Health Law Daily Modification of consent decree crosses line, creates new impermissible injunction
Monday, July 23, 2018

Modification of consent decree crosses line, creates new impermissible injunction

By Harold Bishop, J.D.

In a class action alleging numerous violations in the District of Columbia’s (District) administration of its Medicaid program, a D.C district court’s imposition of brand new injunctive obligations on the District to redress new factual problems arising under the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148), and providing relief under provisions of a prior Consent Decree that were no longer in effect, could not be allowed under Rule 60(b) of the Federal Rules of Civil Procedure. Rule 60(b) only allows modification of a consent decree to the same extent as a final judgment. It does not allow modifications that, in effect, result in a new injunction (Salazar v. District of Columbia, July 20, 2018, Millett, P.).

Background. Both federal and local law have long required the District of Columbia to make Medicaid eligibility determinations within 45 days of an application for benefits (42 C.F.R. §435.912(c)(3)) and to provide Medicaid recipients timely notice of any proposed termination, discontinuation, or suspension of eligibility. Historically, the application and recertification process was done by paper and mail. In 2010, section 2002 of the ACA required the District to base Medicaid eligibility determination on the modified adjusted gross income on the federal tax returns of applicants and recipients. This required the District had to replace its old paper recertification system with a new passive renewal model. The transition from the old paper/mail system to a new DC Access System has been problematic.

Class action dispute. Long before the ACA, in 1993, a group of Medicaid applicants and recipients (beneficiaries) filed a class action against the District of Columbia principally alleging that the District’s administration of its Medicaid program violated the Medicaid statute, its implementing regulations, District law, and the United States Constitution. In 1994, the district court certified a class consisting of five Subclasses. The first two Subclasses, which involved Medicaid-eligible newborns and certain hospitalized applicants, settled before trial and are not at issue. Of the remaining three, Subclass III consisted of individuals who alleged delayed processing of their initial Medicaid applications. Subclass IV consisted of individuals who alleged that the District failed to comply with pre-ACA requirements to provide adequate advance notice of the termination or suspension of Medicaid eligibility. And Subclass V consisted of individuals alleging that the District failed to give notice of or to provide the early and periodic screening, diagnostic, and treatment services required for Medicaid-qualified children. After a bench trial in 1996, the District was found liable to Subclasses III, IV, and V for numerous violations of the law.

Consent Decree. The District appealed, but in 1999, while that appeal was still pending, the parties reached a settlement agreement, with the district court approving a Consent Decree. Over the next 14 years, several provisions of the Consent Decree terminated. By 2013, no provisions of the Consent Decree relating to Medicaid eligibility determinations or renewals remained in effect (see Recertification provisions in the class action consent order terminated due to PPACA conflict, October 18, 2013). The only portions of the Consent Decree that were still operative on the District were the Early Childhood Provisions, which governed issuing notice about and the delivery of Early Childhood Services for already Medicaid-eligible children and their family members in Subclass V.

Motion to modify the Consent Decree. In December 2015, the beneficiaries filed a motion for a preliminary injunction to require the District to: (1) provisionally approve all Medicaid applications that had been pending for more than 45 days, until the District made a final determination; and (2) continue the eligibility of all Medicaid recipients due to be renewed, until the District was able to demonstrate that its technology and business processing systems function in an adequate and timely manner. While the preliminary injunction motion was being briefed, the District resolved all of the thousands of remaining Medicaid processing errors. Then, after briefing on the preliminary injunction concluded, the beneficiaries filed a motion under Rule 60(b)(5) and (b)(6) to modify the Consent Decree to achieve precisely the same relief as the pending motion for a preliminary injunction, with the small difference that the Rule 60(b) motion also asked for monthly reporting by the District.

On April 4, 2016, the district court granted the beneficiaries’ motion to modify the Consent Decree and then denied the motion for a preliminary injunction as moot (see ACA-related backlogs and delays result in modification of prior settlement, April 5, 2016). In its order, the district court recognized that its decision provided additional injunctive relief, based on the new post-ACA factual circumstances. On May 17, 2016, the court granted the District’s motion to stay the 2016 Order pending appeal (see Modified settlement based on ACA-related backlogs stayed due to complexity and cost, May 19, 2016).

Analysis. Once a consent decree has been entered, Rule 60(b) allows the court to modify its terms to the same extent as any final judgment. According to the D.C. Circuit, while the line between permissible tightening of an injunction’s terms and the impermissible imposition of a new injunction is sometimes difficult to discern, it was not so in this case. The district court’s decision impermissibly: (1) imposed additional injunctive relief based on new factual circumstances arising from the District’s asserted violations of the ACA, which did not even exist at the time the Consent Decree was entered; (2) provided relief for Subclasses of beneficiaries and corresponding sections of the Consent Decree that had already been vacated or terminated; and (3) imposed brand new injunctive commands on governmental operations without any of the ordinary protections for such exceptional relief.

For these reasons, the D.C. Circuit reversed the district court’s order, vacated the new injunctive relief, and remanded for proceedings consistent with its decision.

The case is No. 16-7065.

Attorneys: Kathleen L. Millian (Terris, Pravlik & Millian, LLP) for Oscar Salazar. Loren L. AliKhan, Office of the Attorney General, for District of Columbia.

Companies: District of Columbia

MainStory: TopStory CaseDecisions CMSNews CoPNews MedicaidNews EligibilityNews DistrictofColumbiaNews

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