UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
____________________________________________
MORGANNE MILES, by her mother KRYSTAL
TITUS; OLIVIA MILES, by her mother KRYSTAL
TITUS; PASCALE MOSSIN, by her mother 08-CVAMY
MARGARET MCCUTCIN; THEO CHAN,
by his father SUNNY CHAN; LEAH CHAN,
by her father, SUNNY CHAN,
COMPLAINT
Plaintiffs,
v.
MICHAEL O. LEAVITT, Secretary, United States
Department of Health and Human Services,
Defendant.
____________________________________________
I. INTRODUCTION
1. This is an action against the Secretary of the United States Department of Health and Human Services (?Secretary?), who is responsible for implementing the
State Children?s Health Insurance Program at the federal level in a manner consistent with the Social Security Act and the Administrative Procedure Act. Title XXI of the Social
Security Act, the State Children?s Health Insurance Program, provides States broad flexibility to design and offer affordable, credible health insurance coverage to children
whose families cannot otherwise afford all or part of the cost of the coverage.
2. The plaintiffs are children whose ages range from 5 months to 3½ years old. As a result of rules implemented by the Secretary in August 2007, the plaintiffs have been
denied affordable health insurance coverage through the New York State Children?s Health Insurance Program. Without this coverage, it is difficult or impossible for the 2
plaintiffs to obtain necessary health care, including routine check-ups and vaccines, diagnostic tests, prescriptions, and surgical procedures.
3. Plaintiffs allege that the Secretary exceeded his authority when issuing the federal rule because it includes requirements that are inconsistent with the Social Security
Act and requirements that were not properly promulgated pursuant to the Administrative Procedure Act. Plaintiffs seek declaratory, injunctive, and mandamus relief to stop
continued implementation of the unlawful rule.
II. JURISDICTION AND VENUE
4. Jurisdiction is conferred by 28 U.S.C. §§ 1331 and 1361. Plaintiffs? action for declaratory, injunctive relief, and other appropriate relief is authorized by 28 U.S.C. §§
1651, 2201, and 2202.
5. Venue is proper under 28 U.S.C. § 1391(e).
III. PARTIES
6. Plaintiff Morganne Miles is a 3-year-old child who lives with her parents in Gorham, New York. She appears in this action through her mother, Krystal Titus.
7. Plaintiff Olivia Miles is a 1-year-old infant who lives with her parents in Gorham, New York. She appears in this action through her mother, Krystal Titus.
8. Plaintiff Pascale Mossin is a 2½-year-old infant who lives with her mother in New York, New York. She appears in this action through her mother, Amy Margaret McCutchin.
9. Plaintiff Theo Chan is a 3½ -year-old boy who lives with his parents in Brooklyn, New York. He appears in this action through his father, Sunny Chan. 3
10. Plaintiff Leah Chan is a 5-month-old infant who lives with her parents in Brooklyn, New York. She appears in this action through his father, Sunny Chan.
11. Defendant Michael O. Leavitt is the Secretary of the United States Department of Health and Human Services (?Department?) and is responsible for administering the Department?s programs consistent with federal law, including the Social Security Act and the Administrative Procedure Act. The Secretary administers the State Children?s Health Insurance Program (?SCHIP?) through the Centers for Medicare & Medicaid Services (?CMS?). Secretary Leavitt is sued in his official capacity.
IV. LEGAL FRAMEWORK
12. The SCHIP is a cooperative federal-state program that entitles States to federal funding when they implement programs that are consistent with the
requirements set forth in Title XXI of the Social Security Act (the ?SCHIP statute?). See 42 U.S.C. § 1397aa(c).
13. Originally referred to as the Children?s Health Insurance Program, Title XXI was renamed the State Children?s Health Insurance Program, thus emphasizing the States?
broad discretion to establish and operate their programs so long as the programs meet the general requirements of the Act.
14. The purpose of SCHIP is to ?provide funds to States to enable them to initiate and expand the provision of child health assistance to uninsured, low-income children in
an effective and efficient manner that is coordinated with other sources of health benefits coverage for children.? 42 U.S.C. § 1397aa(a).
15. To participate in SCHIP and receive federal funding, the SCHIP statute requires each participating State to submit a State Child Health Plan (a ?State plan?) to the 4 Secretary of the Department. The State plan ?sets forth how the State intends to use the funds provided through Title XXI to provide child health assistance to needy children.?
42 U.S.C. § 1397aa(b). The State plan must describe the State?s eligibility standards and methodologies, outreach and coordination efforts, health benefits coverage, and
performance measures and goals. 42 U.S.C. §§ 1397bb-1397gg.
16. Consistent with the SCHIP statute, the regulations promulgated by the Department confirm that ?[w]ithin broad Federal rules, each State decides eligible groups, types and ranges of services, payment levels for benefit coverage, and administrative and operating procedures.? 42 C.F.R. § 457.1.
17. States can participate in SCHIP by expanding their existing Medicaid programs to additional low-income children and/or by creating new, separate programs. 42 U.S.C. § 1397aa(a). The SCHIP statute provides greater flexibility to States choosing to create separate SCHIP programs, allowing these States to fashion their own SCHIP eligibility requirements and benefit packages within the parameters of Title XXI rather than adhering to stricter Medicaid eligibility and coverage rules. Compare 42 U.S.C. §§ 1397aa-1397jj (SCHIP requirements) with 42 U.S.C. § 1396a-1396v (Medicaid requirements). New York participates in SCHIP and has elected to use a separate program.
18. The SCHIP statute requires states choosing to implement a separate program to include a general description of the State?s eligibility standards and methodologies in
the State plan. The SCHIP statute does not define income for purposes of SCHIP eligibility but rather gives each state broad discretion to decide how and what to count as
income. Thus, each State can establish eligibility standards and methodologies for 5 defining income that reflect the cost of living in the state, including health care costs. See 42 U.S.C. § 1397bb.
19. The SCHIP statute provides that the State child health plan ?shall include a description of procedures to be used to ensure ? that the insurance provided under the
State child health plan does not substitute for coverage under group health plans?.? 42 U.S.C. § 1397bb(b)(3). The State plan must ?include a description? of the extent to which and manner in which low-income and other classes of children have creditable health insurance coverage, current State efforts to provide or obtain creditable health coverage for uncovered children, and how the State plan is designed to be coordinated with such efforts to increase health coverage. Id. at § 1397bb(a).
20. In formulating regulations addressing health coverage, the Department has stated, ?States have broad discretion to develop substitution prevention policies that best
serve their particular populations.? 66 Fed. Reg. 2490, 2604 (Jan. 11, 2001). The duly promulgated regulations provide that: ?A State plan must include a description of?(a)
The extent to which, and manner in which, children in the State, ? currently have creditable health coverage?; [and] (b) current State efforts to provide or obtain creditable health coverage for uncovered children,?.? 42 C.F.R. § 457.80. In addition, ?The State plan must include a description of reasonable procedures to ensure that health benefits coverage provided under the State plan does not substitute for coverage provided under group health plans?.? 42 C.F.R. § 457.805.
21. Federal regulations address substitution, sometimes referred to as ?crowd out,? in a provision discussing a State?s possible operation of a premium assistance program. 42 C.F.R. § 457.810(a). Under this rule, an enrollee must not have had coverage under a 6 group health plan for a period of at least six months prior to enrollment in a premium assistance program. A State may not require a minimum waiting period that exceeds 12 months. States can permit reasonable exceptions to the minimum waiting period, including for involuntary loss of coverage, economic hardship, and a switch to employment that does not offer dependent coverage. Id.
22. Nowhere in the SCHIP statute is there a requirement for a State to obtain or maintain a certain level of private insurance coverage as a condition of establishing or
expanding coverage for uninsured children through SCHIP. The provisions of the Social Security Act do not authorize the Secretary to require States to obtain or maintain a
certain level of private insurance coverage as a condition of establishing or expanding coverage for uninsured children through SCHIP.
23. According to the SCHIP statute, a State?s eligibility standards ?shall, within any defined group of covered targeted low-income children, not cover such children with
higher family income without covering children with a lower family income?.? 42 U.S.C. § 1397bb(b)(1)(B)(i); 42 C.F.R. § 457.320(b)(1) (?In establishing eligibility standards and methodologies, a State may not ? cover children with a higher family income without covering children with a lower family income within any defined group of covered
targeted low-income children). In addition, the plan must ?include a description of procedures to be used to ensure ? that children found eligible ? under the State
Medicaid plan ? are enrolled for such assistance?.? 42 U.S.C. § 1397bb(b)(3)(B); 42 C.F.R. § 457.350.
24. Thus, the SCHIP statute requires States to ?cover? children in lower income groups before covering children with higher family incomes and to ?describe the procedures to be used to ensure that Medicaid-eligible children are ?enrolled for such 7 [Medicaid] assistance.? The SCHIP statute does not require, or authorize the Secretary to
require, that a certain percentage of those children eligible for coverage accept it before coverage can be offered to children in higher income families. Nor does the SCHIP
statute require or authorize the Secretary to require States to enroll a certain percentage of children in Medicaid or SCHIP as a precondition of implementing or expanding SCHIP coverage to children with higher family incomes.
25. The SCHIP statute explicitly gives States that elect to establish separate SCHIPs the discretion whether or not to impose cost sharing. The SCHIP statute provides that a ?State child health plan shall include a description, ?, of the amount (if any) of premiums, deductibles, coinsurance, and other cost sharing imposed.? 42 U.S.C. § 1397cc(e)(1)(A).
26. If a State chooses to implement cost sharing, it cannot impose deductibles, coinsurance, or other cost sharing with respect to well baby and child care and immunizations. 42 U.S.C. § 1397cc(e)(2).
27. For children in families with incomes above 150% of the Federal Poverty Level (?FPL?), ?any premiums, deductibles, cost sharing or similar charges imposed under
26. If a State chooses to implement cost sharing, it cannot impose deductibles, coinsurance, or other cost sharing with respect to well baby and child care and immunizations. 42 U.S.C. § 1397cc(e)(2).
27. For children in families with incomes above 150% of the Federal Poverty Level (?FPL?), ?any premiums, deductibles, cost sharing or similar charges imposed under
the State child health plan may be imposed on a sliding scale related to income, except that the total annual aggregate cost-sharing with respect to all targeted low-income
children in a family under this subchapter may not exceed 5 percent of such family?s income for the year involved.? 42 U.S.C. § 1397cc(e)(3)(B).
28. The duly promulgated regulations allow the State to decide whether to impose cost sharing in the SCHIP. 42 C.F.R § 457.510. 8
29. The Social Security Act does not authorize the Secretary to require states to impose cost sharing, to impose cost sharing that approximates the cost of private
coverage, or to impose cost sharing on well baby and child care and immunizations through the SCHIP.
30. The SCHIP statute authorizes the Secretary to require States to collect data and furnish reports to the Secretary in the ?standardized format? the Secretary may require
to monitor State programs and compare the effectiveness of State plans. 42 U.S.C. § 1397gg(b). Consistent with the SCHIP statute, the federal regulations recognize that the
Secretary will obtain data and reports from states using ?standardized formats.? 42 C.F.R. § 457.720.
31. The State can amend its State child health plan. 42 U.S.C. § 1397ff(b). The SCHIP statute provides that these amendments ?shall be approved? by the Secretary and
?shall be effective? on the dates specified in the amendment unless the Secretary finds that the amendment does not ?substantially comply? with the requirements of Title XXI. Id. at §§ 1397ff(b)-(e); 42 C.F.R. § 457.65(a)(1) (stating that, in general, ?[a] State plan or plan amendment takes effect on the day specified in the plan or plan amendment?.?).
32. The right to ?alter, amend, or repeal? any provision of Title XXI is reserved to the Congress. 42 U.S.C. § 1304.
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