MEDICAID
DUE PROCESS ISSUES - NOTICE AND HEARINGS

Maureen O'Connell & Sidney Watson
March 2001


I. Federal Law

A. Statute: 42 U.S.C. § 1396a(a)(3)

B. Regulations: 42 C.F.R. § 431.200-.250

42 C.F.R. § 435.911-.920

HCFA, State Medicaid Manual


II. Basic Legal Requirements

A. Right to apply without delay   42 C.F.R. § 435.906

McMillan v. McCrimon, 807 F. Supp. 475, (C.D.Ill. 1992). Once state elects to provide optional services, the state must comply with all requirements of the Medicaid. Plaintiffs challenged the state's failure to accept applications for the state's optional HCBW program. The court held that the state had to afford each individual an opportunity to apply for Medicaid HCB waiver services without delay.

B. Written application   42 C.F.R. § 435.907

C. Written eligibility standards

Martinez v. Ibarra, 759 F. Supp. 664 (D. Colo. 1991). HCBW program's failure to establish clear, written procedures regarding determinations of need violated recipients' due process rights.

D. Timely determination of eligibility and services

1. Eligibility determinations must be completed in 90 days for those applying on the basis of disability and 45 for all other applicants.  42 C.F.R. § 435.912

2. Requests for services must be handled with "reasonable promptness."  42 U.S.C. §1396a(a)(8); 42 CFR § 435.930

E. Written notice and the right to request a fair hearing. 42 CFR § 431.210-213

1. Denials of eligibility must include the reasons for the action, the specific regulation supporting the action, and an explanation of the person's right to request a hearing. 42 C.F.R. § 435.912

2. Goldberg v. Kelly, 397 U.S. 254 (1970). Welfare beneficiary has constitutional due process rights to an effective opportunity to challenge the termination and to retain an attorney to do so. Welfare beneficiary also has right to a pre-termination hearing.

3. Mathews v. Eldridge, 424 U.S. 319 (1976). SSD recipient has no constitutional right to a pre-termination hearing. Court creates a balancing test for determining what process is due: (1) the private interest affected, (2) the risk of an erroneous deprivation of such interest and the probable value of additional safeguards, and (3) the government's interests.

F. Fair Hearing For Applicants and Recipients. 42 CFR § 431.200 -.250

1. A fair hearing must be available to any individual whose application is denied or is not acted upon in a reasonably prompt manner. A hearing is also available when a state Medicaid agency seeks to deny, terminate, or suspend services.

2. State Medicaid agencies must inform applicants and recipients of the right to request a hearing, the method to obtain a hearing, and the ability to be represented by an attorney or other representative.

3. A Medicaid beneficiary who requests a fair hearing has the right to: review his/her case file; review all documents to be used by the state at the hearing; call witnesses, establish the facts of the case without interference from the state; and confront and cross-examine adverse witnesses.

4. Hearing decisions must be based solely on the evidence presented at the hearing and must summarize the facts of the case, identify relevant regulations and supporting evidence, and be issued within 90 days of the request for a hearing.

III. Case Law Concerning Medicaid Fair Hearing

A. Denial, Suspensions, Terminations & Reductions, i.e. Changes in Care

Featherstone v. Stanton, 626 F.2d 591 (7th Cir. 1980). The case contains a detailed discussion of the federal regulatory requirements for hearing.

Mikel v. Gourley, No. 76-881C(1) (E.D. Mo., May 15, 1990), appeal dismissed, 951 F.2d 166 (8th Cir. 1991). Upholding right to timely in person as opposed to telephone fair hearing.

Parry v. Crawford, 990 F. Supp. 1250 (D. Nev, 1998). Applicant for ICF/MR services is entitled to notice and an opportunity to request a fair hearing when application is denied. This is true despite an applicant's repeated requests for the same benefits. Notice is required after every determination of services.

King v. Fallon, 801 F. Supp. 925 (D.R.I. 1992). Notice required to challenge level-of-care assessments governing eligibility for home and community based waiver services.

Haymons v. Williams, 795 F. Supp. 511 (M.D.Fla. 1992). Medicaid beneficiaries entitled to individual notice when their home health providers were terminated from the program.

Jeneski v. Myers, 163 Cal. App. 3d 18 (1984), cert. denied Kizer v. Jeneski, 471 U.S. 1136 (1985). Notice and hearing rights required for denials for prior authorization requests for drugs.

Stenson v. Blum, 476 F. Supp. 1331 (S.D.N.Y. 1979), aff'd mem., 628 F.2d 1345 (2d Cir.), cert. denied, 449 U.S. 885 (1980). State may not terminate Medicaid benefits without notice and an opportunity for a hearing and without an ex parte determination of eligibility for Medicaid benefits independent of eligibility for SSI.

B. Notice and Hearing Rights with Managed Care and Other Independent Contractors

J.K. v. Dillenberg, 835 F. Supp. 694 (1993). State provided mental health services to children through regional behavioral health authorities (REHBA). One REHBA introduced a new policy requiring limiting inpatient services to 90 days. Court found state action because REHBA assigned the entire responsibility for a state-created service, served only state supported patients, and engaged in utilization review. As a result, due process attaches to REHBA actions just as it would the actions of the state. Case remanded to determine what process was due. Defendants argued they were engaged in UR and level of care decisions that did not prompt due process protections.

Banks v. Sec. of the Indian Family and Social Services Administration, 997 F.2d 231 (7th Cir. 1993). Recipient not entitled to notice and an opportunity for a hearing when provider's claim for reimbursement is rejected. Provider prohibited from attempting to collect from recipient, therefore no negative change in recipient's benefits to trigger due process.

Perry v. Chin, 1996 WL 159808 (D. Ariz. 1996). State provided Medicaid services through private health maintenance organizations. These private health plans may not terminate previously provided services without written notice and an opportunity for a hearing from the state or the health plans. The court found state action on the part of the health plan and further held that a state cannot use contracts to avoid federal legal obligations. The state remains liable for violations of law by the contractor.

Daniels v. Wadley, 926 F. Supp. 1305 (M.D. Tenn. 1996). Private Medicaid managed care organizations meet state action requirements and may not deny, delay, reduce, suspend or terminate Medicaid eligibility or services without adequate notice and timely fair hearing.

Yaretsky v. Blum, 457 U.S. 991 (1982). Discharge or transfer by private nursing home does not require notice and opportunity to be heard because decision of a private entity.

Fukerson v. Comm'r, 802 F. Supp. 529 (D. Me. 1992). Provider's determination that service is "non-emergency" and thus, that co-payment is required, is not agency action and thus no right to a hearing.

Taylor v. St. Clair, 685 F.2d 982 (5th Cir. 1982). Discharge or transfer by private nursing home does not require notice and opportunity to be heard.

C. Across-the-Board Changes (Sole Issue of Federal or State Law)

Cramer v. Chiles, 33 F. Supp. 2d 1342, 1352 (S.D. Fla. 1999). Individualized due process notices required when a state statutory change denied beneficiaries a choice between an ICF/MR facility or a home and community-based waiver program.

Eder v. Beal, 609 F.2d 695 (3d Cir. 1979), cert. Denied, 444 U.S. 950 (1979). Notice required to implement various across-the-board reductions in Medicaid benefits.

But, see Benton v. Rhodes, 586 F.2d 1 (6th Cir. 1978), cert. Denied, 440 U.S. 973 (1979). No right to notice of termination of optional benefits, although state had provided an abbreviated form of written notice.

Budnicki v. Beal, 450 F. Supp. 546 (E.D. Pa. 1978). State reduced coverage for orthopedic shoes. Due process requires state to provide opportunity for hearing to those who challenge proposed terminations as resting on incorrect or misleading factual premises or a misapplication of rules or policies to the facts or particular cases. State is not constitutionally required to provide hearing to those who have no "factual issues in dispute or where the application of the rule of law is not intertwined with factual issues."

Beton v. Rhodes, 586 F.2d 1 (6th Cir. 1978), cert. denied, 440 U.S. 973 (1979). No hearing required when state terminates optional services.

D. Notice Must Be Adequate

Vargas v. Trainor, 508 F.2d 485, 490 (7th Cir. 1974), cert. denied, 420 U.S. 1008 (1975). Notice to public assistance recipients must include reasons or grounds for the action.

Moffitt v. Austin, 600 F. Supp. 295 (W.D. Ky 1984). Plaintiffs were residents of ICF facilities. The state agency contracted with a PSRO to periodically review the level and appropriateness of care provided. When the PSRO decides that the patient no longer requires the level of care that he or she is receiving, the patient must receive a notice that contains a detailed statement of the intended action, the reason for the change in status, citation to the specific statutory section requiring reduction or termination, and specific notice of the recipient's right to appeal.

Cherry v. Tompkins, WL 502403 (S.D. Ohio 1995). Statement "you do not have an appropriate level of care" is insufficient notice of reason for denial of home and community based waiver services.

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