Court Orders Kentucky to Restore Medicaid LTC Benefits

Kerr v. Holsinger, No. 0-68-JMH (E.D. Ky. Mar. 25, 2004)

The U.S. District Court for the Eastern District of Kentucky has granted the motion for preliminary injunction filed by the National Senior Citizens Law Center and the Office of Kentucky Legal Services Programs (OKLSP), on behalf of Kentucky residents whose Medicaid coverage for long-term care was terminated by the state. Concluding that “manipulating eligibility standards in order to make up for budget deficits is unreasonable and inconsistent with Medicaid objectives,” the court ordered that the plaintiffs’ Medicaid coverage be immediately reinstated.

The class action lawsuit, filed against officials in Kentucky’s Medicaid agency in October, challenged the agency’s new regulations, revising long-term care eligibility standards. See Washington Weekly, Oct 10, 2003. The changes were at the center of the state’s effort to cut $50 million from its Medicaid long-term care spending, which officials apparently hoped to accomplish by simply making it unreasonably difficult for individuals to demonstrate a medical need for nursing home or home and community-based care services. In some cases, individuals who had resided in nursing homes for close to five years were being informed by the state that they did not need nursing facility care.

Pointing to Kentucky’s previous findings that they were eligible for long-term care, plaintiffs charged the state with denying mandatory Medicaid services—nursing facility services—to eligible individuals in violation of 42 U.S.C. §§1396a(a)(10)(A) and 1396(d)(a)(4), and with employing an unreasonable eligibility standard in violation of 42 U.S.C. §1396a(a)(17). Plaintiffs also alleged that the state was not providing them notices regarding their eligibility that complied with the requirements of 42 U.S.C. §1396a(a)(3). The state moved to dismiss, alleging that, per Gonzaga, the plaintiffs did not have any rights in these provisions that could be enforced under 42 U.S.C. §1983.

The court held that all four provisions contain enforceable rights. Each, the court said, is clearly intended to benefit the plaintiffs, imposes a binding obligation on the state, and is not so “vague or amorphous” that its enforcement is beyond the scope of the judiciary. The court also held resoundingly that the state could not restrict these rights for the sole purpose of saving money. “Medicaid regulations adopted for the wrong reason; i.e., without a Medicaid-related or health-related purpose, are contrary to the purposes of the Act because they are inherently arbitrary, unreasonable, and invalid.” The court denied the state’s motion to dismiss and granted a preliminary injunction, ordering defendants to reinstate plaintiffs’ benefits.