Ronni RABIN, individually and as a representative of all persons similarly situated, Maritza Avila, individually and as a representative of all persons similarly situated, Jane Doe, Ronald Green, individually and as representatives of all persons similarly situated, Wende Qallab, individually and as a representative of all persons similarly situated, Plaintiffs-Appellants, v. Patricia WILSON-COKER, in her official capacity as Commissioner of the Connecticut Department of Social Services, Defendant-Appellee.
No. 03-7572.
United States Court of Appeals, Second Circuit.
Argued: August 4, 2003. Decided: March 26, 2004.
362 F.3d 190
Hugh Barber, Assistant Attorney General (Richard Blumenthal, Attorney General, Richard J. Lynch and Tanya Feliciano, Assistant Attorneys General, on the brief), Hartford, CT., for Defendant-Appellee.
Before: POOLER, SACK, and WESLEY, Circuit Judges.
POOLER, Circuit Judge.
1 Congress has determined that parents who receive Medicaid should enjoy a temporary grace period before having their benefits terminated when their earned income would otherwise make them ineligible. The question we face is whether the grace period only applies when the parent is fortunate enough to get a job or receive a salary increase that triggers ineligibility, or if the grace period also applies when a state lowers its income eligibility limits, making a working parent who has not received an increase in her salary ineligible.
2 The statute central to this appeal,
The Statutory Framework
3 Prior to April 1, 2003, Connecticut allowed families with income levels up to 150% of the federal poverty level to participate in HUSKY A, a state Medicaid program. Connecticut achieved this result by not counting income between its AFDC eligibility levels and 150% of the federal poverty level. In 2003, the Connecticut legislature enacted P.A. 03-02, which provided that parents and other needy caretaker relatives would not be eligible for TMA if their incomes exceeded 100% of the federal poverty level.
4 Connecticut‘s actions took place against the background of a Byzantine tangle of federal statutes, any one of which is difficult to decipher if read either independently of the history of the program or in isolation from other provisions of the Medicaid Act. We therefore undertake a brief description and history of the Medicaid program, created in 1965.
6 Medicaid eligibility is categorical. To receive benefits, applicants must show both that they are needy and that they fall into one of the many categories set forth in
7 PRWORA abolished the AFDC program and established a new cash assistance program for families, Temporary Assistance to Needy Families (TANF). See
8 The TMA program also has a long history. In 1972, Congress provided that families who became ineligible for AFDC due to increased income from employment would remain eligible for Medicaid for four months.
9 The Eighth Circuit found Section 209‘s TMA language ambiguous because increased income from employment could refer either to actual income from employment or to income that was countable under the applicable eligibility standards. Id. at 1177. Thus, the court turned to the legislative history of the TMA statute and found that [t]he clear primary purpose of the provision was to remove a work disincentive: loss of Medicaid benefits and that a secondary purpose was preventing sudden loss of medical care. Id. Although the court also acknowledged that the purpose of limiting the earned income disregard was undoubtedly to cut federal spending, it found this purpose irrelevant to construing the language of the separate statutory provision authorizing TMA, explaining that [t]he fact that in 1981 Congress sought to cut the budget in no way imposes a general rule that all statutes involving expenditures must be construed in favor of spending less. Id. at 1178.
10 The Phillips court also rejected HHS‘s interpretation of the TMA provision, which supported the state, because it was not based on long-standing policy, had not been the subject of administrative adjudication or rulemaking, and was not supportive of the congressional purpose of the TMA provision. Id.
12 In probable reaction to Phillips, Congress added a new section to the AFDC statute which granted families who lost AFDC as a result of the expiration of the thirty and one-third disregard a minimum of nine months of transitional Medicaid.
13 Four years later, Congress adopted
14 Extension of eligibility for medical assistance
15 (a) Initial 6-month extension.
16 (1) Requirement.
17 Notwithstanding any other provision of this subchapter, each State plan approved under this subchapter must provide that each family which was receiving aid pursuant to a plan of the State approved under [the AFDC requirements] in at least 3 of the 6 months immediately preceding the month in which such family becomes ineligible for such aid, because of hours of, or income from, employment of the caretaker relative... or because of section 602(a)(8)(B)(ii)(II) of this title (providing for a time-limited earned income disregard), shall ... remain eligible for assistance under the plan ... during the immediately succeeding 6-month period....
18 Section 1396r-6(b) provides for an additional six-month extension as long as the recipient complies with certain reporting requirements.
19 TMA next resurfaced in 1996 as part of PRWORA.
20 For continued medical assistance in the case of individuals (and families composed of individuals) described in subsection (b)(1)(A) of this section who would otherwise become ineligible because of hours or income from employment, see sections 1396r-6 and 1396a(e)(1) of this title.
21 Because Section 1396a(e)(1)(B) suspends Section 1396a(e)(1)(A)‘s operation with respect to individuals and families who become ineligible for aid between April 1, 1990, and September 30, 2003, as did plaintiffs, Section 1396r-6 is the sole applicable section for determining plaintiffs’ TMA eligibility.
District Court Proceedings
22 On March 28, 2003, the appellants and two additional plaintiffs, who had no income from employment, filed a civil rights complaint in the United States District Court for the District of Connecticut. Their claims included one based on defects in the notice of termination and another alleging violation of
23 On April 14, 2003, Wilson-Coker moved for summary judgment on plaintiffs’ claim that they were entitled to TMA under Sections 1396r-6(a)(1) and 1396u-1(c)(2). She principally argued that plaintiffs are not eligible for TMA because their terminations resulted from reduced eligibility levels rather than income from employment.
24 Chief Judge Chatigny dismissed plaintiffs’ complaint, finding that plaintiffs were not terminated from Medicaid because of income from employment. Rabin v. Wilson-Coker, 266 F.Supp.2d 332, 335 (D.Conn.2003). The judge first found that the phrase income from employment was ambiguous because [i]t could apply to plaintiffs, who cease to be eligible because their income exceeds the new HUSKY A income eligibility limit established by Public Act 03-02. Alternatively, it may apply only if the triggering event causing a loss in eligibility is an increase in income, a condition that was explicitly stated in the predecessor statute to §§ 1396u-1(c)(2) and 1396r-6.
26 He therefore considered the legislative history of PRWORA, which as we have seen reenacted the TMA program without change. See id. at 339-40. Because this history repeatedly references increased income from employment, Judge Chatigny found it to be supportive of Wilson-Coker‘s interpretation. Id. at 339. In light of the repeated mention of increased income in the 1996 PRWORA legislative history, the judge did not attribute significance to Congress‘s 1988 deletion of the word increased from the TMA provision. Id.
27 Judge Chatigny also found that defendant‘s reading of the statute best served the legislative purposes of PRWORA: to (1) provide healthcare to the most needy, (2) control healthcare expenditures, (3) provide states with maximum flexibility in designing Medicaid programs, and (4) protect states from unanticipated costs resulting from changes in the business cycle. Id. at 340. In addition, he found defendant‘s interpretation to be consistent with the main purpose of TMA, which is to assure people that if they go to work, or their salaries increase, they will not lose their health insurance coverage. Id. He reasoned that although [i]t is possible that when a state lowers an income eligibility limit to reduce Medicaid expenditures, some of the affected individuals may stop working to avoid losing benefits, ... there is no indication Congress intended to require states confronted with budget deficits to provide TMA to persons in that situation in order to encourage them to keep working. Id.
28 Finally, he relied on CMS‘s interpretation of the statute to protect only those recipients who become ineligible due to increased earned income. Id. Despite the tentative nature of this interpretation, he found that it still give[s] the best indication of how CMS interprets the statute. Id.
29 Judge Chatigny therefore granted summary judgment to defendant and denied plaintiffs’ motion for injunctive relief. He did not rule on plaintiffs’ class certification motion.
30 Those plaintiffs whose households receive earned income from employment filed a timely notice of appeal limited to the district court‘s interpretation of Section 1396r-6. On appeal, they principally argue that the district court erred by finding income from employment ambiguous and thus resorting to sources other than the statutory language. They also contend, however, that the legislative purposes of the TMA statute are consistent with its plain language and that the district court improperly relied on advisory portions of CMS‘s State Medicaid Manual. Defendants defend the district court‘s reasoning but also urge affirmance on three alternative bases: (1) pursuant to
31 Prior to oral argument, plaintiffs requested and were granted an injunction pending appeal barring Wilson-Coker from ending Medicaid coverage for the individual plaintiffs or the plaintiff class based on the statutory rights contested on appeal. On January 23, 2004, Wilson-Coker requested that we vacate the injunction or expedite consideration of the appeal.
DISCUSSION
32 I. The ambiguity of Section 1396r-6.
33 A statute is ambiguous if its terms are susceptible to two or more reasonable meanings. Natural Res. Def. Council v. Muszynski, 268 F.3d 91, 98 (2d Cir.2001). We determine whether a statutory provision is ambiguous by examining its language, the context in which the language is used, and the broader context of the statute as a whole. Freier v. Westinghouse Elec. Corp., 303 F.3d 176, 197 (2d Cir.2002).
34 Wilson-Coker argues that the statute implicitly requires increased income because if the recipient‘s earned income does not change, the termination results from something other than the recipient‘s earned income. She contends that plaintiffs were terminated because of the lowered income disregards rather than because of earned income. She also argues that because some plaintiffs have income from sources other than employment, we must determine whether income from employment has to be a but for cause of the termination. Finally, she suggests that the word increased would be redundant in the statute because only an increase in income will trigger ineligibility assuming that income limits remain the same.
36 Notwithstanding White, reading Section 1396r-6 without reference to its history or its purpose requires us to conclude that it is ambiguous. We believe that a reasonable reader could read this section either as mandating an extension of benefits whenever earned income plays a role in a recipient‘s termination or as requiring that earned income — rather than a change in eligibility standards — be the primary cause for the termination.
37 II. Applying the canons of construction.
38 Where a statute is ambiguous, we must look to the canons of construction. Auburn Hous. Auth. v. Martinez, 277 F.3d 138, 143 (2d Cir.2002). At least three such canons are relevant in this case. First, a statute is to be considered in all its parts when construing any one of them. Lexecon Inc. v. Milberg Weiss Bershad Hynes & Lerach, 523 U.S. 26, 36 (1998). If drafters choose to use one word in part of a statute and omit it in another, it is generally presumed that Congress acts intentionally and purposely in the disparate inclusion or exclusion. Russello v. United States, 464 U.S. 16, 23 (1983) (internal quotation marks omitted). Second, we must give some significant measure of deference to CMS‘s interpretation of the statute. Community Health Ctr. v. Wilson-Coker, 311 F.3d 132, 137 (2d Cir.2002). Third, the interpretation given to the statute must be consistent with the congressional purpose for enacting it. Holloway v. United States, 526 U.S. 1, 9 (1999).
39 The first canon — an examination of how the statute in all of its parts fits together — favors plaintiffs’ interpretation of Section 1396r-6. However, the section we must examine to understand the relevance of this canon is not Section 1396r-6 itself, but rather Section 1396a(e). Subsection (1)(a) of Section 1396a(e) provides that recipients who have become ineligible for [AFDC] because of increased hours of, or increased income from, employment, shall, while a member of such family is employed, remain eligible for [Medicaid] assistance... for 4 calendar months. Subsection (1)(B), however, instructs that Subsection (1)(A) does not apply to persons who become ineligible for AFDC from April 1, 1990, to September 30, 2003. For these recipients, the agency must use Section 1396r-6.
40 The administrative interpretation of Section 1396r-6, on the other hand, favors defendant. CMS has stated or implied in several different sources, none of which is a published regulation, that the recipient must have increased his income in order to be eligible for TMA. See, e.g., CMS State Medicaid Manual §§ 3308.4, 3308.13; CMS letter of June 5, 1998, to State Medicaid Directors and TANF Administrators, at 2; Health Care Financing Administration2 State Plan Preprint HCFA-PM 91-4, at 2-A (August 1991). As we have said, such informal interpretations merit some significant measure of deference. Community Health Ctr., 311 F.3d at 137.
42 Second, the Lorillard principle — even assuming it should be applied to administrative interpretations that are not contained in published regulations and where there is no proof of Congressional awareness — would have much less significance in this situation because the administrative interpretation co-existed with and post-dated a conflicting judicial interpretation. By the time CMS articulated its interpretation of the current TMA provision, the Eighth Circuit already had construed increased income from employment to mean increased countable income from employment. See Phillips, 728 F.2d at 1178. Congress then (1) adopted Phillips’ specific holding in Public Law 98-369 and (2) in 1988, deleted increased before income from employment in the TMA provision. This history suggests much more strongly that Congress was aware of Phillips and adopted its bottom-line conclusion that it is increased countable income from employment, rather than increased actual income from employment, that triggers TMA eligibility than it suggests Congressional awareness and adoption of the CMS interpretation.
43 Despite our rejection of Wilson-Coker‘s argument for Lorillard deference, we must still accord the CMS interpretation considerable deference, with the exact degree of deference depending upon the agency‘s expertise, the care it took in reaching its conclusions, the formality with which it promulgates its interpretations, the consistency of its views over time, and the ultimate persuasiveness of its arguments. Community Health Ctr., 311 F.3d at 138 (citing United States v. Mead Corp., 533 U.S. 218, 234-35 (2001)). CMS, the agency charged with administering Medicaid, has acknowledged expertise in this area and its position has been consistent at least since 1991, when it promulgated the pre-printed form. The formality of CMS‘s interpretation is at an intermediate level between a published recommendation and an interpretation advanced only in litigation. However, there is no indication in the record of the process through which CMS arrived at its interpretation. Most significantly, there is no suggestion that CMS took into account the Eighth Circuit‘s view that — in light of the purposes of the TMA provision — it must be construed to include an increase in countable income even in the absence of an increase in actual income. See Phillips, 728 F.2d at 1178. Therefore, we cannot say with confidence that CMS‘s interpretation came about as the result of a reasoned process. In fact, CMS labels its interpretation as tentative. CMS State Medicaid Manual § 3308.1. We therefore conclude that we will accord CMS‘s interpretation that degree of deference it reasonably deserves in light of the other canons of interpretation.
44 The district court found that CMS‘s interpretation best served the statutory purposes of PRWORA. Rabin, 266 F.Supp.2d at 340 (citing H.Rep. No. 104-651, at 1351-52). PRWORA, however, neither created nor amended the TMA program; it simply continued it. Therefore, the purposes of PRWORA are not particularly relevant to interpreting Section 1396r-6. Cf. Phillips, 728 F.2d at 1178 (rejecting relevance of Act that limited the thirty and one-third disregard to four months — even though its primary purpose was to cut federal spending — because the Act did not expressly modify § 1396a(e)(1), and we are unwilling to assume it was modified by implication).
46 H. Rep. 100-159, at 11. These purposes are consistent with the original purposes of the TMA program and further demonstrate Congress‘s commitment to providing a soft landing in the form of transitional medical coverage for those recipients who suddenly become ineligible for AFDC because of earned income.
47 The district court found that construing TMA not to apply when new income limits cause a recipient‘s ineligibility might motivate some parents to leave work, but that it could not assume that Congress wanted to prevent states from immediately enforcing new income limits during a fiscal crisis. Rabin, 266 F.Supp.2d at 340. In doing so, the district court weighed one of TMA‘s two identified purposes against the purposes of PRWORA. As we have indicated, we doubt the relevance of PRWORA‘s purposes in interpreting TMA. In addition, it is clear to us that both of Congress‘s purposes for creating and then liberalizing the TMA program are served by plaintiffs’ interpretation and disserved by defendant‘s. Connecticut‘s abrupt termination of plaintiffs’ medical insurance clearly contravened the second of the two purposes we have identified because it did not provide plaintiffs with a soft landing. Second, to an extent that is not knowable by us or by the district court, the elimination of medical coverage removes an incentive to work, and in the case of persons with serious illnesses may indeed prevent them from working altogether. Thus, we conclude that the purposes of the TMA provision clearly support plaintiffs’ position.
48 Arriving at this conclusion affects our analysis in two ways. First, the statutory purpose canon suggests that Section 1396r-6 applies where earned income plays a role in causing a recipient‘s ineligibility. Second, the inconsistency of CMS‘s interpretation with the statutory purposes significantly undermines its persuasiveness.
49 III. Legislative history.
50 In addition to examining the canons of statutory interpretation, we may also look to legislative history to determine the intent of an ambiguous statute. Auburn Hous. Auth., 277 F.3d at 144. Wilson-Coker relies primarily on references in the Senate, House, and Conference reports for the Family Support Act to increased earnings from employment as the triggering factor for TMA eligibility. See, e.g., S.Rep. No. 100-377, at 42-43; H. Conf. Rep. No. 100-998, at 169. We agree that these references support Wilson-Coker‘s interpretation. If they existed in isolation, they likely would persuade us of the correctness of her argument.
52 Despite some legislative history and an administrative interpretation to the contrary, we conclude that plaintiffs’ interpretation of Section 1396r-6 is more consistent with the legislative purpose for enacting TMA than is defendant‘s interpretation. As discussed previously, plaintiffs’ interpretation also is the more logical one when considering the statute as a whole. Finally, the most important aspect of the legislative history — Congress‘s deletion of the word increased — strongly supports plaintiffs’ interpretation. We therefore conclude that Medicaid recipients who cease to be eligible because the state has promulgated lower income limits are eligible for TMA if they (1) have earned income and (2) would not have been ineligible under the new income limits if they had only unearned income.
53 IV. Wilson-Coker‘s alternative arguments.
54 A. 1996 AFDC limits.
55 Based on Section 1396u-1(c)(2), Wilson-Coker argues that plaintiffs are not eligible for TMA because they are not eligible for AFDC using 1996 income eligibility levels.
56 B. The sunset provision.
57 Wilson-Coker also argues that TMA went out of existence on September 30, 2002, pursuant to
59 Defendant‘s final argument is that Sections 1396r-6 and 1396u-1 do not create individual rights enabling plaintiffs to sue under Section 1983. In large part, this argument relies on Gonzaga Univ. v. Doe, 536 U.S. 273, 276 (2002), in which the Court determined that a provision of the Family Educational Rights and Privacy Act (FERPA) was not designed to convey rights on individual plaintiffs and thus did not justify a suit under Section 1983. See also Taylor v. Vermont Dep‘t of Educ., 313 F.3d 768, 786 (2d Cir.2002). In Gonzaga, the Court held that [o]nce a plaintiff demonstrates that a statute confers an individual right, the right is presumptively enforceable by § 1983. 536 U.S. at 284. For a statute to create such private rights, its text must be phrased in terms of the persons benefitted. Id. (quoting Cannon v. University of Chi., 441 U.S. 677, 692 n. 13 (1979)).
60 The Gonzaga Court applied this standard to the relevant section of FERPA, which provides:
61 No funds shall be made available under any applicable program to any educational agency or institution which has a policy or practice of permitting the release of education records (or personally identifiable information contained therein ...) of students without the written consent of their parents to any individual, agency, or organization.
62 Id. at 279 (quoting
63 Section 1396u-1 merely cross-references Section 1396r-6, so it is to the latter section we must turn in assessing whether Congress intended to give Medicaid recipients enforceable rights. Subsection (a) of Section 1396r-6 provides that each State plan approved under this subchapter must provide that each family which was receiving [AFDC] in at least 3 of the 6 months immediately preceding the month in which such family becomes ineligible for such aid, because of ... income from employment ... remain eligible for assistance under the plan ... during the immediately succeeding 6-month period. This language focuses much more directly than does the FERPA provision on the individual‘s entitlement. In particular, it contains no qualifying language akin to FERPA‘s policy or practice.
64 Section 1396r-6(a), however, does require the State Plan to provide that eligible applicants receive aid rather than directly requiring that all eligible persons receive the assistance. Wilson-Coker contends that this wording indicates that, as in Gonzaga, Congress focused on the aggregate requirement and the responsibilities of the various administrative actors rather than on the rights of the recipients. This argument fails because Congress has provided that [i]n an action brought to enforce a provision of this chapter [which includes the Medicaid statutes], such provision is not to be deemed unenforceable because of its inclusion in a section of this chapter requiring a State plan or specifying the required contents of a State plan.
65 Because all of the language of Section 1396r-6 except the plan requirements language, reflects Congress‘s intention to confer a right to TMA upon persons who meet the various eligibility requirements, we find that Section 1396r-6 can support a Section 1983 claim. The only relevant post-Gonzaga precedent from the Courts of Appeals supports this holding. See Gean v. Hattaway, 330 F.3d 758, 772-73 (6th Cir.2003); Bryson v. Shumway, 308 F.3d 79, 88-89 (1st Cir.2002). Cf. Wilder v. Virginia Hosp. Assoc., 496 U.S. 498 (1990); Concourse Rehab. & Nursing Ctr. Inc. v. Whalen, 249 F.3d 136, 143-44 (2d Cir.2001).
66 For the reasons we have discussed, we reverse the decision of the district court. We remand for entry of summary judgment in favor of plaintiffs establishing that Section 1396r-6 requires the provision of TMA to those persons in receipt of earned income who are discontinued because — under new eligibility provisions enacted by the state — their earned income causes them to become ineligible for AFDC. We do not hold that individuals who would be ineligible for AFDC under new eligibility standards even if they had no earned income are eligible for TMA. We remind the parties that neither our prior injunction nor this decision requires defendant to continue granting Medicaid to recipients who have exhausted their eligibility, or to recipients whom defendant deems ineligible for TMA for reasons other than the interpretation of the TMA statute she has defended on this appeal. Finally, Wilson-Coker‘s post-argument motion is denied as moot.