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SALAZAR v. DISTRICT OF COLUMBIA

October 11, 1996

OSCAR SALAZAR, JR. et al., on behalf of themselves and all others similarly situated, Plaintiffs,
v.
DISTRICT OF COLUMBIA et al., Defendants.



The opinion of the court was delivered by: KESSLER

 Plaintiffs *fn2" bring this action pursuant to 42 U.S.C. § 1983 on behalf of themselves and a class of needy children and adults who have applied for Medicaid *fn3" in the District of Columbia. After three years of pretrial litigation, including extensive, complex discovery generally conducted in good faith by both sides, several dispositive motions, and exhaustive settlement efforts, *fn4" this case proceeded to trial.

 This Court conducted a seven-day bench trial on the four remaining claims *fn5" in the Complaint: Claim 4, which alleges that Defendants *fn6" do not issue decisions and provide Medicaid coverage within 45 days after initial applications are submitted; Claim 5, which alleges that Defendants do not provide advance notice of the discontinuance or suspension of Medicaid benefits; Claim 6, which alleges that Defendants do not provide or arrange for the provision of early and periodic screening, diagnostic and treatment ("EPSDT") services to Medicaid recipients who request such services; and Claim 7, which alleges that Defendants do not effectively notify individuals of the availability of EPSDT services. During the trial, the Court heard testimony from 38 witnesses for Plaintiffs and 16 witnesses for Defendants; over 500 exhibits were admitted into evidence.

 * * *

 This case is about people--children and adults who are sick, poor, and vulnerable--for whom life, in the memorable words of poet Langston Hughes, "ain't been no crystal stair". It is written in the dry and bloodless language of "the law"--statistics, acronyms of agencies and bureaucratic entities, Supreme Court case names and quotes, official governmental reports, periodicity tables, etc. But let there be no forgetting the real people to whom this dry and bloodless language gives voice: anxious, working parents who are too poor to obtain medications or heart catheter procedures or lead poisoning screens for their children, AIDS patients unable to get treatment, elderly persons suffering from chronic conditions like diabetes and heart disease who require constant monitoring and medical attention. Behind every "fact" found herein is a human face and the reality of being poor in the richest nation on earth.

 I. INTRODUCTION

 Medicaid is the largest public assistance program in the District of Columbia, serving slightly over 25% of all District residents. From April 1995 to April 1996, an average of approximately 115,000 people per month were eligible for Medicaid. For example, in February 1996, 111,644 people were eligible for Medicaid. Of this total, 73,337, or 65.7%, qualified as categorically eligible for Medicaid through the Aid to Families with Dependent Children ("AFDC") program; 23,903, or 21.4%, qualified for Medicaid as a result of nursing home care, their enrollment in the General Public Assistance ("CPA") program, or their enrollment in the Supplemental Security Income ("SSI") program; 11,321, or 10.1%, qualified through the Non-Public Assistance ("NPA") program; and 3,083, or 2.8%, qualified because they were foster care children. Within NPA, the Multinational Program serves approximately 3,000 people, who constitute slightly over 2.5% of all Medicaid-eligible persons. *fn7" However, of the entire monthly Medicaid application workload, which is approximately 2,150 cases, the Multinational Program normally accounts for approximately 8% of all applications. *fn8" Testimony of John M. Bayne ("Bayne Test."), P 6.

 Upon Plaintiffs' motion, the court certified the following class pursuant to Fed. R. Civ. P. 23(b)(2):

 
All persons who have applied, have attempted to apply, or will apply in the future during the pendency of this litigation, for medical assistance pursuant to Title 19 of the Social Security Act ("Medicaid"), and all persons who have received, are receiving, or will receive in the future during the pendency of this litigation, Medicaid in the District of Columbia with respect to the following claims:
 
. . .
 
Any claims for declaratory, injunctive, or other relief premised on an alleged delay in excess of 45 days in the processing of Medicaid applications [Sub-class III)
 
Any claims for declaratory, injunctive, or other relief premised on an alleged lack of advance notice of the discontinuance, suspension or obligation to recertify Medicaid benefits, after being found eligible [Sub-class IV]
 
Any claims for declaratory, injunctive, or other relief premised on an alleged lack of effective notice of the availability of early and periodic screening, diagnostic and treatment ("EPSDT") services for children under 21 years of age, and/or an alleged lack of EPSDT services for eligible children under 21 years of age [Sub-class V].

 See Orders of October 6, 1994 and November 3, 1994 (Kessler, J.).

  The NPA program encompasses different categories of eligible persons, including non-SSI disabled and multinational persons and children in foster care. As the litigation developed, and as a result of obtaining discovery, Plaintiffs focused more and more narrowly on NPA applicants and recipients. At trial, Plaintiffs asserted Claim 4, regarding untimely processing of initial Medicaid applications, only on behalf of certain NPA applicants, i.e., non-disabled, non-foster care applicants. As to Claim 5, *fn9" Plaintiffs asserted the recertification component of that claim on behalf of all non-foster care NPA recipients. As to the EVS component of Claim 5 and the request for reimbursement for Plaintiffs' out-of-pocket expenses, Plaintiffs sued on behalf of all Medicaid applicants and recipients. As to Claims 6 and 7, Plaintiffs continued to seek relief on behalf of all Medicaid applicants and recipients.

 On April 1, 1994, Defendants started implementing the District's Medicaid Managed Care Program, a health care delivery system for the 65.7% of all Medicaid recipients who receive AFDC benefits. Testimony of Terri Thompson ("T. Thompson Test."), P 15. The Medicaid Managed Care Program allows patients to choose between prepaid, capitated managed care organizations and fee-for-service primary care providers. Id. Testimony of Paul Offner ("Offner Test."); Testimony of Jane E. Thompson ("J. Thompson Test.").

 Mr. Paul Offner, Commissioner of Health Care Finance for the District of Columbia, and Ms. Jane Thompson, Chief of the Managed Care Program in the Commission on Health Care Finance ("CHCF"), testified at length regarding their plans for a major overhaul of the Medicaid Managed Care Program. This massive restructuring of the delivery of health care to poor people in the District of Columbia was to begin with a Request for Proposals ("RFP"), which was issued shortly before trial, in early April 1996. Both Mr. Offner and Ms. Thompson testified that this restructuring of the Medicaid Managed Care Program would alleviate many of the problems they conceded existed in the District's EPSDT program. Defendants repeatedly relied upon the reforms embodied in the RFP to assure the Court that concrete steps were being taken to correct a system which was admittedly failing to operate efficiently, economically, and in accordance with federal law. After trial, however, the Court learned that this RFP has been withdrawn. See Pls.' Post-Trial Brief at 2, n. 1. *fn10"

 II. FINDINGS OF FACT

 A. Timeliness of Initial Application Processing

 Defendants are required to send notices of decision on Medicaid applications within 45 days of receiving the applications. See 42 U.S.C. § 1396a(a)(8); 42 C.F.R. § 435.911(a); D.C. Code Ann. § 3-205.26. However, as discussed below, the record clearly establishes that NPA Medicaid applications are not processed in a timely manner.

 1. Initial Medicaid applications are accepted and processed by the Income Maintenance Administration ("IMA"), a division of the Commission on Social Services within the D.C. Department of Human Services ("DHS"), at IMA's central intake offices at 645 H Street, N.E., Washington, D.C. ("645 H Street), and at IMA's nine decentralized service centers located at various community locations. Bayne Test., PP 5 and 7. At 645 H Street, there are two separate sections that handle NPA applications: the Multinational Section and the NPA Intake Section. Bayne Cross-Exam. Test. *fn11"

 2. Medicaid applications are processed by IMA social service representatives ("SSRs"), who in turn rely upon the Automated Client Eligibility Determination System ("ACEDS"), a computer system used to determine eligibility for the many public assistance programs administered by IMA. Testimony of Arlene Conover ("Conover Test."), PP 3-4. An IMA SSR enters the application into ACEDS, determines from the automated ACEDS checklist which information is still needed to complete the application process, and gives the applicant that checklist with instructions to provide any missing, required information to the SSR. Id., P 6.

 3. As the applicant provides the required information, the SSR updates the automated record of the checklist. Id. On the 10th and 30th days after an application is submitted, notices requesting any outstanding information are issued to the applicant automatically, without intervention by the SSR, to remind the applicant of the date of application and the data still needed to determine eligibility. Id. On the 15th day or on the next available workday following the issuance of the 30-day notice, ACEDS denies the application automatically if the checklist still contains outstanding items. If the applicant requests additional time to supply the required information and the SSR grants that request and enters an extension date, ACEDS will not automatically deny the application on the 45th day. Id., PP 6-7. When ACEDS does deny the application automatically, it also issues a denial notice. If, during the application time frame, the applicant provides all of the information, no additional reminder notices are issued and the automatic denial does not occur. Id. Medicaid applications and notices generated by ACEDS are available in both English and Spanish; when applicants first apply for Medicaid, they are given the choice of having their ACEDS notices printed in either language. Bayne Test.; Conover Test.

 
1. Medical Eligibility Operations Reports

 4. IMA's Medical Eligibility Operations ("MEO") reports, which provide information about non-disability NPA applications, clearly show that all Medicaid applications are not processed within 45 days. MEO reports are available for the period from January 1992 through February 1996. In every month for which MEO reports are available, the reports indicate that applications filed more than 45 days earlier were still pending at the end of the month. Pls.' Exs. 103, 104, 111. The December 1993 MEO report for the Multinational Section at 645 H Street reveals that at the end of that month, that section had 536 applications pending over 45 days, or 60% of all reported applications pending at the end of that month for that unit. Pls.' Exs. 104, 111. In the same month, the NPA Intake Section at 645 H Street had 517 applications pending over 45 days, or 54% of the total reported applications pending at the end of the month. Pls.' Exs. 103, 104.

 5. Although Defendants managed to reduce that backlog by 1995, there were still substantial backlogs. Pls.' Exs. 4 at 199, and 19 at 100. The May 1995 MEO report shows 46 cases pending over 45 days for the Multinational Section, and 30 cases pending over 45 days for the NPA Intake Section. Pls.' Exs. 111, 103. These numbers represent 8% and 15% of the reported applications for the Multinational Section and the NPA Intake Section, respectively. The June 1995 MEO report for the Multinational Section shows 35 applications pending for more than 45 days, or 12.2% of the 288 total applications pending at the end of June; the same report for the NPA Intake Section shows 33 applications pending at the end of June, or 7.8% of the 425 total applications pending at the end of June. Pls.' Exs. 103, 104, and 111. Finally, the MEO report for July 1995 shows that 73 applications were pending for over 45 days in the Multinational Section, or 24.7% of the total number of applications pending at the end of July. Pls.' Ex. 111. The NPA Intake Section had 135 applications pending for more than 45 days, or 28.6% of the 472 Medicaid applications pending at the end of July. Pls.' Ex. 103.

 6. For the 12-month period from March 1995 until February 1996, the average monthly number of applications pending for more than 45 days was 67.8 for the Multinational Section, or 19.8%, and 49.6 for the NPA Intake Section, or 10.6%. In the Multinational Section, the percentages of applications pending for more than 45 days were 25% or greater in five out of twelve months, including three of most recent months for which data is available -- December 1995 and January and February 1996. In the NPA Intake Section, the percentages of applications pending for more than 45 days were 11% or lower for all months except July and August 1995. Pls.' Ex. 104.

 7. The MEO reports actually undercount the number of applications that IMA fails to process within 45 days, because they only count applications that are still pending at the end of the month. Thus, they do not capture applications that were processed before the end of a particular month, but which took more than 45 days to process. The MEO reports also do not account for delays in application processing caused by applicants' failure to submit complete documentation, changes of address, or death, nor do they account for transfers of applicants to different categories of eligibility or Defendants' procedure for counting 45 days. Finally, the available MEO reports only show application processing rates for two NPA application processing sections: the NPA Intake Section and the Multinational Section, both located at 645 H Street. *fn12"

 
2. Plaintiffs' Statistical Sample

 a. Nature of the Study

 Plaintiffs retained the Center for Forensic Economic Studies, Inc. ("CFES") to analyze IMA's timeliness in processing applications. CFES began by selecting samples of five groups of Medicaid recipients in the District of Columbia: (1) all active, non-disability, NPA cases *fn13" ; (2) all active, non-categorically eligible disability cases; (3) all active cases involving newborns born to mothers receiving Medicaid at the time of the newborns' birth; (4) all active, AFDC Medicaid cases; and (5) NPA cases processed by IMA's Multinational Section ("NPA-Multinational cases"). Siskin Test. at 3. *fn14"

 CFES and Plaintiffs then received from IMA four computer data files corresponding to the above requests. Id. at 4. *fn15" Each data file contained thousands of individual case records. Id. at Table 1. From these data files, CFES selected systematic random samples for each of the five Medicaid populations: (1) 300 NPA case records involving cases not processed by the Multinational Section ("NPA-Nonmultinational"), (2) 100 non-categorically eligible disability ("disability") case records, (3) 100 case records of newborns born to mothers receiving Medicaid at the time of the newborns' birth, (4) 100 AFDC or AFDC-related cash records, and (5) 100 NPA-Multinational case records, for a total of 700 Medicaid case records. Plaintiffs' counsel then requested and received the actual case files corresponding to the case records. Id.

 Plaintiffs' counsel reviewed the IMA case files, recorded relevant information onto database entry forms, reviewed the database entry forms for accuracy, and reviewed the computer database for accuracy. Testimony of Rochelle Bobroff ("Bobroff Test.") at 5-7. In conducting their review of the case files, Plaintiffs' counsel found that only 97 of the requested 300 NPA-Nonmultinational case files were relevant for purposes of application processing. Siskin Test. at Table 2. The remainder of the case files received were considered irrelevant for several reasons. First, 112 of the records received from IMA were merely case profiles rather than actual case files. Bobroff Test. at 3; Bobroff Cross-Exam. Test. The case profiles lacked crucial information, such as the dates of Medicaid applications and the dates of notice of decision. Bobroff Test. at 3; see also Pls.' Ex. 180 (examples of case profiles provided to Plaintiffs). Second, 56 of the NPA case files concerned foster care children. Bobroff Test. at 3. Plaintiffs' counsel considered these case files irrelevant because children in foster care are automatically eligible for Medicaid and thus do not undergo the application process that NPA applicants undergo. Id. Third, the NPA case files supplied by IMA to Plaintiffs' counsel contained 42 AFDC case files. Id. at 4; Bobroff Cross-exam. Test. If persons apply for and are found eligible for AFDC, they also become automatically eligible for Medicaid. *fn16" Defs.' Ex. 2 (D.C. Medical Assistance Policy Handbook), § 1610. *fn17" Thus, Plaintiffs' counsel excluded the AFDC case files from their study also.

 The fourth Medicaid population Plaintiffs excluded was the group of non-categorically eligible, disabled applicants for Medicaid. *fn18" Although such persons submit Medicaid applications to IMA, their case files were irrelevant, in Plaintiffs' estimation, because IMA has an additional 15 days in which to process their applications. Bobroff Cross-Exam. Test. Finally, some case files lacked relevant data, such as an application form, or information about the time in which the application was processed. Id. at 5. These case files were also excluded from the sample. Id.

 Plaintiffs' counsel identified 188 relevant NPA-Multinational case files by supplementing the original sample of 100 case files with 88 case files drawn from other samples. These 88 additional case files included 70 case files that initially appeared in the general NPA sample of 300 but contained information about NPA-Multinational applications. Id. at 5. *fn19"

 After Plaintiffs' counsel determined which case files contained relevant information, they presented the computer database containing all such files to CFES for statistical analysis. Siskin Test. at 2. Using a 95% confidence interval, CFES found that applications were improperly processed *fn20" approximately 42.3% of the time by IMA units that processed NPA-Nonmultinational applications (41 out of 97 applications) and 69.7% of the time by the Multinational Section (131 out of 188 applications). Pls.' Ex. 5 at 8; Siskin Test. at 2 and 10.

 
b. Defendants' Objections to the Study

 Defendants have strenuously challenged these findings. Mr. Bayne testified that CFES' study was not useful from a managerial perspective, because it did not measure IMA's overall timeliness in processing Medicaid applications; it did not study processing of AFDC-Medicaid applications; and it did not study applications that were ultimately denied. A typical, and more useful, study, according to Mr. Bayne, would be one that measured timeliness of all Medicaid application processing within a particular time frame, e.g., one month. Bayne Cross-Exam. Test. Mr. Bayne also criticized the study for focusing only on the universe of active cases, i.e., cases in which applications were granted, and for including cases from 1993 and 1994.

 Rebecca Klemm, Ph.D., an expert witness retained by Defendants, similarly criticized Plaintiffs' failure to measure timeliness of all applications being processed within a particular time period. According to Dr. Klemm, the best and most accurate method for studying the Medicaid application process is "to identify cases as they arrive for processing and then follow them through the entire process until a decision is reached." Klemm Test., P 4a. This way, both the timeliness or untimeliness of the processing and the reasons for the timeliness or untimeliness *fn21" can be understood. Klemm Test., P 4.

 Additionally, Dr. Klemm objected to the title of CFES' study, "untimely processing of applications for Medicaid," as too broad, because CFES actually studied only a discrete subgroup of Medicaid eligibility determinations, i.e., non-disability, non-foster care NPA Medicaid applications. Id. P 5. Dr. Klemm asserted that IMA's timeliness in making initial Medicaid eligibility decisions should be measured by considering not only how quickly IMA processes non-disability NPA applications, but also by considering how quickly IMA makes eligibility determinations for NPA-disability applicants and other Medicaid "applicants," i.e., children in foster care, AFDC recipients, and SSI recipients. Id., P 5 and Table 2A. With respect to foster care cases, Dr. Klemm testified that the time period between commitment of children to the District of Columbia's custody and commencement of those children's Medicaid eligibility could be measured. Similarly, with respect to SSI cases, the time period between IMA's receipt of a computer tape identifying SSI recipients and commencement of Medicaid eligibility for those recipients could be measured. With respect to disability NPA applications, Plaintiffs could have assessed IMA's compliance with the 60-day requirement for application processing. In sum, Dr. Klemm testified, a study of the timeliness of application processing should consider all of the ways in which Medicaid eligibility is determined. Klemm Cross-Exam. Test. Finally, Dr. Klemm also criticized CFES' failure to study applications that were denied. Id. P 5. *fn22"

 Dr. Klemm used a similar analysis with Plaintiffs' NPA-Multinational findings. Considering the 16 refutations Defendants made after actually reviewing 99 of Plaintiffs' cases, she estimated that out of the 188 NPA-Multinational cases studied by Plaintiffs, IMA improperly processed 110, or 58.4%, of the applications. See id.

 With respect to six of Defendants' actual refutations, Plaintiffs conceded timely processing of applications. Plaintiffs also agreed with Defendants that two had been processed in 46 days; an additional seven had been processed in 46 days due to IMA's allowance of a full 15-day period following the issuance of the 30-day notice, where the date of the 30-day notice was delayed because it fell on a non-business day; and one had been ignored because the applicant had already been found eligible for Medicaid. Two of the refutations have been withdrawn by Defendants. Stipulation of the Parties Concerning Siskin Test., Jesberg Test., and CFES Study, 5-30-96 ("Joint Stipulation") at 5. However, because neither party has identified the categories from which the agreed-upon applications were drawn (i.e., non-disabled NPA-Nonmultinational or NPA-Multinational), the Court cannot incorporate this information into the percentages offered by either Plaintiffs or Defendants.

 
c. The Court's Findings

 8. Defendants contend that Plaintiffs' study should be excluded from evidence in this case, because it failed to encompass eligibility determinations for the groups identified by Dr. Klemm, i.e., NPA-disability applicants, children in foster care, AFDC recipients, GPA recipients, and SSI recipients. See Defs.' Post-Trial Brief at 7. Such eligibility determinations should not have been included in Plaintiffs' statistical sample, however, because they are outside the scope of the Court's November 3, 1994 Class Certification Order. In that order, the Court certified plaintiff subclass III, which was defined as

 
all persons who have applied, have attempted to apply, or will apply in the future during the pendency of this litigation, for [Medicaid] . . . with respect to any claims . . . for declaratory, injunctive, or other relief premised on an alleged delay in excess of 45 days in the processing of Medicaid applications.

 November 3, 1994 Class Certification Order (emphasis added). SSI recipients--persons whose eligibility for SSI is determined by the federal Social Security Administration--and foster care children are automatically eligible for Medicaid in the District of Columbia consequently they do not not submit Medicaid applications to IMA and IMA makes no independent Medicaid eligibility determination for them. Defs.' Ex. 2 (D.C. Medical Assistance Policy Handbook), § 1620; Bobroff Test at 3. Similarly, AFDC recipients and GPA recipients are automatically eligible for Medicaid, Defs.' Ex. 2, §§ 1610 and 1630, and thus do not submit separate Medicaid applications to IMA. *fn23" Finally, applications for NPA-disability Medicaid must be processed within 60 days, rather than 45 days. D.C. Code Ann. § 3-205.26 (1994). Thus, the groups about whose exclusion Dr. Klemm complained simply do not belong to a plaintiff subclass alleging "delay in excess of 45 days in the processing of Medicaid applications."

 9. Even before the Court defined subclass III in its November 3, 1994 Order, Defendants knew that Claim 4 only encompassed applicants for NPA Medicaid. In June 1994, Defendants responded to Plaintiffs' First Set of Interrogatories, which asked Defendants for "the number of applicants for Medicaid benefits in the District of Columbia." Pls.' Ex. 101 at 2. Defendants responded that "this information can be derived from the available statistical reports prepared by each intake center handling NPA Medicaid applications." Id. at 3 (emphasis added). Similarly, when Defendants were asked to supply the number of Medicaid applicants who were denied benefits, their response "assumed [that] this interrogatory actually seeks information on NPA Medicaid applicants who were ultimately denied Medicaid eligibility. . ." Id. at 5-6 (emphasis added).

 10. Defendants' argument that Plaintiffs also should have studied denied applications is more compelling. See Defs.' Post-Trial Brief at 7. The case of Bazemore v. Friday, 478 U.S. 385, 92 L. Ed. 2d 315, 106 S. Ct. 3000 (1986), is instructive on this issue, however. The court of appeals had upheld the district court's exclusion of expert statistical analyses purporting to show salary disparities between white and black workers, on the ground that the analyses did not incorporate "all measurable variables thought to have an effect on salary level." Id. at 399. The Supreme Court rejected this conclusion as "plainly incorrect," and ruled that "normally, failure to include variables will affect the analysis' probativeness, not its admissibility." Id. at 400. The Court further noted that at trial, the defendants had merely "declared . . . that many factors go into making up an individual employee's salary; they made no attempt--statistical or otherwise--to demonstrate that when these factors were properly organized and accounted for there was no significant disparity between the salaries of blacks and whites." Id. at 404. *fn24"

 11. It is true that IMA's timeliness in processing applications that were denied would be one relevant factor for determining its timeliness in processing all non-disability, non-foster care NPA applications. However, the Court has no reason to assume that applications resulting in denial are processed more quickly than applications resulting in a finding of eligibility and, therefore, no reason to assume that Defendants are prejudiced by exclusion of such applications from the study. For example, the inherent difficulties in processing NPA-Multinational applications promptly, which are described in Finding No. 34, would apply with equal force to applications which are both accepted and denied. Thus, the Court finds that Plaintiffs' omission of denied applications is a weakness which merely "render[s] the analysis less probative that it otherwise might be"; it does not affect the study's admissibility. Bazemore, 478 U.S. at 400.

 The Court further notes that Defendants' criticism of Plaintiffs' failure to measure application processing for denied applications is similar to the criticisms of the Bazemore regression analyses. Like the defendants in Bazemore, Defendants in this case merely pointed to the denied applications, without ever attempting to show, statistically or otherwise, that when denied applications are considered, IMA's rate of proper application processing improves. See Bazemore, 478 U.S. at 404. In short, no evidence suggests that if Plaintiffs had statistically analyzed denied applications as well as accepted applications, the results would be any different.

 12. The Court accepts the numerical corrections to CFES' study made by Dr. Klemm in reliance on Ms. Jesberg's refutations. Thus, the final results of the study, as corrected by Dr. Klemm, are that Defendants failed to decide applications within 45 days in 35 out of the 97 non-disability NPA-Nonmultinational applications, or 36.0%, and in 110 out of 188 NPA-Multinational cases studied, or 58.4%. *fn25"

 
3. Hospital Evidence

 13. Hospitals frequently treat patients who, at the time of hospitalization or outpatient treatment, qualify for but are not currently receiving Medicaid. In order to ensure their own reimbursement, many hospitals have retained private firms to help patients who have already received hospital services complete their Medicaid applications. Testimony of David Sparks ("Sparks Test."), P 5; Testimony of Helen Green ("Green Test."). To receive Medicaid reimbursement for services already rendered, the applications must be submitted within 90 days of treatment. Testimony of Timothy B. Sheridan ("Sheridan Test.)

 14. Georgetown University Medical Center ("GUMC") submits Medicaid applications on behalf of its patients on a rolling basis. In other words, as soon as patients complete Medicaid applications, GUMC has a messenger deliver them to IMA. For the period from August 1, 1995 to March 26, 1996, GUMC sent 136 Medicaid applications to IMA on behalf of its patients, and IMA issued 70 eligibility decisions. As of March 28, 1996, 66 applications were still pending, 55 of which (83%) had been pending over 45 days. In 23 out of the 70 decided applications (33%), IMA issued a decision within 45 days. In 47 out of 70 (67%), however, IMA issued a decision more than 45 days after IMA received the application. Of the 47 decisions that took longer than 45 days, 18 (26%) were decided more than 60 days after IMA received the application; 15 (21%) were decided more than 90 days after IMA received the application; and 14 (20%) were decided more than 120 days after IMA received the application. Sheridan Test., PP 4-7; Sheridan Cross-Exam. Test.

 15. As of March 28, 1996, of the 107 Medicaid applications submitted by Providence Hospital on behalf of its patients in November and December 1995, 58 had been decided, and 49 had not yet been decided. Thus, 45.8% of the applications had been pending for between three and four months. Sparks Test. P 7.

 
4. Class Members' Experiences

 Many individual class members testified regarding IMA's failure to process Medicaid applications within 45 days.

 16. Ms. Josefa Alvarez submitted a Medicaid application on or about April 1993 for her children, but did not receive a notice of decision until October 1993, nearly six months later. By the time she received this notice, her Medicaid eligibility had already expired. Testimony of Josefa Alvarez ("J. Alvarez Test.") at 1.

 17. Ms. Sylvia Cruz-Diaz Alvarez applied for Medicaid on August 31, 1992, for herself and her children, Nelson and Jessica, after Ms. Alvarez was informed that Nelson needed a hernia operation. Ms. Alvarez did not receive any decision until on or about November 30, 1992, approximately 90 days after she applied. Moreover, the November 30, 1992 determination notice only covered herself and Nelson; Ms. Alvarez received no determination notice concerning Jessica until May 25, 1994, approximately 21 months after she applied. Jessica's notice, furthermore, stated that Jessica was eligible for Medicaid from June 1992 to August 1993, a period that had already expired by the time the notice was received. Ms. Alvarez applied a second time for Medicaid on or about June 13, 1994; she received a determination notice about two months later, on August 8, 1994, after her lawyer intervened. Testimony of Silvia Alvarez ("S. Alvarez Test.") at 1-5.

 19. Ms. Mirna Argueta submitted a Medicaid application on or about December 13, 1994. She did not receive a determination until late February 1995, over two months later. At that time, she received a notice of approval for her two children, but did not receive Medicaid cards for them until March 1995. Testimony of Mirna Argueta ("Argueta Test.") at 3-4.

 20. Ms. Hilda Avelar applied for Medicaid on January 6, 1994, at 645 H Street, N.E., and, in February 1994, informed DHS of her son's birth on January 29, 1994. On or about August 3, 1994, about eight months after she had applied, Ms. Avelar received a notice of decision indicating that her children were Medicaid-eligible from January 1994 through December 1994; however, she did not receive Medicaid cards until August 31, 1994, after her legal representative intervened. Testimony of Hilda Avelar ("Avelar Test.") at 1-3.

 21. In August 1992, Ms. Abigail Flores applied for Medicaid on behalf of four of her children. She did not receive IMA's notice of decision until March 31, 1993, after the intervention of her legal representative. Testimony of Abigail Flores ("Flores Test.") at 1-2; Green Test., PP 43-47.

 22. Ms. Orbelina Guardado applied for Medicaid when she was pregnant on or about early April 1993. Four months later, in August 1993, her legal representative learned, from Ms. Jesberg, that Ms. Guardado's son, who had been born in June 1993, was eligible for Medicaid from June 1993 to August 1994. Testimony of Orbelina Guardado ("Guardado Test.") at 1-3.

 23. Ms. Patricia Harden applied for Medicaid on May 9, 1994, and received a notice of eligibility dated July 13, 1994. Testimony of Patricia Harden ("Harden Test.") at 1. Thus, DHS took approximately 60 days to process Ms. Harden's application.

 24. Ms. Irma Hernandez applied for Medicaid on behalf of her children in April 1993, and received a notice of approval on or about November 23, 1993, approximately eight months after her application was submitted. While awaiting her application decision, Ms. Hernandez frequently had trouble obtaining medicine for her children. Testimony of Irma Hernandez ("Hernandez Test.") at 1-2.

 25. Ms. Maria Mendoza applied for Medicaid on behalf of herself and her three children in April 1994, when her son was hospitalized at D.C. General Hospital. Ms. Mendoza's sister inquired at IMA about the status of the application in September 1994, and learned that the application had been denied for failure to submit necessary documentation. Ms. Mendoza had not received the three notices requesting further information which IMA allegedly sent. Ms. Mendoza re-applied for Medicaid in January 1995; her family was found eligible and was issued Medicaid cards in February 1995. However, she is now being sued by D.C. General Hospital to collect the $ 20,000 hospital bill incurred for her son's April 1994 hospitalization. Ms. Mendoza's caseworker informed Ms. Mendoza's sister that Medicaid would not pay for the April 1994 hospitalization. Testimony of Maria Mendoza ("Mendoza Test.") at 1.

 26. On April 27, 1993, Ms. Maria Moreno applied for Medicaid for her family. On May 6, 1993, she received a request for employment verification, and submitted the necessary information on May 20, 1993. Ms. Moreno then received a second letter dated May 26, 1993, in which IMA again requested the same information. Ms. Moreno received a denial notice dated June 10, 1993, which stated that Ms. Moreno had failed to provide information to IMA. The same month, however, after her legal representative intervened, Ms. Moreno received an approval notice for her two sons, stating that they were eligible retroactively from January 1, 1993 until October 31, 1993. Testimony of Maria Moreno ("Moreno Test.") at 1-2.

 27. On or about March 14, 1995, Ms. Rosa Rivas submitted a Medicaid application at 645 H Street, N.E. for her son, Joaquin. Ms. Rivas received a notice from IMA on April 3, 1995, which, she thought, stated that all necessary information had been received. In late April 1995, however, she received a denial notice for failure to submit necessary information. Rivas Test. at 4-5.

 28. On or about June 17, 1992, Ms. Adela Salazar applied for Medicaid on behalf of her son, Oscar, Jr., who suffers from spastic quadriplegia. She received no response until January 1993, approximately seven months later, when IMA informed the Salazars that their income was too high for Medicaid, but that they could "spend down" that income in order to qualify. *fn26" During the summer of 1993, IMA informed the Salazars that Oscar was eligible. By that time, they had incurred medical bills of over $ 5,000 for Oscar, Jr., and had spent $ 1,604 in out-of-pocket costs for his care. Testimony of Oscar Salazar, Sr. ("Salazar Test.") at 1-2; Salazar Cross-Exam. Test.

 29. Ms. Miriam Turcios applied for Medicaid in person at 645 H Street, N.E. on or about September 27, 1995, while she was pregnant with her daughter Tania. While waiting for IMA's decision, she gave birth to her daughter on January 14, 1996, and received bills from Mary Center for prenatal care and medical care for Tania, and a $ 10,000 bill from Providence Hospital for charges associated with the birth. During the week of April 8, 1996, she received a notice of approval for Medicaid dated April 2, 1996. The notice stated that she was eligible from September 1, 1995 to August 31, 1996, as well as for three months before September 1, 1995. Testimony of Miriam Turcios ("Turcios Test.") at 1-2; Pls.' Ex. 314.

 30. Mr. Karl Von Faust submitted a Medicaid application to IMA which was received on December 7, 1993. After submitting additional information in May 1994, he received a determination of eligibility on June 23, 1994. During the time in which his application was pending, Mr. Von Faust spent $ 832 of his own funds to obtain prescriptions and pain medications, volunteered for 10 different drug trials in two years in order to receive free medical treatment, and could not afford to visit the doctor. He also spent $ 434.10 in Medicare premiums and $ 20 on care for his foot after surgery. Testimony of Karl Von Faust ("Von Faust Test.") at 2-4.

 31. Ms. April Land, an attorney at the Neighborhood Legal Services Program from 1991 through 1995, has provided legal assistance to at least 20 additional families who did not receive decisions on their Medicaid applications within 45 days. Testimony of April Land ("Land Test."), P 3. According to Ms. Land, IMA requested the same information five times from Mr. Roosevelt Abrego and his wife, who applied for Medicaid on behalf of their daughter. Id. PP 5-7. Although the Abregos provided the requested information each time, they received a notice that their application had been denied for failure to provide information. Id.27 In general, Ms. Land testified, by the time many people are notified of their eligibility for Medicaid, that eligibility has expired or is about to expire. Land Test.

 
5. Defendants' Knowledge of Untimely Processing

 32. Since January 1990, Defendants have known about IMA's failure to process large numbers of NPA Medicaid applications within 45 days. In January 1990, Mr. Ronald Lewis, then manager of 645 H Street, N.E., wrote Mr. Bayne, then IMA's Acting Chief of Program Operations:

 
This is a follow-up memorandum to the one I wrote you on December 13, 1989. The crisis in the Hispanic Unit [Multinational Section] with the Medicaid backlog continues and the overtime project is not solving it.

 Pls.' Ex. 285. In September 1990, Mr. Lewis again wrote Mr. Bayne to inform him that "the backlog in NPA Medicaid continue[s] to grow." Pls.' Ex. 283. Again, in April 1991, Mr. Lewis reported to Mr. Bayne that there were 75 NPA-Multinational applications that had been pending for over 45 days. Pls.' Ex. 280.

 33. On or about February 1993, DHS studied the causes of the application backlog in the Multinational Section, and found, in a written report entitled "Program Analysis: Multinational Medicaid," that "50% of all applications [were] backlogged over 180 days." Pls.' Ex. 292. The report concluded that the Multinational Section was ineffective in providing timely medical assistance to community residents." Id.

 34. At trial, Defendants conceded that prompt processing of applications has been an ongoing struggle for the Multinational Section. Bayne Test., P 13. *fn28"

 B. Termination of Benefits

 Plaintiffs challenge two different systemic problems: (1) IMA fails to act promptly on Medicaid recipients' recertification requests, thereby terminating or causing temporary lapses in Medicaid benefits; and (2) IMA's Eligibility Verification System ("EVS") malfunctions, thereby preventing eligible Medicaid recipients from obtaining needed medical services and medications.

 
Recertification Processing

 35. The period of Medicaid eligibility is generally one year. Green Test., P 23. At the end of the applicable period, each recipient must be recertified in order to maintain her eligibility. All recertifications are handled exclusively by the central service site at 645 H Street, N.E. At that site, the Multinational Section handles recertifications for NPA-Multinational Medicaid recipients, and the Recertification and Spenddown Section handles recertifications for all other Medicaid recipients, including NPA-Nonmultinational recipients. Bayne Cross-Exam. Test.; Green Test., P 23. ACEDS automatically generates recertification forms to be sent to current Medicaid recipients generally 90 days, but occasionally 60 days, before the end of the previously established certification period. Conover Test., P 11; Green Test., P 23. *fn29"

 37. IMA SSRs review the returned recertification forms for completeness and verify the information provided. Green Test., P 26. If additional information is required, ACEDS generates an appropriate letter on the basis of the eligibility worker's entry, and the recipient is usually given 15 days to submit the supplemental documentation. Id. This 15-day period can be extended by the SSR, with supervisory authorization, if the recipient has submitted at least some of the documentation and is actively trying to complete the recertification form. Id. Finally, once all necessary documentation has been received and reviewed, ACEDS generates a notice of denial or approval on the basis of the data entered by the worker. All denials and approvals must be authorized by a supervisor. Id. P 27. No recipients should be terminated without first receiving notice 30 days in advance. Id.

 38. IMA's stated policy is to process recertifications before the date on which recipients' eligibility expires. However, it often fails to do so, as Plaintiffs vividly demonstrated.

 
a. MEO Reports

 39. IMA's Medical Eligibility Operations ("MEO") reports for the Multinational Section demonstrate that IMA frequently fails to process NPA-Multinational recipients' recertification forms before their Medicaid eligibility expires. *fn30" The MEO reports for the Multinational Section contain, on line B.7, data entitled "number of recerts due for the month." Pls.' Ex. 111. According to Ms. Grace Howard, Chief of the Multinational Section for several years before her retirement in March 1995, line B.7 indicates the number of recertifications in the unit for whom eligibility will expire at the end of the reporting period month. Howard Test.; Pls.' Ex. 111 at 1523 (MEO report for November 1993). *fn31"

 40. Thus, according to Ms. Howard, in November 1993, there were 99 people whose Medicaid eligibility would expire at the end of the month, and whose "recerts" were therefore "due for the month." Howard Test. Line B.9 indicates the number of recertifications that were processed during the reporting month. Id. In November 1993, the recertification forms of only 30 people, out of the 99 people whose eligibility was scheduled to expire, were processed. Id. Therefore, 69 Medicaid recipients that month may have suffered at least a temporary lapse in benefits due to the fact that their eligibility expired before their recertifications were processed, i.e., before IMA determined whether they were still eligible. See Bayne Cross-Exam. Test.

  42. Medicaid recipients whose recertifications are not processed before their eligibility is scheduled to expire experience lapses in Medicaid coverage because when recertification forms are received and logged into ACEDS, but are not processed by an IMA SSR, ACEDS does not automatically adjust the eligibility period. Rule 30(b)(6) Deposition of Arlene Conover ("Rule 30(b)(6) Conover Dep."), 1-24-95, at 43. In general, Medicaid recipients in this situation receive no notice of the fact that their recertifications have not been processed and that their benefits will lapse. Howard Test. There are two exceptions, however. First, IMA may, on an individual, ad hoc basis, contact such Medicaid recipients to inform them of this lapse in benefits. Howard Test. Second, Medicaid recipients who do not submit recertification forms by 30 days before the end of the certification period are automatically sent the ACEDS 30-day termination notice discussed in Finding No. 36.

  If a recertification form is processed after a recipient's eligibility has expired, IMA provides benefits retroactively for the period during which benefits lapsed. Deposition of Grace Howard ("Howard Dep."), 11-8-94, at 53-56.

  43. It is IMA's policy to extend Medicaid benefits automatically for those people who, after submitting recertification forms, happen to call IMA to inquire about their recertifications. Howard Cross-Exam. Test.; Green Test.; cf. Jackson Dep., 11-3-94, at 328-29 (stating that IMA has an unwritten practice of extending benefits for one month when a recertification is not processed by the end of the eligibility period, in order to prevent a lapse in coverage). However, it is not IMA's policy to extend Medicaid benefits automatically for all recipients who submitted recertification forms, i.e., those who did not know to, could not, or did not happen to call IMA to inquire about their recertifications. Howard Test.; Green Test. Nor does IMA take any steps to inform recipients about the importance of such telephone inquiries. *fn32"

  
b. Plaintiffs' Statistical Sample33

  44. Plaintiffs retained CFES to measure the frequency of the following four problems with IMA's recertification processing: (1) IMA failed to give the recipient any advance notice whatsoever of a lapse or termination, including the 30-day termination notice, (2) IMA terminated eligibility for failure to return a recertification form, even though it had failed to send the recipient a recertification form, (3) IMA issued a termination notice for failure to return a recertification form, but the recipient subsequently submitted a recertification form before the end of the eligibility period, or (4) the recipient's eligibility lapsed because IMA failed to process the recertification form before the end of the eligibility period. Siskin Test., P 27. *fn34" CFES statistically analyzed 122 NPA-Nonmultinational recertifications, including NPA-disability recertifications, and 199 NPA-Multinational recertifications.

  45. Using a 95% confidence interval, CFES found that one of the above scenarios occurred, resulting in a termination or temporary lapse of Medicaid benefits, an estimated 34.4% of the time in the non-disability NPA-Nonmultinational cases, an estimated 47.2% of the time in the NPA-Multinational cases, and an estimated 26.4% in the NPA-disability cases. Siskin Test., P 28. *fn35"

  46. Again extrapolating from the number of cases IMA had actually reviewed, see supra § II.A.2.b, Dr. Klemm recalculated the percentages of improperly processed recertifications to be 19.5% for the non-disability NPA-Nonmultinational cases, 33.4% for the NPA-Multinational cases, and 21.1% for the NPA-disability cases. See Klemm Test., Table 6A. *fn36"

  47. The Court accepts Dr. Klemm's modifications to CFES' findings. Thus, the Court finds that IMA improperly allowed Medicaid benefits to lapse or to be terminated in an estimated 19.5% of the non-disability NPA-Nonmultinational cases, an estimated 33.4% of the NPA-Multinational cases, and an estimated 21.1% of the NPA-disability cases.

  
c. Class Members' Experiences

  48. Numerous class members who were covered by Medicaid experienced terminations or lapses in benefits either because they were never sent recertification forms, or because they received them and returned them but IMA failed to approve their recertifications before expiration of their Medicaid eligibility.

  49. In or about October 1993, Ms. Josefa Alvarez received a notice of Medicaid eligibility for a period which had already expired. Ms. Alvarez completed a recertification form in or about January 1994. IMA did not receive the recertification form until February 17, 1994, however. Green Test., P 31. On or about January 31, 1994, Ms. Alvarez received a letter which stated that her children's benefits would expire on February 28, 1994, because she had not returned the recertification form. See Pls.' Ex. 113. *fn37" In March 1994, her legal representative spoke with Ms. Jesberg and wrote to Mr. Bayne, and learned that Ms. Alvarez' children were eligible for Medicaid until August 31, 1994. Ms. Alvarez received a notice of approval for Medicaid at the end of March 1994. J. Alvarez Test. at 1-4.

  50. In early January 1996, Ms. Alvarez received a recertification form and a letter stating that her children's benefits were due to expire on February 29, 1996. Ms. Alvarez submitted the completed recertification form in person at 645 H Street, N.E.; however, on March 26, 1996, she was told by a pharmacist that her children's Medicaid cards were not working, so she had to pay for their medications herself. Supplemental Testimony of Josefa Alvarez ("J. Alvarez Supp. Test.") at 1-2. According to Ms. Green, ACEDS would have revealed her Medicaid coverage, even though EVS incorrectly reported that her family was not enrolled in Medicaid. Green Cross-Exam. Test.

  51. On December 27, 1995, Katy Lisette Alvarez became ill and was admitted to Children's Hospital, which informed her mother, Ms. Silvia Alvarez, that Katy's Medicaid had expired. Ms. Alvarez contacted IMA and learned that Katy's eligibility had expired because no recertification form had been submitted. However, Ms. Alvarez had never received a recertification form from IMA. Ms. Alvarez submitted all necessary recertification information in January 1996, and received a notice dated February 29, 1996, stating that her children were Medicaid-eligible until May 31, 1996. When Ms. Alvarez took Katy to the Adams-Morgan Clinic for a checkup on March 13, 1996, she was informed that Katy's Medicaid card was working. Supplemental Testimony of Silvia Alvarez ("S. Alvarez Supp. Test.") at 1-2.

  52. On or about July 22, 1993, Ms. Reina Aparicio received a notice for her son Brian stating that Brian was eligible for Medicaid from April 1993 to September 1993. On or about August 19, 1993, Ms. Aparicio returned a recertification form to DHS via certified mail. On or about October 13, 1993, Ms. Aparicio received a notice from IMA indicating that Brian was eligible from October 1993 to September 1994. Therefore, Brian experienced a lapse in Medicaid benefits for 13 days in October 1993. Testimony of Reina Aparicio ("Aparicio Test.") at 1-2. Eligibility begins on the first day of the first month of the eligibility period, and ends on the last day of the last month. Green Test., P 34. Thus, Brian did receive retroactive coverage for early October 1993. Id.

  53. In March 1994, Ms. Blanca Arce received a recertification form, which she returned in person to the DHS office at 645 H Street, N.E. Ms. Arce never received a response to this recertification form. In July 1994, she received another recertification form, which she also returned in person to 645 H Street, N.E. Arce Test. at 2.

  54. On or about November 30, 1994, Ms. Mirna Argueta, who had been receiving Medicaid for her children, was informed by the Adams Morgan Clinic that her children's Medicaid benefits had expired. Ms. Argueta had not received a recertification form in the mail advising her of her obligation to recertify the benefits or any advance notice that the benefits would be terminated. Argueta Test. at 3.

  55. In or about April 1994, Ms. Abigail Flores received a recertification form for an eligibility period expiring on May 31, 1994. She completed and hand-delivered the recertification form to DHS, although the date of delivery is not clear. She received a notice of eligibility on or about July 25, 1994. Her children experienced a lapse in benefits from June 1, 1994 to July 25, 1994, during which time Ms. Flores was told by the Adams Morgan Clinic that her daughter Irma was not Medicaid-eligible. Flores Test. at 2-4.

  56. Subsequently, Ms. Flores' children's Medicaid benefits were due to expire on December 31, 1995. Ms. Flores completed their recertification forms and delivered them to 645 H Street, N.E., in early September 1995. On March 22, 1996, Ms. Flores visited the office at 645 H Street, N.E., in person, and learned that the recertifications still had not been processed. As of March 27, 1996, she had still not received any response to the recertifications; however, when she recently took her son Alfredo to Children's Hospital for emergency treatment, she was informed by hospital staff that her son was Medicaid-eligible. Supplemental Testimony of Abigail Flores ("Flores Supp. Test.") at 1-2.

  57. Ms. Orbelina Guardado submitted a recertification form on or about January 5, 1995 for an eligibility period ending February 28, 1995. Ms. Guardado then submitted information requested by IMA in person on or about February 16, 1995. She did not receive a notice of approval concerning the recertification until April 14, 1995, however. Thus, she experienced a lapse in benefits for her family from March 1, 1995 until on or about April 14, 1995. During that period, in March 1995, she had to pay a deposit to have her son Mauricio treated at Children's Hospital when he was ill, and had to pay for his prescription. Ms. Guardado was unable to purchase a prescription for her son Edwin in March because she lacked the money. Guardado Test. at 4-7.

  58. In January or February 1995, Ms. Patricia Harden received a Medicaid recertification form. She completed the form and had it delivered to IMA by courier. On November 27, 1995, Ms. Harden suffered a heart attack and was taken to Georgetown University Medical Center, where she underwent double bypass surgery and remained until December 4, 1995. On December 4, 1995, Ms. Harden's son attempted to fill her prescriptions with her Medicaid card; however, the pharmacist said that the card was invalid. Thus, Ms. Harden had to pay approximately $ 150 for the prescriptions.

  59. When Ms. Harden called IMA, she was informed that her benefits had been terminated because IMA had never received her recertification form. Ms. Harden had never received any notice of termination of benefits, however. Ms. Harden called an official in Mayor Barry's office, who told her that he would look into the matter. Within a few days, Ms. Green and her assistant visited Ms. Harden's apartment with a blank recertification form, had her sign it, and promised that they would begin processing it immediately. Ms. Harden then received a notice dated January 2, 1996, stating that her Medicaid eligibility would not expire until April 30, 1996. During the period when IMA did not consider her to be Medicaid-eligible, Ms. Harden spent several hundred dollars on prescription medicine. Harden Test. at 2-3.

  60. Ms. Irma Hernandez was not sent a recertification form for Medicaid benefits due to expire at the end of August 1994. Pls.' Ex. 160, bates stamp no. 201978. She went to the DHS office and requested a recertification form, and submitted it on or about July 27, 1994. Hernandez Test. at 4-5. An approval notice was generated by ACEDS on October 24, 1994. Pls.' Ex. 160, bates stamp no. 201978. Thus, the Hernandez family experienced a lapse in Medicaid benefits from September 1, 1994, to October 24, 1994.

  61. In mid-January 1996, Ms. Adriana Lopez took her daughter Maria, who has a heart condition, to Children's Hospital for a checkup. Maria's eligibility had been scheduled to expire in December 1995, but Ms. Lopez had sent a recertification form to IMA in October 1995. At the hospital, Ms. Lopez was informed that Maria's Medicaid card was not working, and that verification through an IMA caseworker was not possible that day. Therefore, Maria did not ...


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