Detsel v.
Sullivan, et al.
Before:
Newman, Pratt and Mahoney,
Circuit Judges.
New
Pratt, Circuit Judge: This appeal presents a novel issue under the Medicaid
program. We must decide whether a handicapped child who receives
Medicaid-covered nursing services 24 hours a day in her home can reasonably be
denied those services during the time she attends public school. According to
the Secretary of Health and Human Services, denial is compelled by 42 C.F.R. §440.80,
the Medicaid regulation that defines “private duty nursing services”. The
United States District Court for the Northern District of New York, Thomas J.
McAvoy, Judge, agreed with the
secretary and dismissed the complaint of Melissa Detsel, a severely handicapped
child who, suing by her mother, had challenged this interpretation as arbitrary
and capricious. Although we give administrative agencies considerable deference
in interpreting their own regulations, we believe that the secretary has failed
to advance any reasonable basis for his decision here. Accordingly, we reverse
the judgment of the district court, and remand for entry of judgment in favor of
Melissa Detsel.
Background
A.
Melissa Detsel.
Melissa
Detsel is an eleven-year-old girl who suffers from multiple physical impairments
involving her heart, lungs, digestive system, back, and feet. Melissa was born
with an incomplete diaphragm that allowed her abdominal organs to move upward,
hindering the development of her lungs. As a result, Melissa’s lungs cannot
expand and contract sufficiently on their own, and she is unable to breathe
without the assistance of a mechanical ventilator. When Melissa was very young,
gastrointestinal abnormalities required doctors to perform a “jejunostomy”,
or gastronomy. Later attempts to correct Melissa’s digestive problems were
unsuccessful, and she now receives all her food and medication through a
“J-tube”. Melissa also suffers from several heart defects and orthopedic
problems, including congestive heart failure, scoliosis, and club feet. Because
of the severity of her disabilities, Melissa requires the services of a trained
nurse 24 hours a day.
Despite
her physical handicaps and the constant presence of nurses and life-sustaining
equipment, Melissa has been able to attend public school since kindergarten. Her
educational plan includes traditional academic subjects as well as various
special programs such as speech and physical therapy. In an affidavit filed with
the district court, Robert Brannigan, a school administrator, reported:
Melissa
has benefitted greatly from her school programs. She has advanced academically
and socially; her reading is at the third grade level [as of February 1988]; her
speech is greatly improved; and the activity level of her classes has
strengthened her physically. * * * Presently, Melissa is having her best year
yet. She really enjoys the school experience and the opportunity to interact
with and learn from her classmates. * * * Melissa’s presence in school also
has carryover benefits to her classmates. Her determination and participation in
classroom activities provides a very positive example for any under-achievers in
her classes; her teachers report that Melissa is “magic” to have in the
classroom. * * * Overall, Melissa is quite an extraordinary child. Although her
handicaps are extremely severe, she has great aspirations and determination to
succeed. She is competitive and independent and she thrives on the learning and
other experiences school provides.
Although
Melissa’s school district can fulfill its educational obligations by providing
at least one hour of home instruction per day, 18 N.Y.C.R.R. §200.6(g), Dr.
Gregory Liptak, Melissa’s treating physician, insists that such limited home
tutoring would be “medically devastating” for Melissa. Dr. Liptak notes that
the physical involvement and general activity level of Melissa’s school
program would be impossible to duplicate at home. Maximizing Melissa’s
physical development and stamina is essential, according to Dr. Liptak, “to
better prepare her for the rigors of transplant surgery if her respiratory
function deteriorates.” Dr. Liptak also describes the psychological and social
benefits of exposing handicapped children to normal experiences, and believes
that Melissa’s growth in these areas depends on her continuation in school.
The secretary does not dispute Dr. Liptak’s assertions; he opposes only
Medicaid’s responsibility for providing Melissa’s nursing care in settings
other than her home or an institution.
B.
Who Pays?
When
Melissa enrolled in kindergarten in 1983, it was unclear whether the school
district, Medicaid, or neither would be responsible for her nursing care during
school hours. Melissa’s mother initially sought a declaration that the nursing
care was a “related service” under the Education of All Handicapped Children
Act (the “EHA”), 20 U.S.C. §1401(18), and thus within the responsibility of
the school district. In that action, however, a panel of this court decided that
the constant and intensive nature of the care brought it within the “medical
services” exclusion to the EHA, 20 U.S.C. §1401(17), in contrast to the more
routine medical procedures that courts had recently found to be “related
services” under the act. Detsel v. Board of Educ., 820 F.2d 587 (2d Cir. 1987) (per curiam), aff’g,
637 F. Supp. 1022 (N.D.N.Y. 1986), cert.
denied, 484 U.S. 883 (1987). Cf.
Irving Independent School Dist. v. Tatro, 468 U.S. 883 (1984) (intermittent
bladder catheterization, which child could soon perform herself, is “related
service” under EHA); Department of Educ.
v. Katherine D., 727 F.2d 809 (9th Cir. 1983) (occasional repositioning of
suction tube in child’s throat, which “even a lay person” could do, is
“related service” under EHA), cert.
denied, 471 U.S. 1117 (1985).
The
present action addresses the question of whether the cost of Melissa’s nurse
in school is covered by Medicaid. Medicaid was created in 1965 when Congress
added Title XIX to the Social Security Act, 42 U.S.C. §1396 et
seq., and was designed as a joint state-federal program to help needy
individuals pay for medical care. Once a state elects to participate in the
program, it must provide a list of “mandatory services”, such as inpatient
hospital care, and may also offer one or more “optional services”, including
private duty nursing. The State of
The
secretary’s position in this case is based on his interpretation of 42 C.F.R.
§440.80 (“§440.80”), which reads in full as follows:
§440.80
Private duty nursing services.
Private
duty nursing services means nursing
services for recipients who require more individual and continuous care than is
available from a visiting nurse or routinely provided by the nursing staff of
the hospital or skilled nursing facility. The services are provided--
(a)
By a registered nurse or a licensed practical nurse;
(b)
Under the direction of the recipient’s physician; and
(c)
To a recipient in one or more of the following locations at the option of the
State--
(1)
His or her own home;
(2)
A hospital; or
(3)
A skilled nursing facility.
A
substantially identical version of this definition appeared in the original
Medicaid regulations, published in 1966 as the Handbook
of Public Assistance Administration, Supplement D. Unfortunately, any
documents that might shed light on the rationale for the definition were lost or
destroyed in 1977, when the records of the newly-created Health Care Financing
Administration (“HCFA”) were moved from Washington to Baltimore. Apparently,
the only existing document that discusses §440.80 is a memorandum prepared in
1981 by the HCFA Task Force for Regulatory Reform. The authors of that
memorandum could find “no files available which indicated the source or
rationale for this definition”, but stated that the definition “reflects
what is probably a common understanding of when private duty nursing services
are generally utilized and who normally provides them.”
The
HCFA report did not deal with the question of whether private duty nursing could
be provided in a public school setting. That issue was addressed for the first
time in 1984, after a representative of the New York State Department of Social
Services wrote a letter to Theodore Shulman, as associate regional administrator
for HHS, asking for clarification of the issue. Shulman responded in pertinent
part:
The
State has indicated that it has been receiving an increasing number of claims
for the services of private duty nurses in questionable settings, particularly
accompanying and furnishing care to children while they are attending school.
The
regulations at 42 CFR 440.80(c) limit the provision of private duty nursing
services “to a recipient in his own home or in a hospital or skilled nursing
facility”. After thoroughly researching the issue, we conclude that the
regulations are quite clear and that Title XIX payment would not be available
for private duty nursing services when they are furnished in settings other than
those stated in the regulations.
In
short, Melissa’s nursing care would be covered by Medicaid only if the nurse
remained in a hospital, in a skilled nursing facility, or within the four
corners of Melissa’s home. The Shulman letter now represents the secretary’s
official position on this issue. For convenience, we will refer to it as the
“secretary’s interpretation” or the “at-home limitation”.
After
exhausting her administrative remedies within the county and state, Melissa, by
her mother, brought this lawsuit challenging the at-home limitation. In an order
dated September 22, 1988, the district court granted the secretary’s motion
for summary judgment, holding that the secretary’s interpretation of §440.80
was sufficiently reasonable:
The
Department’s rationale for the restriction is that the benefit of private duty
nursing services should be rendered in out of the ordinary cases only and not as
a means of paying for services that should be rendered as a matter of course by
facilities such as hospitals or skilled nursing facilities. According to the
Department, the common understanding of private duty nursing care is one
involving extraordinary medical care during periods of critical need and
limiting such care to a residential setting, whether that is the recipient’s
home or an institution, is not unreasonable.
The
Court agrees with the Department and hereby upholds the Department’s
interpretation as not unreasonable.
This
appeal followed.
Discussion
In
reviewing the secretary’s interpretation of §440.80, we must first determine
whether Congress has directly addressed the precise question at issue. If the
intent of Congress is clear, that ends our inquiry, for the court’s duty is to
enforce the unambiguously expressed will of Congress. Chevron
A.
Congressional Intent
Detsel
and amici argue that the at-home
limitation conflicts with “clearly stated” congressional intent as expressed
by the broad remedial purposes of the Medicaid Act, and by subsequent
legislative activity involving the rights of handicapped persons. They point out
that congress created the Medicaid program to assist states in providing
“rehabilitation and other services to help [recipients] attain or retain
capability for independence or self-care”, 42 U.S.C. §1396, and that Congress
directed participating states to administer their plans in “the best interests
of the recipient”. 42 U.S.C. §1396a(a)(19).
Subsequent
legislation has expanded the list of services reimbursed by Medicaid, e.g.,
Pub. L. No. 99-272, §9508(a)(1) (1986) (codified as amended at 42 U.S.C. §1396n(g))
(adding “targeted case management” as an optional service under the Medicaid
program), and has made it clear that Medicaid is financially responsible for the
“related services” identified in a child’s individual education plan if
those services are covered by the state’s Medicaid program. Pub. L. No.
100-360, §411(k)(13)(A) (1988) (adding subsection (c) to 42 U.S.C. §1396b). In
addition, Congress directed the secretary to establish a task force on
“technology-dependent children” whose function was to
(1)
identify barriers that prevent the provision of appropriate care in a home or
community setting to meet the special needs of technology-dependent children;
and
(2)
recommended changes in the provision and financing of health care in private and
public health care programs (including appropriate joint public-private
initiatives) so as to provide home and community-based alternatives to the
institutionalization of technology-dependent children. Pub. L. No. 99-272, §9520
(1986), 42 U.S.C. §1396a note.
While
this legislation reveals a trend toward expanding services for the handicapped,
and even an awareness of the problems facing children like Melissa, it fails to
address the question of whether Medicaid should provide private duty nursing
care in school. Our role is not to speculate on what Congress might have
intended had it considered this question, but rather to determine whether
Congress “actually ha[d] an intent”. Chevron, 467
B.
Reasonableness of the Secretary’s
Interpretation
Lacking
a clear statement of congressional intent, we must defer to the secretary’s
resolution of the issue as long as it is a reasonable one. Chevron,
467
Agency
deference has not come so far that we will uphold regulations whenever it is
possible to “conceive a basis” for administrative action. * * * Our
recognition of Congress’ need to vest administrative agencies with ample power
to assist in the difficult task of governing a vast and complex industrial
Nation carries with it the correlative responsibility of the agency to explain
the rationale and factual basis for its decision, even though we show respect
for the agency’s judgment in both. Bowen v. American Hospital Assn., 476
The
secretary’s explanation for the at-home limitation boils down to three basic
assertions: (1) the limitation is reasonable because it reflects the “common
understanding” of private duty nursing at the time §440.80 was originally
promulgated; (2) the limitation is a rational exercise of the secretary’s duty
to allocate public resources efficiently; and (3) the limitation should be given
special deference because §440.80 was issued contemporaneously with the
Medicaid Act and has remained substantially unchanged since that time. The
district court upheld the secretary on the basis of the first rationale without
considering the other two. We conclude, however, that none of the explanations
advanced by the secretary provides a reasonable ground for upholding the at-home
limitation, and we reverse accordingly.
1.
“Common Understanding” of Private Duty
Nursing. According to the secretary, the at-home limitation represents “a
rational determination to limit the provision of private duty nursing services
to those locations where such services were most commonly being provided at the
time the regulation was promulgated.” Secretary’s
Brief at 30. The secretary claims that when the Medicaid regulations were
initially formulated in the mid-1960s, private duty nursing was generally
recognized as an “out-of-the-ordinary” service that could be provided only
in a home or an institution because “the technological advances which permit
ventilator-assisted individuals like appellant to leave an institutional or home
setting did not exist in 1965”.
The
secretary bases this argument on a portion of the 1981 HCFA memorandum that
discusses the origin and history of §440.80. The conclusions drawn in the
memorandum rest on a questionable evidentiary basis, however, since all
documentation relating to §440.80 was lost in 1977. Lacking any documentary
record, the task force posited that §440.80 represents what was “probably a
common understanding” of private duty nursing. It may have been, therefore,
merely a description of what was intended to be the full scope of private duty
nursing activity at the time. However, the statement is little more than
conjecture--an educated guess about the original purpose of the regulation in
the absence of any facts, and we can hardly accept an agency’s reliance on
“evidence” that is itself mere speculation.
Even
if the secretary was correct in his assumption that §440.80 was originally
intended to limit, rather than merely describe, the common understanding of
private duty nursing as it existed in 1965, that limitation would not
necessarily remain reasonable today. Congress delegates substantial authority to
administrative agencies principally because agencies, given time and experience,
acquire a special sensitivity to the evolving needs in the regulated field, and
develop “a body of experience and informed judgment to which courts and
litigants may properly resort for guidance.” Skidmore
v. Swift & Co., 323
flexibility
and adaptability to changing needs and patterns of transportation is an
essential part of the office of a regulatory agency. Regulatory agencies do not
establish rules of conduct to last forever; they are supposed, within the limits
of the law and of fair and prudent administration, to adapt their rules and
practices to the Nation’s needs in a volatile, changing economy. They are
neither required nor supposed to regulate the present and the future within the
inflexible limits of yesterday.
American Trucking Assns. v. Atchison, T. &
S.F. Ry., 387 U.S. 397, 416 (1967); see
also City of Akron v. Akron Center for
Reproductive Health, Inc., 462 U.S. 416 (1983) (reasonableness of ordinance
regulating second-trimester abortions undermined by advances in medicine); American
Civil Liberties Union v. FCC, 823 F.2d 1554, 1565 (D.C. Cir. 1987) (FCC
should “carefully monitor the effects of its regulations [of cable television
rates] and make adjustments where circumstances so require. * * * [W]e would not
expect the Commission to adhere blindly to regulations that are cast in doubt by
new developments or better understanding of the relevant facts.”), cert. denied, 485 U.S. 959 (1988); Natural Resources Defense Council, Inc. v. Herrington, 768 F.2d
1355, 1408 (D.C. Cir. 1985) (DOE efficiency standards for household appliances
“would be patently unreasonable” if “based on data half a decade old.”).
In
view of advances in the care of severely handicapped individuals over the past
twenty-five years, we do not believe that the medical assumptions of the
mid-1960s offer a valid basis for the secretary’s interpretation. Two and a
half decades ago it may have been widely accepted that a person needing the
services of a private duty nurse would be confined to a hospital, a skilled
nursing facility, or the four corners of her home, but unfortunately these
assumptions no longer hold true today. The professional literature cited in the
record convincingly demonstrates that private duty nursing is now commonly
understood to be “setting independent”; that is, it refers to a level of
care rather than to specific locations where the care can be provided. Indeed,
the HCFA memorandum iteself describes private duty nursing as “care that is
beyond that ordinarily available (in terms of time intensity) in the setting an
individual is in.” Because the secretary’s explanation for his narrow
interpretation of §440.80 depends on a static and obsolete view of the relevant
facts, we do not accept it as reasonable.
2.
Administrative Efficiency. The
secretary’s call to efficiency is also unavailing. The secretary claims,
without pointing to any cost figures, that the at-home limitation is an exercise
of the department’s “line-drawing” role that is “a necessary part of
allocating scarce resources among various social welfare programs.” Secretary’s
Brief at 34. As a general proposition, it is quite true that the department
deals in finite resources and must set basic eligibility criteria in order to
administer its programs efficiently. Economic considerations can provide an
important basis for upholding congressional and regulatory action in this area.
See, e.g., Lyng v. International Union,
UAW, 108 S.Ct. 1184, 1193 (1988) (“ ‘Fiscal considerations may compel
certain difficult choices in order to improve the protection afforded to the
entire benefitted class’ ”) (quoting Harris
v. McRae, 448 U.S. at 355 (Stevens, J., dissenting)); Bowen v. Gilliard, 483 U.S. 587, 599 & n.13 (1987) (“
‘General rules are essential if a fund of this magnitude is to be administered
with a modicum of efficiency, even though such rules inevitably produce
seemingly arbitrary consequences in some individual cases.’ ”) (quoting Califano
v. Jobst, 434
Here,
however, the secretary fails to show how the at-home limitation furthers any of
the department’s legitimate fiscal concerns. Medicaid pays for all the
supplies and equipment that Melissa needs, whether she remains at home the
entire day or attends school, and provides a private duty nurse around the clock
in her home. Refusing to permit the nurse to accompany Melissa to school in
effect confines Melissa to her home. But this saves no money, because Medicaid
would still be responsible for paying for the nurse and for all supplies and
equipment while Melissa remained at home. Moreover, since the state will be
required to furnish a home tutor if Melissa cannot attend school, the
secretary’s interpretation would require a greater total expenditure of public
resources. Thus the secretary is essentially asking us to accept under his
general duty to conserve resources a rule that leads to no savings within his
own department and, indeed, to a net increase in overall public spending. This
argument surely does not provide us with a reasonable basis for upholding his
interpretation.
3.
Deference. The secretary finally urges
us to treat his interpretation with special deference because §440.80 “was
issued virtually contemporaneously with the [Medicaid Act] and has remained
substantially unchanged since that time.” Secretary’s Brief at 26. The short and sufficient answer to this
argument is that §440.80 itself is not being challenged in this lawsuit, only
the secretary’s narrow interpretation of his regulation. This interpretation,
moreover, appears to conflict with the analysis of §440.80 set forth in the
1981 HCFA memorandum. The memorandum asserts that §440.80 is “definitive only
in terms of stating the professional level of the nurse providing the
service”, implying, of course, that other aspects of the regulation, including
the place restrictions, are not definitive. The memorandum also suggests that
intermediate care facilities and nursing homes were omitted from §440.80
“possibly by accident rather than design”, but concludes that private duty
nursing would nonetheless be available in those settings. The secretary’s
present position, by contrast, does not account for these or any other
additional locations. Considering the inconsistencies in the department’s
views in this area, we see no reason to confer any greater degree of deference
to the at-home limitation than it would ordinarily deserve.
Generally,
the weight given to an agency’s decisions “depend[s] upon the thoroughness
evident in its consideration, the validity of its reasoning, its consistency
with earlier and later pronouncements, and all those factors which give it power
to persuade, if lacking power to control.” Skidmore,
323
Conclusion
We
hold that, under the circumstances of this case, §440.80 was unreasonably
applied to preclude a claimant who resides at home from receiving Medicaid
reimbursement for private duty nursing rendered during those few hours of each
day when her normal life activities take her outside her home to attend school.
The
judgment of the district court is reversed and the case is remanded to the
district court for entry of judgment in favor of Melissa Detsel. We commend the