TPM Wins Ruling that Plaintiffs Have Stated a Claim that Due Process Requires Individualized Written Notice When Prescribed Drugs Denied Medicaid Coverage at Pharmacy

On March 26, 2017, the United States District Court for the District of Columbia issued a decision in N.B. v. District of Columbia in favor of plaintiffs represented by Terris, Pravlik & Millian, LLP, and the National Health Law Program.  Plaintiffs allege that the District of Columbia has systematically failed to provide Medicaid recipients with due process when a prescribed medication is denied Medicaid coverage at the pharmacy.  Defendants, the District of Columbia and the Department of Health Care Finance, had filed a renewed motion to dismiss on a second remand from the United States Court of Appeals for the District of Columbia Circuit (“the D.C. Circuit”).  The district court partially denied defendants’ renewed motion to dismiss, finding that plaintiffs have stated a claim that the District’s current system violates the Fifth Amendment’s Due Process Clause by not providing individualized written notice to Medicaid recipients.  

Plaintiffs filed their complaint on September 7, 2010.  On August 8, 2011, the district court granted defendants’ first motion to dismiss on the ground that plaintiffs lacked standing.  On June 8, 2012, the D.C. Circuit reversed the district court’s decision and remanded the case for further proceedings.  In March 2014, the district court granted defendants’ second motion to dismiss because, inter alia, it determined that the plaintiffs lacked a protected property interest (i.e., a legitimate claim of entitlement to the prescribed medication) and therefore had no protections under the Due Process Clause.

In July 2015, the D.C. Circuit reversed in part, holding that under the U.S. Constitution plaintiffs have a protected property interest in Medicaid coverage of any prescribed medication not completely excluded from coverage under Medicaid.  The D.C. Circuit cited the “mandatory, non-discretionary terms” used in the District’s Medicaid regulations (29 D.C.M.R. 2700, et seq.).  The D.C. Circuit remanded the case to the district court.

On March 23, 2016, defendants filed a third motion to dismiss, arguing, inter alia, that plaintiffs failed to state a Due Process Clause claim because the District’s current Medicaid pharmacy program provides sufficient notice to Medicaid recipients.  Defendants argued, inter alia, that Medicaid recipients who are denied prescription drug coverage could learn the reason for the denial by asking the pharmacist or calling District officials.  Plaintiffs contended that the system’s reliance on affirmative inquiry was inadequate to protect the due process rights of Medicaid recipients under the Constitution.

The district court agreed with the plaintiffs. The court found that requiring Medicaid recipients to ask the pharmacist or call District officials to learn the reason for the prescription denial “is constitutionally insufficient, and thus, the fact that a Medicaid plaintiff could conduct such an inquiry is irrelevant to the constitutional analysis” (emphasis in original).  The district court concluded that plaintiffs have stated a claim under the Due Process Clause of the Fifth Amendment and that the District’s current practice “simply cannot constitute adequate notice.  * * * [I have] concluded that defendants have failed to provide adequate initial written notice that reasonably apprises plaintiffs of the reasons for the prescription denial.”  The case now proceeds to discovery and a determination on class certification.

Click here for the decision.