# Amicus Curiae Brief — Whitburn v. Addis

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URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386018_1062%3A3

## Record

- **Collection:** Supreme Court brief
- **Document type:** Amicus Curiae Brief
- **Published:** January 1, 1999
- **Citation:** 525 U.S. 1176

## Text

Jn the Supreme Court of the Gnited States

GERALD WHITBURN, SECRETARY,
WISCONSIN DEPARTMENT OF HEALTH AND FAMIL"
SERVICES, ET AL., PETITIONERS

PATRICK ADDIS, ET AL.

ON PETITION FOR A WRIT OF CERTIORARI
TO THE UNITED STATES COURT OF APPEA
FOR THE SEVENTH CIRCI

BRIEF FOR THE UNITED STATES
AS AMICUS CURIAE

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No. 98-1041 wit

QUESTION PRESENTED

Whether Wisconsin’s method of determining benefit
eligibility and need levels for a class of Medicaid
applicants is consistent with the requirement of
42 U.S.C. 1896a(a)(17)(D) that such methods not “take
into account the financial responsibility” for the appli-
cant of any other person except a parent or spouse.

TABLE OF CONTENTS

Page
ERIE TE SEALS OE RO Fe NIM ORT eB SOR rt Re l
RUNNIN Seirecsackkchecitce Lacs cdnsticsibiie tebihi anc buck. cchcdicltta sic: 8
RARE IRI Ay SEN anda Nb OED OE GT EE OS 19
TABLE OF AUTHORITIES
Cases:
Atkins v. Rivera, 477 U. S. ME ERIUEY Siusciciccnadiccasinacs 2.17
Bowen y. Gilliard, 483 U.S. 587 (1987) ..........000000.. 5, 9
Chevron USA. Ine. Metaiel Resources Defense
Council, Inc., 467 u s. SPE CE UIUD ins srecekidcachovaindsaie 17
Georgia Dep't of Med. Assistance v. Bowen, 846
We Pe AUN RN SO oe 9
Malloy v. Eichler, 860 F.2d 1179 (3d Cir.
og EBT EE BELL IEE SLED OC EE 9
Saenz v. Roe, No. 98-97 RM Bes AMEE cisco cdeviseteicks 4
Schweiker v. Gray Panthers, 453 U.S. 3
EMRE akeiineccduicccdelccacsts i dcbpbuncs demdabaiuh ulesbieinaeckchdackcssis 17
Sneede v. Coye, 856 F. Supp. 526 (N.D. Cal
NE ated pecs inde piithsrenpsschibseosaliia knicks eo hk S 1]
Sneede v. Kizer:
728 F. Supp. ae Giekts Se ROOD cock es 1]
No. C89-1932-THE, 1990 WL 155532 (N.D. Cal.
May 3 & June 8, 1990), aff'd mem., 951 F. 2d 360
and 362 (9th Cir. 1990), cert. denied. 506 U.S
RSLS EIGS SRR otal aera eae saat 11, 12. 15
No. 90-15141, 1991 WL 26880 (9th C ir. Dec. 13,
1991), cert. denied, 506 U.S. 939 (19: 2) siailall alin 12, 16. 17
Wilder vy. Virginia Hosp. Ass'n, 496 U.S. 498
Se SER gas 70, SBE SEEN RESET es OD 2
Your Home Visiting Nurse Servs., Inc. v. Shalala.
Pe a et A a a eae ea” 17

(IIT)

— . ere aa cee

IV
Statutes, regulations and rule: Page
Personal Responsibility and Work Reconciliation
Act of 1996, Pub. L. No. 104-193, Tit. I, 110 Stat.
B51 ssssitainieiarctlicihchisimrensabenneatbiniiicetisians . 4
SS REGENTS, SE CE BEET ciiciacciicssatsetvccninsetesensatnincinniesinns 4
Social Security Act, 42 U.S.C. 301 et seq.:
Tit. IV, 42 U.S.C. 601:
Me Peas? SEI TD ccs senssciascinnsnscesiiobapionsnsidindmeniuisainenn 4
SE UE ac ROD viteratninsiatiensssnccirniinnteinisksicvicsesenenidi 4
GE ULTRA. SRO AD witesscsatbnsgincorntsenstishanainiiahsnhionab 4
SE aa. SOT wietininstccesinicernecinnintnibeninncineiied 4,9
Tit. XI, 42 U.S.C. 1301:
GD TR. SII) caccinsiesnsesssesinnsstiostcetpbintiucessnctenisia 2
Tit. XIX, 42 U.S.C. 1396 et seg. (Medicaid Act) .............. 1
Gat UL ZEA As. SAPONE semetinensedarsiatieaianacinlacsbsanibasesismiaaiaaniancii 1,2
42 U.S.C. 1396(a) (1994 & Supp. IIL 1997) oc 2
42 U.S.C, TERG AA TOM ANT) cccicessesccscsesssessscoonesscoseeess 4
42 U.S.C. 189Galay(LOA)IM(T) ....ccccscsssorsereressereeevsesees 2
42 U.S.C. 189Ga(a)(LO)(A)G)(TT) .....ccsccsscsvsscesssnsesecesees 2
42 U.S.C. 1396a(a)(LO)A) GID) ...cscccseecescssessseneesesenes 3
42 U.S.C. 139Ga(a)(LOMA) TV) .......ccscsessessssesveeseesees 3
42 U.S.C. 189Gala OAD) .......cceccessssssssssessscsessnesenes 3,4
42 U.S.C. 1896a(a)(1O)(C)G)(TIT) «0... seccccsecseenscssesseees 4
ME CAD. SIRF sciiwitescicscnsiseshnsnssncsasncaningstlibeasic 2,14
4S UC: TEED) Voi ssctsssrcscscnsiscncvsesinasvccictannens 2,17
SE UA. : SERRA ETI nsscistevscsiniecsiesnctinenctivios passim
42 UGA, : TEGGREI TA Ss) cisnscstnsciirensernsivistimbpmintoanntenes 4,9
42 U.S.C. 1396(b) (1994 & Supp. ITI 1997) .............. 2
SE UTA. TION ctrvsistadicasiacsbiesdisthidakciicninidaiierscus 4
GE UG, “GEIR DD). sacstipchracintabeaicioentscraeesnsoncsinics 4
BE AR Sr eerdihicinicheninceeestcdeiesbotbesnsidosanianate 4
42 U.S.C. 1896u-1(a) (Supp. IIT 1997) wo. eeceeseeees 4
42 U.S.C. 1396u-1(b) (Supp. IIT 1997) ........cccsecseesee 4
Tit. XXI, 42 U.S.C, 1397aa et seq.:
42 U.S.C. 1397aa(a) (Supp. ITT 1997) ......cecsecsecseesseees 18
42 U.S.C. 1397bb(3)(A)-(B) (Supp. IIT 1997) ............. 18
42 U.S.C. 1397dd(d) (Supp. LIT 1997) .....ccceccecsecsecseeees 18
42 U.S.C. 1397jj(b) (Supp. LIT 1997) .........cccssssesessesseees 18
Wis. Stat. Ann. § 49.47(4)(¢c)(2) (West Supp. 1998) .......... 5

V

Regulations and rule—Continued: Page
42 C.F.R.:
2 eae Weer sea eR cin veer nner 4
CE C1, AR A RAAT aS A CI hie BN Moe Rhee 4
en 2
OUI I i Ok 12
EO S| AREER EES aetna harks Aisa EOE m/e ae aR: 12
NIE MEIIIUIE cane cdeceuekcchsededdsusnonslelKadelacdsnighatinesna 12
ME St OIE ics os se tnalediansaibobunasindonscomnsai cagacklociioa 12

Miscellaneous:

54 Fed. Reg. (1989):

SSUES dss bcdsuhenve kn sdescspiqeakevaneeusanbicenssteineens 10
Ns SE NEED Sidicinvidiseicisssecoschicumumapacchicdvbareiesasind 10, 16
hy RAE Gaia Da dbah csr airings iiscigecleniinyccueiniatecemusbecinaias 16
58 Fed. Reg. (1993):
Fie; SUPPUN deaabanstiei chaus sbibdvebasuseibiantccestarechackasdvacedesics koe 12
SRD MIPNNIRIEE “dvs cos sunsevanvasccussdqdnandsvaacdenscsbuuierthacsized 3
Di SPE Sasetdeaicknrakscicsus satiiecedsudantidceissasagstace ciediocaunees 3
Nh, MER DEE, siwissusuhaesvascea cinbanaheeskaakcaccintasoucseerny cla 12
BD GURID niles ba vitndcnandeusiviiausaivan tecgksnakesedeaaeincdiooniias 11, 18, 16 -
ihe MITE blioeeavokaackiascsececdaniasascsniadsacitecsansbtinnies 12
Oh, GIN Si dccligcavanabavourhaniacmvds teadiashdkebitvebcedie ti skejaneabouie 10, 13
el EMMMNED | Scions iahenbousnvenpaauseuiacnebaaeeccalenonmemaualonin 12
59 Fed. Reg. (1994):
Ps: GARAPEPR. Son apiscensvskavins Adntsianpouabvediacddbedabaieioasecdbencadeass 10, 13

BD, SERAMEE:- nig ssibihss abdenscidnnsbad aus siocanibinesuamearenenl seucneeias 3,18

Jn the Supreme Court of the Gnited States

No. 98-1041

GERALD WHITBURN, SECRETARY,
WISCONSIN DEPARTMENT OF HEALTH AND FAMILY
SERVICES, ET AL., PETITIONERS

Vv.

PATRICK ADDIS, ET AL.

ON PETITION FOR A WRIT OF CERTIORARI
TO THE UNITED STATES COURT OF APPEALS
FOR THE SEVENTH CIRCUIT

BRIEF FOR THE UNITED STATES
AS AMICUS CURIAE

This brief is submitted in response to the Court’s
order inviting the Solicitor General to express the
views of the United States.

STATEMENT

1. The Medicaid Act, 42 U.S.C. 1396 et seg., estab-
lishes a cooperative program under which the federal
government provides matching funds to assist partici-
pating States in providing, among other things, medical
assistance for families with dependent children “whose
income and resources are insufficient to meet the costs
of necessary medical services.” 42 U.S.C. 1396. The
Act is administered at the federal level by the Secre-
tary of Health and Human Services, who disburses

matching funds to States with approved plans for
providing medical assistance. See generally 42 U.S.C.
1301(a)(6), 1302(a), 1396, 1396b (1994 & Supp. IIT 1997).
Although participation in the program is voluntary, and
state plans may vary considerably in detail,
participating States must comply with a number of
requirements imposed by the Act and the Secretary’s
regulations. See 42 U.S.C. 1396a (1994 & Supp. III
1997); Wilder v. Virginia Hosp. Ass’n, 496 U.S. 498, 502
(1990); Atkins v. Rivera, 477 U.S. 154, 157 (1986).

The Act requires state Medicaid plans to include
“reasonable standards * * * for determining
eligibility for and the extent of medical assistance under
the plan.” 42 U.S.C. 1396a(a)(17). Those standards
must “provide for taking into account only such income
and resources as are * * * available to the applicant
or recipient,” and must not “take into account the
financial responsibility of any individual for any appli-
cant or recipient of assistance * * * unless such
applicant or recipient is such individual’s spouse or
* * * [minor] child.” 42 U.S.C. 1396a(a)(17)(B) and
(D). The Act thus precludes participating States from
assuming, either for purposes of ascertaining threshold
eligibility or for purposes of setting benefit levels, that
anyone other than a spouse or parent is contributing
financially to the support of an applicant for Medicaid
benefits. See also 42 C.F.R. 435.602(a)(1).

2. Some people become eligible for Medicaid benefits
automatically after they qualify for benefits under
another federal or federally supported program, such as
Supplemental Security Income. See 42 U.S.C.
1396a(a)(10)(A)G)()-(d1D. Other forms of eligibility
depend on an assessment of the applicant’s financial
need, measured against standards prescribed by the
States under general rules set by the Medicaid Act and

3

other federal law. See 42 U.S.C. 1396a(a)(10)(A)(i)(IID-
(VIT) and (a)(10)(A)(ii), 1896d(a); see also Pet. App. A5-
A6; 58 Fed. Reg. 4908-4909, 4915 (1993). In performing
such assessments for purposes of its Medicaid plan,
Wisconsin first determines the income and assets that
are deemed to be available to the applicant under plan
rules, and then compares those amounts to applicable
standards of need. See Pet. App. A7-A8, A23-A24.

In the first step of the process (determining income
and assets), the State takes into account only the
applicant’s own income, plus a share of the income of
any financially responsible spouse or parent.' The
share of a spouse or parent’s income to be allocated to
the applicant is determined by dividing that income by
the total number of people for whom the spouse or
parent is financially responsible, including himself or
herself. If, for example, the applicant is a child living
with both parents and one sibling, any income that the
sibling may have (from, for instance, disability benefits
or child support payments) will be ignored, in compli-
ance with 42 U.S.C. 1396a(a)(17)(D). The sibling’s
presence in the household will be taken into account,
however, in attributing the parents’ income, because
each parent is recognized as financially responsible both
for the other parent and for both children. Thus, if one
parent earns $600 each month and the other $400, one-
fourth of each amount will be attributed to each
member of the household. If the applicant child has no
independent income, his or her income for Medicaid
eligibility purposes will be $250. Respondents do not

' Although the Act requires assessment of both income and
assets, in the interest of simplicity we focus on the determination
of income for purposes of this brief.

4

challenge this aspect of Wisconsin’s procedure. See Br.
in Opp. 3.

Having determined the income attributable to a
Medicaid applicant, the State next compares that in-
come to an applicable standard of need. In many cir-
cumstances, including those relevant here, the Act
requires the State, subject to the important exception
assertedly applicable in this case, to use need standards
(as well as methods of determining income) based on
those it used under the former program of Aid to
Families with Dependent Childrén (AFDC). See 42
U.S.C. 1896a(a)(10)(A)(i)-Gi), (C\MCUID and (/)(3)(E)
(1994 & Supp. III 1997), 1396b(f) (1994 & Supp. III
1997), 1896u-1(a) and (b) (Supp. III 1997); 42 C.F.R.
435.601(a) and (b).2. The Medicaid standards, like those
under AFDC, generally treat each family as a unit, and
vary according to family size. See generally, e.g., 42
U.S.C. 602(a)7)-(8), (31) and (38) (1994) (repealed); see
also 42 U.S.C. 1396b(f)(1)(B) and (f)(8). Those stan-
dards are, moreover, established on the premise that
there are economies inherent in group living, so that,

* The AFDC program was replaced in 1996 by a new program,
Temporary Assistance for Needy Families. Personal Responsi-
bility and Work Opportunity Reconciliation Act of 1996
(PRWORA), Pub. L. No. 104-193, Tit. I, 110 Stat. 2110 (enacting
provisions codified at 42 U.S.C. 601 et seg. (Supp. III 1997)); see
Saenz v. Roe, No. 98-97 (May 17, 1999), slip op. 4. PRWORA
simultaneously amended the Medicaid Act, however, to provide
that, subject to qualifications not at issue here, statutory and other
references in or under the Medicaid Act, including those involving
“income and resource standards and income and resource
methodologies,” continue to refer to the former AFDC provisions
and the various state plans implemented under them, “as in effect
as of July 16, 1996, with respect to [each] State.” 42 U.S.C. 1396u-
l(a) (Supp. III 1997), enacted by PRWORA § 11.(a)(2), 110 Stat.
2177.

5

for example, the need standard for a family of two is
less than twice the standard for a family of one, and
one-third the standard for a family of three is less than
one-half the standard for a family of two. See Pet. App.
A831, A33; compare Bowen v. Gilliard, 483 U.S. 587, 599
(1987).

To make need determinations for individual Medicaid
applicants, Wisconsin compares the individual income
levels it has calculated for the applicant to an individual
need standard that it computes by prorating the need
standard for a family the size of the applicant’s entire
family (limited to those family members who live to-
gether in the same household), including family mem-
bers whose incomes were not counted in determining
the income and resources attributable to the applicant.
Thus, in the example given above, the State would use
the need standard for a family of four, even though no
income belonging to the applicant’s sibling was included
in computing the applicant’s income. If the State set its
need standard for a family of four at $360, the individual
need standard would be $90, and the child in the
example would not be eligible for Medicaid assistance,
because his or her income was determined to be $250
for Medicaid purposes.’

3. Petitioners are the Secretary of the Wisconsin
Department of Health and Family Services and other
state officials responsible for the administration of Wis-
consin’s Medicaid program. Respondents sued petition-
ers in federal district court, purporting to represent

3 In some cases, the child would become eligible if an amount
equal to the excess of attributed income ($250) over individual
need ($90) had been spent on medical care, health insurance, or
certain other allowable expenses. See Pet. App. A24; Wis. Stat.
Ann. § 49.47(4)(c)(2) (West Supp. 1998).

6

(among others) a class of actual or potential Medicaid
beneficiaries. Respondents sought declaratory and in-
junctive relief on the ground that Wisconsin’s method
of computing applicable individual need standards takes
into account the financial responsibility for the ap-
plicant of family members other than the appli-
cant’s spouse or parents, in violation of 42 U.S.C.
1396a(a)(17)(D).’

The district court rejected respondents’ challenge to
the State’s method of calculating need. Pet. App. A19-
A37. After reviewing the law governing the federal
and state programs (id. at Al19-A25), the court noted
that responsibility for the operation of Medicaid
programs is committed largely to the States, and that
the state methodology at issue is one that the Secretary
once proposed to mandate through federal regulations
(id. at A26-A27). The court then rejected any general
challenge to the State’s method of calculating income on
the basis of proration within units consisting of an
applicant and his or her spouse and parents, holding
that the State’s procedure reflects a reasonable imple-
mentation of applicable federal rules. Jd. at A28-A30.
The court also rejected respondents’ specific claim that
the use of need standards based on the total number of
family members living in the household, including
members whose income may not be counted as available

* Respondents also challenged the State’s rules for determining
the satisfaction of Medicaid “deductible[s],” and its rules for
determining Medicaid eligibility when a disabled individual applies
for benefits both for himself or herself and for a child or children in
his or her care. See Pet. App. A8; Br. in Opp. 3. The court of ap-
peals struck down the deductible rules (Pet. App. A16), but
sustained the State’s treatment of applications by disabled
caretakers (id. at Al6-A18). Neither of those rulings has been
challenged in this Court. See Pet. 3.

7

to the applicant under Section 1396a(a)(17)(D), violates
that Section. Observing that the provision in question
prohibits taking into account “the financial
responsibility” for the applicant of any individual other
than a parent or spouse (id. at A31), the court reasoned
that “[t]he assumption that an individual’s need is less
because he lives in a household with multiple members
is not the equivalent” of deeming every member’s
income to be available to the applicant, but rather
merely “reflects a common-sense judgment that living
expenses are higher for individuals maintaining their
own independent households than they are for
individuals sharing accommodations.” Id. at Ad32; see
id. at A32-A33. The court accordingly granted
petitioners’ motion to dismiss respondents’ complaint.
Id. at A37.

The court of appeals reversed in relevant part. Pet.
App. A1-A18. The court agreed with respondents that
the State’s use of a need standard based on total family
size, by “assum[ing] that the applicant’s need is less
because of the presence of non-legally responsible
persons in the household,” has “the same effect as
deeming the income of those nonlegally responsible
relatives to [be available to] the applicant,” and on that
basis the court held that that approach to assessing
need violates Section 1396a(a)(17)(D). Jd. at Al1-A12.
Noting that “it is the need standard employe by the
state that ultimately will determine both the applicant’s
eligibility for medical assistance * * * [and] the
amount of benefits that will be available,” the court
observed that “when a state assumes that an appli-
eant’s living expenses are less based solely upon the
presence of non-legally responsible persons in the
household, thereby reducing the applicant’s level of
need,” it “necessarily is assuming that those persons

8

will be contributing to the applicant’s living expenses.”
Id, at A138.

The court rejected the argument that Wisconsin’s
procedure merely takes account of “economies of scale.”
Pet. App. Al3. It reasoned that any computation of
need “premised on the assumption that contributions
from members of the household [who] are not finan-
cially responsible for the applicant are nonetheless
actually benefitting the applicant by reducing the
amount of income/resources that applicant needs for
non-medical essentials” amounts, in effect, to “the
taking into account of the ‘financial responsibility’ of
that non-responsible individual.” /bid. A13. The court
concluded:

[Bly prorating the applicant’s need based upon the
need standard for the applicant’s entire family
group, including individuals * * * who are not
legally responsible for the applicant, Wisconsin is
violating subsection (17)(D) in that it is implicitly
considering the financial responsibility for the
applicant of a non-legally responsible person in the
household.

Id, at Al5-A16. The court of appeals accordingly re-
versed the district court’s dismissal of respondents’
complaint, and remanded the case to that court for
further proceedings. /d. at A18.

DISCUSSION

The court of appeals in this case adopted one plausi-
ble interpretation of the relevant provisions of the
Medicaid Act. While the alternative construction ad-
vanced by petitioner is not unreasonable, it has not
been adopted by any court of appeals, and previous
federal regulations based on that construction were

f\

9

withdrawn before they became effective. In the
absence of any conflict on the issue among the courts of
appeals, or between the courts and the Secretary, the
decision below does not warrant review by this Court.

1. As we have explained (see pp. 2-5, supra), some
individuals or families are eligible for Medicaid benefits
only if their income and assets fall below threshold
amounts. In many cases the Medicaid Act requires,
subject to the important exception at issue in this case,
that each State determine Medicaid eligibility using the
methods for determining income, and the threshold
need standards, that the State used for purposes of the
former AFDC program. See p. 4 & note 2, supra.

The statutory question presented in this case arises
because, beginning in 1984, Congress required that
computations of income and need for AFDC purposes
be made on a combined basis for defined family groups
—including, for example, all eligible siblings living in
the same household. See 42 U.S.C. 602(a)(38) (1994)
(repealed); Bowen v. Gilliard, 483 U.S. 587, 592-594
(1987). A number of courts thereafter held, however,
that States could not apply the new AFDC grouping
requirements in assessing income for purposes of
Medicaid eligibility, if doing so would—as in the case of
siblings—violate the proscription in 42 U.S.C.
1396a(a)(17)(D) against “takling] into account the
financial responsibility of any individual [other than a
spouse or parent] for any applicant or recipient of
[Medicaid] assistance.” See, e.g., Malloy v. Eichler, 860
F.2d 1179, 1182 (8d Cir. 1988); Georgia Dep’t of Med.
Assistance v. Bowen, 846 F.2d 708, 710 (11th Cir. 1988):
see also 42 U.S.C. 1396a(/)(3)(E) (providing that, for
certain groups of Medicaid applicants, family income
“shall be determined” using the State’s AFDC meth-
odology, “except to the extent such methodology is

10

inconsistent with clause (D) of subsection (a)(17)”).
Those decisions, in which the Secretary ultimately
acquiesced, left state Medicaid administrators without
definitive guidance concerning what modifications to
AFDC income-determination and need-determination
methods were required or permitted before those
methods were used for determining eligibility for
Medicaid. See 59 Fed. Reg. 43,051 (1994) (describing
issue); 54 Fed. Reg. 39,427-39,428 (1989) (same); see also
58 Fed. Reg. 4924 (1993) (“States only know that they
cannot use AFDC standard filing unit policy, but do not
know what to use instead.”).

The Secretary initially sought to address that uncer-
tainty in commentary accompanying the pubiication, in
1989, of proposed regulations specifically addressing a
number of other issues under the Act. 54 Fed. Reg. at
39,426-39,428. The commentary identified and dis-
cussed the issue, and proposed the adoption of a
nationwide policy: No one but a spouse or parent would
be automatically grouped with a Medicaid applicant for
purposes of determining eligibility, but all family mem-
bers in a household who applied for Medicaid benefits
would be treated as a single group under the AFDC
rules. /bid. The commentary specifically noted, how-
ever, that there were other possib!2 approaches, and
the Secretary invited comments from all interested
parties concerning how best to reconcile the Act’s
requirements that States make eligibility determina-
tions based on AFDC standards, but at the same time
attribute financial responsibility only to parents and
spouses. /d, at 39,428.

The Secretary’s invitation drew a mixed response.
Some commenters supported the Secretary’s proposal,
while others argued that treating relatives other than
spouses and parents as part of one family unit would

1]

violate Section 1396a(a)(17)(D), even if the family were
allowed the option (not available under AFDC) of
excluding such relatives from the eligibility computa-
tions by not applying for Medicaid benefits on their
behalf. See 58 Fed. Reg. at 4916. That argument was
also made in litigation. In 1990, a federal district court
enjoined the State of California from enforcing eligibil-
ity rules that were consistent with the Secretary’s
initial proposal, and enjoined the Secretary from requir-
ing or permitting the use of such rules by any State
within the Ninth Circuit. Sneede v. Kizer, 728 F. Supp.
607 (N.D. Cal. 1990) (enjoining enforcement of
California rules); Sneede v. Kizer, No. C89-1932-TEH,
1990 WL 155532 (N.D. Cal. May 3, 1990) (certifying
circuit-wide class to challenge Secretary’s policy); see
Sneede v. Coye, 856 F. Supp. 526, 530 (N.D. Cal. 1994)
(noting that initial injunction was later extended to
cover federal defendants).

In attempting to frame a remedial decree responsive
to the district court’s initial decision in Sneede, the Sec-
retary joined California officials in proposing a revised
system for determining Medicaid eligibility in that case.
See Sneede v. Kizer, No. C89-1932-TEH, 1990 WL
155532 (N.D. Cal. June 8, 1990) (addressing dispute
over how to comply with initial decision), aff'd mem.,
951 F.2d 360 and 362 (9th Cir. 1990), cert. denied, 506
U.S. 939 (1992). Under that proposal, Medicaid appli-
cants’ income would have been computed on the basis of
family groups that included only children, parents, and
spouses whose financial responsibility for each other
could properly be taken into account under Section
1396a(a)(17)(D). The resources so determined would
then have been compared, however, to individual need
standards derived by ascertaining the size of the family
group that would have been used for AFDC purposes

12

(which would typically be larger than the special Medi-
caid family group), and then dividing the AFDC need
standard for a family of that size by the total number of
members in the AFDC group. See Sneede, 1990 WL
proposed by the Secretary in Sneede was thus essen-
tially thé same as the Wisconsin method at issue in this
case.

The district court in Sneede rejected the use of that
method, holding that Section 1896a(a)(17)(D) prohibits
taking the presence of a non-financially-responsible
member of a Medicaid applicant’s household into ac-
count in determining the applicable need standard, just
as it prohibits taking such a member’s income into
account in determining the financial resources available
to the applicant. Sneede, 1990 WL 155532, at *5-*7.
The Ninth Circuit affirmed that decision in an unpub-
lished (and hence non-precedential, see 9th Cir. R. 36.3)
opinion. Sneede v. Kizer, No. 90-15141, 1991 WL 268830
(9th Cir. Dee. 18, 1991) (decision noted at 951 F.2d 362
(Table)), cert. denied, 506 U.S, 939 (1992),

After further analysis, and in light of those develop-
ments, the Secretary ultimately abandoned the particu-
lar nationwide policy that had been proposed in the
1989 regulatory commentary. Instead, in early 1998,
the Secretary adopted, subject to public comment and a
deferred effective date, final regulations that would
have required States outside the Ninth Circuit (where
the Sneede injunction remained in effect) to adopt and
apply essentially the same methodology that had been
proposed (and rejected by the courts) in Sneede. See 58
Fed. Reg. at 4908, 4915-4917, 4923-4924, 4930-4931 (§§
435.602(d), 435.604 and 435.606). The commentary
accompanying publication of the new regulations rec-
ognized that the approach adopted “[might] not be

13

ideal,” but it characterized that approach as the
drafters’ “best attempt to harmonize the competing
demands of the various provisions of the Medicaid
statute|,] as interpreted by most of the courts|,| * * *
in a manner consistent with simplicity of administra-
tion.” 58 Fed. Reg. at 4916.

The 1993 regulations addressing this issue were
given a delayed effective date to allow an opportunity
for public comment, and that date was later extended
twice in order to allow for further review, See 58 Fed.
Reg. at 4916, 4924; 59 Fed. Reg. at 48,051. Describing
the comments she received on this issue, the Secretary
explained that, with one exception, the 13 States and
seven interest groups that submitted comments all
objected to the methodology the regulations would
require for determining eligibility, characterizing it as
“error prone,” “unnecessarily complex,” and likely to
result in “significant administrative costs.” 59 Fed.
Reg. at 43,051. A technical advisory group consulted
by the Secretary also expressed a preference for a
policy that would “minimize ] the disruption of current
approaches”; and advocates for benefit recipients “en-
dorse[d] allowing States a choice of several options, but
strongly oppose[d] allowing the budgeting method in
the * * * regulation to be one of [those] options.”
Ibid.

In light of those comments, the Secretary ultimately
decided not to include in her regulations any one federal
policy on how to adapt the rules and methods then
applicable under AFDC for purposes of determining
Medicaid eligibility. She instead withdrew the 1993
regulations on the issue, which had never become
effective, in favor of “allowing States flexibility, within
any constraints imposed by court orders or agreements
with recipient advocate groups, to interpret the current

14

provisions” of federal law. 59 Fed. Reg. at 48,052. As
the Secretary explained, “in the absence of specific
regulatory guidance on the methodologies for establish-
ing income and resource eligibility” for affected Medi-
caid applicants, the States would merely be “required
to use methodologies that comply with the statute and
any applicable court orders.” /bid.

2. The textual question ultimately at issue in this
case is a narrow and rather subtle one: Whether using
a need standard that takes account of certain economies
of scale that are generally involved in group living
amounts to “tak[ing] into account the financial respon-
sibility” of one household member for another, within
the meaning of Section 1896a(a)(17)(D). The court of
appeals adopted one permissible answer to that ques-
tion, holding that the use of such a standard does
violate Section 1396a(a)(17)(D).

Section 1396a(a)(17) governs the determination of
both “eligibility for and the extent of medical assis-
tance” under the Act. The reference to the “extent” of
assistance may be read to suggest that the prohibition
in clause (D) should apply not only to determining the
income attributable to an applicant, but also to deter-
minations that involve comparing that income to a need
standard, especially where that comparison establishes
an amount of medical or similar expenses the applicant
must incur before becoming eligible for Medicaid. See
note 3, supra. In addition, it is possible to read “finan-
cial responsibility” more broadly than did the district
court in this case (see id. at A31-A32), to encompass
“the assumption that contributions from members of
the household [who] are not financially responsible for
the applicant are nonetheless actually benefitting the
applicant by reducing the amount of income/resources
that [the] applicant needs [or that others, such as the

15

applicant’s parents, must expend on the applicant’s
behalf] for non-medical essentials.” Jd. at A13 (quoting
Sneede, 1990 WL 155532, at *6). There may also be a
question whether it is appropriate, as a policy matter,
to import into a medical assistance program, without
any modification, family-size-based need standards that
were designed to reflect the sort of “economies of scale”
that commonly apply to expenses such as housing,
utilities, and to some extent food.® Finally, the decision
below is consistent with the line of appellate cases
holding that Section 1396a(a)(17)(D) requires modifica-
tion of the family units used to determine an apphrant’s
income under AFDC, and with the decision of the only
other court of appeals to have addressed, albeit in a
non-precedential opinion, the precise question pre-
sented by this case. See Malloy, and cases there cited:
Sneede, 1991 WL 268830.

° In the context of a general economic assistance program it
makes sense to take account of the fact that a family of three may
not pay any more for housing or electricity, and not much more for
food, than a family of two. It is not, however, obvious that it will
generally cost a mother less to buy medical care for a second child,
simply because she already has to buy care for the first. Patients
do not typically realize significant “economies of scale” on expenses
for medical essentials such as doctor visits, vaccinations, or
eyeglasses. At the same time, the ascertainment of need under the
Medicaid program also takes account of family expenses other than
those for medical care, and for those expenses economies of scale
presumably are present. Thus, although it is true that the decision
below treats income and need determinations differently in limited
respects (see Pet. 7), it is also true that in the Medicaid context
there are at least some grounds on which it may be sensible to do
so. It is realistic to assume that a parent’s resources will be
stretched evenly over herself, her spouse, and all of her depen-
dents. It is not necessarily realistic to expect that all her financial
needs, or those of her children, can be as easily prorated.

16

That the decision below rests on a permissible inter-
pretation of Section 1396a(a)(17)(D) does not require
the contrary conclusion concerning the different inter-
pretation of that provision advanced by petitioner. As
the district court explained in this case, it is also possi-
ble to read the statutory phrase “financial responsibil-
ity” to refer to an obligation to contribute available in-
come or assets to the common good, without reference
to the distinct question of an applicant’s financial need.
Pet. App. A381-A82 (emphasis altered). Moreover, as
petitioner points out (Pet. 7), the court of appeals’
construction of Section 1896a(a)(17)(D) may result in
seeming inconsistencies between the required determi-
nations of income and need. Indeed, as we have des-
cribed, the Secretary previously advocated adoption of
an eligibility-determination method similar to Wiscon-
sin’s, both in the Sneede litigation and in the 1993
regulations. See also 54 Fed. Reg. at 39,427-39,428;
Sneede, 1991 WL 268830, at **2-**3 (describing
arguments advanced by the State and the Secretary in
that case).

The existence of reasonable textual and policy argu-
ments on both sides of the issue has consistently led the
Secretary to acknowledge that the question presented
in this case is a difficult one, to which there may be a

® All agree, for example, that if a single mother lives with her
three children, one-fourth of the mother’s income is properly
attributed to each child, even if the Medicaid application unit in
question excludes one of the children (perhaps because he has
independent income, which may not properly be attributed to his
siblings). Although the “excluded” child is therefore taken into ac-
count in ascertaining the income deemed available to the applica-
tion unit, under the decision below the existence of the same child
must be ignored when it comes to ascertaining the unit’s financial
need.

17

number of plausible answers. See 54 Fed. Reg. at
39,428 (noting existence of alternatives and soliciting
comments); 58 Fed. Reg. at 4916 (recognizing difficulty
of problem and characterizing new regulation as a “best
attempt”); see also Pet. App. A30-A33 (district court’s
opinion sustaining State’s position in this case); ef.
Sneede, 1991 WL 268830, at **4 (declining to award
attorneys’ fees because position advanced by State and
Secretary in that case “had a reasonable basis in law
and fact”). Such situations are not uncommon in the
administration of complex national benefit programs,
and are often resolved through the adoption, by federal
administrators, of a formal interpretation of the
relevant law. In this case, the Secretary could reasona-
bly have issued regulations adopting either petitioners’
or respondents’ construction of the Medicaid Act, and
that determination would have been not only permissi-
ble, but authoritative. See, e.g., Your Home Visiting
Nurse Servs., Inc. v. Shalala, 119 8. Ct. 930, 933-934
(1999); Atkins v. Rivera, 477 U.S. 154, 162 (1986);
Chevron U.S.A. Inc. v. Natural Resources Defense
Council, Inc., 467 U.S. 837, 844 (1984); Schweiker v.
Gray Panthers, 453 U.S. 34, 43-44 (1981).

In this unusual instance, however, the Secretary,
after thorough consideration, decided not to promulgate
regulations adopting any definitive interpretation of

* The Ninth Circuit was accordingly wrong to suggest, in its
memorandum opinion in Sneede, that the terms of the Medicaid
Act compelled the result it reached, regardless of the Secretary’s
construction of the Act. See 1991 WL 268830, at **2-**3: compare
Gray Panthers, 453 U.S. at 43 (“The Social Security Act is among
the most intricate ever drafted by Congress,” and Congress has
therefore “conferred on the Secretary exceptionally broad au-
thority to prescribe standards for applying certain sections of the
Act,” including 42 U.S.C. 1396a(a)(17)(B).).

18

the relevant statutory provisions or to impose any one
methodology on the States. She determined that it
would instead be preferable, under all the circum-
stances, to allow States participating in the Medicaid
program the greatest possible flexibility to apply those
provisions, in light of their own state plans, administra-
tive structures, resource constraints, and policy priori-
ties. See 59 Fed. Reg. at 48,052. In her announcement
of that determination, however, the Secretary made
clear that the resulting freedom to adopt different
methods for determining Medicaid eligibility would
remain subject to each State’s ultimate responsibility to
“comply with the statute and [with] any applicable
court orders.” /bid. Respondents brought the present
case on the theory that Wisconsin’s method of deter-
mining Medicaid eligibility does not “comply with the
statute.”

Federal courts have a general obligation to adjudi-
cate federal claims properly before them; and, in the
absence of any authoritative interpretation by the
Secretary, it was proper for both courts that considered
this case to identifv and construe for themselves the
relevant provisions of federal law. As we have
explained, the construction urged by respondents and
adopted by the court of appeals is a permissible one.
The court’s decision does not conflict with any decision
of this Court or of any other court of appeals, or with
any construction presently adopted by the Secretary."

5 In addition, the likely practical impact of the decision is
obscured by Wisconsin’s impending implementation (in July 1999)
of a “child health plan” approved under the State Children’s Health
Insurance Program, 42 U.S.C. 1397aa et seg. (Supp. III 1997),
which makes additional federal funds available to participating
States to help fund health care for low-income children who do not
qualify for Medicaid benefits. See generaliy 42 U.S.C. 1397aa(a)

19

Under these circumstances, the question presented by
the State’s petition for a writ of certiorari does not
warrant review by this Court.

CONCLUSION
The petition for a writ of certiorari should be denied.

Respectfully submitted.

SETH P. WAXMAN
Solicitor General
DAVID W. OGDEN
Acting Assistant Attorney
General
EDWIN S. KNEEDLER
Deputy Soticitor General
EDWARD C. DUMONT
Assistant to the Solicitor
General
BARBARA C. BIDDLE
FREDDI LIPSTEIN
Attorneys

MAY 1999

(purpose), 1397bb(3)(A)-(B) (eligibility screening and ccordination
with Medicaid), 1397dd(d) (coordination with Medicaid), 1397jj(b)
(defining “targeted low-income child” as one with family income
below specified Medicaid eligibility levels, and not otherwise
eligible for Medicaid) (Supp. III 1997).

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386018_1062%3A3. Public record. Not legal advice.