Parent v. State Of Haw.I

703 F.Supp.2d 1078

G., Parent and Next Friend of K., A Disabled Child, et al., Plaintiffs,

v.State of HAWAII, DEPARTMENT OF HUMAN SERVICES, et al., Defendants.

G., Parent and Next Friend of K., A Disabled Child, et al., Plaintiffs,

v.United States Department of Health and Human Services, et al., Defendants.

Civ. Nos. 08-00551 ACK-BMK, 09-00044 ACK-BMK.

United States District Court D. Hawai‘i.

March 19, 2010.

As Amended June 14, 2010.

Bruce F. Sherman, Honolulu, HI, Rafael G. Del Castillo, Jouxson-Meyers & Del Castillo LLLC, Wahiawa, HI, for Plaintiffs.

Charles A. Miller, Laura E. Schattschneider, Covington & Burling LLP, Michelle R. Bennett, U.S. Department of Justice, Washington, DC, John F. Molay, Lee-Ann N.M. Brewer, Derrick K. Watson, Office of the Attorney General, Honolulu, HI, for Defendants.

ORDER GRANTING IN PART, AND DENYING IN PART, EVERCARE'S MOTION FOR PARTIAL SUMMARY JUDGMENT, AND THE JOINDERS THEREIN, AS TO PLAINTIFFS' CLAIMS THAT THE QExA PROVIDER NETWORKS ARE INADEQUATE

ALAN C. KAY, Senior District Judge.

PROCEDURAL HISTORY

I. Prior Proceedings

On December 8, 2008, in Civil No. 08-00551 ACK-BMK, Plaintiffs filed a complaint against Defendants the State of Hawaii, Department of Human Services (“State DHS”), and Lillian B. Koller, in her official capacity as the Director of the State DHS (collectively, “State Defendants” or “State”). At that point, the Plaintiffs were comprised of aged, blind, and disabled (“ABD”) Medicaid beneficiaries (“ABD Plaintiffs”). Their principal allegation is that the State Defendants have violated certain provisions of Title XIX of the Social Security Act, commonly known as the Medicaid Act, 42 U.S.C. § 1396 et seq., by requiring ABD beneficiaries to enroll with one of two healthcare entities as a condition of receiving Medicaid benefits in connection with the agency's managed care program for ABD beneficiaries, the QUEST Expanded Access (“QExA”) Program. Those two entities were the only ones awarded contracts to provide the care for ABD beneficiaries under the QExA Program (“QExA Contracts”). They are WellCare Health Insurance of Arizona, Inc. d/b/a Ohana Health Plan (“WellCare of Arizona”) and United Healthcare Insurance Company d/b/a Evercare (“Evercare”) (collectively, “QExA Contractors”), and they have intervened in this matter.

On January 30, 2009, in Civil No. 09-00044 ACK-BMK, Plaintiffs filed a complaint against the United States Department of Health and Human Services (“Federal DHHS”) and the Secretary of the Federal DHHS (“Secretary”) (collectively, “Federal Defendants”).

On February 4, 2009, Plaintiffs filed a first amended complaint against the Federal Defendants. “At the federal level, Congress has entrusted the Secretary of [the Federal DHHS] with administering Medicaid, and the Secretary, in turn, exercises that delegated authority through the [Centers for Medicare and Medicaid Services (‘CMS') ].” Wong v. Doar, 571 F.3d 247, 250 (2d Cir.2009). Plaintiffs contended that the CMS acted arbitrarily and capriciously by granting a waiver of the “freedom of choice” provision, 42 U.S.C. § 1396a(a)(23), for the QExA Program pursuant to 42 U.S.C. § 1315(a), and by thereafter approving the QExA Contracts. On February 19, 2009, Civil Nos. 08-00551 and 09-00044 were consolidated.

This is the third case brought in this Court challenging the QExA Program. See AlohaCare v. Hawaii, Dep't of Human Servs., 567 F.Supp.2d 1238 (D.Haw.2008) aff'd, 572 F.3d 740 (9th Cir.2009) (upholding the district court's decision that a disappointed bidder for a QExA Contract did not have statutory standing to enforce certain provisions of the Medicaid Act); Hawaii Coal. for Health v. Hawaii, Dep't of Human Servs., 576 F.Supp.2d 1114 (D.Haw.2008) aff'd No. 08-17343, 365 Fed.Appx. 874, 2010 WL 582670, 2010 U.S.App. LEXIS 3471 (9th Cir. Feb. 19, 2010) (dismissing a health advocacy organization's complaint because, among other things, the organization did not have statutory standing to enforce certain provisions of the Medicaid Act). ¹

On May 11, 2009, the Court entered an order granting in part and denying in part a motion to dismiss filed by the State Defendants and joinders therein. See G. v. Hawaii, Dep't of Human Servs., Civ. Nos. 08-00551 ACK-BMK & 09-00044 ACK-BMK, 2009 WL 1322354, 2009 U.S. Dist. LEXIS 39851 (D.Haw. May 11, 2009) (“5/11/09 Order”). The Court thereafter granted Plaintiffs leave to amend their complaints in certain respects. See Order Granting in Part, and Denying in Part Plaintiffs' Leave to Amend Their Complaints, Docket no. 138 (July, 14 2009) (“7/14/09 Order”). They therefore filed a first amended complaint against the State Defendants and a second amended complaint against the Federal Defendants.

On June 2, 2009, Plaintiffs filed a motion for a preliminary injunction against the Federal Defendants. On August 7, 2009, Plaintiffs filed a motion for a temporary restraining order against the Federal Defendants. On August 10, 2009, Plaintiffs filed a motion for a temporary restraining order and a preliminary injunction against the State Defendants. The Court denied Plaintiffs' motions for temporary restraining orders. Plaintiffs subsequently withdrew their motions for preliminary injunctions.

With leave of Court, on August 31, 2009, Plaintiffs filed a second amended complaint against the State Defendants (“State Second Amended Complaint”) and, on September 1, 2009, they filed a third amended complaint against the Federal Defendants. Those complaints added claims on behalf of certain Medicaid healthcare providers (“Provider Plaintiffs”) and new ABD beneficiaries. The Provider Plaintiffs are physicians, pharmacists, and ancillary care providers who accepted ABD beneficiaries as patients and clients under the fee-for-service program, which preceded the QExA Program, and who have provided care and services to ABD beneficiaries under the QExA Program. The State Second Amended Complaint asserts the following nine counts: (I) deprivation of rights under federal law and 42 U.S.C. § 1983; (II) violations of preemptive federal law by virtue of the Supremacy Clause; (III) further specific violations of preemptive federal law and regulations; (IV) insufficient assurances of solvency and evidence of poor performance in other states; (V) insufficient range of services and provider networks; (VI) violation of the Americans with Disabilities Act (“ADA”); (VII) violation of the Rehabilitation Act of 1973; (VIII) violation of 42 U.S.C. § 1396a(a)(30)(A) and 42 C.F.R. § 447.204; and (IX) unlawful taking.

On September 8, 2009, the Federal Defendants filed the administrative record (“AR”), which is roughly 5,200 pages in length. At Plaintiffs' request, the administrative record includes documents from 2004 onwards. 7/18/09 Transcript of Proceedings 28:3-22. Plaintiffs did not ask for any documents that were created prior to 2004 Id.

In October and November of 2009, three motions for summary judgment were filed in the action against the State Defendants and three motions for summary judgment were filed in the action against the Federal Defendants. With respect to the motions in the action against the Federal Defendants, on December 23, 2009, the Court granted summary judgment in favor of the Federal Defendants as to all claims asserted in the third amended complaint against them. See G. v. Hawaii, Dep't of Human Servs., 676 F.Supp.2d 1006 (D.Haw.2009) (“12/23/09 Order”). The Court determined that the CMS did not act arbitrarily or capriciously in granting the 42 U.S.C. § 1315(a) waiver of the “freedom of choice” provision or approving the QExA Contracts. Id.

As for the motions for summary judgment in the action against the State Defendants, on December 24, 2009, the Court granted summary judgment in favor of the State Defendants as to: (1) Counts VI(ADA) and VII (Rehabilitation Act) insofar as those counts assert integration claims on behalf of all ABD Plaintiffs, except for ABD Plaintiff L.P.; (2) Count VIII (42 U.S.C. § 1396a (a)(30)(A)); (3) Count IX (taking); and (4) Plaintiffs' claim that the QExA Contractors fail to meet the second solvency standard set forth in 42 U.S.C. § 1396b(m)(1)(A). However, the Court denied the State Defendants' motion for summary judgment as to Counts VI(ADA) and VII (Rehabilitation Act) insofar as those counts assert equal access claims (in relation to QUEST) on behalf of the ABD Plaintiffs and an integration claim on behalf of ABD Plaintiff L.P G. v. Hawaii, Dep't of Human Servs., 676 F.Supp.2d 1046 (D.Haw.2009) (“12/24/09 Order”). In addition, the Court denied Plaintiffs' motion for summary judgment as to whether the QExA Contractors meet the first and third solvency requirements for MCOs prescribed by 42 U.S.C. § 1396b(m)(1)(A). Id.

II. Evercare's Motion for Summary Judgment

On November 20, 2009, Evercare filed a motion for partial summary judgment regarding Plaintiffs' claims that assert the State Defendants violated the requirements of the Medicaid statute relating to provider networks and access to services by requiring enrollment in the QExA plans offered by Evercare and WellCare of Arizona as a condition of receiving Medicaid benefits (“Evercare's MSJ” or “Evercare's motion for summary judgment”). These claims are asserted in Counts I, II, III, and V of the State Second Amended Complaint. The motion was accompanied by a memorandum (“Evercare's MSJ Mem.”) in support and a concise statement of facts (“Evercare's MSJ CSF”). On November 23, 2009, the State Defendants and WellCare of Arizona filed joinders in Evercare's motion. ²

On January 21, 2010, Plaintiffs filed a memorandum in opposition to Evercare's MSJ (“Pls.' Opp'n”), and a concise statement of facts in opposition (“Pls.' Opp'n CSF”).

On January 28, 2010, Evercare filed a reply to Plaintiffs' Opp'n (“Evercare's Reply”). On the same day, WellCare of Arizona filed a reply to Plaintiffs Opp'n (“WellCare of Arizona's Reply”).³ WellCare of Arizona's reply responded to two issues unique to...