DAVIO v. NEBRASKA DEPT. OF HEALTH HUMAN

But the facilities instead chose to contest the constitutionality of the statute in federal court. And, we explained, sovereign immunity precluded federal courts from granting the facilities the monetary relief they sought. Even if it was a suit against a private party, such retroactive relief would be paid from public funds and was, therefore, in essence, an action against the State. We concluded that the facilities' decision to bring action in federal court "achieved the result of protection from any future application of the 3.75-percent limitation by the Department, but it did not preserve a remedy which can only be awarded by a state agency or court, insofar as retroactive relief is sought."

While Golden Five was not a class action, it illustrates the necessity of filing a contested case before a hearing officer in order to preserve the right to retroactive monetary relief. The case of Thiboutot v. State presents a class action very similar to the case at bar and further illustrates this point. The original plaintiffs in Thiboutot had fully pursued their administrative remedies to challenge a regulation governing Aid to Families with Dependent Children benefits. They sought to declare the regulation invalid and to obtain retroactive monetary relief.

However, while their appeal was pending before the district court, the plaintiffs amended their complaint to allege a class action seeking both monetary and injunctive relief for other beneficiaries of Aid to Families with Dependent Children. The district court ultimately decided to grant the injunction against the Maine Department of Human Services from enforcing the regulation, which the court determined to be invalid. But the court refused to consider claims for retroactive monetary benefits on behalf of the class, and the plaintiffs appealed. The court of appeals held that the district court's limitation was proper because the waiver of sovereign immunity for administrative appeals referred only to individuals who have sought administrative review of an agency hearing.

Similarly, here, the waiver of sovereign immunity for an action seeking monetary relief from a state agency is found in Neb. Rev. Stat. §§ 84-913 to 84-917 (Reissue 2008). Those provisions first require a hearing before the administrative agency contesting its action. We are unaware of any other means of redress applicable to Davio's claims which would waive sovereign immunity for an action for retroactive monetary relief. Because it appears that a large number of the members of the purported class did not first challenge before a hearing officer the removal of their Medicaid benefits, the district court's limitation of the class certification in this case was proper.

[8,9] As for DHHS' argument that the court erred in certifying the class even for the purpose of declaratory and injunctive relief, we find no harm and no reason to reverse the district court's decision. We note first that Neb. Rev. Stat. § 84-911 (Reissue 2008) provides for the right to challenge the validity of any rule or regulation directly to the district court without first requesting that the administrative agency pass upon the question. But regardless of whether this provision envisions class actions as such, the limited certification of the class in this case was harmless error. It is axiomatic that a regulation deemed invalid cannot be implemented against anyone, whether or not a party to this suit. In other words, even if the court had denied class certification, the declaratory and injunctive relief requested by Davio would have inured to the benefit of the purported class. We therefore find no merit to DHHS' assignments of error pertaining to the district court's certification of the class, which was strictly for purposes of declaratory and injunctive relief.

[10,11] We turn now to the underlying merits of the dispute. Before setting forth the labyrinth of pertinent federal and state welfare laws, we briefly discuss the relationship of the Legislature to DHHS and the principles of separation of powers upon which Davio relies. Neb. Const. art II, § 1, states that "no person or collection of persons being one of these departments shall exercise any power properly belonging to either of the others except as expressly directed or permitted." This provision prohibits the Legislature from improperly delegating its own duties and prerogatives. The Legislature may enact statutes to set forth the law, and it may authorize an administrative or executive department to make rules and regulations to carry out an expressed legislative purpose, but the limitations of the power granted and the standards by which the granted powers are to be administered must be clearly and definitely stated in the authorizing act. Such standards may not rest on indefinite, obscure, or vague generalities, or upon extrinsic evidence not readily available. And an administrative agency may not employ its rulemaking power to modify, alter, or enlarge provisions of a statute which it is charged with administering.

[12-14] We also set forth the standards of statutory interpretation which are relevant to this case and which guide our analysis. Components of a series or collection of statutes pertaining to a certain subject matter are in pari materia and should be conjunctively considered and construed to determine the intent of the Legislature, so that different provisions are consistent, harmonious, and sensible. If the language of a statute is clear, however, the words of such statute are the end of any judicial inquiry regarding its meaning. To the extent there is a conflict between two statutes on the same subject, the specific statute controls over the general statute.

We turn now to the statutes. Broadly, two comprehensive acts, the Medical Assistance Act and the Welfare Reform Act, govern this case.

Medicaid is provided for in the Medical Assistance Act. The Medical Assistance Act was enacted as a cooperative federalstate program to provide health care to needy individuals. DHHS is assigned the responsibility of administering this program. It was originally enacted in 1965, but it has been continuously revised, most extensively in 2006. The current public policy statement for the Medical Assistance Act, contained in § 68-905, states:

It is the public policy of the State of Nebraska to provide a program of medical assistance on behalf of eligible low-income Nebraska residents that (1) assists eligible recipients to access necessary and appropriate health care and related services, (2) emphasizes prevention, early intervention, and the provision of health care and related services in the least restrictive environment consistent with the health care and related needs of the recipients of such services, (3) emphasizes personal independence, self-sufficiency, and freedom of choice, (4) emphasizes personal responsibility and accountability for the payment of health care and related expenses and the appropriate utilization of health care and related services, (5) cooperates with public and private sector entities to promote the public health, (6) cooperates with providers, public and private employers, and private sector insurers in providing access to health care and related services and encouraging and supporting the development and utilization of alternatives to publicly funded medical assistance for such services, (7) is appropriately managed and fiscally sustainable, and (8) qualifies for federal matching funds under federal law.

Eligibility for Medicaid is defined in § 68-915, which sets forth specific disability, income, or dependency prerequisites.

DHHS is authorized in § 68-912 to place "[l]imits on goods and services":

(1) The department may establish (a) premiums, copayments, and deductibles for goods and services provided under the medical assistance program, (b) limits on the amount, duration, and scope of goods and services that recipients may receive under the medical assistance program, and (c) requirements for recipients of medical assistance as a necessary condition for the continued receipt of such assistance, including, but not limited to, active participation in care coordination and appropriate disease management programs and activities.

(2) In establishing and limiting coverage for services under the medical assistance program, the department shall consider (a) the effect of such coverage and limitations on recipients of medical assistance and medical assistance expenditures, (b) the public policy in section 68-905, (c) the experience and outcomes of other states, (d) the nature and scope of benchmark or benchmarkequivalent health insurance coverage as recognized under federal law, and (e) other relevant factors as determined by the department.

Prior to the adoption and promulgation of proposed rules and regulations under § 68-912 or relating to the implementation of Medicaid state plan amendments or waivers, DHHS is required to report to the Governor, the Legislature, and the Medicaid Reform Council with a summary of the proposed rules and regulations and their projected impact. Legislative consideration includes, but is not limited to, the introduction of a legislative bill, a legislative resolution, or an amendment to pending legislation relating to such rules and regulations.

Section 68-916 of the Medical Assistance Act mandates that the recipient assign to DHHS any medical care support available under court order or under rights to pursue or receive payments from any third party liable for the medical care. Section 68-917 is entitled "Applicant or recipient; failure to cooperate; effect." It is limited on its face to the failure to cooperate in obtaining reimbursement for medical care or services as mandated in § 68-916.

The primary benefit described by the Welfare Reform Act is up to 60 months of cash assistance. This benefit is derived from Neb. Rev. Stat. § 43-512 (Reissue 2008), which sets forth ADC benefits and which is incorporated into the Welfare Reform Act. In addition, the Welfare Reform Act provides qualifying participants assistance with transportation expenses, participation and work expense, parenting education, family planning, budgeting, and relocation. When no longer eligible to receive cash assistance, the Welfare Reform Act provides for transitional supportive services for those who still require it. Such services include health care coverage available on a sliding-scale basis to individuals and families with incomes up to 185 percent of the federal poverty level if other health care coverage is not available.

The primary innovation of the Welfare Reform Act is the self-sufficiency Employment First contract. In order to receive the benefits of the Act, the recipient must first undergo a comprehensive assessment and develop an Employment First contract with a case manager that provides for a means to achieve specified self-sufficiency goals. The contract is to have a timeline of benchmarks to facilitate "forward momentum."

According to the Welfare Reform Act, the self-sufficiency evaluation procedure is triggered when an individual or family applies for ADC assistance pursuant to § 43-512. It is not triggered by a Medicaid application under § 68-915. However, DHHS has passed regulations making ADC beneficiaries automatically eligible for Medicaid without a separate § 68-915 application.

We have explained that the intent of the Welfare Reform Act, at least in part, was to reform the welfare system to remove disincentives to employment, promote economic self-sufficiency, and provide individuals and families with the support needed to move from public assistance to economic self-sufficiency. It was intended to be implemented in a manner consistent with federal law and to change public assistance from entitlements to temporary, "contract-based" support, accomplished through individualized assessments of the personal and economic resources of the applicant and the use of individualized self-sufficiency contracts. But we have never addressed whether such self-sufficiency, contract-based support applies to Medicaid.

Section 68-1723(1) states that "[c]ash assistance shall be provided only while recipients are actively engaged in the specific activities outlined in the self-sufficiency contract. . . ." Section 68-1723(2) further specifies that in recipient families with at least one adult with the capacity to work, "[i]f any such adult fails to cooperate in carrying out the terms of the contract, the family shall be ineligible for cash assistance."

Section 43-512(5)(a), which has maintained the relevant language since its amendment in 1990, grants DHHS regulatory power:

For the purpose of preventing dependency, the department shall adopt and promulgate rules and regulations providing for services to former and potential recipients of aid to dependent children and medical assistance benefits. The department shall adopt and promulgate rules and regulations establishing programs and cooperating with programs of work incentive, work experience, job training, and education. The provisions of this section with regard to determination of need, amount of payment, maximum payment, and method of payment shall not be applicable to families or children included in such programs.

The Welfare Reform Act grants DHHS the power and duty to "adopt and promulgate rules and regulations to carry out the Welfare Reform Act."

In the preamble, the Welfare Reform Act sets forth 20 "policies" that DHHS "shall implement." These policies range from the specific requirement that it exclude, for instance, the cash value of life insurance policies when calculating resources, to the general policy of encouraging minor parents to live with their parents. In this appeal, DHHS relies particularly on policy (d) of § 68-1713(1), which was added in 1995 and states in full: "Make Sanctions More Stringent to Emphasize Participant Obligations."

George Kahlandt, the administrator of the "Economic Assistance Unit" with DHHS, testified that this language was related to welfare reform committee recommendations in 1993. Kahlandt testified that prior to that time, if an individual refused to participate in Employment First, the only sanction was the removal of that individual's monthly $71 ADC cash assistance benefit, and even that was tempered by an increase in the family's food stamp allowance. It was Kahlandt's opinion that the language in policy (d) contemplated not only the increase in the removal of cash assistance from the individual to the entire family, an amount in excess of $400 for a family of four, but also the removal of Medicaid benefits. Prior to the passage of policy (d), DHHS did not remove Medicaid benefits for the failure to comply with self-sufficiency goals.

Kahlandt explained that the committee was formed in anticipation of the federal Personal Responsibility and Work Opportunity and Reconciliation Act, which was passed in 1996. That legislation created the Temporary Assistance for Needy Families program, which replaced the welfare programs known as Aid to Families with Dependent Children, the Job Opportunities and Basic Skills Training program, and the Emergency Assistance program. The law ended federal entitlement to assistance and instead created the Temporary Assistance for Needy Families program as a block grant that provides states, territories, and tribes federal funds each year. Under 42 U.S.C. § 1936u-1(3)(A) (2006) of the Social Security Act, participating states have the option, although they are not required, to terminate medical assistance for failure to meet the work requirement tied to cash assistance.

As is apparent from the above, there is nothing in any of the relevant statutes which expressly states DHHS may remove Medicaid benefits as a sanction for noncompliance with Employment First. DHHS relies instead on the fact that the law does not specifically prohibit the removal of Medicaid and that the Legislature has expressed a public policy of welfare as being temporary, contract-based support. DHHS also attempts to patch together the various provisions granting regulatory authority, the "[l]imits on goods and services" provision of § 68-912, and, especially, the statement in § 68-1713(1)(d) that it "Make Sanctions More Stringent to Emphasize Participant Obligations" to make an argument for a clear mandate by the Legislature. We do not find such a mandate.

As already discussed, it is the Legislature's stated public policy, at least in the Welfare Reform Act, that able-bodied recipients become self-sufficient as quickly as possible so that their welfare benefits are merely temporary. On the other hand, the acts also have beneficent purposes that go beyond simply pushing recipients toward the ultimate goal of self-sufficiency. We have said that in the absence of clearly expressed intent to the contrary, we must construe these laws so as to effectuate their beneficent purposes.

It is particularly the policy of the Medical Assistance Act to provide medical care to persons in need. And, unlike the Welfare Reform Act, which focuses on ADC and other transitional benefits, the Medical Assistance Act makes no reference to Employment First contracts. The lengthy set of policies set forth by the Medical Assistance Act does not indicate that Medicaid benefits should be tied to quasi-contractual obligations of "forward momentum." Section 68-912 of the Medical Assistance Act specifically sets forth the limits DHHS can place on benefits, and yet it focuses solely on the patient participation and responsibility concerns common to any health provider, such as copayments and limitations on what services are covered. It fails to make any reference to self-sufficiency contracts.

Section 43-512(5)(a) comes slightly closer inasmuch as it refers to both "medical assistance benefits" and "preventing dependency." However, it does so in the context of "providing for services" for the participant. It, again, makes absolutely no reference to sanctions. In fact, it seems from reading § 43-512 as a whole that the rules and regulations referred to in that section were meant to pertain to benefits supplemental to the basic welfare provisions — for which "need, amount of payment, maximum payment, and method of payment" are applicable.

Finally, we find, contrary to DHHS' assertion, that the provision that DHHS shall "Make Sanctions More Stringent to Emphasize Participant Obligations" provides no particular directive. It certainly does not and, indeed, cannot confer upon DHHS unlimited discretion in determining the measure and the means of sanctions for noncompliance. Instead, this provision must be read in conjunction with the limitations and standards expressly provided by the Legislature. In effect, these provisions define what rules and regulations DHHS may pass to "Make Sanctions More Stringent."

What is most pertinent to this case is the fact that in § 68-1723 of the Welfare Reform Act, the Legislature has set forth specific provisions concerning the prescribed sanction for noncompliance with Employment First self-sufficiency contracts. That provision specifies only that the family's "cash assistance" shall be removed as a consequence of noncompliance. If the Legislature had intended Medicaid to be removed as a sanction for noncompliance, there was no reason not to have stated so in § 68-1723. We lack authority to add to this provision language that clearly is not there.

DHHS asserts that if we do not construe "Make Sanctions More Stringent" to authorize the removal of Medicaid, then that provision is rendered meaningless. DHHS rests this assertion on the fact that policy (d) of § 68-1713(1) was finally adopted on June 13, 1995, while the sanction provision of § 68-1723 had already been adopted on April 20, 1994. We find this argument unconvincing. The language of policy (d) is general and could mean nothing more than the stricter implementation of the sanctions outlined in § 68-1723. Or, as DHHS suggests, the language could have been contemplated in conjunction with other language that ultimately did not make it into the Welfare Reform Act. As Davio suggests, it could refer to the contemplated increase to removing the entire family's ADC benefits, even though the latter provision was ultimately adopted first. In other words, the reason and the timing of policy (d) are largely a matter of speculation. Such speculation is unnecessary when the statutes clearly define the appropriate sanctions for specified behavior.

Nor are we convinced to stray from the clear language of the acts by DHHS' argument of legislative acquiescence. Where a statute has long been construed by administrative officials charged with its execution, and where the Legislature has several times been in session without amending or changing such statute — despite its full knowledge of the interpretation — we will not disregard that interpretation unless it is clearly erroneous. But this seldom-used rule of legislative acquiescence to administrative interpretations is but a complement to the traditional rules of statutory construction already set forth. In McQuiston v. Griffith, for instance, the plaintiff's proposed interpretation of a statute was already a stretch, and the fact that the Legislature had not acted to "correct" it was simply further evidence that our interpretation was correct.

We will not ignore the meaning of the statutes relevant to this case simply because DHHS has passed a regulation and the Legislature has since failed to amend its law to correct DHHS' error. In other words, DHHS' interpretation was clearly erroneous. Moreover, although DHHS points to provisions in the Medical Assistance Act which mandate that reports be sent to the Governor and the Legislature, there is no evidence in this case that the Legislature actually considered such a report or was specifically aware of Regulation 2-020.09B2f and its implementation.

It is both consistent and logical that the Legislature chose to remove as a sanction only those benefits gained specifically as a result of entering into the self-sufficiency contract, and to not further penalize the recipient by taking away Medicaid. More to the point, we, like DHHS, are without the power to enlarge upon the expressed legislative purpose. Finding specific provisions covering noncompliance, which do not authorize the removal of Medicaid, and finding no provision elsewhere that allows this as a sanction, we find the limitations of the Legislature's delegation clear. Therefore, in enacting Regulation 2-020.09B2f, DHHS unlawfully enlarged upon the authorizing statutes and violated the principles of separation of powers. The district court was correct in declaring Regulation 2-020.09B2f invalid.

AFFIRMED.

GERRARD, J., not participating.