Note: The following post was contributed by a HarvardCRCL.org executive board member. The article offers a critique of the recent Second Circuit decision in Shaknes v. Berlin.
In the struggle to ensure that all Americans receive the health care guaranteed by the Medicaid Act, perhaps no lever is more important to private citizens than lawsuits under 42 U.S.C. § 1983. In the wake of Gonzaga Univ. v. Doe, 536 U.S. 273, 284–85 (2002) in which the Supreme Court entrenched a tight-fisted test for whether Congress has guaranteed a statutory right to individuals, the lower courts have felt out the bounds of a new doctrine piecemeal. Recently, in Shakhnes v. Berlin, 689 F.3d 244 (2d Cir. 2012), the Second Circuit held that at least in some cases where Congress confers a right with bounds set by flexible standards – as opposed to hard and fast rules – and a regulation subsequently “defines or fleshes out that right” by imposing a rigid rule, the statute provides the “source” of a right but the regulation ultimately defines the limits of what is enforceable under § 1983. The court ignored persuasive reasoning that would have provided a conceptually sounder basis for deciding the narrow issue at bar, but in so doing mitigated the unduly harsh consequences of the narrower conception of rights that would follow from such reasoning in the wake of Gonzaga.
The aforementioned issue in Shakhnes arose from a section of the Medicaid Act requiring states administering Medicaid programs to “grant an opportunity for a fair hearing before the State agency to any individual [in certain circumstances].” 42 U.S.C. § 1396a(a)(3). A regulation further describing the fair hearing process lays out that “[t]he [state’s Medicaid] agency must take final administrative action . . . [o]rdinarily, within 90 days from” the request of a fair hearing. 42 C.F.R. 431.244 (f)(1)(ii). The parties agreed that the statutory provision implies a right not just to a fair hearing, but also to a decision at some point after that fair hearing. The question in Shakhnes, more narrowly defined, was whether plaintiffs could enforce the regulation’s ‘90 day’ requirement itself or whether they were limited to enforcing the more vague statutory right to a decision after their fair hearings.
The court introduced several analogies to support its decision that the ‘90 day’ requirement from the text of the regulation, with its “source” in the statute, is itself enforceable. It first looked to the Supreme Court’s decision in Wright v. City of Roanoke Redevelopment and Housing Authority, 479 U.S. 418 (1987). In Wright, the Court encountered a statute providing that “tenants could be charged as rent no more and no less than 30 percent of their income,” while corresponding “regulations . . . expressly required that a ‘reasonable’ amount for utilities be included in rent.” The Court decided that the regulations were enforceable because they “defin[ed] the statutory concept of ‘rent,’” and did so in a manner consistent with the purposes of the statute. The Shakhnes court then considered D.D. v. New York City Bd. of Educ., 465 F.3d 503 (2d Cir. 2006), in which a plaintiff sued over inadequate delivery of special education services in a New York City public school. The Individuals with Disabilities Education Act (IDEA) required “special education and related services [to be] provided in conformity with the individualized education program [IEP]required under [IDEA].” A corresponding regulation required that IEPs be “implemented as soon as possible” following their composition. The court found that the school system’s failure to implement the IEP ‘as soon as possible,’ as the regulation required, violated plaintiffs’rights. Finally, the court referred to, and ultimately adopted the language of, an 11th Circuit case. In Harris v. James, 127 F.3d 993 (11th Cir. 1997), the court considered whether providing “necessary transportation for [Medicaid] recipients to and from [treatment] providers,” as spelled out in a regulation, 42 C.F.R. § 431.53, was enforceable under 42 U.S.C. § 1983, given that various statutory provisions in the Medicaid Act arguably guaranteed certain rights related to provision of services, e.g., that the administering agency had to “provide . . . medical assistance . . . with reasonable promptness to all eligible individuals.” 42 U.S.C. § 1396a(a)(8). Reasoning that “regulation[s that] go beyond explicating the specific content of the statutory provision and impose distinct obligations . . . [are] too far removed from Congressional intent to constitute a ‘federal right’ enforceable under § 1983,” the Harris court held that the regulation guaranteeing transportation as part of Medicaid services was not enforceable under 42 U.S.C. § 1983.
The Shakhnes court ignored persuasive reasoning from a case in another circuit whose facts on the issue of when a regulation ‘merely defines’ a statutory right versus when it ‘imposes distinct obligations’ which, although not in the context of enforceability of rights under 42 U.S.C. § 1983, aptly treated the issue. The issue in Hoctor v. U.S. Dep’t of Agriculture, 82 F.3d 165 (7th Cir. 1996), was whether an agency’s internal memorandum fell under the exception in 5 U.S.C. § 553(b)(A) exempting agency statements interpreting prior regulations from the notice-and-comment rulemaking requirements in 5 U.S.C. §§ 553(b), (c). In other words, the question was whether the statement merely “particularize[d] through interpretation” a standard laid out in a previous regulation promulgated subject to notice-and-comment procedures, or whether it “impose[d] a[n independent] duty on the persons subject to it.” The earlier regulation required that “the facility [housing the animals] be constructed of such material and of such strength as appropriate for the animals involved [and that t]he indoor and outdoor housing facilities shall be structurally sound and . . . maintained in good repair to protect the animals from injury and to contain the animals.” 9 C.F.R. § 3.125(a). The year after the agency adopted this regulation, it issued an internal memorandum requiring that “all ‘dangerous animals,’ defined as including, among members of the cat family, lions, tigers, and leopards,  be [housed] inside a perimeter fence at least eight feet high.” The Department of Agriculture then sanctioned Hoctor for having a fence only six feet high around his animal enclosures. “The only ground on which the Department defend[ed] sanctioning Hoctor . . . [wa]s that requiring an eight-foot-high perimeter fence for dangerous animals is an interpretation of the Department’s own structural-strength regulation.” Judge Posner, writing for the panel, wrote that to determine whether one statement interprets a standard enumerated in another, one should ask whether it is obviously tied to the first by some chain of reasoning or whether it stands alone. He explained that “[a] rule that turns on a number is likely to be arbitrary in th[e] sense” that it is “not derived from” the underpinning standard. On the other hand,
[h]ad the Department of Agriculture said in the internal memorandum that it could not imagine a case in which a perimeter fence for dangerous animals that was lower than eight feet would provide secure containment, and would therefore presume, subject to rebuttal, that a lower fence was insecure, it would have been on stronger ground. For it would have been tying the rule to the animating standard, that of secure containment, rather than making it stand free of the standard, self-contained, unbending, arbitrary. To switch metaphors, the ‘flatter’ a rule is, the harder it is to conceive of it as merely spelling out what is in some sense latent in a statute or regulation, and the eight-foot rule in its present form is as flat as they come.
Indeed, the Shakhnes defendants in their brief seemed to hint at this kind of argument. At times their brief seeks to distinguish between “rigid” and “flexible” language in putatively interpretive regulations, and implies that only the latter could be sufficiently “tied . . . to the underlying statute itself.” Brief of Appellant at 29-30, Shakhnes v. Berlin, 689 F.3d 244 (2d Cir. 2012) (No. 11-2003), 2011 WL 3882067, at *29-30. But the argument only analogizes to cases that seem to suggest this rule; it does not explicitly state it. At oral argument, counsel for defendant at best indirectly pointed to this distinction by indicating that rigid ‘interpretations’ do not allow for case-by-case evaluation according to all of the ‘facts and circumstances.’ But this, too, does not get at the heart of the legitimate reasoning in Hoctor (which went without citation at any point in Shakhnes).
The Shakhnes court’s analogy to D.D. and Wright, and disanalogy from Harris, were actually misplaced. In D.D., the regulation interpreting the statute required that the IEP be implemented “as soon as possible”—itself a flexible standard, and thus plausibly derivable from the statute requiring educational services to conform to an IEP. While D.D. involved a flexible interpretation of a flexible standard, Wright involved a rigid interpretation of a rigid (albeit ambiguous, or so the Court held) rule. In Wright, the regulation at issue interpreted the statutory requirement that a family “‘shall pay as rent’ a specified percentage of its income” to encompass payment not just for “the use of the dwelling accommodation,” but also for, among other services, “reasonable amounts of utilities.” Neither of these cases involved a shift from a vague guarantee to a specific one. Meanwhile, in Harris, plaintiffs argued that the regulation at issue “merely interpreted” the statutory provisions where it derived a specific requirement—transportation to medical service providers—from statutory provisions making broad, standard-based guarantees, e.g., promptness in delivery of services. The court declined to hold “that transportation to and from providers is reasonably understood to be part of the content of a right to prompt provision of assistance . . . .” (emphasis in original). The Harris court, then, heeded Judge Posner’s distinction, concluding that it was unreasonable to call the regulation a ‘mere interpretation’ of the statute.
The Shakhnes court did not follow the Hoctor distinction. If it had, it would have demanded that, like in D.D., in moving from the flexible statutory requirement, the regulation must also be flexible (e.g., “in general, in 90 days,” or “except under extenuating circumstances, in 90 days,” or “within a reasonable time”). It would have noted that, like in Hoctor, a 90-day requirement arbitrarily imposes a rigid timeline where in individual cases a significantly shorter processing period may still violate the right in 42 U.S.C. § 1396a(a)(3), or a much longer one may not.
Of course, this decision is a boon for civil rights plaintiffs, who will, at least for now, benefit from a much easier road to class actions. Without a decision like this, the timeline of every single plaintiff would be an individual issue in litigation; with Shakhnes, serious injustices will not go without a remedy. The decision is helpful even for suits by individuals, as it obviates the need to litigate the “reasonable promptness” issue, with the concomitant possibility of requiring experts and additional discovery, in every case.
If this issue ever makes it to the Supreme Court, it is unlikely to be decided favorably given the flaw in its reasoning and the Court’s reluctance to clear the way for class actions. In the meantime, however, this decision protects the rights of Americans to receive Medicaid services promptly, and in a manner that may very well be closer to the intent with which Congress adopted the Medicaid Act and its subsequent amendments.