716 F.3d 107
4th Cir.2013Background
- Medicaid beneficiaries with severe developmental disabilities sue NC state actors over reduction of services without notice or hearing.
- PBH, an MCO under contract with the NC DHHS, implemented a new base-budget system reducing some enrollees’ service budgets in 2011.
- Some plaintiffs' budgets were reduced; letters lacked appeal procedures; parents modified plans to maintain services.
- District court grants a preliminary injunction reinstating prior service levels and requiring notice/hearing for reductions.
- PBH and Shipman appeal, but the Secretary of the NC DHHS does not join the appeal.
- Court considers whether PBH can pursue the appeal given the single state agency requirement and the Secretary’s non-appeal.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Can PBH appeal without the Secretary? | PBH seeks to reduce services via appeal despite no appeal by NCDHHS. | Single state agency rule bars PBH’s appeal without the Secretary’s participation. | Appeal dismissed; PBH cannot appeal in absence of the single state agency. |
| Does PBH seek to change an NCDHHS administrative decision? | No change to NCDHHS decision; positions remain aligned. | PBH seeks to overturn the NCDHHS’ decision not to appeal and to comply with injunction. | PBH’s appeal changes or disapproves an NCDHHS administrative decision; barred under 42 C.F.R. § 431.10(e)(3). |
| Is PBH’s appeal redressable given the injunction binds the Secretary? | A favorable ruling would allow PBH to reduce services. | Injunction binds the Secretary and PBH as its agent; relief would be illusory. | No redressability; injunction binds both parties and PBH cannot obtain relief without Secretary’s participation. |
| Does the single state agency requirement preclude PBH’s challenge to the injunction? | Yes; the requirement prevents PBH from overriding the Secretary’s decision not to appeal. |
Key Cases Cited
- Forsyth Cnty. Bd. of Soc. Servs. v. Div. of Soc. Servs., 346 S.E.2d 414 (N.C. 1986) (single state agency accountability)
- Hillburn v. Maher, 795 F.2d 252 (2d Cir. 1986) (single state agency accountability and efficiency)
- San Lazaro Ass’n v. Connell, 286 F.3d 1088 (9th Cir. 2002) (single state agency efficiency and accountability)
- Regal Knitwear Co. v. NLRB, 324 U.S. 9 (Supreme Court 1945) (agency decisions bind agents to injunctions)
- Smith v. Dairymen, Inc., 790 F.2d 1107 (4th Cir. 1986) (rule about non-appealing co-defendants and relief)
- Bowles v. Russell, 551 U.S. 205 (Supreme Court 2007) (time limits and jurisdiction in appeals)
- Lujan v. Defenders of Wildlife, 504 U.S. 555 (Supreme Court 1992) (standing requires redressability and likelihood of redress)
- Tenn. Ass’n of Health Maint. Orgs. v. Grier, 262 F.3d 559 (6th Cir. 2001) (limits on agency actions and relief)