Mary Nasello v. Theresa Eagleson

In the
United States Court of Appeals
For the Seventh Circuit
____________________
No. 19-3215
MARY NASELLO, et al.,
Plaintiffs-Appellants,
v.
THERESA A. EAGLESON, Director of the Illinois Department of
Healthcare and Family Services, and GRACE B. HOU, Director
of the Illinois Department of Human Services,
Defendants-Appellees.
____________________
Appeal from the United States District Court for the
Northern District of Illinois, Eastern Division.
No. 18 C 7597 — Robert W. Gettleman, Judge.
____________________
ARGUED SEPTEMBER 24, 2020 — DECIDED OCTOBER 6, 2020
____________________
Before EASTERBROOK, MANION, and KANNE, Circuit Judges.
EASTERBROOK, Circuit Judge. Plaintiffs have been classified
as “medically needy” for the purpose of the Medicaid pro-
gram. Most people eligible for Medicaid benefits are “cate-
gorically needy” because their income falls below a thresh-
old of eligibility. People with higher income but steep medi-
cal expenses are “medically needy” once they spend enough
2 No. 19-3215
of their own income and assets to qualify for the program’s
aid. 42 U.S.C. §1396a(a)(10); Winter v. Miller, 676 F.2d 276,
277 (7th Cir. 1982) (discussing the nomenclature). The dis-
pute at hand concerns how much these plaintiffs must
spend—or, equivalently, how much of their current income
and assets a state deems available for medical purposes. The
higher those numbers, the less Medicaid pays.
Plaintiffs contend that medical expenses they incurred
before being classified as “medically needy” should be treat-
ed as money spent on medical care, whether or not those
bills have been paid. Doing this would increase the state’s
payments for their ongoing care. But although Illinois deems
all of the plaintiffs “medically needy” and eligible for public
contributions toward their medical expenses, it does not
treat plaintiffs’ past or outstanding bills as equivalent to
their current medical outlays. They asked the district court
to direct Illinois to pay more toward their care. But the judge
dismissed the suit on the pleadings. 2019 U.S. Dist. LEXIS
174318 (N.D. Ill. Oct. 8, 2019).
Section 1396a(r)(1)(A) of Title 42 supplies the complaint’s
lead theory. It reads:
[When a state calculates medically needy persons’ income] …
there shall be taken into account amounts for incurred expenses
for medical or remedial care that are not subject to payment by a
third party, including—(i) medicare and other health insurance
premiums, deductibles, or coinsurance, and (ii) necessary medi-
cal or remedial care recognized under State law but not covered
under the State plan under this subchapter, subject to reasonable
limits the State may establish on the amount of these expenses.
Plaintiffs contend that amounts for which they are legally
liable for care in earlier years count toward this total but that
Illinois has not given them required credit and is thus not
No. 19-3215 3
following this part of the statute and its implementing regu-
lations.
The threshold problem, as the district court recognized, is
that Medicaid is a cooperative program through which the
federal government reimburses certain expenses of states
that promise to abide by the program’s rules. Medicaid does
not establish anyone’s entitlement to receive medical care (or
particular payments); it requires only compliance with the
terms of the bargain between the state and federal govern-
ments. Congress could make those terms enforceable in suits
by potential beneficiaries such as plaintiffs, but it has not
done so. Instead it has created a system of administrative
remedies. Plaintiffs have bypassed those, and the district
judge held that, because the statute does not create a private
right of action to enforce §1396a(r)(1), they do not have a ju-
dicial remedy.
Some older decisions, beginning with Maine v. Thiboutot,
448 U.S. 1 (1980), use 42 U.S.C. §1983 as the source of a pri-
vate remedy for the beneficiaries of federally funded state
programs such as Medicare. As far as we can tell, however,
the Supreme Court has not added to the list of enforceable
provisions since Wilder v. Virginia Hospital Association, 496
U.S. 498 (1990). In the three decades since Wilder it has re-
peatedly declined to create private rights of action under
statutes that set conditions on federal funding of state pro-
grams. For a few of those decisions see Armstrong v. Excep-
tional Child Center, Inc., 575 U.S. 320 (2015) (Medicaid pro-
viders lack a private right of action to enforce the terms of
§1396a(a)(30)(A)); Astra USA, Inc. v. Santa Clara County, 563
U.S. 110 (2011) (private beneficiaries of a state-federal con-
tract, whose terms are prescribed by statute, can’t sue to en-
4 No. 19-3215
force those terms); Gonzaga University v. Doe, 536 U.S. 273
(2002) (Family Educational Rights and Privacy Act, another
cooperative state-federal program, cannot be enforced
through suits under §1983).
Plaintiffs have not cited, and we did not find, any appel-
late decision holding that district judges may enforce
§1396a(r)(1)(A) in private suits. Armstrong and its immediate
predecessors do not permit a court of appeals to enlarge the
list of implied rights of action when the statute sets condi-
tions on states’ participation in a program, rather than creat-
ing direct private rights. Creating new rights of action is a
legislative rather than a judicial task. This remits beneficiar-
ies to the administrative process—and if that fails they could
ask the responsible federal officials to disapprove a state’s
plan or withhold reimbursement.
Section 1396a(a)(8) supplies plaintiffs’ fallback argument.
This statute provides that a state’s plan must
provide that all individuals wishing to make application for
medical assistance under the plan shall have opportunity to do
so, and that such assistance shall be furnished with reasonable
promptness to all eligible individuals[.]
Several courts of appeals have held that this requirement can
be enforced in private suits. Romano v. Greenstein, 721 F.3d
373, 377–79 (5th Cir. 2013); Doe v. Kidd, 501 F.3d 348, 355–57
(4th Cir. 2007); Sabree v. Richman, 367 F.3d 180, 189–93 (3d
Cir. 2004); Bryson v. Shumway, 308 F.3d 79, 88–89 (1st Cir.
2002); Doe v. Chiles, 136 F.3d 709, 715–19 (11th Cir. 1998).
Our opinion in Bertrand v. Maram, 495 F.3d 452 (7th Cir.
2007), expresses skepticism about this line of decisions,
which is hard to reconcile with the Supreme Court’s post-
Wilder doctrine—and multiple decisions since 2007 (such as
No. 19-3215 5
Armstrong and Astra USA) make it even harder to imply a
private right of action. But to avoid creating a conflict among
the circuits Bertrand assumed for the sake of argument that
such a private right exists and resolved the case for defend-
ants on the merits. (This is permissible because the existence
of a private right of action is not a jurisdictional require-
ment.) We take the same path, without suggesting that we
would follow the other circuits if push came to shove.
The district court pointed out the insuperable problem
that plaintiffs face in trying to frame a claim under
§1396a(a)(8): they are receiving benefits. Their grievance
concerns not the time at which these ongoing benefits are
paid but the amount of those benefits. Many parts of the
Medicaid Act (including §1396a(r)(1)(A)) affect the amount
of benefits, but §1396a(a)(8) is not among them. Plaintiffs re-
join that the extra sums to which they claim entitlement
aren’t being paid at all and thus necessarily aren’t being paid
“with reasonable promptness”. That’s word play. It would
not be appropriate for a federal court to turn a statute about
the timing of benefits into a statute about the level of bene-
fits. Section 1396a(r)(1)(A) cannot be enforced through the
back door in the name of §1396a(a)(8).
Plaintiffs have one more line of argument. They maintain
that they are disabled (which cannot be doubted; all of them
need full-time care at skilled nursing facilities) and that the
state is discriminating against them on account of that disa-
bility. They rely on the Americans with Disabilities Act, 42
U.S.C. §12131–34, and the Rehabilitation Act, 29 U.S.C. §794.
Yet how is Illinois discriminating against them on account of
disabilities? It is their disabilities that have made them
“medically needy” and qualified them for Medicaid benefits.
6 No. 19-3215
That the benefits are not as high as they want is not a form of
discrimination.
Plaintiffs receive more governmental aid than non-
disabled persons. The ADA and Rehabilitation Act may re-
quire some accommodations in the implementation of the
Medicaid program, but we concluded in Vaughn v. Walthall,
968 F.3d 814 (7th Cir. 2020), that a state need not depart from
the terms of that program—or draw on funds allocated to
other programs—in order to provide those accommodations.
Plaintiffs’ complaint does not identify any accommodation
that would be required by the ADA or Rehabilitation Act yet
comport with the terms of the Medicaid Act.
According to plaintiffs, the district court should have al-
lowed them to amend their complaint to include allegations
that would have established a plausible claim. Yet their brief
does not tell us what a new complaint could allege. The en-
tirety of their argument is:
Plaintiffs specifically requested leave to amend their complaint
in the event that the Court found pleading deficiencies. The Dis-
trict Court did not address Plaintiffs’ request to amend and did
not find that amendment would be futile.
That bare-bones assertion does not come close to establish-
ing that the district court was required to accept and adjudi-
cate a new complaint.
In the district court they proposed to amend to add alle-
gations bolstering their assertion that each of them is disa-
bled. That would have been pointless, because the district
judge assumed that issue in their favor but ruled that their
disabilities had not been held against them. So is there any-
thing that plaintiffs could have added to show a violation of
these statutes? Elsewhere in their appellate briefs plaintiffs
No. 19-3215 7
say that disabled persons are entitled to accommodations
that give them more time to fill out forms or satisfy other re-
quirements of the program. But they have not been penal-
ized because of bureaucratic hurdles that bear more heavily
on the disabled. Their problem is substantive: the state does
not give them credit for outstanding medical bills. The dis-
trict judge resolved the claim that plaintiffs made. If they
have more to say, they should have told us what it is. See,
e.g., Operating Engineers Pension Trust v. Kohl’s Corp., 895 F.3d
933, 942 (7th Cir. 2018).
AFFIRMED