K.W. v. Armstrong

The Medicaid Act requires an agency to inform every applicant of their right to a hearing at the time of any action affecting their claim, of which the notice must contain the reasons for the intended action.

Richard Armstrong, Lisa Hettinger, and the Idaho Department of Health and Welfare (collectively, “Department”) appealed the district court’s order to expand the preliminary injunction forbidding the Department from decreasing individual budgets from a class of participants, and applicants to, Idaho’s Developmental Disabilities Waiver program (“DD Waiver program”) without proper notice. The Department also appealed the denial of the Department’s proposed budget notice for the class affected by the injunction. On appeal, the Department argued that the fair hearing provisions of the Medicaid Act were not triggered through the calculation of lower individual budgets, nor were participants deprived of their property under the Due Process Clause of the Constitution. The Ninth Circuit affirmed the extension of the preliminary injunction, but held that the panel lacked jurisdiction to review the issue regarding the proposed notice. The panel noted that the Medicaid Act requires an agency to “inform every applicant of his right to a hearing . . . at the time of any action affecting his or her claim, of which this notice must contain the reasons for the intended action.” Here, action referred to reduction of covered services. The panel agreed with the district court that calculating a lower budget constituted an action due to the reduction in covered services. The panel also concluded that the district court did not abuse its discretion in holding that the DD Waiver program participants and applicants were to prevail on their claim of being denied notice under the Due Process Clause. Due to the lack of jurisdiction to review the district court’s order of denying the motion to approve the 2013 Proposed Notice, the panel affirmed the order expanding the preliminary injunction to cover the class. AFFIRMED.