United States District Court, D. Arizona
ORDER
ROSEMARY MARQUEZ UNITED STATES DISTRICT JUDGE
Pending
before the Court is Plaintiffs' Renewed Motion for Class
Certification, or in the Alternative, to Take Plaintiffs'
Motion Under Advisement and for Class Discovery (Doc. 113),
and Magistrate Judge D. Thomas Ferraro's Report and
Recommendation Re: the Renewed Motion for Class Certification
(Doc. 172). Plaintiffs objected to the Report and
Recommendation[1] (Doc. 198) and Defendant responded to
those objections (Doc. 214). The Court will adopt the Report
and Recommendation, deny the Motion for Class Certification,
and decline to grant Plaintiffs class discovery.
Defendant's Motion for Leave to File Deposition Testimony
in Support of Response to Plaintiffs' Objections to
Report and Recommendation (Doc. 223) will also be denied.
Also
before the Court are Plaintiff's Objections to Order
Denying In Part Plaintiffs' Motion to Compel Discovery
Responses[2] (Doc. 185), The Court will sustain
in-part, overrule in-part Plaintiffs' Objections to the
Order Denying Plaintiffs' Motion to Compel.[3]
I.
Background
Plaintiff
Aita Darjee is an immigrant from Nepal who came with her
family to the United States as a refugee in 2011 and, based
on her status as a refugee, is eligible for Full Medical
Assistance (“Full MA”) with Arizona Health Care
Cost Containment System (“AHCCCS”). (Doc. 1 at
13.) Plaintiff Darjee's benefit eligibility was twice
improperly reduced, once in 2015 and once in 2016, to Federal
Emergency Services (“FES”), a medical plan with
significantly less coverage. (Id.) After both
reductions, Full MA was restored, but Plaintiff Darjee and
her family worry that their benefits will again be improperly
reduced, preventing them from obtaining much-needed medical
care. (Id. at 14-15.)
Plaintiff
Alma Sanchez Haro came to the United States in 2003 as an
immigrant and has, since that time, been eligible for Full MA
based on her status as a victim of domestic violence under
the Violence Against Women Act (“VAWA”). (Doc. 1
at 15.) In 2015, Plaintiff Sanchez Haro became a legal
permanent resident (“LPR”); LPRs generally have
to wait five years for Full MA, but Plaintiff Sanchez Haro is
exempt from the waiting period because of her VAWA status.
(Id. at 15-16.) After obtaining status as an LPR,
Plaintiff Sanchez Haro's benefits were improperly reduced
to FES on three separate occasions, but Full MA was later
restored each time. (Id. at 16; Doc. 119 at 4-5;
Doc. 158 at 2.) Plaintiff Sanchez Haro suffers from medical
conditions, including mental illness, and worries that her
reduced status will prevent her from receiving the
medications and medical care she relies on. (Doc. 1 at 17.)
AHCCCS
benefits are determined by the Department of Economic
Security (“DES”), which processes applications
for benefits using the Health-e-Arizona Plus computer system
(“HEAPlus”). (See, e.g., Doc. 117-1
(exhibit explaining the means by which the computer program
processes applicant information as well as suggested
modifications to the system).) Immigration information
relating to eligibility for benefits is stored at an
application level; that is, immigration information will not
transfer within the system when a caseworker begins a new
application, like a renewal. (Id. at 6.) The system
prompts a caseworker with a series of questions regarding the
applicant, including immigration information affecting
benefit eligibility, and will then automatically generate a
benefit eligibility response. (See id.) However, any
application which, based on the information input by the
caseworker, would result in an eligibility change from Full
MA to FES cannot happen automatically because it requires
approval by DES supervisory staff. (Doc. 119 at 5-6.)
Plaintiffs
filed this putative class action claiming that Defendant, in
his official capacity, violated the Medicaid Act, 42 U.S.C.
§ 1396a(a)(8)[4] by failing to furnish them Medicaid
benefits with “reasonable promptness.”
(See Doc. 1 at 17-18.) Plaintiffs additionally claim
that the written eligibility notices Defendant sent to
Plaintiffs were deficient and in violation of the Due Process
Clause of the Fourteenth Amendment in addition to the
Medicaid Act, 42 U.S.C. § 1396a(a)(3). (Doc. 1 at 18.)
II.
Class Certification-Related Procedural History
Plaintiffs
Darjee and Sanchez Haro filed their two-count Complaint (Doc.
1) in July 2016 alongside a Motion for Class Certification
(Doc. 5), which sought certification of a class defined as:
All immigrant residents of Arizona eligible for full-scope
Arizona Health Care Cost Containment System
(“AHCCCS”) benefits who, on or after January 1,
2015, have been or will be required to recertify their
eligibility for AHCCCS and whose benefits have been or will
be improperly reduced from full-scope AHCCCS to
emergency-only AHCCCS.
(Doc. 5 at 1-2.) Defendant subsequently filed a Motion to
Dismiss (Doc. 35) on the basis that Plaintiffs failed to
state a claim or, even if they did state a claim, they lacked
standing to assert their claims, and that their claims were
moot. After a motions hearing (Doc. 58), Judge Ferraro issued
a Report and Recommendation (Doc. 72), recommending that the
Court grant the Motion to Dismiss with prejudice and deny as
moot the motion for class certification and other pending
motions. After considering Plaintiffs' Objections to the
Report and Recommendation (Doc. 77; see also Doc.
80, 82) the Court adopted the Report and Recommendation in
part. (Doc. 85.) Specifically, the Court dismissed Plaintiff
Darjee's claim under Count 2, otherwise denied the motion
to dismiss, and denied the Motion for Class Certification.
(Id.; Doc. 87 at 20-23.)
After
approximately six months of discovery, Plaintiffs filed the
instant Renewed Motion for Class Certification (Doc. 113),
for which Judge Ferraro has issued a Report and
Recommendation (Doc. 172) recommending denial of the Motion.
Plaintiffs objected to the Report and Recommendation (Doc.
198) and Defendants responded to those Objections (Doc. 214).
III.
Renewed Motion for Class Certification
In the
Renewed Motion, Plaintiffs seek certification of the
following class: All immigrant residents of Arizona eligible
for full-scope AHCCCS benefits who, on or after January 1,
2015, have been or will be required to recertify their
eligibility for AHCCCS through the Health-e-Arizona Plus
computer system and whose benefits have been or will be
reduced from full-scope AHCCCS to emergency-only AHCCCS.
(Doc. 119 at 15.) In support of the Renewed Motion,
Plaintiffs submit “Newly Discovered Evidence”
(see Doc. 119 at 3) that they believe cures the
deficiencies that resulted in the denial of their first
motion for class certification.
First,
Plaintiffs argue that Plaintiff Sanchez Haro's additional
erroneous benefit reduction on March 28, 2017, is evidence
that the improper and systemic benefit reductions are still
ongoing. (Doc. 119 at 3.) According to Plaintiffs, when
AHCCCS was processing Plaintiff Sanchez Haro's renewal
application, her benefits were reduced to FES despite the
fact that her renewal application requested no information
regarding her immigration status, and she twice verified her
immigration status with a case worker. (Id. at 4-5.)
Thus, Plaintiffs blame the manner in which the HEAPlus system
stores and presents immigration information upon renewal for
the incorrect benefit reduction.[5] (Doc. 119 at 6.)
Second,
Plaintiffs present testimony that internal AHCCCS and DES
monitoring reveals that errors resulting in improper benefit
reductions are numerous and “occur on a nearly daily
basis.” (Doc. 119 at 7.)
Third,
Plaintiffs present evidence that the HEAPlus system stores
immigration information on an application-by-application
basis as opposed to tying immigration information to the
applicant. (Doc. 119 at 7-8.) As a result, when new
applications are processed, the computer system does not
present the reviewer will all relevant immigration
information; only information from the currently pending
application is shown. (Id.) Testimony from DES and
AHCCCS employees, as well as a comparison to a related
computer system used for determining food stamps benefits,
are offered in support of this notion. (Id. at 9.)
Altogether, Plaintiffs assert that the HEAPlus system design
causes improper benefit reductions because it (1) does not
properly access previous immigration information, (2) prompts
caseworkers to assign only emergency benefits, (3) does not
automatically reverify immigration information, and (4) does
not allow automatic FES determinations to be corrected but
rather requires caseworkers to make informal annotations to
applications. (Id. at 10-13.)
Fourth,
and lastly, Plaintiffs aver that improper reductions were not
the result of conflicting information provided by applicants,
but rather can be traced to the HEAPlus computer system.
(Id. at 13.) Based on the above evidence, Plaintiffs
argue that they have sufficient evidence to satisfy the Rule
23 class certification requirements.
In
response to the Renewed Motion, Defendant argues that
Plaintiffs' contentions that information is not properly
stored in the HEAPlus system and that DES is somehow obliged
to make the system more efficient are incorrect. (Doc. 128 at
4-5.) Defendant points out that the error rate for incorrect
notices of reduction of benefits is less than one percent.
(Id. at 3.) He further argues that, in any event, an
inconvenient or less than ideally efficient computer program
does not establish a policy or practice of denying Full MA
benefits. (Id. at 5.)
In
evaluating the Renewed Motion, Judge Ferraro found that
Plaintiffs failed to satisfy their burden of showing
commonality, typicality, or numerosity. (See Doc.
172.) Accordingly, he recommends that this Court deny the
Renewed Motion for Class Certification. (Id. at 14.)
As to
commonality, Jude Ferraro rejected the argument that being
“at risk” of a benefit reduction was sufficient
to establish a violation of 42 U.S.C. § 1396a(a)(8), so
an allegation that all putative class members had suffered a
non-cognizable injury could not establish commonality.
(Id. at 5-7.) Alternatively, Judge Ferraro found
that simply alleging a violation of the same statutory
provision is insufficient to establish commonality under Rule
23. (Id. at 7.) Citing Wal-Mart v. Dukes,
564 U.S. 338 (2011), Judge Ferraro explained that “the
commonality provision requires a plaintiff to affirmatively
demonstrate that the class members have suffered the same
injury, not merely violations of the same provision of
law.” (Doc. 172 at 7.) To that end, Judge Ferraro
pointed out that improper benefit reductions identified by
Plaintiffs, even as to just those suffered by Plaintiff
Sanchez Haro, did not have the same cause. (Id. at
7-8.) In addition, Judge Ferraro pointed with disapproval to
Plaintiffs' failure to set temporal limits to the
proposed class because it is incongruous with the
statute's requirement that benefits be furnished with
“reasonable promptness[.]” (Id. at 10.)
Finally, because benefit reductions must ultimately be
approved by a DES eligibility worker, the HEAPlus system
cannot alone be to blame for benefit reductions.
(Id. at 10-11.)
In
finding that the proposed class fails to satisfy the Rule 23
typicality requirement, Judge Ferraro once again pointed to
the disparate causes of the named Plaintiffs' injuries as
evidence that Plaintiffs are not, and cannot, be typical of
the claims at issue. (Id. at 11.) As an example,
Plaintiff Darjee's benefits were reduced because her
immigration status was not “carried forward” in
the HEAPlus system, while one of Plaintiff Sanchez Haro's
benefits reductions was because of caseworker error.
(Id.)
As to
the numerosity requirement, Judge Ferraro concluded that
Plaintiffs had not affirmatively shown that the class is
sufficiently numerous because the class is not well enough
defined. (Id. at 12.) That is, Plaintiffs have only
presented evidence of the number of people who have received
erroneous notification that their benefits were improperly
reduced, not the number of people who failed to be furnished
with medical assistance with reasonable promptness.
(Id.) Judge Ferraro found that the final 23(a)
requirement, adequacy of representation, was satisfied
contingent on satisfaction of the other Rule 23(a)
requirements. (Id. at 13.)
Finally,
Judge Ferraro determined that Plaintiffs had failed to
establish that “injunctive relief or corresponding
declaratory relief is appropriate respecting the class as a
whole, ” as required by Rule 23(b)(2). (Id. at
13.) Because Plaintiffs' benefit reductions did not have
a single cause, Judge Ferraro explained, “each
individual class member would be entitled to a different
injunction or declaratory judgment[, ]” thus precluding
class certification under Rule 23(b)(2). (Id.
(citing Wal-Mart, 564 U.S. at 360).)
A.
Standard of Review
A
district judge must “make a de novo determination of
those portions” of a magistrate judge's
“report or specified proposed findings or
recommendations to which objection is made.” 28 U.S.C.
§ 636(b)(1). The advisory committee's notes to Rule
72(b) of the Federal Rules of Civil Procedure state that,
“[w]hen no timely objection is filed, the court need
only satisfy itself that there is no clear error on the face
of the record in order to accept the recommendation” of
a magistrate judge. Fed.R.Civ.P. 72(b) advisory
committee's note to 1983 addition; see also Johnson
v. Zema Sys. Corp., 170 F.3d 734, 739 (7th Cir. 1999)
(“If no objection or only partial objection is made,
the district court judge reviews those unobjected portions
for clear error.”); Prior v. Ryan, CV
10-225-TUC-RCC, 2012 WL 1344286, at *1 (D. Ariz. Apr. 18,
2012) (reviewing for clear error unobjected-to portions of
Report and Recommendation).
While
28 U.S.C. § 636 “does not require the judge to
review an issue de novo if no objections are filed,
it does not preclude further review by the district judge,
sua sponte or at the request of a party, under a
de novo or any other standard.” Thomas v.
Arn, 474 U.S. 140, 154 (1985). The Court “may
accept, reject, or modify, in whole or in part, the findings
or recommendations made by the magistrate judge.” 28
U.S.C. § 636(b)(1).
B.
Discussion
Because
Plaintiffs object to the ultimate conclusion of Judge
Ferraro's Report and Recommendation, the Court will
engage in de novo review of the Renewed Motion.
1.
General Arguments
In
their Objection to Judge Ferraro's Report and
Recommendation, Plaintiffs begin by arguing that the errors
identified by Defendant's HEAPlus computer system have
yet to be corrected. (Doc. 198 at 3.) Plaintiffs contend that
“[t]he necessary changes concern nearly every aspect of
the HEAPlus system” and complain that the
“document detailing the significant changes needed . .
. has not been finalized and approved, and there is no
deadline for its implementation.” (Id.)
Plaintiffs
then go on to describe examples of the myriad errors the
HEAPlus system necessarily produces. For example, (1)
caseworkers are not able to override the system's
determination that an immigrant is eligible only for FES
because once data, like immigrant status grant date, has been
retrieved from the database, it is no longer editable
(id. at 4-5); (2) the program does not provide a
means for inputting and/or assessing benefit eligibility
based on more than one qualifying status (id. at 5);
and (3) certain data fields incorrectly auto-populate when
left unanswered (id. at 5 n.5). Plaintiffs also
point to correct determinations in their cases by other
computer systems making related determinations as further
proof that the computer system is deficient. (Id. at
7.)
Next,
Plaintiffs contend that the manual review process instituted
by DES in order to identify and correct improper benefit
reductions is “temporary and wholly inadequate at
preventing continuing errors[.]” (Id.)
Plaintiffs also express concern that the manual review
process is voluntary, presumably in contrast to a
Court-ordered correction of the system, and thus could be
discontinued at any time. (Id. at 8.) Further,
Plaintiffs point out that errors are still occurring despite
the additional review. As an example, Plaintiff Sanchez
Haro's March 28, 2017 benefit reduction was erroneously
confirmed as correct by a DES supervisor. (Id. at
9.)
The
remainder of the factual allegations in Plaintiffs'
Objections attempts to dismiss counterarguments based on
other possible sources of errors. (See Id. at
12-13.) That is, Plaintiffs seek to establish that although
caseworkers and reviewers may cause some errors, the source
of the problem ...