Faced with the threat of a preliminary injunction, Indiana Medicaid officials have agreed to restore the benefits of nearly 10,000 blind, elderly and disabled Medicaid recipients. In June, elder law attorney Scott R. Severns filed a class action in federal court on behalf of Medicaid recipients who had their benefits terminated under the state's malfunctioning spend-down system. Daugherty et. al v. Roob et. al (S.D. Ind., No. 1:06-cv-0878-JDT-WTL, June 23, 2006).
Indiana Medicaid beneficiaries whose income exceeds the applicable income-standard must incur medical expenses greater than their excess income in any given month order to continue to be eligible for the program. But because bills may be subject to payment by third parties, the information to prove whether a person met the spend-down limit for a particular month is not available until months after the services are rendered. Nevertheless, caseworkers are expected to make determinations of current eligibility despite the lack of current information. Caseworkers, according to the suit, receive inadequate training to make such complex determinations, lack clear standards, and often rely on guesswork.
In the first five months of 2006, the Indiana Family & Social Services Administration (FSSA) terminated nearly 10,000 from the complex spend-down program. The lawsuit, brought by six Medicaid beneficiaries, accuses Indiana of violating the constitutional rights of some of its most vulnerable citizens by failing to provide adequate explanation of the terminations or notice. In none of the cases of the six named plaintiffs was a proper inquiry made into their medical expenses, according to the suit. Some with $5,000 per month in expenses were summarily terminated with the message "medical expenses do not exceed excess income."
Attorney Severns said: "We've reviewed cases from one end of the state to the other and found the same problems over and over again. It's as if the rule book had been thrown out and the rules of fair-play suspended."
Severns filed the class action complaint for injunctive relief on June 2. On June 9, just prior to an emergency hearing in federal district court, the state agreed to stop terminating more Medicaid beneficiaries from the Medicaid spend-down program. With a hearing on the plaintiffs' preliminary injunction request looming, FSSA then agreed to reinstate all beneficiaries who had been terminated since January 1. Further settlement negotiations are ongoing.
Indiana's complex Medicaid spend-down program has been the subject of prior litigation.
For more details on the current case -- including the class action complaint for injunctive relief, a memorandum in support, and the joint stipulation to temporary restraining orders -- go to www.severns.com/daugherty/daugherty-roob.html
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