D.C. Circuit Reboots Medicaid Class Action

(CN) - Medicaid recipients may sue the District of Columbia for systematically denying Medicaid coverage for prescription drugs, the D.C. Circuit ruled, citing evidence that Medicaid denies 30 to 50 percent of prescription coverage requests.

Five Medicaid recipients filed a federal class action in the District of Columbia, claiming the District did not explain its reason for denying coverage.

Without such an explanation, a Medicaid recipient cannot request a hearing to challenge the decision.

The District Court dismissed for lack of standing. It found that "in many of the instances alleged by plaintiffs, they were, in fact, ultimately able to obtain their prescriptions at no cost," so there was "no injury."

But the D.C. Circuit found that the alleged facts established that the plaintiffs might be denied medications in the future.

Judge David Tatel wrote for the panel: "Because plaintiffs seek only forward-looking injunctive and declaratory relief, 'past injuries alone are insufficient to establish standing,' and plaintiffs must show that they 'suffer[] an ongoing injury or face[] an immediate threat of injury.'"

One John Doe plaintiff suffers from severe asthma and requires two inhalers every 30 days. He claims that the out-of-pocket costs of his prescriptions range from "several hundred to over one thousand dollars each month."

"Even if recipients are able to pay out-of-pocket for medications, such payments 'can result in financial harm to a population acutely vulnerable to such injury,'" Judge Tatel found.

"Doe explains that when DHCF [Department of Health Care Finance] denies coverage, his mother has to pay out-of-pocket for his medications, 'typically' causing her to 'forego paying a bill or another necessary living expense in order to buy the medication.'"

Plaintiffs presented statistical evidence showing that "the DHCF denies prescription medication coverage at quite a high rate," Tatel found.

On one day in March 2009, the judge wrote, "District pharmacies denied nearly half (49.7 percent) of all Medicaid prescription claims."

"Viewed in this light, the complaint in this case fairly shows that Doe will face a relatively high likelihood of denial - possibly ranging from thirty to fifty percent - each time he submits a prescription for coverage."

The panel found: "The District contends that Doe's history of coverage denials actually undermines his claim to standing. Because his coverage problems have been 'fixed,' the District argues, Doe is unlikely to experience denials in the future. But Doe's experience - especially DHCF's repeated denials of his inhaler prescription for recurring and varying reasons - suggests that, in practice, resolving a denial once does not necessarily make a problem less likely to recur and that DHCF's evolving coverage restrictions can result in denials of prescriptions previously obtained without difficulty.

"Moreover, given that prior authorizations expire, and ... doctors treating hundreds of patients cannot easily stay abreast of how any given patient is insured and which prescriptions require prior approval, it is far from clear that resolving a prior authorization issue once will make a Medicaid recipient less likely to experience prior authorization-based denials in the future."

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