Appeal from the United States District Court for the Southern District of Indiana, Indianapolis Division. Nos. IP 76 C 730 C 274 -- William E. Steckler, Judge.
Before Castle, Senior Circuit Judge, and Swygert and Sprecher, Circuit Judges.
This appeal challenges the sufficiency of the procedures employed by the Indiana Department of Public Welfare in reviewing denials of Medicaid benefits. We find the procedures inadequate in certain respects and reverse the judgment below.
The state of Indiana, through its Department of Public Welfare (DPW), participates in a jointly funded federal-state Medicaid program established by Title XIX of the Social Security Act, 42 U.S.C. §§ 1396 to 1396k. As a participating state, Indiana has accepted all of the provisions of the Social Security Act and has agreed to comply with all of the requirements of the Act and its attendant rules and regulations. See Ind. Code § 12-1-2-12. The present appeal consolidates the cases of two classes of plaintiffs, one class challenging the sufficiency of the DPW's procedures for appealing the denial of dental benefits and the other class challenging the procedures for appealing the denial of disability benefits.
Plaintiff Patricia Featherston is the representative of the class objecting to the dental benefits appeal procedures. On September 25, 1975, through her caseworker at the Marion County DPW, Featherston applied for partial dentures. That request was denied by the Medicaid Dental Panel (MDP) on September 10, and again on October 17, and November 20, 1975.
Plaintiff requested and received a hearing to appeal the denial of her request. At the hearing, which was held May 18, 1976, Featherston was accompanied by a representative and presented evidence to a hearing officer. The hearing officer then transmitted to an alternate Medicaid Dental Panel (AMDP) a summary of the evidence and tentative findings of fact for the AMDP's review and evaluation. The panel informed the DPW that Featherston's request should again be denied; accordingly, the director of the Division of Public Assistance upheld the denial.
On December 22, 1976, plaintiff Featherston filed a class action against the director of the Marion County DPW and the administrator of the state DPW. In her complaint, she alleged that the procedures used by the state welfare department were violative of the Social Security Act and regulations as well as the applicant's constitutional right to due process.
In a similar vein, plaintiff Grace Driver is the representative of a class objecting to disability benefits appeal procedures. On June 11, 1977, Driver applied to the Marion County DPW for Medicaid disability benefits. In keeping with DPW regulations, her application, together with a social summary and a physician's report, were submitted to a state Medical Review Team (MRT) for a determination of her eligibility. On August 23, the MRT concluded that Driver did not meet the disability requirements.
Plaintiff Driver requested and received a hearing to appeal the denial of her application for disability benefits. The hearing was held on October 13, 1977, at which time plaintiff was accompanied by a representative and submitted evidence to a hearing officer. As in the dental appeal proceedings, the hearing officer prepared tentative findings of fact for review by an alternate medical review team (AMRT). The AMRT considered the proposed findings and sixty-three pages of medical information submitted by plaintiff and concluded that the denial of disability benefits should be affirmed. Accordingly, the director of the Division of Public Assistance upheld the denial.
On May 1, 1978, plaintiff Driver filed a class action, alleging that the DPW appeal system was contrary to the Social Security Act and accompanying regulations and to the due process clause of the Fourteenth Amendment. As mentioned above, the Driver and Featherston actions were consolidated. On September 28, 1978, the district court granted summary judgment against both plaintiff classes and they have appealed.
Title XIX of the Social Security Act provides, in pertinent part:
(a) A State plan for medical assistance must
(3) provide for granting an opportunity for a fair hearing before the State agency to any individual whose claim for medical assistance under the plan is denied or is not acted upon with reasonable promptness . . . .
42 U.S.C. § 1396a(a)(3). The dispute in this appeal focuses on whether the procedures employed by the Indiana DPW are sufficient to satisfy the constitutional and statutory requirements for a "fair hearing." While the constitutional requirements for a fair hearing have been outlined by the Supreme Court in Goldberg v. Kelly, 397 U.S. 254, 90 S. Ct. 1011, 25 L. Ed. 2d 287 (1970), and its progeny, the federal regulations applicable to Title XIX social security claims prescribe greater procedural safeguards than are mandated by the Constitution:
The hearing system must meet the due process standards set forth in Goldberg v. Kelly, 397 U.S. 254 (90 S. Ct. 1011, 25 L. Ed. 2d 287) (1970), and any ...