Immigrants Can Sue Over Restored Medicaid Benefits

CINCINNATI (CN) – The claims of a potential class of permanent resident aliens whom Michigan temporarily denied Medicaid benefits under the federal health care law are not moot, a divided Sixth Circuit ruled.

Although lead plaintiffs Aelen Unan and Patricia Quintino had their Medicaid benefits restored shortly after they filed suit in September 2014, the state cannot merely “pick off” potential litigants to avoid the suit, the Sixth Circuit found 2-1 on Friday.

The case was argued before a panel in November, and centers on whether Michigan has adequately fixed systemic computer issues that improperly assigned Emergency Services Only, or ESO, benefits to permanent resident aliens entitled to full Medicaid coverage. The problem occurred following the implementation of the Patient Protection and Affordable Care Act, also called Obamacare.

U.S. Circuit Judge Karen Nelson Moore called the timing of the state’s award of benefits to the lead plaintiffs “suspect” in her opinion issued Friday, writing for the circuit majority in overturning the district court’s award of summary judgment to Michigan’s Department of Health and Human Services.

Michigan also settled the claim, Judge Moore noted, of a replacement plaintiff “as soon as she was identified in a motion to intervene.”

“The exact timing of when these claims were mooted supports a finding that defendant was strategically seeking to avoid litigation by selectively resolving the claims of any potential representatives as soon as they became known to defendant,” the judge wrote for the 2-1 majority.

Moore disagreed with the Michigan’s argument that the implementation of a systemic fix moots all of the plaintiffs’ claims.

“The fact remains that not one of the individuals identified as a named plaintiff or potential named plaintiff was granted relief on the basis of a systemic fix… The ‘picking off’ exception therefore should apply in this case,” she wrote.

Moore also doubted the reliability of the state’s computer system, and cited the plaintiffs’ allegations of “hundreds of erroneous assignments” that occurred after the supposed permanent fix of the system in December 2014.

“Although DHHS has apparently undertaken significant efforts to remedy this problem, the effect of these fixes on the prospect of future violations is a factual dispute that remains open,” the ruling states, abbreviating the name of the state health department.

The panel did not go so far as to grant the plaintiffs’ motion for judgment as a matter of law, however, and ruled the permanent resident aliens “cannot definitively demonstrate that defendant’s current patterns and practices violate the Medicaid statute.”

U.S. Circuit Judge Jeffrey Sutton authored a scathing dissent to the majority opinion, declaring the case moot in his opening sentence.

“Unan and Quintino filed this lawsuit to require Michigan to fix an error in its computer system that assigned non-citizens to the wrong Medicaid eligibility category,” he wrote. “Michigan has done just that. Unan and Quintino also asked Michigan to provide them and the members of a putative class Medicaid benefits and constitutionally adequate notice. Michigan has done that too – for every member of the putative class. At this point, Unan and Quintino cannot identify a single immigrant covered by their putative class action to whom the state should be providing benefits but is not.” (Emphasis in original.)

Sutton flatly rejected Moore’s application of the “picking off” exemption and instead argued the state “‘picked off’ the entire putative class – which is to say it gave everyone just what they wanted.”

“If that’s what we call ‘picking off,’ I doubt there is a potential claimant in the country that would object to it,” he wrote.

Sutton also noted that the U.S. Supreme Court has only applied the “picking off” exemption after the district court has issued a ruling on class certification, which has yet to occur in the present case.

While he admitted the state fixed the named plaintiffs’ issues on an “ad hoc basis,” Sutton stressed that these fixes “took place alongside an ongoing and comprehensive computer system fix.” (Emphasis in original)

“What more can plaintiffs or the court fairly ask of the state? And what good would it do to wait to run the named and potential plaintiffs’ applications back through the now fixed computer system? To apply the ‘picking off’ exception here, it seems to me, runs the risk of turning it into a caricature and encourages defendants to delay relief until the comprehensive fix is already in place,” he wrote.

Sutton cited the 12.2 percent error rate of the Social Security disability benefits program, and said that “it is inevitable that errors will occur in implementing any complex benefits program.”

He concluded his dissent: “Yet Unan and Quintino, as their counsel acknowledged at oral argument, don’t believe any error rate, whether 10% or 0.00001%, would demonstrate that the department has resolved the ‘systemic errors’ in Michigan’s Medicaid benefits program. If that’s the case, this lawsuit has no end. The ‘systemic error’ is the fact that no one person, and thus no one computer system, is beyond reproach. That’s not enough to maintain a case or controversy in any setting. And it’s assuredly not enough to maintain one in this setting – where the department has given Unan and Quintino everything they asked for.” (Emphasis in original.)

Sixth Circuit Judge Helene White agreed with Sutton that the “picking off” exception does not apply in the present case, but nevertheless sided with Moore in reversing the lower court’s decision.

White relied on the “inherently transitory” exception to mootness – also discussed in Moore’s majority opinion – which bases mootness on how long a claim is likely to remain active.

White concurred with Moore’s opinion, which stated that the named plaintiffs’ injury was “so transitory that it would likely evade review by becoming moot before the district court can rule on class certification,” and that “other class members are suffering the injury.”

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