United States District Court, District of Columbia
N.B. et al., Plaintiffs,
THE DISTRICT OF COLUMBIA et at., Defendants.
RICHARD J. LEAN United States-District Judge
in this case are residents of the District of Columbia
("the District" or "D.C.") who are
eligible for Medicaid benefits and who unsuccessfully sought
coverage for specific drug prescriptions. In their Amended
Complaint, they allege that the District, the Mayor of D.C.,
and the Director of the Division of Health Care Finance
("DHCF") have systematically failed to provide
Medicaid recipients with "adequate and timely notice,
the opportunity for a fair hearing, and the opportunity for
reinstated coverage pending a hearing decision" when
they are denied coverage for specific prescriptions, in
violation of the Fifth Amendment to the U.S. Constitution,
Title XIX of the Social Security Act, and local D.C. law. Am.
Compl. ¶ 1 [Dkt. # 43].
remand from our Circuit Court, this Court is now faced with
defendants' Updated Motion to Dismiss [Dkt. # 64] the
Amended Complaint for failure to state a claim. NB ex
rel. Peacock v. District of Columbia, 794 F.3d 31, 35-36
(D.C. Cir. 2015). Although plaintiffs' claims under Title
XIX have been dismissed, plaintiffs continue to allege
violations of the Due Process Clause of the Fifth Amendment
to the Constitution 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. Upon
consideration of the pleadings and relevant law, and for the
reasons explained below, defendants' Motion to Dismiss is
GRANTED in part and DENIED in part.
Legal and Factual Framework
factual and legal issues underlying this case are described
in painstaking detail in the earlier opinions of both this
Court and our Circuit Court, so a more concise background
summary will suffice here. See N.B. ex rel. Peacock v.
Dist. of Columbia, 800 F.Supp.2d 51, 52-54 (D.D.C.
2011); N.B. ex rel. Peacock v. Dist. of Columbia,
682 F.3d 77, 80-81 (D.C. Cir. 2012); N.B. ex rel Peacock
v. Dist. of Columbia, 34 F.Supp.3d 146 (D.D.C. 2014);
N.B ex rel. Peacock v. Dist. of Columbia, 794 F.3d
31, 35-36 (D.C. Cir. 2015).
1968, Congress established Medicaid as a "cooperative
federal-state program that provides federal funding for state
medical services to the poor." Title XIX of the Social
Security Act ("Grants to States for Medical Assistance
Programs"), 42 U.S.C. § 1396 et seq.; Frew v.
Hawkins, 540 U.S. 431, 433 (2004). Although funding
comes from both federal and state governments (including the
District of Columbia), Medicaid is administered by state
agencies. See 42 U.S.C. § 1396a(a)(2), (a)(5);
42 C.F.R. §430.0.
District's Department of Health Care Finance
("DHCF") administers the D.C. Medicaid program,
which provides, inter alia, certain prescription
drug benefits to qualified beneficiaries. D.C. CODE §
7-771.07(1). In order to manage its prescription coverage
benefit, DHCF contracts with Xerox, a third-party company, to
operate an electronic claims management system and process
Medicaid prescription drug coverage claims at the point of
sale. See Am. Compl. ¶¶ 33-34; Defs.'
Updated Mot. to Dismiss at 3n.2.
plaintiffs in this case all receive Medicaid benefits in the
District and suffer from conditions that require prescription
drug treatment. Am. Compl. ¶¶ 5-13, 17. They allege
that on various occasions their prescription drug coverage
under Medicaid was "denied, terminated, or reduced,
" and the District failed to provide them with any
"notice of the denial, the reason for the denial, the
right to a hearing, or the circumstances under which Medicaid
will continue providing coverage during the appeal
process." Am. Compl. ¶¶ 47, 58, 61, 74, 80,
84, 141, 154, 172. Specifically, plaintiffs allege multiple
instances in which they attempted to fill prescriptions at
pharmacies, were told that Medicaid would not cover the
prescriptions, and were not given notice of the reasons for
the rejections or their procedural rights for challenging the
denial. Id. ¶¶ 57, 58, 61, 77, 80, 140,
141, 154, 165, 172.
the plaintiffs initiated this action in 2010. See
Compl. [Dkt # 3]. In 2011, ' I held that plaintiffs
lacked Article III standing and granted
defendants' motion to dismiss the case. See NB v.
District of Columbia, 800 F.Supp.2d 51 (D.D.C. 2011). In
2012, our Circuit Court reversed on appeal, holding that the
plaintiffs' complaint included sufficient factual
allegations to establish that at least one plaintiff, John
Doe, had standing on a procedural injury theory. See NB
ex rel. Peacock v. District of Columbia, 682 F.3d 77, 82
(D.C. Cir. 2012). On remand, plaintiffs amended their
complaint to add four new plaintiffs and new facts, without
changing their legal causes of action. Am. Compl. In 2014, 1
determined that plaintiffs' Amended Complaint failed to
state a claim under either Title XIX or the Fifth Amendment,
dismissed the D.C. law claims for lack of pendent
jurisdiction, and again dismissed the case. NB ex rel.
Peacock v. District of Columbia, 34 F.Supp.3d 146
(D.D.C. 2014). On appeal, our Circuit Court affirmed in part
and reversed in part, holding that though plaintiffs failed
to state a claim under Title XIX, they had alleged that D.C.
had deprived them of their protected property interests in
prescription coverage, and remanded to this Court to consider
what process the plaintiffs are entitled to under the Fifth
Amendment. NB ex rel. Peacock v. District of
Columbia, 794 F.3d 31, 40-44, (D.C. Cir. 2015). In light
of the partial reversal, the Circuit also noted that I could
reconsider this Court's jurisdiction over the D.C. law
claims on remand. Id. at 44.
deciding a motion to dismiss under Rule 12(b)(6) for failure
to state a claim upon which relief can be granted, the Court
must determine whether the complaint contains
"sufficient factual matter, accepted as true, to state a
claim to relief that is plausible on its face."
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)
(internal quotation marks and citations omitted). The
complaint must include "more than labels and
conclusions, and a formulaic recitation of the elements of a
cause of action will not do"; instead, the complaint
must include factual allegations that "raise a right to
relief above the speculative level." Bell Atlantic
Co v. Twombly, 550 U.S. 544, 555 (2007) (internal
quotation marks and citation omitted).
the Rule 12(b)(6) standard, Court must read the
complaint's factual allegations in the light most
favorable to the plaintiff, id, but the Court is not
required to accept plaintiffs legal conclusions, even if they
are framed as factual assertions. Browning v.
Clinton, 292 F.3d 235, 242 (D.C. Cir. 2002). As a
result, a claim that is rooted in a faulty legal theory must
be dismissed, "whether it is based on an outlandish
legal theory or on a close but ultimately unavailing
one." Nietzke v. Williams, 490 U.S. 319,
motion to dismiss stage, the Court "may consider only
the facts alleged in the complaint, any documents either
attached to or incorporated in the complaint[, ] and .matters
of which [the court] may take judicial notice." EEOC
v. St. ...