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Unan v. Lyon

United States Court of Appeals, Sixth Circuit

March 31, 2017

Aelen Unan and Patricia Quintino, on behalf of themselves and all others similarly situated, Plaintiffs-Appellants,
Nick Lyon, in his official capacity as Director, Michigan Department of Community Health and Human Services, Defendant-Appellee.

          Argued: November 29, 2016

          Appeal from the United States District Court for the Eastern District of Michigan at Detroit. No. 2:14-cv-13470-Marianne O. Battani, District Judge


          Anna M. Hill, MICHIGAN IMMIGRANT RIGHTS CENTER, Kalamazoo, Michigan, for Appellants.

          Joshua S. Smith, OFFICE OF THE MICHIGAN ATTORNEY GENERAL, Lansing, Michigan, for Appellee.

         ON BRIEF:

          Anna M. Hill, Susan E. Reed, MICHIGAN IMMIGRANT RIGHTS CENTER, Kalamazoo, Michigan, Marie K. DeFer, Edward J. Hoort, Veronica A. Perera, Lysa Postula-Stein, CENTER FOR CIVIL JUSTICE, Flint, Michigan, for Appellants.

          Jonathan S. Ludwig, OFFICE OF THE MICHIGAN ATTORNEY GENERAL, Lansing, Michigan, for Appellee.

          Before: MOORE, SUTTON, and WHITE, Circuit Judges.


          KAREN NELSON MOORE, Circuit Judge.

          In the course of implementing certain changes required by the Patient Protection and Affordable Care Act of 2010 ("ACA"), the State of Michigan experienced a systemic computer problem that erroneously assigned thousands of non-citizens, who may have been eligible for comprehensive Medicaid coverage, to Emergency Services Only ("ESO") Medicaid. Plaintiffs Aelen Unan and Patricia Quintino, two eligible non-citizen residents of Michigan who were erroneously assigned ESO coverage, filed a class action complaint against Nick Lyon, Director of the Michigan Department of Health and Human Services ("DHHS"), alleging violations of the Medicaid statute and the Due Process Clause of the Fourteenth Amendment. On cross-motions for summary judgment, the district court found that actions taken by the State since the complaint was filed had resolved all systemic errors. Finding plaintiffs' claims to be moot, the district court granted defendant's motion for summary judgment, denied plaintiffs' motion for the same, and dismissed as moot plaintiffs' motions for preliminary injunction and class certification. Plaintiffs now appeal the district court's judgment. For the reasons set forth below, we hold that the plaintiffs' claims are not moot, and REVERSE the district court's grant of defendant's motion for summary judgment. On the basis of grounds other than those relied upon by the district court, we AFFIRM the denial of plaintiffs' motion for summary judgment as to their claims that defendant failed to provide comprehensive Medicaid coverage and a reasonable opportunity to verify immigration status, and hold that there are fact issues precluding summary judgment for both plaintiffs and defendant. We hold that defendant is entitled to judgment as a matter of law on the remaining notice claims, and we REMAND the case for further proceedings.

         I. BACKGROUND

         In 1986, Congress made comprehensive Medicaid benefits available to eligible non-citizens who attest to having "satisfactory immigration status." Pub. L. No. 99‒603, § 121(a)(1), 100 Stat. 3359 (codified as amended at 42 U.S.C. §1320b‒7(d)(4)(A)). Non-citizen applicants are required to present verified documentation to prove their immigration status. 42 U.S.C. § 1320b‒7(d)(2). If an individual attests to his or her status, but does not submit or verify the required documentation, state Medicaid agencies are required to provide that individual with a "reasonable opportunity" to provide documents verifying their eligible status. 42 U.S.C. § 1320b‒7(d)(4)(A). In Michigan, DHHS[1] administers the state Medicaid program, which is known as the Healthy Michigan Plan. Appellee's Br. at 3.

         On January 25, 2014, DHHS implemented various system changes required by the ACA. R. 22‒6 (Hundley Aff. at 2) (Page ID #837). In the course of implementation, a systemic computer problem caused a number of applicants to be assigned automatically to ESO Medicaid, although they might otherwise be eligible for comprehensive coverage. Specifically, non-citizen applicants who attested to, but failed to verify, their immigration status were automatically denied comprehensive coverage, and approved for ESO coverage only. Id. at 3 (Page ID #838). Denial of comprehensive coverage occurred without a reasonable opportunity to provide documents verifying an applicant's eligible status. Id.

         Among these applicants were named plaintiffs Unan and Quintino. Their cases are nearly identical. Unan, a refugee, applied for Medicaid on April 2, 2014. Quintino, who became a legal permanent resident in 1998, applied for Medicaid on April 1, 2014. Neither Unan nor Quintino was asked for documentation of her immigration status, although each had previously provided such proof of status for her food assistance case. Each received a Health Coverage Determination Notice indicating that she had been approved for ESO Medicaid. The letters did not include any language regarding denial of comprehensive Medicaid coverage. R. 28‒3 (Health Care Determination Notices) (Page ID #976‒83).

         On September 8, 2014, Unan and Quintino filed a class-action lawsuit for declaratory and injunctive relief against Nick Lyon, the Director of DHHS, [2] alleging that defendant (1) failed promptly to provide comprehensive Medicaid to plaintiffs pursuant to 42 U.S.C. § 1396a(a)(8), 10(A) (Count I); (2) failed to provide comprehensive Medicaid to plaintiffs pending a reasonable opportunity to verify plaintiffs' immigration status pursuant to 42 U.S.C. §§ 1396a(a)(8), 1320b‒ 7(d)(4)(A) (Counts II and III); and (3) failed to provide plaintiffs with adequate notice and a meaningful opportunity to be heard regarding the denial of comprehensive Medicaid pursuant to 42 U.S.C. § 1396a(a)(3) and the Due Process Clause of the Fourteenth Amendment (Counts IV and V). On the same date, plaintiffs filed a motion for preliminary injunction and a motion for class certification.

         Two days after the complaint was filed, Unan and Quintino were both determined by DHHS to be eligible for comprehensive Medicaid coverage retroactive to April 1, 2014. On August 2, 2014, DHHS, while working to correct the systemic computer problem, began approving for full Medicaid individual applicants who attested to eligible immigration status. R. 22‒6 (Hundley Aff. at 3) (Page ID #838). DHHS applied other temporary fixes throughout November, and by the end of December, had reprocessed well over 16, 000 cases in addition to those corrected manually. R. 69‒10 (Woods Aff., Exh. B at 2‒3) (Page ID #1755‒56). Defendant claims that a "permanent correction for the ESO issue" was implemented by December 30, 2014. R. 45 (Def. Reply in Support of First Mot. to Dismiss and/or for Summ. J. at 2) (Page ID #1216).

         On March 24, 2015, the district court ordered the parties to prepare revised notices for Medicaid applicants, and held in abeyance plaintiffs' motions for preliminary injunction and class certification. R. 46 (Dist. Ct. Order Denying Mot. to Dismiss) (Page ID #1247‒48). On July 23, 2015, the district court stayed discovery pending resolution of dispositive motions. Both parties filed cross-motions for summary judgment[3] on August 31, 2015, and a hearing was held on October 8, 2015. R. 69 (Def. Second Mot. to Dismiss and/or for Summ. J.) (Page ID #1624- 73); R. 70 (Pls. Mot. for Summ. J.) (Page ID #1780-826). On January 11, 2016, the district court granted defendant's motion for summary judgment, denied plaintiffs' motion for summary judgment, and entered judgment for defendant. R. 83 (Dist. Ct. Order at 33) (Page ID #2443). Plaintiffs' motions for class certification and preliminary injunction were dismissed as moot. Plaintiffs filed a timely notice of appeal.

         II. JURISDICTION: Mootness

         A. Standard of Review

         This court reviews jurisdictional issues de novo. Demis v. Sniezek, 558 F.3d 508, 512 (6th Cir. 2009). It is well established that a federal court must determine jurisdictional questions before proceeding to the merits. Children's Hosp. Med. Ctr. of Akron v. Youngstown Assocs. in Radiology, Inc., 612 F.App'x 836, 837 (6th Cir. 2015) (citing Steel Co. v. Citizens for a Better Env't, 523 U.S. 83, 111 (1998)). The Supreme Court has made clear that Article III requires that "an actual controversy must be extant at all stages of review, not merely at the time the complaint is filed." Preiser v. Newkirk, 422 U.S. 395, 401 (1975) (quotation marks omitted). A case may therefore become moot "when the issues presented are no longer 'live' or the parties lack a legally cognizable interest in the outcome." U.S. Parole Comm'n v. Geraghty, 445 U.S. 388, 396 (1980) (quoting Powell v. McCormack, 395 U.S. 486, 496 (1969)).

         Mootness doctrine, however, is "flexible" in the case of class actions. Wilson v. Gordon, 822 F.3d 934, 942 (6th Cir. 2016) (quoting Geraghty, 445 U.S. at 400). In general, "[o]nce a class is certified, the mooting of the named plaintiff's claim does not moot the action, [and] the court continues to have jurisdiction to hear the merits of the action if a controversy between any class member and the defendant exists." Brunet v. City of Columbus, 1 F.3d 390, 399 (6th Cir. 1993). Although dismissal is ordinarily required when the named plaintiff's claim becomes moot before certification, we have recognized some exceptions to this general rule. Wilson, 822 F.3d at 942. The plaintiffs argue that two such exceptions apply in this case, namely, the "picking off" exception and the "inherently transitory" exception. Appellants' Br. at 39-47. We consider each in turn.

          B. Named plaintiffs' individual claims are not moot

         1. "Picking off" exception

         The parties do not dispute that the named plaintiffs' individual claims became moot when, two days after the complaint was filed, they were approved for comprehensive Medicaid coverage retroactive to the date of their applications. Appellants' Br. at 36; Appellee's Br. at 23. Plaintiffs argue, however that defendant cannot avoid litigation by strategically "picking off" named plaintiffs and settling their individual claims. Appellants' Br. at 39.

         The "picking off" exception was developed to prevent defendants from strategically avoiding litigation by settling or buying off individual named plaintiffs in a way that "would be contrary to sound judicial administration." Deposit Guar. Nat'l Bank v. Roper, 445 U.S. 326, 339 (1980). We need not wait until after class certification has been denied to apply this exception. Our cases recognize this exception even when a motion for class certification is still pending, because "the defendant is on notice that the named plaintiff wishes to proceed as a class, and the concern that the defendant therefore might strategically seek to avoid that possibility exists." Wilson, 822 F.3d at 947; see also Brunet, 1 F.3d at 400 ("If a tender made to the individual plaintiff while the motion for certification is pending could prevent the courts from ever reaching the class action issues, that opportunity is at the mercy of a defendant, even in cases where a class action would be most clearly appropriate") (quoting Susman v. Lincoln Am. Corp., 587 F.2d 866, 870 (7th Cir. 1978)).

         We recently had an opportunity to address the "picking off" exception in Wilson, a case strikingly similar to the one before us. In Wilson, eleven named plaintiffs filed a class action complaint against various state officials charged with administering TennCare, Tennessee's Medicaid program. 822 F.3d at 940-41. The plaintiffs alleged that as a result of problems relating to ACA-mandated updates to TennCare's computer system, plaintiffs experienced delays in their Medicaid eligibility determinations and did not receive fair hearings on those delays. Id. at 941. A day before the hearing on class certification, the State enrolled all named plaintiffs, as well as 100 other class members, in TennCare. Id. We held that the "picking off" exception applied, and pointed to the timing and method of relief to support our conclusion. Id. at 950-51.

          Specifically, we found it relevant that the individual claims were mooted on the eve of a hearing on the motion for class certification, and not before filing, despite the fact that plaintiffs had brought four similar cases to the State's attention before the lawsuit was filed. Id. at 950 ("The exact timing of when the last claim of a class member identified by Plaintiffs was mooted . . . would also support a finding of motive."). Moreover, we noted that the claims did not become moot "through an established, standard procedure such that it might more clearly be characterized as 'incidental' or 'a matter of standard operating procedure.'" Id. (citations omitted). Rather, "the State created a new, ad hoc process, " providing further support for the inference that the state was attempting to avoid a class action. Id. at 951.

         There is sufficient evidence to support applying the "picking off" exception in this case. As was the case in Wilson, the timing here is suspect. The individual claims of the named plaintiffs were not resolved until after the lawsuit and contemporaneous motion for class certification were filed, despite the fact that the State, by its own admission, became aware of the systemic issue as early as April 14, 2014, nearly five months prior to the initiation of this action. R. 22-6 (Hundley Aff. at 3) (Page ID #838). Defendant also quickly moved to moot the claims of Maria Vargas, a putative class member, as soon as she was identified in a motion to intervene as a potential representative. Appellants' Br. at 42. Although Vargas's claim was immediately resolved, her husband, who applied as a member of the same household on the same date as his wife, did not receive relief until a month later, when plaintiffs' counsel informed DHHS that Vargas's husband was in need of medical services not available through ESO. R. 31‒2 (Emails from Counsel at 2) (Page ID #1091). The exact timing of when these claims were mooted supports a finding that defendant was strategically seeking to avoid litigation by selectively resolving the claims of any potential representatives as soon as they became known to defendant.

         Nor can defendant demonstrate that plaintiffs' claims became moot through an established, standardized procedure.[4] The failure simultaneously to resolve the claims of all members of the Vargas household is evidence of this. See Appellants' Br. at 42. Rather, defendant, like the defendants in Wilson, created a new ad hoc process and mooted the individual named plaintiffs' claims on a case-by-case basis after they were identified in this lawsuit. Wilson, 822 F.3d at 951. Although the dissent asserts that DHHS implemented a systemic fix alongside these ad hoc changes, the fact remains that not one of the individuals identified as a named plaintiff or potential named plaintiff was granted relief on the basis of a systemic fix. As was the case in Wilson, "the State in this case did not moot Plaintiffs' claims through an established, standard procedure such that it might more clearly be characterized as 'incidental' or 'a matter of standard operating procedure.'" Id. at 950 (citations omitted). The "picking off" exception therefore should apply in this case.

         2. "Inherently transitory" exception

         Plaintiffs next claim that the "inherently transitory" exception to mootness also applies in this case. In order for this exception to apply, two requirements must be met. First, the injury must be "so transitory that it would likely evade review by becoming moot before the district court can rule on class certification." Wilson, 822 F.3d at 945. ...

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