A consent decree governing notice and hearing procedures in Tennessee's Medicaid managed care program is binding on managed care organizations (MCOs) that were not parties to the decree. However, the MCOs are entitled to a fairness hearing. Tennessee Association of Health Maintenance Organizations, et al. v. Grier, et al. (U.S. Ct. App., 6th Cir., Nos. 00-5297/ 5298/6048/6150, Aug. 23, 2001).
In May 1996, the U.S. District Court for the Middle District of Tennessee held that the notice and hearing procedures of Tennessee's Medicaid managed care program, TennCare, violated Medicaid law and the Due Process Clause. Three years later, the court approved a revised consent decree that applied specifically to, but was not limited to, the state defendants (the Tennessee Department of Health) and their managed care contractors. On November 24, 1999, six TennCare MCOs and their trade association moved to intervene to challenge the revised consent decree, complaining that the decree imposed new notice and service requirements. Three other trade associations later joined these initial intervenors. On March 16, 2000, the plaintiffs--present and future Medicaid recipients--filed a motion to modify the consent decree to correct technical errors and clarify terms. On April 14, 2000, the intervenors responded, objecting to the 'grossly unbalanced appeals rules' and the 'plainly unconstitutional prohibition on intervention in administrative appeals.' On July 31, 2000, the district court found that the revised consent decree should be modified per the plaintiffs' motion. On August 3, 2000, the intervenors appealed, arguing that since they were not parties to the consent decree, they cannot be bound by it under the Due Process Clause. They also contended that the district court should have conducted a fairness hearing to determine the consent decree's reasonableness.
The U.S. Court of Appeals for the Sixth Circuit rules that district court's entry of the revised consent decree does not violate the intervenor's due process rights, finding that the intervenors are agents of the state and are therefore bound by the consent decree to which the state was a party. However, the court agrees that the district court failed to provide a forum where the intervenors could present their arguments as to why the consent decree should be set aside. The court rules that the intervenors are enrtitled to a fairness hearing on remand, although it rejects the intervenor's suggestion that the hearing must, in the court's words, 'entail the entire panoply of protections afforded by a full-blown trial on the merits.'
For the full-text of this decision, go to https://pacer.ca6.uscourts.gov/cgi-bin/getopn.pl?OPINION=01a0278p.06
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