Opinion
CIVIL ACTION NO 3:99-CV-1576-G
May 9, 2001
MEMORANDUM ORDER
This case is before the court on the summary judgment motion of the defendant Dallas County Hospital District, d/b/a Parkland Health and Hospital System ("Parkland Hospital" or "Parkland"), and on the motion of the defendant Eric M. Bost, Commissioner of the Texas Department of Human Services ("DHS") (Parkland and DHS collectively, "the defendants"), to dismiss the case for lack of subject matter jurisdiction and failure to state a claim. Because the court concludes that Jose and Virginia Leon ("the Leons" or "the plaintiffs") lack standing to bring the instant suit, the court does not consider the defendants' motions on their merits.
Instead, the court, acting sua sponte, dismisses all of the plaintiffs' claims and denies the defendants' motions as moot.
I. BACKGROUND
On July 30, 1997, Jose Leon was admitted to Parkland Hospital in Dallas, Texas, where he received treatment for burn injuries. See Original Complaint ("Complaint") ¶ 9. Mr. Leon informed the hospital through his wife, Virginia Leon, that he had no insurance and could not pay for the services the hospital would render. Id. ¶ 10. After Mr. Leon received treatment, and while still admitted to Parkland Hospital, Parkland employees filled out a Medicaid application for Mr. and Mrs. Leon and instructed Mrs. Leon to file it with the DHS office in Tyler, Texas when the couple returned home. Id. ¶ 13. On August 8, 1997, before Mr. Leon was discharged from the hospital, his wife signed a promissory note to pay the $17,040 in charges for the medical treatment the hospital administered. Id. ¶ 14.
Upon returning to Tyler, Mrs. Leon filed the Medicaid application on August 11, 1997 with the DHS's Tyler Mineola Highway office. Id. ¶ 16. On August 13, 1997, the Leons' application was denied because they had over $4,000 in their bank account. See Joint Pretrial Order at 9; Affidavit of James Cleveland ("Cleveland Affidavit") at 2, Exhibit 2, Defendant Eric M. Bost's Motion to Dismiss ("Motion to Dismiss"); Jose Leon Bank Statements, Attachment "B" to Exhibit 2, Motion to Dismiss; Notice of Benefit Denial (Aug. 13, 1997), Attachment "B" to Exhibit 1, Motion to Dismiss. At all times relevant to the case at bar, the limit on available funds to qualify for Medicaid eligibility under the DHS's Medically Needy Program was $2,000. See Joint Pretrial Order at 9; TDHS Income Assistance Handbook, Attachment "A" to Exhibit 1, Motion to Dismiss. On October 6, 1997, the Leons reapplied for Medicaid, and on November 21, 1997 their application was again denied. See Joint Pretrial Order at 9; Cleveland Affidavit at 2; Final Decision and Order (March 27, 1998), Attachment "C" to Exhibit 2, Motion to Dismiss. This second denial, like the first, resulted from the Leons having in their bank accounts more than the $2,000 maximum permitted for Medicaid eligibility. See id. The plaintiffs appealed this second ruling on December 12, 1997, and after a hearing on January 5, 1998, a DHS hearing officer sustained the agency's determination of the Leons' ineligibility. See id.
On July 12, 1999, the plaintiffs filed their complaint in this case, asserting claims against both Parkland and the DHS. See Complaint at 1. The Leons allege that Parkland has failed and refused, and continues to fail and refuse, to comply with the community services assurance obligations under the Hill-Burton Act and its implementing regulations. See id. ¶ 22. In particular, the plaintiffs complain that Parkland has made no meaningful efforts to notify patients of the Medicaid benefits to which they may be entitled, and to provide language-specific assistance in the timely processing of Medicaid applications. See id. The plaintiffs seek injunctive relief, both to "correct" Parkland's alleged past acts and omissions, and also to prevent "future . . . billing actions by Parkland" and future failures to assist patients in completing their Medicaid eligibility paperwork. See id. ¶ 23. On November 30, 1999, Parkland filed its answer, along with a counterclaim against the plaintiffs. See Defendant's Answer and Counterclaim at 1. Through its counterclaim, Parkland seeks to recover the unpaid balance of the Leons' $17,040 promissory note. See id. at 5.
The plaintiffs contend that the DHS has violated numerous provisions of the Medicaid Act and the regulations promulgated thereunder. First, the plaintiffs allege that the DHS failed and refused, and continues to fail and refuse, to comply with the Medicaid Act's requirements to provide proactive outreach, application, and written eligibility notices. See id. ¶ 24. Second, the plaintiffs maintain that the DHS has failed and refused, and continues to fail and refuse, to implement a proper Medicaid administrative evidentiary hearing process. See id. ¶ 26. Specifically, the Leons aver, among other things, that the current DHS hearings are deficient in that they are not de novo or evidentiary in nature, and in that the current hearing process allows for ex parte contacts between DHS supervisors and hearing officers. See id. Finally, the plaintiffs complain that the DHS has failed and refused, and continues to fail and refuse, to apply the law of "equitable estoppel" against DHS employees, some of whom allegedly provided erroneous oral information to the plaintiffs in the past. See id. ¶ 28. The plaintiffs maintain that they are entitled to injunctive relief to "correct" the DHS's alleged past acts and omissions and to prevent such acts and omissions in the future. See id. ¶¶ 25, 27, 29. Liberally construed, the plaintiffs' complaint against the DHS makes factual allegations to support a 42 U.S.C. § 1983 cause of action alleging the deprivation of rights guaranteed them under the United States Constitution and under the Medicaid Act and its implementing regulations.
The complaint does not specify the nature of the "application" that the DHS was allegedly obligated — but failed — to provide.
II. ANALYSIS The Standing Requirement
Article III of United States Constitution limits federal courts' jurisdiction to "cases" and "controversies." U.S. Const. Art. Ill § 2. Standing — i.e., the need to show that the plaintiff has a direct, personal stake in the outcome of the suit — is an "essential and unchanging part" of this case-or-controversy requirement. Lujan v. Defenders of Wildlife, 504 U.S. 555, 560 (1992). "The federal courts are under an independent obligation to examine their own jurisdiction, and standing is perhaps the most important of [the jurisdictional] doctrines.'" United States v. Hays, 515 U.S. 737, 742 (1995) (quoting FW/PBS, Inc. v. Dallas, 493 U.S. 215, 230-31 (1990)) (internal quotation marks omitted); see also Summers Drug Stores Company Employee Profit Sharing Trust v. Corrigan, 883 F.2d 345, 348 (5th Cir. 1989) ("`Standing, since it goes to the very power of the court to act, must exist at all stages of the proceeding, and not merely when the action is initiated or during an initial appeal.'") (quoting Safir v. Dole, 718 F.2d 475, 481 (D.C. Cir. 1983), cert. denied, 467 U.S. 1206 (1984)); University of South Alabama v. American Tobacco Company, 168 F.3d 405, 410 (11th Cir. 1999) (noting that "it is well settled that a federal court is obligated to inquire into subject matter jurisdiction sua sponte whenever it may be lacking."). As the Supreme Court explained in Lujan, the "irreducible constitutional minimum of standing" has three elements:
First, the plaintiff[s] must have suffered an "injury in fact" — an invasion of a legally protected interest which is (a) concrete and particularized, and (b) "actual or imminent, not `conjectural' or `hypothetical.'" Second, there must be a causal connection between the injury and the conduct complained of — the injury has to be "fairly . . . trace[able] to the challenged action of the defendant, and not . . . th[e] result [of] the independent action of some third party not before the court." Third, it must be "likely," as opposed to merely "speculative," that the injury will be "redressed by a favorable decision."504 U.S. at 560 (internal citations and footnote omitted).
Lack of standing is a defect in subject matter jurisdiction. See Haase v. Sessions, 835 F.2d 902, 906 (D.C. Cir. 1987) (citing Bender v. Williamsport Area School District, 475 U.S. 534, 541 (1986)); see also Corrigan, 883 F.2d at 348 ("standing is essential to the exercise of jurisdiction, and . . . lack of standing can be raised at any time by a party or by the court.") (citing United States v. One 18th Century Colombian Monstrance, 797 F.2d 1370, 1374 (5th Cir. 1986), cert. denied, 481 U.S. 1014 (1987)).
Federal district courts have the unique power to make factual findings which are decisive of subject matter jurisdiction. See Williamson v. Tucker, 645 F.2d 404, 413 (5th Cir.) (citing, among other authorities, Land v. Dollar, 330 U.S. 731, 735 n. 4 (1947)), cert. denied, 454 U.S. 897 (1981). The district court has the power to dismiss for lack of subject matter jurisdiction — and thus for lack of standing — on any one of three separate bases: "(1) the complaint alone; (2) the complaint supplemented by undisputed facts evidenced in the record; or (3) the complaint supplemented by undisputed facts plus the court's resolution of disputed facts." Williamson, 645 F.2d at 413; Robinson v. TCI/US West Communications Inc., 117 F.3d 900, 904 (5th Cir. 1997); see also Haase, 835 F.2d at 907 (noting that, to the extent the assessment of a plaintiff's standing turns on factual evidence, a court may consider all matters developed in the record at the time of its decision). Consistent with Williamson's teaching, the following analysis of the plaintiffs' standing is based upon the court's examination of the complaint supplemented by undisputed record evidence.
1. Injury in Fact
The 29-paragraph complaint in the instant case refers only once to "injuries suffered" by the plaintiffs, allegedly as a result of their having utilized the Medicaid administrative appeal process. The complaint does not, however, specify what the plaintiffs' alleged injuries were. Complaint ¶ 19. A careful review of the complaint reveals that the only "concrete and particularized" injury, in the language of Lujan, 504 U.S. at 560, conceivably suffered by the plaintiffs was the DHS's denial of their two Medicaid applications. See Complaint ¶¶ 17-19. As noted previously, the complaint alleges numerous additional "failures" on the defendants' part, ranging from Parkland's non-compliance with the Hill-Burton Act's community services assurances to the DHS's failure to provide written Medicaid eligibility notices and to administer a proper administrative hearing process for appeals of Medicaid denials. See Complaint ¶¶ 22, 24, 26. Even if it be assumed that these alleged failures constituted "invasion[s] of . . . legally protected interest[s]," Lujan, 504 U.S. at 560, these invasions are insufficiently concrete and particularized to satisfy the "injury in fact" requirement of standing. See Arizonans for Official English v. Arizona, 520 U.S. 43, 64 (1997) ("An interest shared generally with the public at large in the proper application of the Constitution and laws will not do.") (citation omitted). The court finds, therefore, that the sole injury suffered by the plaintiffs was the DHS's denial in 1997 and 1998 of their applications for Medicaid benefits.
The Supreme Court stated in Lujan v. Defenders of Wildlife that, by "particularized," it meant that "the injury must affect the plaintiff in a personal and individual way." 504 U.S. 555, 560 n. 1 (1992)
2. Traceability
The injury allegedly suffered by the plaintiffs does not satisfy the requirements of standing, because there is no "causal connection between [this] injury and the conduct complained of — the injury has to be fairly . . . trace [able] to the challenged action of the defendant." Lujan, 504 U.S. at 560 (citations omitted). Parkland's alleged non-compliance with the Hill-Burton Act and its implementing regulations, see Complaint ¶ 22, could not have caused the injury of which the plaintiffs complain. Even if the court takes as given the facts alleged by the plaintiffs, viz., that Parkland made no "meaningful efforts" to notify them of the Medicaid benefits to which they were entitled, or to provide language-specific assistance in the processing of their Medicaid application, id., this omission did not prevent the plaintiffs from filing their Medicaid application in Tyler, Texas. See Complaint ¶ 16; Joint Pretrial Order at 9. In fact, the Leons twice submitted an application, and on both occasions, the applications were reviewed and denied on the merits by officials at the DHS office in Tyler. See Joint Pretrial Order at 9. The plaintiffs allege that, had Parkland's business office processed their Medicaid application immediately upon Mr. Lyons' admission to the hospital, the plaintiffs' alleged injuries— i.e., the denial of their Medicaid claim — would not have occurred. See Complaint ¶ 11. The record in this case contains no evidence supporting this allegation, however; all the evidence is to the contrary.Nor could any of the failures imputed to the DHS have caused the plaintiffs' injury. As noted earlier, the complaint alleges that the DHS violated numerous provisions of the Medicaid Act and its implementing regulations. See Complaint ¶¶ 24-29. According to the plaintiffs, the DHS has failed and refused to: (1) comply with the Medicaid Act's requirements to provide proactive outreach, application, and written eligibility notices; (2) implement a Medicaid administrative evidentiary hearing process which prohibits ex parte communications between DHS supervisors and administrative hearing officers, and which provides for de novo review of Medicaid application denials; and (3) equitably estop DHS employees from providing erroneous oral information. See Complaint ¶¶ 24-29.
It is undisputed that the Leons' Medicaid application was denied because, at the time Mr. Leon incurred his medical expenses, the plaintiffs simply had too many financial resources to qualify for Medicaid benefits. See Joint Pretrial Order at 9. Even if the court assumes that the DHS violated the Medicaid Act and regulations, in the manner alleged in the complaint, these violations obviously did not cause the plaintiffs' injury. Indeed, the complaint does not even challenge the validity of the DHS's finding that the Leons were ineligible for Medicaid. Instead, the complaint vaguely hints that a confluence of statutory and regulatory violations by the DHS and Parkland led, in some unspecified way, to the DHS's denial of the Leons' Medicaid application. This dubious reasoning falls far short of satisfying the traceability requirement of standing.
3. Redressability
The denial of the Leons' Medicaid application would not be redressed by the relief sought in their pleadings. In fact, it is difficult to discern any clear relationship between the relief sought and the injury allegedly sustained. The plaintiffs' injury was limited to the DHS's denial of their Medicaid applications, yet they seek through this lawsuit broad-ranging injunctive relief aimed at substantially revamping the Medicaid-related operations of two vast public agencies. Even were the court to grant such sweeping injunctive relief, however, there is no evidence in the record that it would redress the financial injury suffered by the plaintiffs when their applications for Medicaid benefits were denied on the merits.
Accordingly, the court concludes that no case or controversy exists in this action, because the plaintiffs lack standing to pursue the claims asserted against Parkland and the DHS. On the court's own motion, the plaintiffs' claims are therefore dismissed.
Parkland's State Law Counterclaim
Federal court jurisdiction exists over an entire action, including state law claims, when the federal and state law claims "`derive from a common nucleus of operative fact' and are `such that [a plaintiff] would ordinarily be expected to try them all in one judicial proceeding.'" Carnegie-Mellon University v. Cohill, 484 U.S. 343, 349 (1988) (quoting United Mine Workers of America v. Gibbs, 383 U.S. 715, 725 (1966)). Yet supplemental jurisdiction is a "doctrine of discretion, not of plaintiff's right." Gibbs, 383 U.S. at 726. Consequently, "a federal court should consider and weigh in each case, and at every stage of the litigation, the values of judicial economy, convenience, fairness, and comity in order to decide whether to exercise jurisdiction over a case brought in that court involving pendent state-law claims." Carnegie-Mellon, 484 U.S. at 350.
When the federal claims are dismissed before trial and only state law claims remain, the balance of factors to be considered under the supplemental jurisdiction doctrine weigh heavily in favor declining jurisdiction; therefore, the federal court should usually decline the exercise of jurisdiction over the remaining claims and remand the case to state court. Id. at n. 7. According to the Fifth Circuit, "[o]ur general rule is to dismiss state claims when the federal claims to which they are pendent are dismissed." Parker Parsley Petroleum Co. v. Dresser Industries, 972 F.2d 580, 585 (5th Cir. 1992) (citing Wong v. Stripling, 881 F.2d 200, 204 (5th Cir. 1989)).
In the present case, the federal claims have been eliminated and only Parkland's state law counterclaim remains. Because the federal claims were dismissed before trial, the factors of judicial economy, convenience, fairness, and comity suggest that this court ought to decline jurisdiction over the remaining state law claim. See 28 U.S.C. § 1367(c)(3). Accordingly, Parkland's counterclaim is dismissed without prejudice.
III. CONCLUSION
For the reasons set forth above, the plaintiffs' claims against Parkland and the DHS are DISMISSED, sua sponte, for lack of standing. Parkland's motion to dismiss and the DHS's motion for summary judgment on the plaintiffs' claims are denied as moot. Parkland's counterclaim against the plaintiffs is DISMISSED without prejudice to its being refiled in state court, and Parkland's motion for summary judgment on its counterclaim is denied as moot.
SO ORDERED.