Nb v. District of Columbia , 244 F. Supp. 3d 176 ( 2017 )

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA F I L E D
N.B. et al., ) MAR 2 6 2017
Plaintiffs, § °?"°'rg yirsr'hg‘i)i'$"§ti£&r gfgiii?nma
v. § Civil Case No. 10-1511 (RJL)
THE DISTRICT OF COLUMBIA et al., §
Defendants. §
MEMoRANDUM 0P1N10N
Marchz$, 2017 [Dkt. # 64]
Plaintiffs in this case are residents of the District of Columbia (“the District” or
“D.C.”) Who are eligible for Medicaid benefits and Who unsuccessfully sought coverage
for specific drug prescriptions In their Amended Complaint, they allege that the District,
the Mayor of D.C., and the Director of the Division of Health Care Finance (“DHCF”)
have systematically failed to provide l\/Iedioaid recipients With “adequate and timely
notice, the opportunity for a fair hearing, and the opportunity for reinstated coverage
pending a hearing decision” When they are denied coverage for specific prescriptions, in
violation of the Fifth Amendment to the U.S. Constitution, Title XIX of the Social
Security Act, and local D.C. law. Am. Compl. 11 l [Dkt. # 43].
Following remand from our Circuit Court, this Court is now faced With
defendants’ Updated Motion to Dismiss [Dkt. # 64] the Amended Complaint for failure
to state a claim. NB ex rel. Peacock v. District of Columbia, 794 F.3d 31, 35-36 (D.C.
Cir. 2015). Although plaintiffs’ claims under Title XIX have been dismissed, plaintiffs
continue to allege violations of the Due Process Clause of the Fifth Amendment to the
Constitution and District of Columbia law, D.C. Code § 4-2()l.01, et seq., and they seek
declaratory and injunctive relief under 42 U.S.C. § 1983. See Am. Compl. 111 181-195.
Upon consideration of the pleadings and relevant lavv, and for the reasons explained
below, defendants’ l\/[otion to Dismiss is GRANTED in part and DENIED in part.
BACKGROUND
I. Legal and Factual Framework
The factual and legal issues underlying this case are described in painstaking detail
in the earlier opinions of both this Court and our Circuit Court, so a more concise
background summary Will suffice here. See N.B. ex rel. Peacock v. Dist. of Columbia,
800 F. Supp. 2d Sl, 52-54 (D.D.C. 2011); N.B. ex rel. Peacock v. Dist. OfColumbia, 682
F.3d 77, 80-81 (D.C. Cir. 2012); N.B. ex rel Peacock v. Disl‘. ofColumbz`a, 34 F. Supp.
3d 146 (D.D.C. 20]4); N.B ex rel. Peacock v. Dist. of Columbia, 794 F.3d 3l, 35-36
(D.C. Cir. 2015).
In 1968, Congress established Medicaid as a “cooperative federal-state program
that provides federal funding for state medical services to the poor.” Title XIX of the
Social Security Act (“Grants to States for Medical Assistance Programs”), 42
U.S.C. § 1396 et Seq.; Frew` v. Hawkl'ns, 540 U.S. 431, 433 (2()()4). Although funding
comes from both federal and state governments (including the District of Columbia),
Medicaid is administered by state agencies See 42 U.S.C. § l396a(a)(2), (a)(S); 42
C.F.R. § 430.().
The District’s Department of Health Care Finance (“DHCF”) administers the D.C.
Medicaid program, Which provides, inter alia, certain prescription drug benefits to
2
qualified beneficiaries D.C. CODE §7-771.07(1). ln order to manage its prescription
coverage benefit, DHCF contracts with Xerox, a third-party company, to operate an
electronic claims management system and process Medicaid prescription drug coverage
claims at the point of sale. See Am. Compl. 1111 33-34; Defs.’ Updated Mot. to Dismiss at
3 n.2.
The plaintiffs in this casel all receive Medicaid benefits in the District and suffer
from conditions that require prescription drug treatment. Am. Compl. 1111 5-13, 17. They
allege that on various occasions their prescription drug coverage under Medicaid was
“denied, terminated, or reduced,” and the District failed to provide them with any “notice
of the denial, the reason for the denial, the right to a hearing, or the circumstances under
which Medicaid will continue providing coverage during the appeal process.”
Am. Compl. 1111 47, 58, 61, 74, 80, 84, 141, 154, 172. Specifically, plaintiffs allege
multiple instances in which they attempted to fill prescriptions at pharmacies, were told
that Medicaid would not cover the prescriptions, and were not given notice of the reasons
for the rejections or their procedural rights for challenging the denial. Id. {[11 57, 58, 61,
77,80,140,141,154,165,172.
II. Procedural History
Five of the plaintiffs initiated this action in 2010. See Compl. [Dkt # 3]. ln 201 1,
1 held that plaintiffs lacked Article 111 standing and granted defendants’ motion to dismiss
the case. See NB v. District of Columbia, 800 F. Supp. 2d 51 (D.D.C. 2011). ln 2012,
' In their pleadings, plaintiffs inform the Court that plaintiffs Peacock, Robinson, Rucker, and Tatum
must be withdrawn from the case due to lack of standing, although they have not formally withdrawn
them from the matter. Pls.’ Opp’n to Defs.’ Updated l\/Iot. to Dismiss at l n.l [Dkt. # 67]. The Court will
therefore rest its analysis on the allegations pertaining to the remaining plaintiffs
3
our Circuit Court reversed on appeal, holding that the plaintiffs’ complaint included
sufficient factual allegations to establish that at least one plaintiff, John Doe, had standing
on a procedural injury theory. See NB ex rel. Peacock v. District of Columbia, 682 F.3d
77, 82 (D.C. Cir. 2012). On remand, plaintiffs amended their complaint to add four new
plaintiffs and new facts, without changing their legal causes of action. Am. Compl. ln
2014, l determined that plaintiff`s’ Amended Complaint failed to state a claim under either
Title XlX or the Fifth Amendment, dismissed the D.C. law claims for lack of pendent
jurisdiction, and again dismissed the case. NB ex rel. Peacock v. District ofColumbia, 34
F. Supp. 3d 146 (D.D.C. 2014). On appeal, our Circuit Court affirmed in part and
reversed in part, holding that though plaintiffs failed to state a claim under Title XIX,
they had alleged that D.C. had deprived them of their protected property interests in
prescription coverage, and remanded to this Court to consider what process the plaintiffs
are entitled to under the Fifth Amendment. NB ex rel. Peacock v. District of Columbia,
794 F.3d 31, 40»44, (D.C. Cir. 2015). ln light of the partial reversal, the Circuit also
noted that l could reconsider this Court’s jurisdiction over the D.C. law claims on
remand. Ia’. at 44.
STANDARD OF REVIEW
When deciding a motion to dismiss under Rule 12(b)(6) for failure to state a claim
upon which relief can be granted, the Court must determine whether the complaint
contains “sufficient factual matter, accepted as true, to state a claim to relief that is
plausible on its face.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (internal quotation
marks and citations omitted). The complaint must include “more than labels and
4
conclusions and a formulaic recitation of the elements of a cause of action will not do”;
instead, the complaint must include factual allegations that “raise a right to relief above
the speculative level.” Bell Atlantz'c C0 v. Twombly, 550 U.S. 544, 555 (2007) (internal
quotation marks and citation omitted).
Under the Rule 12(b)(6) standard, Court must read the complaint’s factual
allegations in the light most favorable to the plaintiff, id., but the Court is not required to
accept plaintiffs legal conclusions, even if they are framed as factual assertions
Browning v. Clz`mon, 292 F.3d 235, 242 (D.C. Cir. 2002). As a result, a claim that is
rooted in a faulty legal theory must be dismissed, “whether it is based on an outlandish
legal theory or on a close but ultimately unavailing one.” Nz`etzke v. Williams, 490 U.S.
319, 327 (1989).
At the motion to dismiss stage, the Court “may consider only the facts alleged in
the complaint, any documents either attached to or incorporated in the complaint[,] and
matters of which [the court] may take judicial notice.” EEOC v. St. Frcmcis Xavz'er
Parochz'al Sch., 117 F.3d 621, 624 (D.C. Cir. 1997).
ANALYSIS
At this stage, plaintiffs have two remaining claims First, they allege that the
District’s practices regarding Medicaid prescription denials are constitutionally
insufficient and fail to provide the notice and procedure required by the Due Process
Clause of the Fifth Amendment. Second, they allege that those practices violate the
District’s local statutes that provide notice and procedural protections to public assistance
recipients
l. Fifth Amendment Due Process
The Fifth Amendment to the Constitution guarantees that “[n]o person shall . . . be
deprived oflife, liberty, or property, without due process oflaw.” U.S. CONST. amend. V.
As a result, individuals are constitutionally entitled to “notice and an opportunity to be
heard before the Government deprives them of property” interests Um`ted States v.
James Daniel Good Real Prop., 510 U.S. 43, 48 (1993). ln order to state a procedural
due process claim, a plaintiff must allege “(i) deprivation of a protected liberty or
property interest; (ii) by the government; [and] (iii) without the process that is ‘due’
under the Fifth Amendinent.” N.B. ex rel. Peacock v. District ofColumbia, 794 F.3d 31,
41 (D.C. Cir. 2015) (citations omitted).
Our Circuit has already held that the plaintiffs “have a legitimate claim of
entitlement to coverage of any drug not completely excluded from coverage under
Medicaid,” which constitutes a “property interest protected by the Fifth Amendment.”
Id. at 42. The Circuit also held that the plaintiffs have “adequately alleged that Xerox,
[DHCF’s third party electronic claims manager] . . . determined their eligibility for
benefits while acting as an agent of the District,” such that the deprivation of their
property interest in their prescription benefits was caused by state action. Id. at 42-44.
As a result, the analysis here must focus on the third prong#what process is due to
plaintiffs when DHCF, through Xerox’s ECl\/I system, denies coverage for a drug that is
not totally excluded from Medicaid coverage.
Plaintiffs allege two separate due process arguments First, they assert that they
are entitled to more notice than the District currently provides when prescription claims
6
are denied at the point of sale. Am. Compl. jj 47. Second, they argue that they must
receive a “pre-termination evidentiary hearing before prescription drug benefits are
discontinued.” [a’. 11 183). For the following reasons, l agree with the former and disagree
with the latter.
a. Constitutional Due Process Requires that Plaintiffs Receive Some
Written Notice of the Reasons for their Denial at the Point of Sale.
The District argues that Medicaid beneficiaries receive constitutionally adequate
notice through a “series of codified procedural safeguards and informal mechanisms for
seeking information and assistance.” Defs.’ Updated Mot. to Dismiss at 17. First, they
assert that beneficiaries do not need written notice that the prescription is being denied,
because “they are leaving the pharmacy with something other than what [they]
requested,” and the fact of the denial is self-evident. Defs’ Updated Mot. to Dismiss at
15. Second, they argue that beneficiaries receive adequate notice of their procedural
rights (including their rights to temporary coverage) because they are codified and
published in the D.C. Code and D.C. Municipal Regulations. Id. at 14-15 (citing Cz`ly of
West Covl`na v. Perkins, 525 U.S. 234, 241 (1999) (holding that due process does not
require “individualized notice of state-law remedies which are established by published,
generally available state statutes and case law”)). Lastly, the District argues that the
beneficiary does not need notice of the reasons for the denial, because they can ask the
pharmacist directly for the reason or call District officials for assistance with their
prescription coverage. Id. at 16-17. ln addition, they argue that a beneficiary does not
need to know the reason for their denial, because the District does not require
beneficiaries to know the reason for the denial when they invoke their procedural rights,
and the DHCF always bears the “burden of producing sufficient evidence to establish the
reasons for the denial” at an administrative appeal hearing. Id. at 17 (citing D.C. l\/IUN.
REGS. tit. 1, § 2971.1-.7, id. § 2822.2(a).)
By comparison, plaintiffs assert that whenever DHCF denies Medicaid coverage
for a prescription, they are constitutionally entitled to individualized written notice that
informs them of the denial, the specific reasons for denial, the beneficiary’s rights to a
hearing, and the circumstances under which coverage may be extended pending a
hearing. Am. Compl. 1147; Pls.’ Opp’n to Updated Mot. to Dismiss at 4, 11 [Dkt. # 67].
The Supreme Court stated in Mullane v. Cem‘ral Hanover Bank & Trust C0. that in
order to satisfy due process, notice must be “reasonably calculated, under all the
circumstances to apprise interested parties of the pendency of the action and afford them
an opportunity to present their objections.” 339 U.S. 306, 314 (1950); Dusenberry v.
Um`led States, 534 U.S. 161, 168 (2002); Barkley v. U.S. Marshals Serv. ex rel. Hylton,
766 F.3d 25, 31 (D.C. Cir. 2014).2 Applying this framework, 1 find that plaintiffs have
2 Plaintiffs argue that the Court, when analyzing a due process claim that challenges the adequacy of
notice to a property interest holder, must apply the three-factor balancing test laid down in Malhews v.
E/dridge, 424 U.S. 893, 903 (1976). Plaintiffs are correct only insofar as the law in our Circuit used to
require courts to apply the Mathews framework when assessing due process claims challenging the
adequacy of the notice provided Lepelletier v. F.D.I.C., 164 F.3d 37, 45-46 (D.C. Cir. 1999) (reversing
district court dismissal of due process claim that considered and applied Mullane test, on grounds that
district court failed to consider Malhews factors). However, the Supreme Couit subsequently held that
Malhews is not an “all-embraeing test for deciding due process claims” and that the Muflmie
reasonableness test is appropriate "wlien confronted with questions regarding the adequacy of the method
used to give notice. ” Dusenberry v. Unl`led Stales, 534 U.S. 161, 168 (2002). See also Bark/ey v. U.S.
Marshals Serv. ex /"e[. Hyll()n, 766 F.3d 25, 31-32 (D.C. Cir. 2014) (applying Mullane test to plaintiffs’
notice-related claim, and Mathews balancing factors to their claims challenging the adequacy of their
procedural rights).
stated a claim that they have received insufficient notice regarding the reason for their
prescription denial at the point of sale.
Our Circuit Court has repeatedly held that individuals faced with the deprivation
of a property interest must be informed of the government’s reason for the denial. Ralls
Corp. v. Commz'ltee on Forez`gn Invesimenl in the Um'lecz’ Stales, 758 F.3d 296, 318
(D.C. Cir. 2014) (noting that “the right to know the factual basis for the action” is an
essential component[] of due process” (internal citations omitted)); Reeves Aleuticm
Airways, lnc, v. Um`ted Stafes, 982 F.2d 594, 599 (D.C. Cir. 1993) (“[W]hen a notice
requires its targets to guess among several possible bases for adverse government action,
it has not served [the] fundamental purposes [of due process.]”); Gray Panthers v.
Schwez`ker (“Gray Panthers 1”), 652 F.2d 146, 168-69, 172 (D.C. Cir. 1980) (“Without
notice or the specific reasons for the denial, a claimant is reduced to guessing what
evidence can or should be submitted in response and driven to responding to every
possible argument against denial at the possible risk of missing the critical one
altogether.”). See also Ass ’n Of ley Orgs. for Reform Now v. FEMA, 463 F. Supp. 2d
26, 35 (D.D.C. 2006) (Leon, J.) (holding that plaintiffs had established likelihood of
success on due process claim where FEMA’s notice of denying housing benefits failed to
clearly specify reasons for denial). As alleged in the Amended Complaint, the District
currently denies prescription coverage without explaining to the claimant the reason for
the denial.
ln Gray Pcmthers v. Schwel`ker (“Gray Pcmthers 1 ”), our Circuit held that the
Department of Health and Huinan Services failed to provide constitutionally adequate
9
notice to Medicare recipients when it did not give them written notice of the reasons for
denying benefits worth less than 8100. 652 F.2d 146, 148 (D.C. Cir. 1980). And while it
may be the case, as our Circuit Court pointed out, that “in some circumstances . . . a lack
of precise initial notice of the grounds for denial may be compensated for by ready access
to the adverse evidence or a summary thereof,” Gray Pcmthers I, 652 F.2d at 169, the
District cannot, as a matter of law, cure the inadequacies of the initial notice-or the total
lack thereof_by placing the onus on individuals to proactively ask the pharmacist or call
District officials to obtain more clarity. Both this Circuit and other courts around the
country have held that requiring individuals to undertake an affirmative inquiry to learn
the reasons for their denial is constitutionally insufficient, and thus, the fact that a
Medicaid plaintiff coulol conduct such an inquiry is irrelevant to the constitutional
analysis Groy Pantliers v. Schwel`ker (“Gmy Panthers II”), 716 F.2d 23, 32 (D.C. Cir.
1983) (holding that beneficiary’s ability to call insurance carrier and supplement written
notice was constitutionally inadequate); Vargas v. Tral`nor, 508 F.2d 485, 489-90 (7th
Cir. 1974) (holding that ability to gain more information by contacting caseworker did
not cure insufficient written notice); Ortz`z v. Eichler, 616 F. Supp. 1046, 1062 (D. Del.
1985) (“Defendants’ . . . contention that notice inadequacies are unimportant because
claimants can call the agency for more detailed information_has been repeatedly
rejected by other federal courts.”).
The beneficiary here is given no indication why the prescription is being denied at
the point of sale. As such, he is totally unable to determine what the next best step is
Although he knows that he’s not getting Medicaid coverage for his prescription, he has
10
no indication, for example, whether the denial is attributable to a mistake or omission by
the doctor, a determination that the drug is not covered by Medicaid, or a determination
that the individual is not eligible for Medicaid coverage. Without that information, he
effectively lacks the opportunity to which the Supreme Court said he was entitled. ln
short, he does not know whether to contact his physician, contact the DHCF, or research
his procedural rights and invoke his right to a hearing. This simply cannot constitute
adequate notice, Some initial written notice of the reason for the denial will reasonably
apprise the plaintiff of the denial, provide him with information that will assist him in
deciding whether to invoke his procedural rights, and allow him to prepare for a hearing
should he choose to invoke those rights Furthermore, on a more practical level, some
initial notice of the reason for denial will likely allow inadvertent or erroneous denials to
be resolved quickly and through informal means Cf. Gray Pantliers I, 652 F.2d at 172
n.55 (D.C. Cir. 1980) (“[W]e suspect that if a more helpful and thorough notice of the
basis for denial were provided, many disputes could be resolved at an earlier stage.”).
As a result, 1 will deny the defendants’ Updated Motion to Dismiss having
concluded that defendants have failed to provide adequate initial written notice that
reasonably apprises plaintiffs of the reasons for the prescription denial. However, it is
inappropriate to determine the nature or scope of specific relief prior to discovery or the
Court’s determination of any class certification motions
11
b. The Fifth Amendment Does Not Require the District to Cover Denied
Prescriptions Until There is an Evidentiary Hearing.
ln addition to their notice claim, plaintiffs also argue that they are constitutionally
entitled to a “pre-termination evidentiary hearing before 1prescription drug] benefits are
discontinued.” Am. Compl. 1111 3, 183. Ultimately, this claim boils down to an assertion
that the District should cover all denied prescriptions until the District conducts an
evidentiary hearing. Pls.’ Opp’n to Defs.’ Updated Mot. to Dismiss at 32. 1 disagree
Under the D.C. Code and municipal regulations Medicaid beneficiaries are
already entitled to a wide range of procedural protections Any Medicaid beneficiary
“aggrieved by 1any1 action or inaction” is entitled to a fair hearing with the District’s
Office of Administrative Hearings (“OAH”) upon request. D.C. CODE §4-210.01; D.C.
l\/IUN. REGS. tit. 29, §9508. A beneficiary can make a request for an OAH hearing in
writing, in person, or by telephone, and he or she simply needs to make a request that
includes, the requester’s name, contact information, a description of the benefits at issue,
and the action to which the person objects ld. tit. 1, § 2971.3. As discussed earlier, a
beneficiary has the right to review any information related to the government’s decision
before the hearing. lo'. § 2973.4. During the hearing, a beneficiary may be represented
by counsel, and has the right to testify, to present and object to evidence, and to
subpoena, present, and cross-examine witnesses Io’. § 2976.5. At the hearing, the
government always bears the burden of producing sufficient evidence to establish the
reason for the denial. Icl. § 2822.2(a). ln its pleadings, the District also points to a range
of “ad hoc assistance” available to Medicaid beneficiaries for example, they can contact
12
DHCF directly to obtain more information about their benefits Am. Compl. 11 77. D.C.
also offers a Health Care Oinbudsinan Program, which defendants describe as an
“independent entity charged with assisting consumers like plaintiffs in resolving any
problem they experience with their coverage or access to health care, helping consumers
understand their rights and responsibilities and resolving complaints regarding their
health care.” Defs.’ Updated Mot. to Dismiss at 8; D.C. CODE § 7-2071.04. Last,
District law also establishes circumstances under which DHCF will pay for a temporary
supply of prescription benefits lf an otherwise valid prescription is rejected due to lack
of a prior authorization from DHCF, or the provider determines that there is a potential
emergency, the District’s regulations require that the pharmacist provide the beneficiary
with a temporary three day supply. D.C. MUN. REGS., tit. 29, § 2705.1-.2.
Under the Fifth Amendment, individuals are entitled to a hearing before they are
“finally deprived of a property interest,” and in most contexts, the hearing must occur
before the deprivation of the property interest, absent an “extraordinary situation[] where
some valid governmental interest is at stake that justifies postponing the hearing until
after the event.” Mal‘hews v. Ela’rz`o’ge, 424 U.S. 319, 902 (1976); Um`teo’ Stotes v. James
Dam'el Goocl Real Properly, 510 U.S. 43, 53 (1993). Due process challenges, and the
determination whether a post-deprivation hearing is permitted, are governed by Mothews
v. Eldridge, 424 U.S. 319 (1976). ln that case, the Supreme Court held that Social
Security benefits could be constitutionally terminated after an initial ineligibility
determination, but before there was a formal evidentiary hearing and a final
administrative decision. Icl. at 340~50. ln reaching its decision, the Supreme Court held
13
that courts determining the “specific dictates of due process” should consider three
distinct factors: “1f1irst, the private interest that will be affected by the official action;
second, the risk of an erroneous deprivation of such interest through the procedures used,
and the probable value, if any, of additional or substitute procedural safeguards; and
finally, the Government’s interest, including the fiscal and administrative burdens that the
additional or substitute procedural requirement would entail.” Id. at 334. Applying these
factors here, 1 hold that the current administrative procedures are constitutionally
adequate and determine that plaintiffs have not stated a claim that they are entitled to
prescription coverage until there is an evidentiary hearing.
With respect to the first Matlzews f`actor, the personal interest at stake is the
individual’s “claim of entitlement to coverage of any drug not completely excluded from
coverage under Medicaid.” N.B. ex rel. Peacock, 794 F.3d at 42. A financially
vulnerable individual’s ability to obtain assistance in paying for prescription drugs is a
significant personal interest that should not be minimized or ignored. At the same time, l
do not wish to overstate the magnitude of the personal interest involved. Unlike in
Mo!hews, plaintiffs are not facing the total termination of their benefits under a particular
program; instead, they have received an initial determination that a discrete claim is not
covered under the Medicaid program. Nor is DHCF prohibiting the plaintiff from
obtaining the prescription or declaring that the prescription is invalid. The plaintiff may
purchase the prescription out of pocket, if necessary, and the District represents to the
Court that individuals may recover their costs if they prevail in an administrative appeal.
Defs’ Updated l\/lot. to Dismiss at 21.
14
The second factor the Court must consider is “the risk of an erroneous deprivation
of such interest through the procedures used, and the probable value, if any, of additional
or substitute procedural safeguards.” 424 U.S. at 903, 907. The “pretermination”
procedures here are relatively straightforward: an individual presents a signed
prescription to a licensed pharmacist, who then enters the claim into an electronic claims
management system that determines automatically whether the prescription will be
covered. Am. Compl. 1111 33-34. The Amended Complaint includes allegations that,
construed favorably, support a reasonable inference that in some instances the electronic
claims management system erroneously determined that prescriptions were not eligible
for Medicaid coverage. See, e.g., Am. Compl. 11 57 (alleging that one pharmacy
determined that prescribed glucose monitor prescribed for Delilah Wynn was not covered
by Medicaid, whereas second pharmacy filled the prescription under Medicaid); id. 1111
164-66 (alleging that Xerox system erroneously determined that Elise Maldonado was
ineligible for Medicaid, because DCHF failed to timely file her Medicaid recertification).
However, plaintiffs do not allege facts that indicate the risk of an erroneous deprivation
For example, the Amended Complaint alleges that, for a single day in 2009, 3,300 out of
6,641 claims submitted through the ECl\/l system were denied, for a 49.7% denial rate.
Id. 11 44. That figure is irrelevant, though, because it simply alleges the total number of
denials, and does not distinguish between correct and erroneous deprivations
As defendants point out, the risk of erroneous deprivation is diminished in
situations like the one presented here, where individual discretion is eliminated and the
state actor’s decision is delegated to an automated process that applies neutral criteria.
15
See Sl`ckler v. Compbell Cly., 501 F.3d 726, 730 (6th Cir. 2007) (holding that risk of
erroneous deprivation was low where prison officials entered dollar amounts into
computer system that automatically calculated amounts to withhold, on grounds that
procedure “involves elementary accounting that has little risk of error and is non-
discretionary”); Taylor v. Sel)elz`us, 189 Fed. App’x 752, 761 (10th Cir. 2006)
(unpublished) (holding that risk of erroneous deprivation was low when process was
“totally automated and 1was1 controlled by a comprehensive computer program”).
Construing the alleged facts most favorably to the plaintiffs, l find that plaintiffs have
alleged a risk of erroneous deprivation, but have not alleged that the risk is so great as to
weigh in favor of requiring the District to pay for denied prescription coverage until there
has been a formal evidentiary hearing.
Lastly, the Court is instructed to consider “the Government’s interest, including
the function involved and the fiscal and administrative burdens that an additional or
substitute procedural requirement would entail.” 424 U.S. at 335. Here, 1 find that the
District has a strong interest in avoiding the enormous fiscal and administrative burdens
that will ensue if the District is required to pay for claimants’ prescriptions until it holds a
formal evidentiary hearing. Plaintiffs have alleged that the District’s ECl\/l system denies
as many as 3,300 prescription claims per day. Am. Compl. 11 44. If the District was
required to cover those denied prescriptions until an evidentiary hearing could be held,
then the District would be required to hold several thousand hearings per day simply to
prevent a crippling administrative backlog and a ballooning financial obligation. Even
more importantly, such a requirement would inevitably dedicate a significant amount of
16
Medicaid’s finite funds to covering prescriptions that will ultimately be determined to be
ineligible for Medicaid coverage, which will hinder the District’s ability to ensure that
l\/Iedicaid funds are used to provide covered services to eligible recipients See Matlzews,
424 U.S. at 348 (“The cost of protecting those whom the preliminary administrative
process has identified as likely to be found undeserving may in the end come out of the
pockets of the deserving since resources available for any particular program of social
welfare are not unlimited.”); Washi`nglon Teachers’ Union v. Boarcl of Ecluc. of Dist. of
Columbio, 109 F.3d 774, 781 (D.C. Cir. 1997) (holding that teachers were not entitled to
hearing before termination; weighing third Matlzews factor heavily and noting that
“giving over 400 teachers time to respond . . . and requiring principals to answer each
would have slowed the . . . process considerably, both delaying and reducing the financial
savings the District so desperately needed”).
ln light of these three Mathews factors, l find that plaintiffs have not stated a claim
that they are constitutionally entitled to an evidentiary hearing before Medicaid denies
coverage for a prescription
II. D.C. Code Claims
Although l originally dismissed plaintiffs’ D.C. law claims for lack of pendent
jurisdiction, N.B. ex rel Peacock v. District ofColuml)ia, 34 F. Supp. 3d 146, 160 (D.D.C.
2014), our Circuit Court instructed that l could reconsider this Court’s jurisdiction over
the local law claims in light of its partial reversal on plaintiffs’ federal claims N.B. ex
rel. Peacock v. District of Columbia, 794 F.3d 31, 44 (D.C. Cir. 2015). Because the
plaintiffs have stated a federal Fifth Amendment claim, and their D.C. local law claims
17
are so related to their federal claim that they form part of the same case or controversy, 1
find that 1 have supplemental jurisdiction under 28 U.S.C. § 1367 to hear their D.C. law
claims However, upon closer review of their allegations and their asserted legal theory, 1
hold that their local law claims must be dismissed
Plaintiffs allege that the District violated four specific statutory provisions D.C.
Code §§ 4-210.02, 4-205.55, 4-210.04, and 4-205.59. Am. Compl. 11 195. Section
4-210.02 states that the District, upon receipt of a request for a hearing, “shall grant a fair
hearing to any . . . recipient of public assistance who claim for assistance has been
denied . . . .” Sections 4-205.55 and 4-210.04 determine when written notice is required
and the information that the notice must contain. As relevant here, § 4-205.55 requires
the District to give “timely and adequate notice in cases of intended action to discontinue,
withhold, terminate, suspend, reduce assistance, or make assistance subject to additional
conditions” and states that notice must be “postmarked at least 15 days before the date
upon which the action would become effective . . . .” Last, § 4-205.59 requires the
District to reinstate benefits coverage until a hearing, whenever the District fails to
provide timely notice and the recipient requests a hearing within ten days of the postmark
of the written notice,
Plaintiffs argue that the District violated all four provisions when they “fail[ed] to
ensure that plaintiffs received “timely and adequate notice, the opportunity for a fair
hearing, and the opportunity for reinstated drug coverage while a hearing is pending.”
However, plaintiffs concede that there “is no allegation in the Amended Complaint that
plaintiffs requested fair hearings or interim coverage.” Pls.’ Opp’n to Defs’ Updated
18
Mot. to Dismiss at 43. As a result, they have failed to state claims under § 4-210.02 and
§ 4-205.59, which govern the right to a fair hearing and the circumstances under which
interim coverage is provided while a hearing is pending. As a result, the proper question
here is whether § 4-205.55 and §4-210.04 obligated the District to provide written notice
to the plaintiffs when their prescriptions were initially denied. Unfortunately for the
plaintiffs they do not.
Both this Court and our Circuit Court have noted that the District’s local code
provisions are very similar to the federal protections provided by Title XIX of the Social
Security Act and its implementing regulations See N.B. ex rel. Peacock v. Disl. of
Columbia, 34 F. Supp. 3d 146, 149 (D.D.C. 2014), ajj"a’ in part, 794 F.3d at 47; See also
N.B. ex rel. Peacock v. Disl. ofColumbl`a, 682 F.3d 77, 187 (D.C. Cir. 2012) (noting that
“District of Columbia law imposes the same requirements” as federal law). Our Circuit
has already reviewed and affirmed the dismissal of the plaintif`fs’ claims under the
analogous federal provisions N.B. ex rel Peacock v. Disz. of Columbia, 794 F.3d 31
(D.C. Cir. 2015). Given the strong similarities between the two statutory schemes its
earlier analysis is highly instructive here.
Under Title XIX and its implementing regulations state Medicaid agencies are
required to provide an opportunity for a fair hearing whenever an individual’s “claim for
medical assistance is denied,” 42 U.S.C. § 1396(a)(3), and must provide written notice
when there is a “termination, suspension, or reduction of Medicaid eligibility or covered
services.” 42 C.F.R. § 431.220(a)(l)-(2); icl. § 401.201. Our Circuit determined that this
statutory scheme led to situations where the state agency was required to provide an
19
opportunity for a fair hearing, but was not required to provide written notice to the
recipients The agency must provide an opportunity whenever a claim is denied, but must
only provide a notice when there is a “termination, suspension, or reduction of Medicaid
eligibility or covered services” which our Circuit interpreted as encompassing situations
where there is an alteration in the beneficiary’s status quo. As a result, the Court held
that a “garden-variety denial of prescription drug coverage at the point of sale” triggers
the right to a hearing, but does not constitute a “termination, suspension, or reduction” of
services or an alteration in the status quo that triggers written notice requirements Ia'. at
39-40. Our Circuit Court reinforced its interpretation by noting that the federal
regulations require written notice to be provided “at least ten days before” the
“termination, suspension, or reduction” of benefits Ia’. (citing 42 C.F.R. §431.211).
lndeed, it further observed that the District cannot know that it is going to deny a
prescription until it is submitted to the pharmacist, and thus cannot possibly provide ten
days’ advance notice before denying prescription coverage. As a result, the Circuit Court
held that it made little sense to read the regulations to require written notice for “every
denial of prescription drug coverage at the point-of-sale” and affirmed the dismissal of
plaintiffs’ federal statutory claims Ia’.
As mentioned earlier, the local statutory scheme corresponds closely to the federal
statutory scheme. Under D.C. law, the District must provide an opportunity for a fair
hearing whenever a “claim for assistance has been denied,” D.C. Code § 4-210.02, but
only requires written “notice in cases of intended action to discontinue, withhold,
terminate, suspend, reduce assistance, or make assistance subject to additional
20
conditions.” § 4-205.55. 1 find that a denial of a prescription claim triggers the right to a
fair hearing under § 4-210.02, but does not require written notice under § 4-205.55. Just
like the federal scheme, the D.C. Code does not require written notice unless the District
takes action to change the recipient’s status quo, which does not occur when it denies
coverage for a specific prescription claim.3 As a result, plaintiffs’ D.C. local law claims
must be dismissed for failure to state a claim.
III. Claims Against Individual Defendants
Defendants also move to dismiss Mayor Bowser and DHCF Director Turnage as
defendants l\/layor Bowser and Director Turnage were both sued in their official
capacities Am. Comp. at l 1Dkt. #431. However, the District of Columbia is also a
defendant in this matter, and “1t1here is no . . . need to bring official-capacity actions
against local government officials for . . . local government units can be sued directly for
damages or injunctive or declaratory relief.” Kentucky v. Graham, 473 U.S. 159, 167
n. 14 (1985). As a result, the plaintiffs’ official-capacity claims against the Mayor and
3 Plaintiffs make much of the fact that the federal scheme requires notice when there is a “termination,
suspension, or reduction” in benefits While the D.C. Code requires notice When there is an action
intended to “discontinue, withhold, terminate, suspend, reduce assistance, or make assistance subject to
additional conditions.” According to plaintiffs these additional terms mean that local law requires notice
in a wider range of scenarios than federal law requires and they specifically argue that a point-of-sale
prescription denial constitutes a decision to “withhold” benefits Pls.’ Opp’n to Defs.’ Updated l\/lot. to
Dislniss at 40-41. l disagree. Wliether or not the inclusion of the additional terms expands the universe
of situations in which notice is required, it cannot logically reach a point-of-sale prescription denial. Such
an interpretation would swallow the statutory scheme and render its distinctions meaningless Under the
local scheme, an opportunity for a hearing is required whenever a “claim for assistance is . . . denied,” but
notice must only be provided in a more limited subset of instances The point-of-sale prescription denial
is the archetypal example of a “claim for assistance . . being denied” and nothing more; if the statute
were read to require notice in this situation, then D.C.’s hearing/notice distinction would totally evaporate
and Written notice would always be required. Furthermore, the D.C. Code requires timely notice to be
postmarked 15 days before an intended action becomes effective, D.C. Code § 4-205.55, further
reinforcing the statute to require DHCF to provide written notice to defendants whenever it denied a
single prescription at a pharmacy.
21
the Director are “redundant and an inefficient use of judicial resources,” and I exercise
my discretion to dismiss them from this case. See Cooke-Seals v. D.C., 973 F. Supp. 184,
187 (D.D.C. 1997); Brown v. Corr. Corp. ofAm., 603 F. Supp. 2d 73, 79 (D.D.C. 2009).
IV. Plaintiffs’ Cursory Request for Leave to Amend
In their opposition, plaintiffs ask the Court to grant them leave to amend their
complaint if “any deficiencies are found in the complaint.” Pls.’ Opp’n. to Mot. to
Dismiss at 45. Plaintiffs have failed to comply with the rules of this District, which
require a party to file a motion to amend the complaint and attach a proposed amended
complaint LCvR 15.1. As our Circuit has explained, “a bare request in an opposition to
a motion to dismiss-without any indication of the particular grounds on which
amendment is sought-does not constitute a motion within the contemplation of Rule
15(a).” Rolli'ns v. Wackenhat Servs., Inc., 703 F.3d 122, 130~31 (D.C. Cir. 2012)
(quotation omitted). Plaintiffs did not attach a proposed amended complaint, nor do they
suggest how amendment would fix the Amended Complaint’s deficiencies 1 therefore
deny their cursory request.
CONCLUSION
Thus, for all of the foregoing reasons the Court DENIES in part and GRANTS in
part defendants’ Updated Motion to Dismiss A separate Order consistent with this
decision accompanies this Memorandum Opinion.
A
Rici~iARD QSBYN
United State ' rict Judge
22