Site Tools

Current Size: 100%

CLS Files Lawsuit Challenging Medicaid Benefit Cuts that Violate State Law

CLS Files Lawsuit Challenging Medicaid Benefit Cuts that Violate State Law

Yesterday, Community Legal Services, Inc. (CLS) filed a class action lawsuit against the Pennsylvania Department of Human Services (DHS, formerly the Department of Public Welfare or DPW) on behalf of approximately 200,000 low-income Pennsylvanians whose Medicaid benefits have been or will be reduced as a result of the Healthy Pennsylvania initiative. 

The lawsuit, Rodriguez v. Mackereth, alleges that DHS has unlawfully reduced Medicaid-covered services in violation of existing state regulations and without issuing new state regulations with required public notice and comment periods.  The lawsuit was filed in Pennsylvania Commonwealth Court.

As part of its Healthy Pennsylvania initiative, DHS has assigned all Medicaid recipients to one of three new benefit packages, all of which contain some benefit cuts.

  • “Healthy Plus” is intended to cover persons aged 65 or older, the disabled, pregnant, or medically frail.  These benefits are most similar to the Medicaid package available before Healthy PA began on January 1, 2015.
  • Healthy PA PCO” is intended to cover individuals with temporary disabilities, survivors of domestic violence, and individuals in substance abuse treatment. This package eliminates dental coverage, access to the Medical Assistance Transportation Program, and other vital services. These cuts took effect January 1, 2015.
  • “Healthy” is designed to cover very low-income parents and young adults transitioning out of foster care.  This package includes strict new annual limits of four specialist doctor visits, six radiology tests, and $350 in laboratory services.  The federal Centers for Medicare and Medicaid Services (CMS) has not approved the Healthy benefit package.  DHS has said that it will keep Medicaid recipients assigned to the Healthy package in their current plans, or near equivalents, until it receives approval, so these cuts have not yet taken effect.

The Rodriguez lawsuit challenges the legality of the Healthy PA PCO and Healthy packages, both of which contain very significant, potentially health-threatening cuts.

The lawsuit alleges that the benefit cuts violate DHS’s existing regulations, which set forth the scope of coverage to which recipients are entitled.  In order to legally make benefit cuts, DHS would have to amend its regulations as required by state law.  Both the Public Welfare Code and the Commonwealth Documents Law, which governs how Pennsylvania’s administrative agencies change their rules, require DHS to go through a formal rulemaking process.  This process is important because it provides for public notice and opportunity for comment.  The lawsuit alleges that the new benefit cuts are legally invalid because DHS failed to take any steps to change the governing law and comply with the rulemaking process.

Plaintiff Caroline Rodriguez was assigned to the Healthy Medicaid benefit package.  She has a chronic kidney condition which requires frequent specialist visits and diagnostic tests which are likely to exceed the benefit limits in the Healthy benefit package.  

Plaintiff Francis Graziano has significant health problems, including chronic hip problems, arthritis, diabetes and hypertension.  He also needs extensive dental work.  Mr. Graziano, who usually lives in Philadelphia but is temporarily staying with family outside of the city, has relied on the Medical Assistance Transportation Program (MATP), which pays for transportation to medical appointments for individuals who cannot afford to pay for it, when he has not been able to afford public transportation.  He was assigned to the Healthy PA PCO benefit package, which means that he lost dental coverage and MATP services on January 1. 

“The Department of Human Services’ unilateral decision to cut Medicaid benefits for almost 200,000 low-income Pennsylvanians without following the procedures mandated by state law is not only illegal, but harmful to the most vulnerable Pennsylvanians,” said Samuel Brooks, Staff Attorney at CLS.

“The Department of Human Services’ disregard for the rulemaking process will cost low-income Pennsylvanians their health and possibly even their lives.” added Pamela Walz, Supervising Attorney at Community Legal Services.

Richard Weishaupt, Senior Attorney at Community Legal Services, said:  “The Affordable Care Act affords states the opportunity to extend health care coverage to all its low income residents and receive 100% federal funding for the first three years.  Instead of taking full advantage of this opportunity, Pennsylvania has pursued an unwise and illegal effort to reduce benefits.”

The lawsuit does not affect up to 600,000 Pennsylvanians who became newly eligible for Medicaid on January 1, 2015 through the Healthy Pennsylvania Medicaid expansion.  Benefits for newly eligible individuals, as well as current recipients who were transferred to the Healthy PA PCO and face benefits cuts, will be 100% funded by the federal government through 2016.

On December 22, 2014, CLS filed a separate class action lawsuit, Diao v. Mackereth, against DHS in U.S. District Court in Philadelphia.  That lawsuit challenges the process by which persons were assigned to the Healthy and Healthy PA PCO plans instead of the more adequate Healthy Plus plan.  That lawsuit is still pending.

A copy of the Rodriguez v. Mackereth complaint is available here.