Bertrand, Christophe v. Maram, Barry S. ( 2007 )

In the
United States Court of Appeals
For the Seventh Circuit
____________
No. 06-3705
CHRISTOPHER BERTRAND, by his parents
Inez Bertrand and Daniel Bertrand, and
FRANK PATTERSON, JR., by his parents
Janice Patterson and Frank Patterson, Sr.,
Plaintiffs-Appellants,
v.
BARRY S. MARAM, Director, Illinois Department
of Healthcare and Family Services, et al.,
Defendants-Appellees.
____________
Appeal from the United States District Court for the
Northern District of Illinois, Eastern Division.
No. 05 C 544—Virginia M. Kendall, Judge.
____________
ARGUED MAY 3, 2007—DECIDED JULY 24, 2007
____________
Before EASTERBROOK, Chief Judge, and FLAUM and
RIPPLE, Circuit Judges.
EASTERBROOK, Chief Judge. Christopher Bertrand
and Frank Patterson are developmentally disabled adults
who want residential habilitation services under the
Medicaid program in Illinois. “Residential habilitation” is
a set of services provided in the applicant’s home (or
another residence) by nurses and other professionals. The
2 No. 06-3705
goal is to see that the person remains safe and healthy; it
is an alternative to institutionalization for those unable
to care for themselves. Illinois covers the costs of residen-
tial habilitation and similar services through its Commu-
nity Integrated Living Arrangement (CILA) program, part
of the state’s Home and Community-Based Services
(HCBS) program.
The federal government does not require states to
provide CILA services as a condition of participation.
Indeed, federal law does not even allow states to provide
such services as part of the Medicaid program (though
states may do so separately, at their own expense) unless
they apply for and receive a waiver of Medicaid’s normal
rules. The possibility of waiver, see 42 U.S.C. §1396n(b),
was extended to home and community-based services by
42 U.S.C. §1396n(c)(1):
The Secretary may by waiver provide that a State
plan approved under this subchapter may include
as “medical assistance” under such plan payment
for part or all of the cost of home or community-
based services (other than room and board) ap-
proved by the Secretary which are provided pursu-
ant to a written plan of care to individuals with
respect to whom there has been a determination
that but for the provision of such services the
individuals would require the level of care pro-
vided in a hospital or a nursing facility or interme-
diate care facility for the mentally retarded the
cost of which could be reimbursed under the State
plan.
Illinois applied for and received a waiver entitling it to
federal reimbursement for such services provided to 10,000
people.
When Bertrand and Patterson applied for residential
habilitation services, however, they were turned down.
No. 06-3705 3
Although both Bertrand and Patterson “require the level
of care provided in a hospital or a nursing facility or
intermediate care facility for the mentally retarded”, and
each already received some services under the HCBS
program, each was told that he did not satisfy the state’s
“priority population criteria” for residential habilitation
under the CILA sub-program. These are the criteria:
(1) individuals who are in crisis situations (e.g.,
including but not limited to, persons who have lost
their caregivers, persons who are in abusive or
neglectful situations); (2) individuals who are
wards of the Illinois Department of Children and
Family Services and are approaching the age of 22
and individuals who are aging out of children’s
residential services funded by the Office of Devel-
opmental Disabilities; (3) individuals who reside in
State-Operated Developmental Centers; (4) Bogard
class members, i.e., certain individuals with
developmental disabilities who currently reside in
a nursing facility; (5) individuals with mental
retardation who reside in State-Operated Mental
Health Hospitals; (6) individuals with aging
caregivers; and (7) individuals who reside in
private ICFs/MR or ICFs/DD.
Those not on the list cannot be reimbursed for residential
habilitation even if medical providers are willing to offer
that service at a price Illinois is willing to pay. Bertrand
applied for reconsideration, arguing (via his parents as
next friends) that he comes within category (6). He lives
with his parents, both of whom are nearing retirement.
The state reversed its decision; Bertrand has been receiv-
ing residential habilitation services at state expense
since May 24, 2005. But Patterson remains outside the
CILA sub-program.
Plaintiffs maintain that the state’s administration of its
HCBS program violates 42 U.S.C. §1396a(a)(8), which says
4 No. 06-3705
that every state plan must “provide that all individuals
wishing to make application for medical assistance under
the plan shall have opportunity to do so, and that such
assistance shall be furnished with reasonable prompt-
ness to all eligible individuals”.
Illinois argued that Bertrand’s claim should be dismissed
as moot. The district judge disagreed, remarking that
Bertrand had moved for class certification before he was
accepted into the CILA program. Paradoxically, however,
the judge then refused to act on Bertrand’s motion, ruling
that class treatment is itself moot because Illinois is
entitled to prevail—not, as the state principally argued,
because there is no private right of action under
§1396a(a)(8), but because the Secretary of Health and
Human Services approved the state’s “priority population
criteria,” and anyone not on the list is not “eligible” for
services as §1396a(a)(8) uses that term. 2006 U.S. Dist.
LEXIS 68935 (N.D. Ill. Sept. 25, 2006).
The district court mishandled the issues related to class
certification. Bertrand and Patterson filed this suit seeking
to represent a class. Fed. R. Civ. P. 23(c)(1) directs district
courts to grant or deny class certification “early” in the
litigation. Yet the district court bypassed that sub-
ject, ruled on the merits almost two years after the suit
had been filed, and then insisted that the class does not
matter. “Early” is a plastic term that affords latitude to
district judges in case management, but “never” is not
within any plausible understanding of “early.”
Judge Kendall, who finally resolved plaintiffs’ claim, was
assigned to the case about a year after its commencement
and is not responsible for her predecessor’s failure to make
an “early” decision about the class. That the subject may
have fallen between stools is unfortunate, however.
Prompt decision is essential, as Bertrand’s situation
shows. Board of School Commissioners of Indianapolis v.
No. 06-3705 5
Jacobs, 420 U.S. 128 (1975), holds that, if a class represen-
tative’s personal claim becomes moot after certification,
then the suit may continue—for the class as a whole
retains a live claim. But if the would-be representative’s
claim becomes moot before certification, then the case
must be dismissed, see Sosna v. Iowa, 419 U.S. 393 (1975),
unless someone else intervenes to carry on as the represen-
tative. Parole Commission v. Geraghty, 445 U.S. 388(1980).
Apparently the district court saw class suits as opportu-
nities for one-way intervention: if the representative
plaintiff wins, then class certification extends the victory
to a larger group. That was a common view before the 1966
amendments to Rule 23, which were designed to divorce
class certification from the merits. See the Committee Note
to the 1966 amendment. After the 1966 amendments,
treatment of plaintiffs and defendants is supposed to be
symmetric, which is possible only if a class is certified (or
not) before decision on the merits. Class-action status must
be granted (or denied) early not only to avoid problems
with mootness, and provide an opportunity for interlocu-
tory review, see Fed. R. Civ. P. 23(f), but also to clarify
who will be bound by the decision. The larger the class, the
more the litigants may invest in discovery and briefing to
ensure that the case is decided correctly. Until everyone
knows who will, and who will not, be bound by the out-
come, it is difficult to make informed decisions about how
the case should proceed.
The district judge may have equated the precedential
effect of a decision with its preclusive effect, but the two
differ. Without a certified class, any other Medicaid
applicant is free to file another suit and present the same
arguments; decisions of district courts do not block succes-
sive litigation by similarly situated persons. Although
decisions of appellate courts have broader authority, in the
absence of class certification any other applicant may
6 No. 06-3705
start over and try to distinguish the adverse precedent.
Likewise, if the first plaintiff wins and the court of appeals
affirms, the agency may try to distinguish the adverse
precedent, or deny its authoritative status, when denying
relief to a similarly situated applicant. It takes a class
certification to produce a conclusive resolution in one
proceeding. Compare United States v. Mendoza, 464 U.S.
154 (1984), with Califano v. Yamasaki, 442 U.S. 682(1979).
In the event, however, no class was certified, and neither
side seeks review of that decision. Bertrand’s claim
therefore must be dismissed as moot. The district court
noted the motion for class certification but missed the
vital qualification that the suit never became a class
action. In a handful of situations, exemplified by Deposit
Guaranty National Bank v. Roper, 445 U.S. 326 (1980),
and Primax Recoveries, Inc. v. Sevilla, 324 F.3d 544, 546-
47 (7th Cir. 2003), class certification may follow the
defendant’s actual or attempted satisfaction of the would-
be representative’s demand; the Court explained in
Deposit Guaranty National Bank that this proviso is
essential to prevent defendants from buying off all poten-
tial class representatives by meeting their demands, one at
a time, and thus preventing effectual relief to a larger
class of victims. Nothing of the sort occurred here—and, to
repeat, no class has been certified, so even if Bertrand had
been furnished CILA services for strategic reasons this
would not justify allowing him to continue litigating in
his own name. He lacks a stake in the outcome, and his
claim must be dismissed as moot.
Section 1396a(a)(8), on which Patterson (the remaining
plaintiff) relies, does not provide a private right of action.
Neither does any other arguably relevant provision in the
Medicaid Act. This leads Patterson to rely on 42 U.S.C.
§1983 and the approach of Maine v. Thiboutot, 448 U.S. 1(1980): §1983 allows the enforcement of federal law (such
No. 06-3705 7
as the Medicaid statute) against state actors (such as the
Illinois Department of Healthcare and Family Services). To
this Illinois responds that Medicaid is a funding statute
that gives states an option rather than placing them
under an obligation. If the state has not kept its end of the
bargain, the argument goes, then the remedy is to cut off
the funds rather than to order specific performance. The
Medicaid Act provides some express private remedies;
using §1983 to augment them would upset the bargain that
the state struck when it joined the program, the state
insists. Illinois relies particularly on Gonzaga University
v. Doe, 536 U.S. 273 (2002), which reached just such a
conclusion with respect to the Family Education Rights
and Privacy Act, another federal statute that uses the lure
of funds to achieve a national objective.
At least two courts of appeals have held since Gonzaga
University, however, that §1396a(a)(8) creates personal
rights that are enforceable as long as the state continues
to accept federal money. Sabree v. Richman, 367 F.3d 180(3d Cir. 2004); Bryson v. Shumway, 308 F.3d 79, 88-89 (1st
Cir. 2002). Another circuit reached the same conclusion
with respect to §1396a(a)(10), which is materially identical
to §1396a(a)(8). See S.D. v. Hood, 391 F.3d 581, 603 (5th
Cir. 2004). Sabree, the most thorough of these decisions,
observes that before Gonzaga University the Court had
held that one portion of the Medicaid Act may be enforced
via §1983, see Wilder v. Virginia Hospital Ass’n, 496 U.S.
498 (1990), and that Gonzaga University did not overrule
Wilder. Although Gonzaga University may have taken a
new analytical approach, courts of appeals must follow
the Supreme Court’s earlier holdings until the Court
itself overrules them. This circuit has itself assumed
after Gonzaga University that §1396a(a)(8) may be en-
forced via §1983. See Bruggeman v. Blagojevich, 324 F.3d
906, 910-11 (7th Cir. 2003) (reaching the merits of a claim
under §1396a(a)(8) without discussing the availability of a
8 No. 06-3705
private right of action, although after mentioning Gonzaga
University in another connection).
What one could say in response is that none of these
decisions dealt with the application of §1396a(a)(8) to a
supplemental state program approved under a waiver. The
idea behind §1396a(a)(8) is that states must comply with
all Medicaid obligations: to enter the program at all is to
agree to supply medical services for every eligible person.
Once Congress created the waiver program in 1981,
however, that situation changed. Today a state may
propose to cover applicants in some parts of its territory
but not others, or to place a limit on the number of persons
who receive treatment. “The Secretary, to the extent he
finds it to be cost-effective and efficient and not inconsis-
tent with the purposes of this subchapter, may waive
such requirements of section 1396a of this title (other
than subsection (s)) (other than sections 1396a(a)(15),
1396a(bb), and 1396a(a)(10)(A) of this title insofar as it
requires provision of the care and services described in
section 1396d(a)(2)(C) of this title) as may be necessary for
a State” to accomplish certain objectives. 42 U.S.C.
§1396n(b). When Illinois adopted its HCBS program, it
particularly asked the Secretary to waive the require-
ment that all comers be accepted, and the Secretary
agreed. The HCBS program in Illinois will pay for no more
than 10,000 persons.
There are three ways to keep within that limit. One is
the price system, which is not possible under the Medicaid
Act. The second is a queue: Everyone who wants to partici-
pate joins a line and is admitted as current participants
move to some other state, are institutionalized, or die. The
third is a triage device. Illinois chose the third way,
through its “priority population criteria.” Patterson
contends that §1396a(a)(8) obliges the state to use the
second device—and when there are unfilled slots available
to put the next medically eligible person into them. But
No. 06-3705 9
it is far from clear to us that dictating a means to imple-
ment a limited-enrollment program is a function of
§1396a(a)(8).
A cap on enrollment serves fiscal rather than medical
objectives, saving money for both state and federal govern-
ments; one reason why the Secretary’s approval is neces-
sary for these optional programs is to ensure that states
don’t make commitments that cost the national govern-
ment more than it is willing to spend. When legislation
such as §1396n(b) and (c)(1) is designed to save money
rather than deliver subsidized care to everyone,
§1396a(a)(8) is a poor fit—and it is correspondingly more
attractive to structure litigation with the Secretary as the
defendant, so that the agency that made the waiver
decision may be asked whether the state’s program
accurately carries out the conditions negotiated with the
federal government. A state is entitled to use “priority
population criteria” as an entry-control device if the
Secretary has approved that use. But it is difficult to
determine the Secretary’s views in a proceeding against
the state. A request that the Secretary terminate fund-
ing would avoid the empty-chair problem.
Because the parties have not briefed the question
whether §1983 supplies a private right of action to enforce
claims under §1396a(a)(8) in the context of waiver, we
think it best to proceed as in Bruggeman: to assume that
there is such an entitlement, while leaving resolution to
the future. A private right of action is not a component of
subject-matter jurisdiction, see Grable & Sons Metal
Products, Inc. v. Darue Engineering & Manufacturing, 545
U.S. 308 (2005), so this is a permissible approach.
May Illinois use the priority population criteria as a
triage device? Patterson insists that the answer does not
matter, because when he applied there were openings
among the allocated 10,000 slots in the HCBS pro-
10 No. 06-3705
gram—and, what is more, Patterson himself occupied one
of them. An earlier decision had admitted Patterson to the
program, though not to the set of CILA services that he
most desired. In fiscal 2004, for example, there were 138
open slots in HCBS, and in fiscal 2003 there had been 230.
It does not follow from this, however, that everyone with
a developmental disability should be admitted immedi-
ately. Abolish the priority population criteria and a queue
would develop. People with relatively weak needs for this
service would receive it just because they applied first,
while others with grave needs would be put off pending
an opening. The only way to ensure that slots are avail-
able for those highest on the priority list is to hold some of
them open at all times. Keeping 1% or 2% (100 to 200) of
the slots available seems a prudent precaution on behalf
of those with the greatest need.
When asked at oral argument whether Patterson could
be removed from the CILA or HCBS program, after ad-
mission, in order to free up a slot for someone with a
better claim to the resources, his lawyer gave a negative
answer. According to counsel, anyone provided a particular
service is in for life; any comparison between the needs of
those already in and those making new applications is
forbidden. That would lead some people to demand entry
to the HCBS program, even if they did not require its
services, to ensure the availability of CILA services later
should a need (or a desire) develop. If that is so, then the
only sensible approach is the one Illinois has chosen.
Priorities must be established, and some slots must be
kept open at all times to avoid turning away people “in
crisis situations” (priority 1) and other high-need appli-
cants. This is true not only for the home and community-
based services as a whole but also for each component of
that umbrella category. Medicaid makes each separate
component of the umbrella program the subject of a
“medical need” requirement, see 42 C.F.R. §440.230(d),
No. 06-3705 11
which makes a great deal of sense. A conclusion that a
person could benefit from one aspect of HCBS does not
mean that the person is a good candidate for every kind of
related service.
Patterson does not contest the state’s assignment of
priorities or contend that his needs are equivalent to those
of people who meet the “priority population criteria.” His
argument, as we have said, is that the state must use an
unsorted queue and provide services to everyone who could
get some benefit from them. Yet a queue would be prob-
lematic under §1396a(a)(8)—for recall that this statute
demands provision of services “with reasonable prompt-
ness”. Taking everyone with a developmental disability,
in order of application, would defeat prompt admission
for those who would receive the greatest benefit.
The record establishes that the Centers for Medicare and
Medicaid Services (CMS), the bureau within the Depart-
ment of Health and Human Services that decides whether
to grant states’ applications for waiver of the Medicaid
rules, knew about the criteria that Illinois proposed to use.
The state’s application says point blank that “[f]or residen-
tial services, the State gives service priority to eligible
persons according to the following priority population
criteria . . .”. The application does not reveal whether CMS
appreciated that Illinois would use these criteria to
exclude some applicants from CILA services, and CMS did
not write an opinion explaining its understanding of the
state’s program. An affidavit from one of the state’s
program administrators says that “[t]he Priority Popula-
tion Criteria were discussed with the CMS review team
during the review process”. What was said, concretely? The
record does not reveal the answer—but then plaintiffs’
counsel did not follow up with a deposition that might have
produced the information. Plaintiffs have not offered any
evidence tending to establish that CMS granted the state’s
request in ignorance of how Illinois employs the priority
12 No. 06-3705
population criteria. Because plaintiffs bear the burden of
persuasion, we must take it that the state’s approach is
agreeable to CMS.
And on that understanding the case is almost over.
Another statute on which Patterson relies, 42 U.S.C.
§1396n(c)(2)(C), offers him no assistance. This subsection
says that persons entitled to care must be “informed of the
feasible alternatives, if available under the waiver, at the
choice of the individuals”. Patterson does not say that he
has been kept ignorant of options open to him. His argu-
ment is that CILA services should be “available,” but this
subsection does not make any particular option “available”
to anyone. It just requires the provision of information
about options that are available.
Each side invokes Chevron U.S.A. Inc. v. Natural
Resources Defense Council, Inc., 467 U.S. 837 (1984);
United States v. Mead Corp., 533 U.S. 218 (2001); and
Skidmore v. Swift & Co., 323 U.S. 134 (1944). Illinois
maintains that the agency’s approval is entitled to Chevron
deference. Plaintiffs insist, to the contrary, that a letter
that CMS circulated in 2001 should receive Chevron
deference (or at least Mead-Skidmore respectful consider-
ation). To this the state replies that letters, not being
regulations, should not play any role at all. (Just in case
we disagree, the state insists that its use of the “priority
population criteria” is consistent with the letter.) All of
this is byplay. It would matter if the “priority population
criteria” were something that the state had invented
after receiving the waiver from CMS, and we had to
decide whether the state’s new approach was consistent
with the statute and regulations. But that’s not what
happened; CMS considered the “priority population crite-
ria” before granting the waiver. A state does not violate
§1396a(a)(8) by using the criteria that formed (part of) the
basis for requesting a waiver under §1396n(c)(1).
AFFIRMED
No. 06-3705 13
A true Copy:
Teste:
________________________________
Clerk of the United States Court of
Appeals for the Seventh Circuit
USCA-02-C-0072—7-24-07