Aelen Unan v. Nick Lyon, 2017 U.S. App. LEXIS 5623

Background

In 2014 Michigan implemented ACA-related changes and a computer error automatically assigned many noncitizen applicants to Emergency Services Only (ESO) Medicaid instead of comprehensive coverage; applicants attesting but not verifying immigration status were affected.
Plaintiffs Unan and Quintino (noncitizen Medicaid applicants) received ESO notices, filed a class action alleging violations of the Medicaid statute (failure to provide comprehensive coverage and a reasonable opportunity to verify immigration status) and procedural due process, and sought class certification and injunctive relief.
Two days after the complaint the State retroactively approved comprehensive coverage for Unan and Quintino; the State also implemented fixes and reprocessed thousands of cases, claiming a permanent correction by December 2014 and sending revised notices beginning May 2015.
The district court found plaintiffs’ claims moot and granted defendant’s summary judgment; plaintiffs appealed. The Sixth Circuit reversed on mootness, held some statutory claims present genuine fact disputes precluding summary judgment, and affirmed summary judgment for the State on the notice claims.
The Sixth Circuit applied the “picking off” and “inherently transitory” exceptions to mootness for the named plaintiffs and concluded the putative class claims were not moot because the State had not shown it was “absolutely clear” the systemic error could not recur.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Mootness of named plaintiffs’ claims	DHHS mooted named plaintiffs only after suit and motion for class certification; State is "picking off" plaintiffs to avoid class litigation	Relief granted to named plaintiffs and classwide fixes render claims moot	Court: Not moot; applied both "picking off" and "inherently transitory" exceptions (majority)
Applicability of the "inherently transitory" exception	Injuries from ESO assignments are uncertain in duration and likely to be resolved quickly, so they would evade review; many other class members suffer same injury	State fixed system and reprocessed cases; injury unlikely to evade review for the class	Court: Exception applies — injury sufficiently transitory and other class members were suffering similar errors
Mootness of putative class statutory claims (systemic ESO assignments)	Substantial record evidence (internal emails, hundreds of post-fix erroneous assignments) shows systemic error persisted; voluntary cessation insufficient to moot	State implemented systemic fixes, reprocessed >16,000 cases, and claims remaining errors are isolated human errors	Court: Not moot; State failed to show it’s "absolutely clear" violations cannot recur; genuine disputes of material fact remain -> reverse summary judgment for State on mootness and deny plaintiffs’ summary judgment on merits (fact issues)
Adequacy of retroactive notices / Due Process	Notices insufficient because they do not specify precise dates individuals were assigned to ESO, hindering a meaningful opportunity to challenge eligibility	Notices state reason for denial, offer hearing rights, include prepopulated hearing forms; individualized date would be burdensome with little benefit	Court: Notices adequate as a matter of law; State entitled to judgment on notice claims (Counts IV & V)

Key Cases Cited

Preiser v. Newkirk, 422 U.S. 395 (recognizes Article III requirement that controversy remain live throughout review)
U.S. Parole Comm’n v. Geraghty, 445 U.S. 388 (class-action mootness principles when named plaintiffs become moot)
Steel Co. v. Citizens for a Better Env’t, 523 U.S. 83 (federal courts must resolve jurisdictional questions before merits)
Deposit Guar. Nat’l Bank v. Roper, 445 U.S. 326 (developed the "picking off" mootness exception)
Wilson v. Gordon, 822 F.3d 934 (6th Cir. 2016) (applied "picking off" and "inherently transitory" exceptions to similar Medicaid-system errors)
Friends of the Earth, Inc. v. Laidlaw Envtl. Servs., 528 U.S. 167 (defendant bears heavy burden to show voluntary cessation moots case)
Goldberg v. Kelly, 397 U.S. 254 (due-process requirements for termination of public benefits)
Mathews v. Eldridge, 424 U.S. 319 (balancing test for procedural due process)
City of Mesquite v. Aladdin’s Castle, Inc., 455 U.S. 283 (voluntary cessation principle)
Lyons v. City of Los Angeles, 461 U.S. 95 (limitations on injunctions for speculative future violations)