Hoban v. State

Hoban v. State, No. 200-4-05 Wncv (Katz, J., Apr. 15, 2005)
[The text of this Vermont trial court opinion is unofficial. It has been
reformatted from the original. The accuracy of the text and the accompanying
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STATE OF VERMONT SUPERIOR COURT
Washington County, ss.: Docket No. 200-4-05 WnCv
HOBAN
v.
STATE OF VERMONT
ENTRY
Petitioners are four elderly recipients of services under the Home
and Community-Based Waiver Services Program administered by the
State as part of Medicaid. For persons who have sufficient levels of
disabilities to justify nursing home placement, this program attempts to
permit such persons to continue to live in their own homes by providing
services in the home. It thereby saves the State some of the cost of
nursing home care, and provides recipients with an alternative to that
often-dreaded fate.
The present case arises out of a notice recently sent by the State to
perhaps 1,800 recipients under this program, advising them that a cap will
be placed on their available services, set at 5.5 hours of service each week.
That is considerably below the level presently provided. Although the cap
took effect April 1, it will not reach each individual until that person’s
particular care plan is reviewed, which is an annual event. For first-
named plaintiff Hoban, that date is April 22. For the other named
plaintiffs it is farther out. But for some members of the 1,800 not a part of
this lawsuit, the cap may trigger a limit on services earlier, or may even
have already had that effect. The (“IADL”) services involved may
include housekeeping, telephone, shopping, travel assistance, and care of
adaptive equipment. It does not include what the State classifies as
“ADL”–dressing, bathing, continence, and eating services. While the
IADL services here involved are obviously very important to those
receiving them, they probably stand below ADL services in the hierarchy
of being essential.
For these reasons, the court scheduled a prompt hearing on
petitioners’ motion. In determining whether to grant a preliminary
injunction, in advance of full consideration of all the issues in the case, as
requested, we use the following standard:
Generally, preliminary injunctive relief is appropriate when
movant shows irreparable harm and either likelihood of
success on the merits or sufficiently serious questions going
to the merits to make them a fair ground for litigation and a
balance of hardships tipping decidedly toward the party
requesting the preliminary relief. However, when the
inunction at issue stays government action taken in the
public interest pursuant to a statutory scheme, the movant
must satisfy the more rigorous “likelihood of success”
prong.
International Dairy Foods Ass’n. v. Amestoy, 92 F.3d 67, 70 (2d Cir.
1996). Although it may appear unusual to cite federal precedent for what
is a procedural question–standards for preliminary relief–we note that
Vermont case law is sparse on the point. This is so because the grant or
denial of such preliminary relief is not ordinarily appealable, unlike the
situation in federal courts. See In re J.G., 160 Vt. 250, 255 (1993).
Returning to that standard, it must be concluded that we are dealing here
with governmental action pursuant to a statutory scheme, 33 V.S.A. §§
6301-03. So the question must be: Are plaintiffs likely to succeed on the
merits?
Defendants’ recent decision to impose a 5.5 hours-per-week cap on
IADL benefits has not been promulgated as a regulation under Vermont’s
Administrative Procedure Act, 3 V.S.A. §§ 800-849. They argue that
such a decision need not be so promulgated. On this issue, Plaintiffs refer
us to In re Diel, 158 Vt. 549 (1992), and quite properly so, because it is
controlling. Legislation authorizing Defendants to conduct a Home Care
Program specifically authorizes the secretary “by rule” to establish
procedures for its conduct. 33 V.S.A. § 6302(a). Defendants review the
various categories in this subsection and argue that none of them
specifically refer to the amounts of benefits to be paid to program
beneficiaries. That may be a narrow reading, but perhaps defendants are
correct on the point. But § 6302(e) requires the Secretary of Human
Services to,
promulgate rules, pursuant to [the Administrative Procedure
Act], for the effective administration of this section. Such
rules shall include but shall not be limited to eligibility
standards . . ., standards for awarding services to be
furnished under this chapter . . . and making allocations
under subsection (c) . . . .
What is at issue here but an eligibility standard? Defendants have
determined that program beneficiaries are no longer eligible for IADL
services, and such shall not be awarded, once they have received 5.5 hours
per week. It may be a very reasonable determination; it may indeed be a
necessary one because of fiscal constraints. But it is a standard which
determines if any member of the class of Home Care beneficiaries is
eligible for IADL services–if they have already received 5.5 hours, they
are not.
Even if § 6302's references to promulgating rules for Home Care
did not exist, the Administrative Procedure Act’s definition of what
constitutes a “rule” would require promulgation of the eligibility cap here
at issue. A “rule” means “each agency statement of general applicability
which implements, interprets or prescribes law or policy.” 3 V.S.A. §
801(b)(9). This definition of “rule,” and the concomitant requirement that
rules be duly promulgated, is the central holding of Diel. In that case, the
issue was the then-Department of Social Welfare’s change of policy to no
longer count fuel assistance payments as income, and then the
implementation of that change. By no longer counting such payments as
income, the effective income of recipients diminished, rendering them
eligible for greater benefits. That “decision interpreted the statute
authorizing the ANFC program and both prescribed and implemented a
policy intended to apply generally to a class of ANFC recipients.” 158
Vt. at 554. Diel goes on to cite out-of-state examples of welfare benefit
rules which have been held to require promulgation under the
Administrative Procedure Acts of their respective states:
Stratford Nursing & Convalescent v. Div. of Med.
Assistance, 522 A.2d 442, 444 (N.J. 1986) (agency “policy”
affected Medicaid reimbursement of all similarly situated
nursing homes and should have been adopted pursuant to
administrative procedure act); Hillcrest Home, Inc. v.
Commonwealth Dept. of Pub. Welfare, 553 A.2d 1037,
1040-42 (Penn. 1989) (change in agency’s interpretation of
“year” to mean calendar year instead of fiscal year was
substantive change in regulation that could not be
accomplished outside rulemaking procedure).
158 Vt. at 554-55 (footnote omitted). The Vermont Supreme Court’s
decision also quotes a number of factors identified by the Supreme Court
of New Jersey which indicate whether a particular policy triggers the
rulemaking process:
the agency determination . . . (1) is intended to have wide
coverage encompassing a large segment of the regulated or
general public, rather than an individual or a narrow[,] select
group; (2) is intended to be applied generally and uniformly
to all similarly situated persons; (3) is designed to operate
only in future cases, that is, prospectively; (4) prescribes a
legal standard or directive that is not otherwise expressly
provided by or clearly and obviously inferable from the
enabling statutory authorization; (5) reflects an
administrative policy that (i) was not previously expressed
in any official and explicit agency determination,
adjudication or rule or (ii) constitutes a material and
significant change from a clear, past agency position on the
identical subject matter; and (6) reflects a decision on
administrative regulatory policy in the nature of the
interpretation of law or general policy.
158 Vt. at 555 n.* (quoting Metromedia, Inc. v. Director, Div. of
Taxation, 478 A.2d 742, 751 (N.J. 1984)). We need not belabor the facts
to conclude that, beyond dispute, the 5.5 cap here at issue applies to the
entire Home Care class, operates prospectively only, describes a new
standard nowhere else expressed, reflects a new administrative policy and
reflects a decision on the administration of benefits in the nature of
general policy. The only criterion we have excluded from this obviously
included group is the “large segment” of the public, criteria (1). Here, we
have been advised that the population of Home Care participants is 1,800
in number. In Metromedia v. Director, the issue was taxation of television
and radio stations with multi-state audiences. Recognizing that New
Jersey is a populous state, nevertheless, it surely does not have anything
approaching 1,800 television and radio stations with multi-state audiences.
The court there, albeit over dissent, nevertheless held that the taxation
policy was invalid for lack of promulgation as an administrative
regulation. Indeed, Diel involved a group of 750 ANFC families. 158 Vt.
at 550. If 750 suffices, so does 1,800.
During the second discussion of this motion between the court and
counsel, the State pressed the point that, regardless of the holding of Diel,
the Legislature has since changed the APA’s definition of regulation and
what must be actually promulgated. 2001 (Adj. Sess.) Public Laws of
Vermont, No. 149, §§ 45-53 (2002). In the State’s view, Diel has been
effectively overruled by these recent changes. We do not doubt the
Legislature’s general authority to alter what was essentially a decision of
statutory interpretation, by subsequent legislation. As with any issue of
statutory interpretation, the foremost duty of this court is to discern the
legislative intent, so that it can effectively be carried out. In re S.
Burlington-Shelburn Highway Proj., 174 Vt. 604, 605 (2002). Clearly,
one intent of the 2002 APA amendment was to reduce the situations in
which administrative rules must be promulgated. Hence, 3 V.S.A. §
831(e) was added, “Except as provided in subsections (a)-(d) of this
section, an agency shall not be required to initiate rulemaking or to adopt
a procedure or a rule.” (Emphasis supplied). However, a review of
subsections (a) through (d) reveals four instances in which rulemaking
remains required:
C due process (§ 831(a));
C statutory direction (§ 831(a));
C request by 25 or more persons (§ 831(c)); and
C request by legislative committee on rules (§ 831(c)).
Subsection (c) hence lists two situations in which rulemaking is required,
in addition to the two provided in (a). Subsection (c) concludes with the
sentence “An agency shall not be required to initiate rulemaking with
respect to any practice or procedure except as provided by this
subsection.” (Emphasis supplied). To the extent this last-quoted sentence
applies to the present dispute, it would seem to be in conflict with
subsection (a), which, as has just been shown, provides two of the four
situations in which rulemaking is required. Further, to the extent this last-
quoted sentence gives a blanket exclusion from rulemaking, except for the
bases set out in (c), it would be redundant and unnecessary, for subsection
(e) is even broader. Subsection (e) is not limited to points of “practice or
procedure,” as is (c). Following the venerable rules of statutory
construction, that language is not presumed to be included inadvisedly,
Payea v. Howard Bank, 164 Vt. 106, 107 (1995), and that needless
redundancy is a disfavored construction, State v. Fisher, 167 Vt. 36, 41
(1997), we conclude that the Legislature continues to draw some level of
distinction between “practice and procedure” and those situations in which
rulemaking is required.
Continuing the effort to understand the legislative intent
undergirding the 2002 APA amendments, so that they may be properly
applied, we look to the context of these changes. Domenchini’s
Administrator v. Hoosac Tunnel & Wilmington R.R., 90 Vt. 451, 456
(1916) (relying on context of disputed section in original act to determine
meaning). Doing so, we find that they appear in a quite unusual context –
not in a separate enactment, but in a part of the capital construction bill,
specifically “An Act Relating to Capital Construction, State Bonding and
the Department of Corrections.” The amendments to the APA are
sandwiched in between provisions specifically relating to the Department
of Corrections. See, e.g., § 42 (reduction in term for good behavior); § 43
(housing of inmates); § 44 (conditional re-entry into the community); § 55
(violation of conditions by parolees and probationers); § 56 (out-of-state
parolee supervision). As previously noted, §§ 45-54 constituted the APA
revisions. Attempting to understand why the legislative Institutions
Committees would have determined to revise the APA, it may be
appropriate to understand an historical context. See, e.g., Com. v. Hughes
865 A.2d 761, 797 (Pa. 2004) (examining historical circumstances
contemporaneous with statutory amendment to help reveal the
amendment’s purpose). A persuasively relevant occurrence would have
been provided by the decision in Parker v. Gorczyk, 173 Vt. 477, in
September, 2001. That case invalidated a Department of Corrections
policy regarding inmate furloughs, because that policy legally constituted
a rule and therefore required rulemaking under the APA. Placing this
context next to the close reading of the statutory language of our previous
paragraph persuades us that it was not the legislative intent to overrule
Diel, which is not a Corrections case.
We therefore conclude that Diel, Vermont’s Administrative
Procedure Act, and the Home Care Programs statute all clearly require
that a cap on services, generally applicable to all Program participants,
must be promulgated as a regulation under the APA. A policy change
violative of the APA is void. Diel, 158 Vt. at 550. As a lower court, we
are, of course, required to follow both precedent and statute. As a court, it
is beyond our authority to weigh the importance of this or that benefit
against its cost. There is no doubt that reducing some benefits may allow
those that remain to be passed on to more people. These are decisions for
the elected branches of government. We have no view as to the fairness
or soundness of any policy judgment undergirding the 5.5 hour cap. We
must, however, rule that petitioners here are reasonably likely to prevail
on their procedural claim, and are entitled to preliminary relief. If a
formal injunction is required, after discussion among counsel, petitioners
shall submit a proposed form thereof.
Dated at Montpelier, Vermont, _________________, 200__.
__________________________
Judge