Frazar v. Hawkins ( 2006 )

  •                                                                United States Court of Appeals
                                                                            Fifth Circuit
                                                                         F I L E D
                    REVISED AUGUST 9, 2006                                 July 20, 2006
                                                                     Charles R. Fulbruge III
                       FOR THE FIFTH CIRCUIT                                 Clerk
                              No. 05-41798
    LINDA FREW, as next friend of her minor child, Carla Frew;
    CHARLOTTE GARVIN, as next friend of her minor children,
    Johnny Martinez, Brooklyn Garvin and BreAnna Garvin;
    SHANNON GARCIA, as next friend of her minor children,
    Andrew Garcia, Marisha Garcia, Stephen Sanchez and Allison
    Sanchez; MARIA AYALA, as next friend of her minor children,
    Christopher Arizola, Leonard Jimenez and Joseph Veliz; MARY
    FISHER, as next friend of her minor child, Tyrone T. Edwards; MARY
    JANE GARZA, as next friend of her minor children, Hilary Garza
    and Sarah Renea Garza,
    DAVID BALLARD, Texas State Medicaid Director; ALBERT
    HAWKINS, State Commissioner of Health and Human Services;
          DR. EDUARDO SANCHEZ, Commissioner of Health; BRIDGETT
          COOK, employee of Texas Department of Health in official capacity,
                   Appeal from the United States District Court for
                            the Eastern District of Texas
    Before REAVLEY, SMITH and DENNIS, Circuit Judges.
    REAVLEY, Circuit Judge:
          This is the latest chapter in the suit to improve Texas administration of the
    Medicaid program to afford health care to the certified class of indigent children.1
    The state officials filed this motion to terminate or modify the consent decree
    entered in 1996. The district court denied the motion and we affirm.
          Following remand from this court, defendants moved pursuant to Federal
    Rule of Civil Procedure 60(b)(5) to terminate the entire consent decree or, in the
             The history of reported decisions begins with the district court’s first
    decision, Frew v. Gilbert, 
    109 F. Supp. 2d 579
     (E.D. Tex. 2000) (Frew I), and
    moves to our first panel decision, Frazar v. Gilbert, 
    300 F.3d 530
     (5th Cir. 2000)
    (Frazar I), the Supreme Court’s decision, Frew v. Hawkins, 
    540 U.S. 431
    , 124 S.
    Ct. 899, 
    157 L. Ed. 2d 855
     (2004) (Frew II), and our decision on remand from the
    Supreme Court, Frazar v. Hawkins, 
    376 F.3d 444
     (5th Cir. 2004) (Frazar II).
    alternative, to dissolve the consent decree as to all urban areas of Texas.2
    Defendants argued that they were in compliance with federal Medicaid law,
    therefore rendering the consent decree unnecessary, and its enforcement inequitable.
    Defendants argued that the ends of the consent decree had been met (i.e.,
    compliance with the federal law), and it was no longer equitable that the judgment
    should have prospective application. In the alternative, defendants argued that they
    established compliance with federal law in all urban areas of Texas and, thus, the
    objects of the consent decree had been attained, and it should have no prospective
    application, with respect to urban areas.
          Plaintiffs argued that defendants were not entitled to Rule 60(b)(5) relief
    because: (1) compliance with federal law alone was insufficient to warrant
    dissolution of the consent decree; (2) defendants were not in compliance with
    federal law; (3) defendants had never attempted to comply, in good faith, with
    certain provisions of the consent decree; and (4) the objects of the consent decree
    had not been attained.
          Following an eight-day evidentiary hearing on the Rule 60(b)(5) motion, and
             Frew v. Hawkins, 
    401 F. Supp. 2d 619
    , 623 (E.D. Tex. 2005) (Frew III).
    Defendants define “urban areas” as the counties served by the Medicaid managed
    care organizations that have entered into the Standardized Contract for Services
    with the Texas Health and Human Services Commission. Id. at 631 n.19.
    consideration of post-hearing briefs, the district court issued a decision denying
    defendants’ Rule 60(b)(5) motion in its entirety. The district court applied the legal
    standard articulated by the Supreme Court in Rufo v. Inmates of the Suffolk County
    502 U.S. 367
    112 S. Ct. 748
    116 L. Ed. 2d 867
     (1992) and by this court in
    Cooper v. Noble, 
    33 F.3d 540
     (5th Cir. 1994). The dispositive holding of the
    district court was to reject defendants’ overriding contention that the recent opinion
    of the Supreme Court in Frew II requires termination of judicial oversight when the
    state complies with federal law, whatever the terms of the consent decree may be.
             We have jurisdiction3 and review the denial of a Rule 60(b) motion for an
    abuse of discretion.4 A district court’s ruling on a Rule 60(b) motion is entitled to
    deference.5 We review de novo, however, any questions of law underlying the
    district court’s decision.6
           Rufo, 502 U.S. at 391, 112 S. Ct. at 764 (“a consent decree is a final
                 Provident Life & Accident Ins. Co. v. Goel, 
    274 F.3d 984
    , 997 (5th Cir.
                 Cooper, 33 F.3d at 543.
            Ran-Nan, Inc. v. Gen. Accident Ins. Co. of Am., 
    252 F.3d 738
    , 739 (5th
    Cir. 2001).
          Defendants contend that the district court applied the incorrect legal standard
    for consent decree modification in institutional reform cases and argue that the
    district court failed to follow the Supreme Court’s admonishments in Frew II
    regarding federalism, separation of powers, democratic accountability, and
    deference to those state officials responsible for administering public institutions and
    programs. The contention is that instead of following Frew II, the district court
    placed too much importance on the Rufo test for consent decree modification.
          In Rufo, the Court noted that the standard for modification of consent decrees,
    now set forth in Federal Rule of Civil Procedure 60(b),7 is a “flexible” one8 and a
    party seeking modification of a consent decree “bears the burden of establishing that
    a significant change in circumstances warrants revision of the decree.”9 That
              Rule 60(b) provides, in relevant part:
          On motion and upon such terms as are just, the court may relieve a party
          or a party's legal representative from a final judgment, order, or proceeding
          for the following reasons: . . . (5) the judgment has been satisfied, released,
          or discharged, or a prior judgment upon which it is based has been
          reversed or otherwise vacated, or it is no longer equitable that the
          judgment should have prospective application. . . .
              Rufo, 502 U.S. at 393, 112 S. Ct. at 765.
              Id. at 383, 112 S. Ct. at 760.
    burden may be met “by showing either a significant change either in factual
    conditions or in law.”10 Once a moving party meets this standard, a district court
    must consider “whether the proposed modification is suitably tailored to the
    changed circumstance.”11
          We have had one occasion to apply the standard set forth in Rufo. In Cooper,
    we upheld a magistrate judge’s denial of the defendants’ Rule 60(b) motion in a
    pre-Prison Litigation Reform Act case applying the Rufo Rule 60(b) standard.12 We
          When significant changes in factual conditions make a consent judgment
          unworkable, make compliance substantially more onerous, or make
          enforcement detrimental to the public interest, a court has the discretion
          to modify the judgment. However, the Supreme Court [in Rufo] never
          suggested that changed factual circumstances in and of themselves were
          sufficient grounds for relief from a judgment. In fact, the Court insisted
          that the petitioning party must “ma[k]e a reasonable effort to comply with
          the decree.” Thus, even if we take as true all the alleged changes in
          factual conditions, the county officials are far from meeting their burden
          under Rufo. The county officials must also: (1) show that those changes
          affect compliance with, or the workability or enforcement of, the final
          judgment, and (2) show that those changes occurred despite the county
          officials' reasonable efforts to comply with the judgment.13
               Id. at 384, 112 S. Ct. at 760.
               Id. at 383, 112 S. Ct. at 760.
               33 F.3d at 545.
               Id. at 544 (internal citations omitted).
          The most recent pronouncement from the Supreme Court on the modification
    of decrees occurred in this case. In Frew II, while in addition to holding that the
    Eleventh Amendment does not act as a bar to an enforcement action to a consent
    decree the initial entry of which was consistent with Ex parte Young, 
    209 U.S. 123
    28 S. Ct. 441
     (1908), the Court dedicated Section III of its opinion to state officials
    warning that enforcement of consent decrees can undermine the sovereign interest
    and accountability of state governments.14
          The Court acknowledged that:
          [i]f not limited to reasonable and necessary implementations of federal
          law, remedies outlined in consent decrees involving state officeholders
          may improperly deprive future officials of their designated legislative and
          executive powers. They may also lead to federal court oversight of state
          programs for long periods of time even absent an ongoing violation of
          federal law.15
    In such circumstances, the Court stated, the States are not without remedy:
                 When a suit under Ex parte Young requires a detailed order to
          ensure compliance with a decree for prospective relief, and the decree in
          effect mandates the State, through its named officials, to administer a
          significant federal program, principles of federalism require that state
          officials with front-line responsibility for administering the program be
          given latitude and substantial discretion.
                 The federal court must exercise its equitable powers to ensure that
               Frew II, 540 U.S. at 441-42, 124 S. Ct. at 905-06.
               Id. at 441, 124 S. Ct. at 905.
          when the objects of the decree have been attained, responsibility for
          discharging the State’s obligations is returned promptly to the State and
          its officials. As public servants, the officials of the State must be
          presumed to have a high degree of competence in deciding how best to
          discharge their governmental responsibilities. A State, in the ordinary
          course, depends upon successor officials, both appointed and elected, to
          bring new insights and solutions to problems of allocating revenues and
          resources. The basic obligations of federal law may remain the same, but
          the precise manner of their discharge may not. If the State establishes
          reason to modify the decree, the court should make the necessary
          changes; where it has not done so, however, the decree should be
          enforced according to its terms.16
    The Court cited two cases as examples of the application of Rule 60(b) to consent
    decrees in the context of institutional reform litigation: Rufo, 
    502 U.S. 367
    , 112 S.
    Ct. 748 and Philadelphia Welfare Rights Organization. v. Shapp, 
    602 F.2d 1114
    (3d Cir 1979).17
               Id. at 442, 124 S. Ct. at 906.
                Id. at 441, 124 S. Ct. at 906. In Shapp, a pre-Rufo case, the district court
    granted the defendants’ motion to modify an institutional reform consent decree in
    light of changed circumstances that were beyond the defendants’ control and were
    not contemplated by the court or the parties when the decree was entered. 602 F.2d
    at 1119–21. The consent decree at issue in Shapp was entered as a result of
    litigation over Pennsylvania's EPSDT program, and the defendants were seeking to
    modify or vacate the decree based on (1) the exemplary performance of
    Pennsylvania's program, and (2) inability to comply, after a good faith effort, with
    certain terms of the decree. The district court modified the decree in three respects
    after finding that the defendants had made a good faith effort at compliance, but
    circumstances beyond the defendants' control and not contemplated by the court or
    parties “put achievement of the [provisions' requirements] beyond reach.” Id. at
          Defendants contend that in light of the principles expressed in Frew II, the
    Supreme Court altered the standard that courts employ to modify a consent decree
    arising from institutional reform litigation, and that Frew II marks a shift away from
    Rufo’s changed-circumstances approach. They contend that Frew II adopted a more
    flexible approach, one which places considerable weight upon democratic
    accountability and federalism concerns. According to defendants, this alleged new
    standard annunciated by the Court in Frew II requires the district court to promptly
    return the State’s program to state officials when the objects of the decree have been
    attained, and to do so here because the object of the consent decree is compliance
    with the Medicaid Early Screening, Diagnosis and Training Program (EPSDT) and
    they are in compliance with the EPSDT. In essence, defendants argue that Frew II
    requires the district court to promptly return the State’s program to state officials if
    there are no ongoing violations of federal law.
          We reject defendants’ argument that Frew II ushers in a new standard for
    consent decree modification. While the Court in Frew II did underscore the
    federalism mandates in institutional reform litigation, it did not alter the standard for
    modification of consent decrees. Instead, it directed lower courts to Rufo and Shapp
    as examples of the proper application of Rule 60(b)(5) to modification of
    institutional reform consent decrees, neither of which discusses mere compliance
    with federal law as a reason for modifying the decree. Further, Frew II did not
    mention federal law compliance as a factor in the Rule 60(b)(5) analysis.
          As the district court aptly stated:
          Dissolution based on mere compliance with the minimum requirements of
          federal law is, additionally, inequitable, because it would permit perpetual
          re-litigation of the merits of Plaintiffs’ claims. In choosing to voluntarily
          enter into the Consent Decree, Defendants waived the opportunity to
          litigate the merits of the claims in Plaintiffs’ Third Amended Complaint
          in exchange for negotiating the terms of the Consent Decree and avoiding
          the time, expense, and inevitable risk of litigation. See Cooper, 33 F.3d
          at 545. Through their argument that compliance with federal law
          necessarily warrants relief under Rule 60(b)(5), however, Defendants are
          seemingly attempting to re-litigate the claims underlying the Consent
          Decree. If the basis for a meritorious Rule 60(b) motion is that the claims
          underlying the consent decree are not meritorious, then parties to consent
          decrees would be permitted to file periodic Rule 60(b) motions asserting
          compliance with federal law and, in effect, continually re-litigate the
          underlying claims until a court determines the defendants are in
          compliance with federal law and the decree is dissolved. The party filing
          the Rule 60(b) motion would potentially be able to eliminate consent
          decree obligations, even if there is no attempted compliance with its
          legally enforceable terms, no showing that conformity to federal law
          makes compliance with the consent decree substantially more onerous or
          unworkable, and no showing that the requested relief is sufficiently
          tailored to the changed factual circumstances. See Rufo, 502 U.S. at
    112 S. Ct. 748
    ; Cooper, 33 F.3d at 545. It follows that the
          parties opposing dissolution would not enjoy the benefits for which they
          bargained or the judicially enforceable obligations upon which they relied
          in entering into the consent decree; and the parties seeking dissolution
          would paradoxically be entitled to equitable relief despite their inequitable
          behavior. A Rule 60(b) motion is not a vehicle by which Defendants may
          disregard the voluntary obligations contained in the Consent Decree,
          allow time to pass, and then litigate the underlying claims in hopes of
          never actually complying with [] its terms.18
          If the Court wished the law to be that consent decrees must be dissolved if
    defendants comply with federal law, it would have expressly stated so. It did not.
    A rule of law based on a single factor (compliance with federal law) is the opposite
    of the Court’s requirement of equitable flexibility.19 We hold that the district court
    properly determined that the applicable legal standard in this case came from Rufo
    and Cooper.
          The district court recognized Frew II’s admonishment that “when the objects
    of the decree have been attained, the responsibility for discharging the State’s
               Frew III, 401 F. Supp. 2d at 636.
              Defendants read Frew II as adopting a standard similar to the Prison
    Litigation Reform Act (PLRA) standard for terminating consent decrees. See 18
    U.S.C. §§ 3626(a)(1)(A), (b)(3), (c)(1). With the PLRA, Congress sought to curtail
    federal courts’ long-term involvement in prison reform and halt federal courts from
    providing more than the constitutional minimum necessary to remedy federal rights
    violations. H.R. REP. NO. 104-21, at 24 n.2 (1995); see also H.R. REP. NO. 104-
    378, at 166 (1995) (“[The PLRA] amends 18 U.S.C. § 3626 to require that prison
    condition remedies do not go beyond the measures necessary to remedy federal
    rights violations. . . .”). But no such language can be found in Frew II. Further, we
    note that the House has introduced the Federal Consent Decree Fairness Act. H.R.
    1229, 109th Cong. (1st Sess. 2005). This Act would require, among others, that
    “the burden of proof shall be on the party who originally filed the civil action to
    demonstrate that the continued enforcement of a consent decree is necessary to
    uphold a Federal right.” Id. at § 3. We leave it for Congress or the Supreme Court
    to change the standard.
    obligations [must be] returned promptly to the State and its officials.”20 Defendants
    argued that the only legitimate object of the consent decree was to ensure
    compliance with federal law regarding the administration of the EPSDT program.
    The district court rejected this argument and held that the compliance with federal
    law is not the sole object of the consent decree.21 The consent decree itself does not
    reference mere compliance with federal law as its object. Rather, it speaks to the
    broader goals of enhancing recipients’ access to health care and improving the use
    of health care services by Texas EPSDT recipients.22 The decree implements the
    Medicaid statute “in a highly detailed way, requiring the state officials to take some
    steps that the statute does not specifically require.”23 The district court held that
    “[t]o interpret the sole object of the Consent Decree to ensure compliance with
    something less than that which is stated in the Consent Decree itself would be akin
    to rewriting the Consent Decree to conform to the constitutional floor. Such action
    is prohibited by the Supreme Court’s holding in Rufo.”24 To which we add that it is
               540 U.S. at 442, 124 S. Ct. at 90.
               Frew III, 401 F. Supp. 2d at 634-35.
               Id. at 634-35 (quoting Frew II, 540 U.S. at 439, 
    124 S. Ct. 899
               Id. at 635. In Rufo, the Court stated:
    prohibited by the prior reversal of our holding in this case. Because the object of
    the consent decree is not mere compliance with federal law, the objects of the
    decree have not been attained.
          Defendants contend that if this court concludes that Frew II does not provide
    the applicable standard for terminating a consent decree, the district court erred by
    not applying the termination standard used by the Supreme Court in the school
    desegregation cases: Missouri v. Jenkins, 
    515 U.S. 70
    115 S. Ct. 2038
    132 L. Ed. 2d 63
     (1995); Freeman v. Pitts, 
    503 U.S. 467
    112 S. Ct. 1430
    118 L. Ed. 2d 108
     (1992); and Board of Education of Oklahoma City Public Schools v. Dowell,
          A proposed modification should not strive to rewrite a consent decree so
          that it conforms to the constitutional floor. Once a court has determined
          that changed circumstances warrant a modification in a consent decree,
          the focus should be on whether the proposed modification is tailored to
          resolve the problems created by the change in circumstances. A court
          should do no more, for a consent decree is a final judgment that may be
          reopened only to the extent that equity requires. The court should not turn
          aside to inquire whether some of the provisions of the decree upon
          separate as distinguished from joint action could have been opposed with
          success if the defendants had offered opposition.
    502 U.S. at 391-92, 112 S. Ct. at 764 (internal quotations, citations and brackets
    498 U.S. 237
    111 S. Ct. 630
    112 L. Ed. 2d 715
          In the context of deciding whether to modify or dissolve a desegregation
    decree, the Court has directed district courts to consider the following factors:
          [1] whether there has been full and satisfactory compliance with the
          decree in those aspects of the system where supervision is to be
          withdrawn; [2] whether retention of judicial control is necessary or
          practicable to achieve compliance with the decree in other facets of the
          school system; and [3] whether the school district has demonstrated, to
          the public and to the parents and students of the once disfavored race, its
          good-faith commitment to the whole of the courts’ decree and to those
          provisions of the law and the Constitution that were the predicate for
          judicial intervention in the first instance.26
    The ultimate inquiry is “‘whether the [constitutional violator] ha[s] complied in
    good faith with the desegregation decree since it was entered, and whether the
    vestiges of past discrimination ha[ve] been eliminated to the extent practicable.’”27
          The district court rejected the notion that Freeman stated the standard for
    consent decree termination. Instead, the district court held that “[t]he applicable
    standard in the Fifth Circuit for both types of relief [modification and termination] is
              We note that the defendants did not make this argument in the district
    court; rather, it was the plaintiffs who urged the district court to apply the
    termination standard set forth in the school desegregation cases. Frew III, 401 F.
    Supp. 2d at 632-33.
               Freeman, 503 U.S. at 491, 112 S. Ct. at 1446.
             Id. at 492, 112 S. Ct. at 1446 (quoting Dowell, 498 U.S. at 249-250, 111 S.
    Ct. at 638).
    that announced in Rufo and applied in Cooper.”28 We need not pursue this question
    because defendants did not attempt to show that they were complying with the
    decree; rather, they argued that they were in compliance with federal law.29 But to
    prevail under Freeman, defendants must prove “full and satisfactory compliance
    with the decree.”30 They did not do so and their argument here is improvident.
          This record and the briefs make no showing that the district court abused its
    discretion in holding that defendants showed no significant change in factual
    circumstances to warrant terminating or modifying the consent decree.
          Defendants argue that under the Rufo standard and this court’s interpretation
    of Rufo in Cooper, the evidence demonstrates sufficiently changed factual
    circumstances warranting the decree’s dissolution, either in whole or in part.
    However, defendants fail to articulate how the district court abused its discretion.
    Instead, defendants only reiterate that they are in compliance with federal law.
          The district court went through each of the alleged changed factual
               Frew III, 401 F. Supp. 2d at 632 (emphasis in original).
            Id. (“Defendants do not argue that they are in substantial compliance with
    the Consent Decree.”).
               503 U.S. at 491, 112 S. Ct. at 1446.
    circumstances and held that defendants failed to meet their burden under Rufo to
    prove significant changed factual circumstances with respect to: (1) medical
    checkups;31 (2) the provision of dental services;32 (3) outreach;33 (4) case
    management;34 and (5) all urban areas of Texas.35 Given that there were no
    significant changed factual circumstances, the district court held that any remedy
    that would dissolve the consent decree in its entirety or as to all urban areas of
    Texas would be “grossly ill-tailored” to the facts as determined by the district
           Having reviewed the record and the district court’s detailed decision, we hold
    that the district court did not abuse its discretion in holding that defendants failed to
    show a significant change in factual circumstances to warrant terminating the
    consent decree in its entirety or for urban areas only.
           The order of the district court denying defendants’ Rule 60(b)(5) motion is
                Frew III, 401 F.Supp. 2d at 641-54.
                Id. at 654-57.
                Id. at 657-66
                Id. at 666-67.
                Id. at 667-81.
                Id. at 683.