mechanism" for providing retroactive coverage for medicaid

applicants who paid their medical bills during the retroactive

coverage period. The Judgment does not order LDHH to implement one

of the two remedies suggested in the Order and Reasons. Rather,

the broadly-phrased Judgment leaves open the possibility that LDHH

may implement an entirely different remedy, so long as its approach

"establishes a mechanism" to provide repayment in some form to

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medicaid applicants who paid their medical bills incurred during

the retroactive coverage period. LDHH may thus avoid any perceived

problems with one of the court's suggested alternatives by

implementing the other suggested remedy, or a by developing a

third, entirely different approach.

IV. CONCLUSION

Louisiana's retroactive coverage policy, which provides

medical assistance for Medicaid recipients who privately paid their

Medicaid-coverable bills incurred during the retroactive coverage

period only if the provider first voluntarily refunds their payment

and then submits a Medicaid claim, violates the mandates of 42

U.S.C. §§ 1396a(a)(10)(B) and (34). The district court correctly

granted summary judgment for the plaintiff class of Louisiana

Medicaid applicants and ordered LDHH to modify its policy to comply

with federal law. For the foregoing reasons, we AFFIRM.

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