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NB v. District of Columbia

United States District Court, District of Columbia

March 30, 2014

NB, et al., Plaintiffs,
THE DISTRICT OF COLUMBIA, et al., Defendants.


RICHARD J. LEON, District Judge.

Nine Medicaid recipients ("plaintiffs") bring this suit against the District of Columbia, the Mayor of D.C., and the Director of D.C.'s Department of Health Care Finance (collectively, "defendants"), alleging that defendants denied Medicaid coverage of their prescription drugs without providing the procedural protections required by law. See generally Am. Compl. [Dkt. #43]. In particular, plaintiffs allege that D.C. "denied, terminated, reduced, or delayed" their prescription drug coverage, and did so without giving them adequate written notice, the opportunity for a fair hearing, and the opportunity for reinstated coverage pending a hearing decision, in violation of federal and D.C. law. See Am. Compl. ¶¶ 1-2. Plaintiffs, therefore, allege violations of the Due Process Clause of the Fifth Amendment of the Constitution, Title XIX of the Social Security Act, 42 U.S.C. § 1396 et seq., and District of Columbia law, D.C. Code § 4-201.01, et seq., and they seek declaratory and injunctive relief under 42 U.S.C. § 1983. See Am. Compl. ¶¶ 181-195; id. at 49.

This Court previously granted defendants' Motion to Dismiss ("Defs.' First Mot.") [Dkt. #10] on the ground that plaintiffs lacked standing, see NB v. District of Columbia, 800 F.Supp.2d 51 (D.D.C. 2011), but plaintiffs successfully appealed that ruling, see NB ex rel. Peacock v. District of Columbia, 682 F.3d 77 (D.C. Cir. 2012). Following remand from our Circuit Court, now pending before this Court are the remaining grounds in defendants' first Motion to Dismiss, as well as defendants' subsequent Motion to Dismiss, or, in the Alternative, for Summary Judgment ("Defs.' Second Mot.") [Dkt. # 46] and Memorandum of Points and Authorities in Support ("Defs.' Second Mem.") [Dkt. #46-1]. Upon consideration of the pleadings and relevant law, defendants' Motions to Dismiss are GRANTED.


I. Medicaid Statutory and Regulatory Framework

Congress established the Medicaid program under Title XIX of the Social Security Act ("Grants to States for Medical Assistance Programs"), 42 U.S.C. § 1396 et seq. Medicaid is a "cooperative federal-state program that provides federal funding for state medical services to the poor." Frew v. Hawkins, 540 U.S. 431, 433 (2004). Rather than directly providing health care services to eligible individuals or providing them with funds to purchase health care, Medicaid typically functions as a provider payment program, wherein the program reimburses approved providers for their services. See 42 U.S.C. § 1396a(a)(32); Am. Compl. ¶ 21.

Medicaid is financed by both the federal and state governments and is administered by state agencies that are responsible for deciding eligibility, services provided, and all related procedures. See 42 U.S.C. § 1396a(a)(2), (5); 42 C.F.R. § 430.0. In the District of Columbia, the Department of Health Care Finance ("DHCF") is the state agency responsible for administering D.C.'s Medicaid program. See 42 U.S.C. § 1396a(a)(5); 42 C.F.R. § 431.10; D.C. Code § 7-771.07(1).

States electing to participate in Medicaid must comply with requirements imposed by federal law, including procedural protections for Medicaid recipients. NB ex rel. Peacock, 682 F.3d at 80. As relevant in this case, the state must provide a Medicaid recipient with written notice of his right to a hearing "at the time" the state takes "any action affecting his... claim." 42 C.F.R. § 431.206(b), (c)(2). Such notice must contain a statement of what action the state intends to take, the reasons for that action, the specific regulations supporting the action, the individual's right to request a hearing, and an explanation of the circumstances under which coverage will be continued if a hearing is requested. 42 C.F.R. § 431.210. District of Columbia law imposes similar requirements. See D.C. Code § 4-205.55.[1]

D.C.'s Medicaid program includes coverage for prescription drugs: DHCF provides reimbursement to licensed, participating pharmacies for covered out-patient drugs dispensed to eligible Medicaid recipients. Am Compl. ¶ 32. As encouraged by the Medicaid statute and regulations, D.C. uses an electronic claims management ("ECM") system in order to facilitate the processing of Medicaid claims for prescription drug coverage at the point of sale. See Am. Compl. ¶¶ 33-34; 42 U.S.C. § 1396r-8(h); 42 C.F.R. § 456.722. DHCF contracts with a third party company, Xerox, [2] to process claims using an ECM system. Am. Compl. ¶ 33.

II. Factual Background

Plaintiffs, who suffer from various ailments that necessitate treatment with prescription drugs, all receive Medicaid benefits in the District of Columbia. Am. Compl. ¶¶ 5-13. They allege that on various occasions their prescription drug coverage under Medicaid was "denied, terminated, reduced, or delayed, " and that D.C. took such actions without providing them with legally-required timely and adequate written notice of the reasons for coverage denials or reductions, the right to request a hearing, and the circumstances under which coverage would be reinstated if a hearing was requested. Id. ¶¶ 48-174.

More specifically, in their complaint plaintiffs allege multiple instances in which they went to fill prescriptions at pharmacies, were told by the pharmacies that Medicaid would not cover the prescriptions, and were not given written notice of either the reasons for the rejections or their procedural rights. Id. As a result, plaintiffs allege that in some cases they had to pay out-of-pocket for medication. E.g., id. ¶¶ 50, 52 (plaintiff NB); id. ¶¶ 67-68, 77 (plaintiff Doe). In other cases, plaintiffs allege that they were able to obtain their prescriptions, covered by Medicaid, at a different pharmacy, e.g., id. ¶ 57 (plaintiff Wynn); id. ¶ 97 (plaintiff Anderson), or at the original pharmacy at a later time or date, e.g., id. ¶ 103 (plaintiff Rucker); id. ¶ 67 (plaintiff Doe); id. ¶ 163 (plaintiff Maldonado), or instead were able to obtain an emergency supply from D.C., id. ¶ 60 (plaintiff Wynn). In still other instances, the pharmacy, rather than refusing to fill a plaintiff's prescription altogether, instead filled a generic drug or other substitute formulation, id. ¶ 79 (plaintiff Doe); id. ¶ 161 (plaintiff Maldonado), or a dosage formulation different from the one actually prescribed, id. ¶¶ 59-60 (plaintiff Wynn).

Plaintiffs further allege that in many cases the pharmacy did not explain to them why a given prescription was not covered by Medicaid and thus would not be filled, e.g., id. ¶ 50 (plaintiff NB), but in some cases the pharmacy did give a reason, such as that the prescription lacked a required prior authorization from the prescribing doctor, e.g., id. ¶ 59 (plaintiff Wynn); id. ¶¶ 70-73, 81-82 (plaintiff Doe); id. ¶ 169 (plaintiff Maldonado), or that the pharmacy computer system showed the patient as ineligible or inactive, id. ¶ 50 (plaintiff NB); id. ¶¶ 101-103 (plaintiff Rucker); id. ¶ 165 (plaintiff Maldonado); id. ¶¶ 146, 150 (plaintiff Tatum), or did not find the patient's Medicaid identification number in the system at all, id. ¶ 90 (plaintiff Anderson).

Plaintiffs also allege that doctors and pharmacists committed errors or omissions that led to problems for plaintiffs in filling prescriptions. For instance, plaintiffs describe numerous occasions on which doctors failed to submit prior authorizations in a timely manner, e.g., id. ¶¶ 59-60 (plaintiff Wynn); id. ¶ 119-122 (plaintiff Robinson), or in a complete and adequate form, id. ¶¶ 107-108 (plaintiff Rucker), or failed to submit or renew them altogether, id. ¶¶ 77, 81-82 (plaintiff Doe). Moreover, plaintiffs allege that pharmacists made errors in several ways, such as filling an incorrect dosage formulation different from the one actually prescribed, id. ¶¶ 59-60 (plaintiff Wynn), unilaterally reducing the number of inhalers a plaintiff received by mistakenly claiming that Medicaid only covered one, id. ¶ 67 (plaintiff Doe), and submitting the wrong Medicaid identification number for a plaintiff, id. ¶ 102 (plaintiff Rucker). Plaintiffs also cite examples of pharmacies allegedly ...

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