decided: November 14, 1979.
CHARLES EDER, MATTIE MCDANIELS AND PHILADELPHIA WELFARE RIGHTS ORGANIZATION, APPELLANTS
FRANK S. BEAL, INDIVIDUALLY AND AS SECRETARY OF THE PENNSYLVANIA DEPARTMENT OF PUBLIC WELFARE; THOMAS HOOKER, INDIVIDUALLY AND AS DEPUTY SECRETARY FOR FAMILY ASSISTANCE, DEPARTMENT OF PUBLIC WELFARE; ROGER CUTT, INDIVIDUALLY AND AS COMMISSIONER OF MEDICAL PROGRAMS, DEPARTMENT OF PUBLIC WELFARE; GLENN JOHNSON, INDIVIDUALLY AND AS DIRECTOR, BUREAU OF MEDICAL ASSISTANCE, DEPARTMENT OF PUBLIC WELFARE; DON JOSE STOVAL, INDIVIDUALLY AND AS EXECUTIVE DIRECTOR, PHILADELPHIA COUNTY BOARD OF ASSISTANCE, APPELLEES
APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF PENNSYLVANIA (D.C. Civil No. 78-0331)
Before Seitz, Chief Judge, and Garth and Sloviter, Circuit Judges.
Opinion OF THE COURT
This appeal presents us with a novel question: must Pennsylvania comply with the notice provisions governing the termination of an optional medical assistance program funded under Title XIX of the Social Security Act,*fn1 even when the discriminatory operation of the program has been held to have violated federal law?*fn2 The district court, while holding that Pennsylvania had not complied with the notice provisions of the Act, nonetheless held that the illegality of the program itself, Inter alia, prevented it from enforcing compliance with the notice provisions. Thus, the district court refused to enjoin the termination of the program. We disagree with the district court's order, and therefore we reverse.
As part of its federally funded medical assistance program,*fn3 Pennsylvania provided eyeglasses only to individuals with pathological eye disorders. Those individuals suffering from ordinary refractive error were not provided with eyeglasses. In White v. Beal, 555 F.2d 1146 (3d Cir. 1977), this court affirmed a district court order which enjoined the discriminatory operation of the Pennsylvania eyeglass program because this restrictive application was found to conflict with the requirements of the Social Security Act. This injunction set the stage for the instant litigation.
After the decision in White v. Beal, appellees, officials of Pennsylvania's Department of Public Welfare (DPW), who administered the eyeglass program, decided to eliminate the program entirely, citing substantial budget deficits.*fn4 This action had been foreseen in the earlier litigation which, as noted, had enjoined the eyeglass program. The district court had there concluded its opinion with the following prediction:
I am aware that as a consequence of this decision, Pennsylvania may elect to eliminate eyeglasses as one of the optional services. As an extreme measure, it might elect to discontinue entirely its participation in the federal medical assistance program under the Social Security Act. Thus, plaintiffs may sustain a pyrrhic victory that defeats rather than accomplishes their purposes.
White v. Beal, 413 F. Supp. 1141, 1155 (E.D.Pa.1976).
On July 30, 1977 DPW published notice of proposed rulemaking which would suspend the eyeglass program. On September 30, 1977, after comments had been received, the proposed rule went into effect unaltered, and the program was terminated. At that time, no individual notices of termination were sent to medical assistance recipients.
Thereafter in April, 1978, Chief Judge Lord enjoined DPW's termination of Pennsylvania's orthopedic shoe program because DPW had failed to comply with the individual notice requirements of Title XIX. Budnicki v. Beal, 450 F. Supp. 546 (E.D.Pa.1978) (no appeal taken). In response to the holding in Budnicki, on June 15, 1978, DPW sent notices to each medical assistance recipient informing them of DPW's earlier termination of the eyeglass program. These notices stated flatly that pre-termination hearings were unavailable because the termination "is an automatic reduction in covered services and there are no circumstances in which you could be incorrectly denied services." Appendix at 14.
Following the decision in Budnicki, the appellants here, who were the plaintiffs in White v. Beal, brought this action to enjoin the termination of the eyeglass program until the notice provisions of Title XIX could be met. They claimed that because those provisions unequivocally require that each individual recipient receive ten days notice in advance of a program's termination,*fn5 DPW was precluded from terminating its program without such notice. Having failed to provide any individual advance notice whatsoever, the plaintiffs argue that Pennsylvania is now obliged to operate an eyeglass program which conforms with the dictates of White v. Beal until such time as a timely and adequate notice is given I. e., for at least a ten day period.*fn6
On cross motions for summary judgment, based upon a stipulation of facts, the district court held that DPW had "clearly" violated the notice provisions of 45 C.F.R. § 205.10(a)(4) (1978). But the court refused to enjoin the termination of the eyeglass program pending conformity with the notice requirements. Reasoning that in this case, unlike Budnicki, the underlying benefits program had been adjudged illegal, the court thought itself without power to order Pennsylvania to operate a "legal" eyeglass program in order to give effect to the notice requirements of Title XIX:
Plaintiffs seek to have the program reinstated, by means of an injunction against its termination, as in Budnicki, until it can be terminated in a manner consistent with statutory and constitutional requirements. Setting aside for the moment the patent incongruity of reinstating an unaffordable program simply to legitimize its retermination, there is one significant obstacle to this remedy that was not present in Budnicki : the program that the plaintiffs seek to have reinstated is, as the plaintiffs have correctly and successfully argued before this court and the court of appeals, illegal. It is indeed a nonsensical and illusory remedy that cures one illegality simply by conjuring up another. Therefore, unless there is a very compelling need for such unusual relief, it will not be granted.
Nor is it within the power of this court to order DPW to initiate an expanded, legal eyeglasses program, I. e., one which makes eyeglasses available to all PMA recipients whose vision is in need of aid or improvement, without regard to whether they suffer from eye pathology or ordinary refractive error. As I recognized in White v. Beal, supra, the PMA eyeglasses program is optional, and the DPW can expand or eliminate it according to its best judgment. As Judge Fullam recently observed in Philadelphia Welfare Rights Organization v. Shapp, No. 73-290 (E.D.Pa., Oct. 3, 1978): "It is simply not in the province of a court to tell Congress, the Executive Branch, or the State government which services must be provided."*fn1a
Appendix at 27-38 (footnote 6 omitted).
Moreover, the court noted that the expense involved in re-establishing the eyeglass program, the "speculative" nature of the benefits which would result from that action, and the good faith of the DPW officials were all "equitable factors" which weighed against granting an injunction.
We hold that the lower court erred as a matter of law, when it concluded that the prior illegality of Pennsylvania's eyeglass program precluded it from enforcing the notice requirements of Title XIX. Moreover, because this error infected the equitable determinations of the district court, and because there is little basis for those determinations, See note 12 Infra, we are satisfied that the district court did not exercise a sound discretion in denying an injunction for reasons of equity.
Federal courts are not reticent to fashion remedies to effectuate important statutory policies. See J. I. Case v. Borak, 377 U.S. 426, 84 S. Ct. 1555, 12 L. Ed. 2d 423 (1964). The policy favoring timely notice to social security recipients of agency actions terminating, suspending or reducing benefits comes within this protective ambit. Accordingly, courts interpreting the Social Security Act have uniformly recognized and upheld this policy. See, e. g., Rochester v. Baganz, 479 F.2d 603 (3d Cir. 1973); Budnicki v. Beal, supra; Yaretsky v. Blum, 592 F.2d 65 (2d Cir. 1979); Becker v. Blum, 464 F. Supp. 152 (S.D.N.Y.1978).
Rochester v. Baganz, supra, expresses this Circuit's view as to the importance of giving timely notice to beneficiaries of state programs. In Rochester, plaintiffs complained of Delaware's reduction of their AFDC benefits. Notice of this reduction had been sent to each recipient individually, but in an untimely fashion.*fn7 The court concluded that the Secretary of HEW was within his authority in requiring timely individual notice, even in cases of across-the-board program terminations where pre-termination hearings would not be required. The court stressed the importance of the notice requirement in light of the impact of program reductions on recipients' everyday lives:
The Secretary urges that even in cases of across-the-board reductions such advance notice is necessary, or at least appropriate, for the orderly administration of welfare programs. He urges that in a program designed to meet subsistence needs recipients ought to be informed in advance if their payments are to be cut for any reason, so that they may be able to plan for the cut, and to the extent possible adjust to it. We agree that it was well within the range of the Secretary's rulemaking authority to insist, as a condition for state participation in the AFDC program, that each state manage its fiscal affairs so as to be able to provide at least this minimum advance warning to beneficiaries about to be deprived of benefits upon which they may have been counting heavily.
479 F.2d at 606. This policy was read by the Rochester court to justify an independent right on the part of program recipients to timely notice in advance of any program change reducing benefits.*fn8 Even if we were not bound by the Rochester court's holding, we perceive no justification for permitting the violation of this important right*fn9 the right to receive timely and adequate advance notice to go without vindication and without remedy.*fn10
Neither the fact that Pennsylvania's eyeglass program had been judged illegal, nor the fact that it is an optional program under Title XIX, would justify a failure to remedy a conceded violation of Title XIX's notice requirements.
The district court laid great stress on the fact that Pennsylvania's eyeglass program was held in White v. Beal, supra, to be in violation of Title XIX. This circumstance, according to the district court, left the recipients of benefits remediless, because it would be "nonsensical and illusory" to reinstate an illegal program where the court has no power to order the establishment of an expanded, "legal" eyeglass program. See Appendix 27 (quoted at 697-698 Supra). But Pennsylvania's obligation to maintain a legal program was not contingent on a court order in this case. Rather, when Pennsylvania elected to participate in Title XIX, and when it established its eyeglass program, it thereby bound itself to act in compliance with federal law. See Rosado v. Wyman, 397 U.S. 397, 90 S. Ct. 1207, 25 L. Ed. 2d 442 (1970); Shapiro v. Thompson, 394 U.S. 618, 89 S. Ct. 1322, 22 L. Ed. 2d 600 (1969); King v. Smith, 392 U.S. 309, 88 S. Ct. 2128, 20 L. Ed. 2d 1118 (1968). At that time its obligation arose. Thus, when the court in White v. Beal, supra, held that Pennsylvania was obligated, under Title XIX, to provide eyeglasses for individuals with refractive error as well as for individuals with eye pathology, it was, in essence, doing no more than recognizing the obligation which Pennsylvania had undertaken when it joined the federally funded program.
Consequently, we have no hesitancy in concluding that the district court incorrectly characterized the question before it as whether to "order DPW to initiate an expanded, legal eyeglasses program." Appendix at 27. Pennsylvania would not, in a legal sense, be initiating a new eyeglass program by providing services to persons with both categories of visual impairments; instead it would be bringing into conformity with the law the program which it had already established and which it was then maintaining.*fn11 Thus, the complaint in this case required the district court to focus only on Pennsylvania's concededly illegal termination of the eyeglass program. In this sense, the issue before the district court here does not differ significantly from the issue confronted by the district court in Budnicki v. Beal.
We hold that the district court erred, as a matter of law, in refusing to enjoin the termination of Pennsylvania's eyeglass program pending compliance with the notice requirements of Title XIX.*fn12 We recognize that this holding will necessarily cause Pennsylvania to conduct a full eyeglass program, providing benefits to recipients with ordinary refractive error as well as to recipients with eye pathologies, for the period before a legal notice may be effected. But this is no more than Pennsylvania obligated itself to do when it originally undertook the eyeglass program. In essence, our holding requires no more than that Pennsylvania "shape up" before it "ships out" of its federally sponsored program.*fn13
Finally, the fact that Pennsylvania's eyeglass program was optional has no affect on our holding. If it were relevant, the "optionality" argument, taken to its logical extreme, would negate any requirement of notice before termination of benefits. For as we have already pointed out, See note 3 Supra, not only was the eyeglass program optional, but extending Title XIX benefits to the medically disadvantaged who do not meet all income standards, was also optional. Furthermore participation in Title XIX programs is, in the first instance, discretionary with the states. The fact that these programs are nominally "optional" does not mean that a state may terminate them without restraint. Rather, as we have previously indicated, once a state elects to participate in an "optional" program, it becomes bound by the federal regulations which govern it. Rosado v. Wyman, supra; King v. Smith, supra. This includes regulations governing the procedures by which a state may terminate programs which it has established.
We conclude that the district court erred in its determination that our holding in White v. Beal prohibited it from enjoining the admittedly illegal program termination in this case. This determination also tainted the equitable considerations addressed by the district court. Thus the district court did not give effect to the policy underlying the notice requirements of 45 C.F.R. § 205.10, which we hold must be satisfied.
We will therefore vacate so much of the December 12, 1978 order of the district court which denied plaintiff's motion for injunctive relief and remand to the district court with the direction that an order be entered enjoining Pennsylvania from terminating its eyeglass program until it has complied with the requirements of 45 C.F.R. § 205.10 (1978).*fn14