United States District Court, D. Arizona
HONORABLE ROSEMARY MÁRQUEZ UNITED STATES DISTRICT
before the Court is a Report and Recommendation issued by
Magistrate Judge D. Thomas Ferraro. Doc. 72. Judge Ferraro
recommends that this Court grant Defendant's Motion to
Dismiss (Doc. 35) and dismiss the Complaint with prejudice,
and deny as moot Plaintiffs' Motion for Class
Certification (Doc. 5), Plaintiffs' Motion for
Preliminary Injunction (Doc. 15), and the related motions to
strike (Docs. 59, 62, 65). Plaintiffs objected to a majority
of the conclusions in Judge Ferraro's
recommendation.Doc. 77. The Court reviews those
conclusions de novo. 28 U.S.C. § 636(b)(1) (“A
judge of the court shall make a de novo determination of
those portions of the report . . . to which objection is
made.”). . . . . . . . . . . . .
filed this putative class action on behalf of low-income
Arizona immigrant residents who qualify for Arizona's
Medicaid program, the Arizona Health Care Cost Containment
System (“AHCCCS”). Compl. ¶ 1, Doc. 1.
Plaintiffs allege that AHCCCS, under Defendant's
supervision, improperly reduced immigrant beneficiaries'
full-scope AHCCCS benefits to emergency-only AHCCCS
benefits. Id. ¶¶ 2, 10.
Plaintiffs claim that Defendant improperly transferred over
3, 500 individuals, and further claim that such transfers
continue today. Id. ¶¶ 40-41. Plaintiffs
seek only declaratory relief affirming the unlawfulness of
Defendant's practices and injunctive relief enjoining
further improper reductions.
1965, Congress created the Medicaid program by adding Title
XIX to the Social Security Act. 42 U.S.C. §§
1396-1396w-5. The purpose of Medicaid is to enable each state
“to furnish . . . medical assistance on behalf of
families with dependent children and of aged, blind, or
disabled individuals, whose income and resources are
insufficient to meet the costs of necessary medical
services.” Id. § 1396-1. To participate
in Medicaid, a state must implement the program through a
state plan which has been submitted to and approved by the
Secretary of the U.S. Department of Health and Human
Services. Id. §§ 1396-1, 1396a(b). Arizona
participates in Medicaid through the AHCCCS program. Ariz.
Rev. Stat. §§ 36-2901 et seq.
plans 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 promptness to all eligible
individuals.” 42 U.S.C. § 1396a(a)(8). Regulations
implementing state Medicaid plans, such as AHCCCS, require
that states “[c]ontinue to furnish Medicaid regularly
to all eligible individuals until they are found to be
ineligible.” 42 C.F.R. § 435.930(b).
eligibility of a Medicaid beneficiary must be renewed every
12 months. Id. § 435.916(a). Recertification is
required to be done through an ex parte process,
whereby a state makes the eligibility redetermination without
requiring information from the beneficiary, if able to do so
based upon reliable information already available to the
state. Id. § 435.916(a)(2). If a state cannot
make the eligibility redetermination based upon available
data, it must send the beneficiary a “pre-populated
renewal form” requesting only the information needed to
renew eligibility. Id. § 435.916(a)(3).
immigrants who enter the United States after August 22, 1996
do not qualify for Medicaid unless they have been
“qualified aliens” for 5 years, as that term is
defined in the code. 8 U.S.C. § 1613(a). Certain
immigrants are exempt from this requirement, including
refugees and victims of domestic battery. Id.
§§ 1613(a)-(b), 1641(c).
Defendant's Alleged Practices
allege their counsel sent AHCCCS a letter in October 2015
concerning the improper reduction of immigrant
beneficiaries' Medicaid benefits. Compl. ¶ 9. In
response, AHCCCS admitted that the errors were caused by its
computer systems and worker errors. Id. AHCCCS
subsequently admitted that over 3, 500 immigrants were
improperly transferred to emergency-only benefits.
Id. The improper transfers continue to the present,
and some immigrant beneficiaries have had their benefits
improperly reduced a second time. Id. ¶ 41.
allege that Defendant fails to process eligibility renewals
consistent with the ex parte process mandated by
federal law. Id. ¶¶ 32, 51. Specifically,
federal law requires States to make the eligibility
redeterminations without requiring information from the
beneficiary, if able to do so based on reliable information
already available to the States. Id. ¶ 32. If a
State must obtain additional information, it must use a
pre-populated form which seeks only the missing information.
Id. The purpose of the ex parte process is
to reduce errors that occur at recertification and lessen the
burden on beneficiaries to submit duplicative or unchanging
Administrative Code § R9-22-306(c) is Arizona's
method of implementing the ex parte process.
Id. ¶ 46. This rule is not as comprehensive as
the federal regulation. Id. Additionally,
Defendant's policy manual, which instructs workers how to
process renewals, does not implement the ex parte
process. Id. ¶¶ 47-48. The manual lists
information that does not need to be obtained for benefit
renewal determinations. Id. ¶ 48. Immigrant
alien numbers, which are similar to social security numbers,
are not included on this list. Id. Plaintiffs allege
on information and belief that Defendant's employees
improperly request alien numbers at each recertification,
which can lead to errors in the renewal decision.
manual lists “non-citizen status” as not needing
to be verified at renewal unless there has been a change in
immigration status. Id. ¶ 49. Plaintiffs allege
on information and belief that Defendant's employees
routinely ask about immigration status at each
recertification although such information is readily
available in each beneficiary's case file. Id.
This too can lead to errors in the renewal decision.
also allege deficiencies in the notices Defendant sends to
those who are transferred from full-scope benefits to
emergency-only benefits. Id. ¶ 52. Federal law
requires the notices to contain a statement of what action is
being taken, “a clear statement of the specific
reasons” for the action, the specific regulations or
the change in law that requires the action, and an
explanation of the hearing process for appeals. Id.
¶¶ 33-37 (citing 42 C.F.R. § 431.210).
to Plaintiffs, the notices state that the beneficiary's
“Medical Assistance Changed, ” the
beneficiary's “full medical services” will
“stop, ” and “Federal Emergency
Services” will “start.” Id. ¶
53. The reason for this action is “your immigration
status does not let you get full medical services.”
Id. The notices do not explain the difference
between emergency and full-scope benefits or provide a
meaningful explanation for the change in eligibility.
Id. Recipients of the notice would not be able to
tell whether Defendant made a mistake. Id.
Additionally, the notices contain legal citations without
explanation; they incorrectly inform the recipient that they
can review portions of their case file; and information about
“Options to Continue Benefits” is confusing.
Id. ¶ 55.
Plaintiff Aita Darjee
Aita Darjee (“Darjee”) is a refugee from Nepal
who lives in Tucson, Arizona. Id. ¶ 8. Prior to
2016, Darjee, her husband, and her minor child all received
full-scope benefits without interruption. Id.
Plaintiffs allege that the Darjees' full-scope benefits
have been improperly reduced to emergency-only benefits twice
since 2015. Id. ¶¶ 58-59. Defendant
restored the benefits after the first error, and restoration
of her benefits from the second error is “imminent if
not complete.” Id.
suffers from a cold approximately 4-5 times per month, and
she goes to the doctor when her symptoms “get
bad” so that she can be put on a machine that makes her
feel better. Id. ¶ 64. She also suffers from a
gastric problem for which she takes medication. Id.
¶ 65. Darjee's husband suffers from diabetes, high
blood pressure, high cholesterol, and asthma, and he takes
several medications to treat these conditions. Id.
¶ 60. Darjee's son must see a doctor before he
starts school, and he also has an allergy for which a doctor
prescribed a lotion. Id. ¶ 66.
learned about the second reduction in benefits after a
doctor's office called and canceled her husband's
appointment; she did not receive any notice explaining the
reduction. Id. ¶ 62. The Darjees fear they will
lose their benefits again and are worried about their health
if they cannot see doctors and obtain medications.
Id. ¶¶ 67, 69-70.
Plaintiff Alma Sanchez Haro
Alma Sanchez Haro (“Sanchez Haro”) is a resident
of Tucson who received full-scope AHCCCS benefits based on
her status as a battered immigrant who entered the United
States prior to 1996. Id. ¶ 9. Sanchez Haro
became a legal permanent resident in January 2015.
Id. ¶ 73. In April 2016, Sanchez Haro received
a notice that she was no longer eligible for full-scope
benefits and would receive emergency-only benefits.
Id. ¶¶ 75, 77. Sanchez Haro could not
understand from the notice why she was no longer eligible, so
she called the phone number printed on the notice to inquire
about the change to her benefits. Id. ¶¶
Haro was informed that she was ineligible because she had not
been a legal permanent resident for 5 years. Id.
¶ 76. Although Sanchez Haro entered the United States
prior to 1996 and was a victim of domestic battery, both of
which exempt her from the 5-year requirement, she was further
informed (incorrectly) that the law had changed in January
2016. Id. ¶¶ 24, 26-27, 76.
Haro suffers from severe depression, anxiety, type II
diabetes, high blood pressure, high cholesterol, and muscle
cramps. Id. ¶¶ 78-79. She takes several
medications for these conditions. Id. She sees a
doctor once per month at La Frontera for her depression and
anxiety issues, and she receives all other medical care from
El Rio. Id. ¶¶ 78, 80.
that Sanchez Haro is no longer receiving full-scope benefits,
she has not been able to see a doctor at El Rio, which now
wants her to pay for her appointments, and she is not
guaranteed future care at La Frontera, which is attempting to
find an insurance company to pay for her care. Id.
¶¶ 81, 83. Although she is receiving her
medication, she worries that the pharmacy will start making
her pay for them, and she is stressed about her future
health. Id. ¶¶ 81-85.
on the foregoing, Plaintiffs assert two Counts. In Count 1,
Plaintiffs allege that Defendant is violating §
1396a(a)(8)'s “reasonable promptness”
requirement by improperly reducing the benefits of eligible
immigrant residents from full-scope to emergency-only. In
Count 2, Plaintiffs allege Defendant is violating the Due
Process Clause of the United States Constitution by sending
deficient notices to immigrant residents who had their
Motion to Dismiss and Report and Recommendation
moved to dismiss the Complaint on August 29, 2016. Def.'s
Mot. Dismiss, Doc. 35. Defendants argued that (1) Plaintiffs
failed to state a claim under 42 U.S.C. § 1396a(a)(8)
because the statute applies only to initial applications for
Medicaid benefits and, therefore, does not provide a cause of
action for errors caused on renewals; (2) Plaintiffs failed
to state a due process claim because they allege no facts
showing that Defendant failed to comply with the statutory
notice requirements; and (3) Plaintiffs lack standing to
pursue their claims or their claims are moot. Id.
opposed. Pls.' Opp'n, Doc. 38. Plaintiffs argued the
Complaint contains sufficient factual allegations to state a
claim for statutory and due process violations. Id.
They further argued that they do have standing and their
claims are not moot. Id. Finally, Plaintiffs
requested leave to file an amended complaint should the Court
determine that any of Defendant's arguments have merit.
Id. at 17.
October 25, 2016, Judge Ferraro issued a Report and
Recommendation recommending that this Court grant
Defendant's motion and dismiss this action. R. & R.
18, Doc. 72. Judge Ferraro found that Plaintiff Darjee did
not have standing to bring her claims when this action was
filed, and although Plaintiff Sanchez Haro had ...