## Facts

- New York administered Medicaid under a federally approved state plan.
- In 2011, New York amended its plan to restrict coverage of orthopedic footwear and compression stockings to beneficiaries with specified, enumerated diagnoses.
- Medicaid recipients with disabilities who required the items for other serious conditions were categorically denied coverage based on diagnosis rather than medical need.
- Plaintiffs filed a putative class action against the state health commissioner, alleging violations of Medicaid comparability and due process, and disability discrimination under Title II of the ADA and § 504 of the Rehabilitation Act, among other theories.
- The district court largely ruled for plaintiffs and permanently enjoined New York from enforcing the restrictions statewide; the commissioner appealed.

## Issues

1. Whether the Medicaid Act’s “reasonable standards” provision is privately enforceable (or enforceable via the Supremacy Clause) against a state official.
2. Whether orthopedic footwear and compression stockings must be covered as mandatory Medicaid home health services or may be treated as optional prosthetic devices.
3. Whether limiting coverage to enumerated diagnoses violates Medicaid’s comparability requirement for categorically needy beneficiaries.
4. Whether due process required individualized written notice of the benefit change and whether it also required evidentiary hearings.
5. Whether the restrictions violated Title II of the ADA and § 504 of the Rehabilitation Act, including the integration mandate, by placing disabled beneficiaries at serious risk of institutionalization.
6. Whether the statewide permanent injunction was overbroad given the mix of affirmed and vacated claims.

## Decision

- The court affirmed in part and vacated in part the judgment.
- It vacated summary judgment for plaintiffs on the Medicaid “reasonable standards” claim, holding there was no private cause of action under that provision or the Supremacy Clause.
- It affirmed summary judgment for the commissioner on the home-health-services theory, concluding the items were properly treated as optional prosthetics rather than mandatory home health services.
- It affirmed summary judgment for plaintiffs on the Medicaid comparability claim, holding the diagnosis-based limitations provided unequal coverage to categorically needy individuals with comparable medical needs.
- It affirmed plaintiffs’ due process claim as to inadequate written notice, but affirmed summary judgment for the commissioner on the claim seeking evidentiary hearings.
- It affirmed summary judgment for plaintiffs on the ADA and Rehabilitation Act claims based on the integration mandate and related anti-discrimination rules.
- It vacated the permanent injunction and remanded for reconsideration of its scope consistent with the appellate rulings.

## Legal Principles

- The Supremacy Clause does not itself create a private right of action to enforce Spending Clause statutes against state officials; absent a cognizable private cause of action, Medicaid “reasonable standards” claims cannot proceed through that route.
- States may treat orthopedic footwear and compression stockings as optional prosthetic benefits rather than mandatory home health services, but optional benefits remain subject to other Medicaid constraints.
- Medicaid’s comparability provision requires that medical assistance for individuals within the same eligibility group be equal in amount, duration, and scope; diagnosis-based categorical exclusions that deny medically comparable beneficiaries equal coverage violate comparability.
- Procedural due process requires adequate written notice of benefit terminations or material coverage changes to allow affected recipients to respond; however, categorical program changes do not automatically require individualized evidentiary hearings for all affected recipients.
- The ADA and Rehabilitation Act prohibit disability-based discrimination in public programs and require services be administered in the most integrated setting appropriate; policies that place qualified individuals at serious risk of institutionalization can violate the integration mandate.
- Injunctive relief must be tailored to the claims and theories that remain valid after appellate review.

## Conclusion

The Second Circuit held that New York’s diagnosis-based limits on coverage for orthopedic footwear and compression stockings violated Medicaid’s comparability requirement and the ADA/Rehabilitation Act integration mandate, and that due process required adequate notice, while rejecting private enforcement of Medicaid’s reasonable-standards provision and vacating the statewide injunction for narrowing on remand.


Davis v. Shah, 821 F.3d 231 (2d Cir. 2016)