A district court issued a preliminary injunction against a state law that places a $1,000 annual limit on Medicaid payments for dental services. The court concluded that both state and federal Medical laws require states to fully “cover” dental procedures that are deemed medically necessary. Bontrager v. Ind. Family and Soc. Servs. Admin., No. 3:11-cv-216, 2011 WL 5386646 (N.D. Ind. Nov. 4, 2011). Chief District Judge Philip P. Simon, a George W. Bush nominee, wrote the opinion. The ACLU of Indiana represents the plaintiff.
Sandra Bontrager, a Medicaid beneficiary, needed “serious dental procedures including implants and abutments for her mandibular jaw.” Because the State places a $1,000 limit on Medicaid payment for dental services, it refused to fully cover the Plaintiff’s expenses. Indiana implemented this policy because, it argued, in its absence the dental program would need to be shut down altogether due to cost overruns. Indiana also defended the policy on the ground that it still fully covers more than 99% of Indiana Medicaid recipients, since that percentage of recipients has dental expenses of less than $1,000 per year.
Ms. Bontrager brought a class action lawsuit on behalf of herself and similarly-situated persons in Indiana, seeking a preliminary injunction. The judge noted that the parties agree that state and federal Medicaid laws require Indiana to cover all dental procedures that are deemed medically necessary. What the parties didn’t agree on, and the sole question before the court, was whether the State “covers” a dental procedure only if it fully pays for it, or whether the State can “cover” a procedure by partially paying for it. Based on a reading of the “byzantine world of state and federal Medicaid laws, regulations, and cases,” the court concluded that Indiana is required to fully pay for all medically necessary dental expenses that are covered.
As a threshold issue, the court concluded that 42 U.S.C. § 1983 provides the Plaintiffs with a private right of action, since a prior Seventh Circuit case held that the relevant provision of the Medicaid Act – 42 U.S.C. § 1396a(a)(10) – confers a private right of action. Miller v. Whitburn, 10 F.3d 1315, 1319-21 (7th Cir. 1993). The court further noted that Miller is not an anomaly, because “virtually every court that has addressed the enforceability of 42 U.S.C. § 1396a(a)(10) has held that it … is privately enforceable.” The court cited cases from the Third, Fifth, Sixth, Eighth and Ninth circuits, as well as several district court decisions, similarly holding that the provision is enforceable under § 1983. The state argued that Miller was inconsistent with Gonzaga Univ. v. Doe, 536 U.S. 273 (2002), but the Court noted that Gonzaga did not overrule prior Supreme Court cases permitting enforcement of the Medicaid statute under § 1983.
Nonetheless, the court stated that were it not bound by Miller, it would have followed the analysis of a New York district court, which held that § 1396a(a)(10)(A) does not confer a private right of action. Casillas v. Daines, 580 F. Supp. 2d 235 (S.D.N.Y. 2008). See our postings on cases from 2008 here (p. 120). Casillas concerned utilization control procedures for gender reassignment treatment. The Indiana district court found the reasoning of Casillas persuasive, arguing that because Medicaid regulations permit limits on services for utilization control, individuals do not have enforceable rights to those services.
Next, the court turned to the main issue – whether Indiana is required to fully cover medically necessary procedures. After reviewing the relevant statutes, regulations, and cases, the court first held that state and federal Medicaid laws require Indiana to “cover” medically necessary dental procedures. See Thie v. Davis, 688 N.E.2d 182, 187 (Ind. Ct. App. 1997). From that principle, the court went on to hold that “since the cap prevents Indiana from covering some medically necessary treatments, I can only conclude that it is in violation of both federal and state Medicaid law.” The court held this after discussing Indiana’s public policy considerations for enacting the cap, and concluding that they are “neither here nor there,” since the case law clearly dictates the outcome.
Next, the court addressed, and rejected in turn, the State’s arguments as to why the cap does not violate state and federal law. First, Indiana argued that because the cap allows for medically necessary dental procedures that cost less than $1,000 per year, the policy is consistent with Thie. See id. The court responded by stating that the cap also “completely exclude[s]” some procedures that are medically necessary, which is in contravention of federal and state law. Second, Indiana argued that the cap is a permissible “utilization control procedure” under 42 C.F.R. § 440.230(d). Regarding this argument, the court first noted that the regulation does not define “utilization control procedure,” and that the phrase is susceptible to several interpretations. The court, however, went on to agree with the Plaintiffs that the “utilization control procedure” argument fails, since such procedures generally are aimed at preventing fraud, inefficiency, and the like, which is not the aim of Indiana’s $1,000 cap. Finally, the State argued that the cap is a permissible limit on the “amount, duration, or scope” of covered dental services. See 42 C.F.R. § 440.230(b). Again, the court was not persuaded by this argument, referring to it as “sleight-of-hand.” According to the court, the relevant question regarding the affect of this regulation on Indiana’s law is whether “the annual cap prevent[s] the State from providing each service in a sufficient amount, duration, and scope such that the service reasonably achieves its purpose.” The answer to this question, the court found, was “clearly, ‘Yes.’”
Having “untangled the substantive questions of Medicaid laws,” the court found the preliminary injunction analysis to be “relatively straightforward,” and thus granted the Plaintiffs’ Motion for Preliminary Injunction.
Scott Herrig, University of California, Berkeley-School of Law 2012