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Darjee v. Betlach

United States District Court, D. Arizona

September 4, 2018

Aita Darjee, et al., Plaintiffs,
Thomas Betlach, Defendant.



         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 ...

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