Appeal from the United States District Court for the Northern District of Indiana, Hammond Division. No. 73-C-184 -- Allen Sharp, Judge .
Before Cummings, Chief Judge, Swygert, Senior Circuit Judge, and Jameson, Senior District Judge.*fn*
In this class action lawsuit, before our court for the second time, plaintiffs allege that various Indiana state officials have failed to implement a mandatory federal health program critical to the welfare of Indiana's needy children. According to 42 U.S.C. § 1396d(a)(4)(B), Early and Periodic Screening, Diagnosis and Treatment (EPSDT), a preventive health program for children, must be provided by each state participating in the federal Medicaid program.*fn1
In March 1974, the district court enjoined the defendants from continuing to administer their program in violation of 42 U.S.C. § 1396d(a)(4)(B) and the regulations and guidelines thereunder. The defendants were ordered to implement a satisfactory EPSDT program in accordance with federal law. We affirmed that judgment noting:
The mandatory obligation upon each participating state to aggressively notify, seek out and screen persons under 21 in order to detect health problems and to pursue those problems with the needed treatment is made unambiguously clear by the 1967 act and by the interpretative regulations and guidelines.
504 F.2d 1246, 1251 (7th Cir. 1974).
Indiana submitted its proposed plan in March 1975, and in August 1976, the district court found that Indiana's EPSDT program was in compliance. After the plaintiffs' motion to amend the judgment was denied in May 1980, plaintiffs filed this appeal. For the reasons that follow, we reverse.
The thrust of the plaintiffs' argument is that Indiana still fails to recognize the extent to which Congress in enacting EPSDT imposed additional responsibilities on the states which had not been required under the regular Medicaid program. In our prior opinion, we quoted and endorsed the Department of Health, Education and Welfare (HEW) 1973 regulation guidelines for EPSDT, issued as part of the Medical Assistance Manual, Part 5, Sections 5-70-00 et seq. (MSA-PRG-21), which state: "Congress intended to require States to take aggressive steps to screen, diagnosis and treat children with health problems." MSA-PRG-21, § 5-70-20(A).*fn2
A penalty of one percent of the amount payable by the Government to a state can be assessed for failure to provide the required services. 42 U.S.C. § 603(g). The penalty is imposed if a state fails to inform families of the health screening services, provide or arrange for screening where requested, or arrange for corrective treatment in response to the results of the screening. We previously noted that the failure of the federal administrative agency to assess a penalty did not preclude our court from ordering declaratory and injunctive relief. 504 F.2d at 1251.*fn3
In our prior opinion, we considered the extent of Indiana's 1974 EPSDT program and found that it was inadequate:
Letters were sent to Medicaid recipients which advised that caseworkers would visit the recipient and that "the caseworkers will want to know if you feel that your children have any health problems." Medicaid providers were advised that caseworkers would give each recipient a form "with instructions to contact their choice of appropriate Medicaid providers, should a health problem be reported by the recipient, observed by the caseworker, or should the recipient request any type of medical service ...."
504 F.2d at 1250. We noted that the defendants themselves had summarized the nature of Indiana's compliance as follows:
Any of the eligible children in this state can secure all of the requested services merely by requesting them from their local health provider .... (Recipients) need merely take their children to the health provider of their ...