MEMORANDUM AND ORDER
In this action, plaintiff attacks certain determinations made by the Pennsylvania Department of Public Welfare in its interpretation of federal regulations promulgated under the Medicaid program. Invoking jurisdiction under 28 U.S.C. §§ 1343(3) and (4), 2201, 2202, 2281 and 2284, plaintiff seeks declaratory and injunctive relief to remedy an alleged deprivation of her civil rights under 42 U.S.C. § 1983 and § 1988. In addition, she asserts a pendent claim under the Supremacy Clause. After a hearing on plaintiff's motion for a preliminary injunction and defendant's motion to dismiss the complaint, the parties entered into a stipulation in which defendant agreed to extend to plaintiff "white card" benefits pending resolution of the various outstanding motions. Presently before the Court are cross motions for summary judgment.
Plaintiff presently receives $195.40 monthly in Social Security disability insurance benefits under Title II of the Social Security Act, 42 U.S.C. § 401 et seq. (SSA benefits). Prior to July, 1974, she received $162.00 per month. Because of the increased level of her Title II (SSA) benefits, she was notified by the Berks County Board of Assistance that she would be required to "spend down" to the General Assistance level of need currently set at $147 before she would qualify for Medicaid "white card"
benefits which she had previously enjoyed from June, 1970. Plaintiff suffers from an arthritic and poliomyelitic condition complicated by a minor heart defect and a chronic loss of equilibrium presumably related to her arthritic circulatory disease. She has difficulty walking and must wear neck and leg braces. In order to alleviate the pain associated with these medical problems, she must spend more than $60.00 each month on prescription drugs.
Prior to the notification by the Berks County Board of Assistance, plaintiff was able to obtain these drugs without expense by using the "white card" she had been issued as a "categorically needy individual" under the pertinent federal and Pennsylvania laws.
She commenced this action alleging that Pennsylvania's statutory scheme for payment of "categorically needy" benefits under Medicaid denied her rights to due process and equal protection under the laws guaranteed by the Fourteenth Amendment.
As Pennsylvania interprets the Social Security Act, according to plaintiff, individuals who are deemed "disabled" under Title XVI, Supplemental Security Income for Aged, Blind and Disabled, 42 U.S.C. § 1381 et seq. (SSI benefits), are not only granted monthly state supplements of $20 over and above the "statutory nationwide benefit level", 42 U.S.C. § 1382(f), but are, in addition, automatically granted "categorical assistance" in the form of "white card" benefits. Plaintiff alleges that defendant's practice violates the mandate of the federal law, Title XIX, Grants to States for Medical Assistance Programs, 42 U.S.C. § 1396 et seq.
In this case we are faced with a statutory and constitutional challenge to the defendant's eligibility standards for granting "white card" benefits. Following the procedure mandated in Hagans v. Lavine, 415 U.S. 528, 39 L. Ed. 2d 577, 94 S. Ct. 1372 (1974), we must first determine whether the constitutional questions have sufficient substance to support federal jurisdiction pursuant to 28 U.S.C. § 1343. Without jurisdiction under § 1343, we are powerless to consider the plaintiff's pendent statutory claim based on the Supremacy Clause of the Constitution. Once we conclude preliminarily that a substantial federal question is raised, however, our duty is to adjudicate the potentially dispositive pendent "statutory" claim before dealing with the merits of the constitutional question which requires consideration by a three-judge court. If we find the statutory question to be dispositive, then the three-judge court need not be convened.
We have concluded, as a preliminary matter, that plaintiff has clearly alleged a deprivation, under color of state law, of her right to equal protection under the Fourteenth Amendment which for the purposes of jurisdiction, meets the substantiality requirement under Hagans, supra, 415 U.S. 537-538, 94 S. Ct.1372, 39 L. Ed. 2d 577; Doe v. Beal, 523 F.2d 611 (3d Cir. 1975,).
Under Pennsylvania's Medicaid Program, categorical assistance ("white card" benefit) is automatically granted to persons who are "disabled" under the appropriate criteria incorporated into the SSI program, 42 U.S.C. § 1382c (a)(3). These disabled persons receive a federally mandated cash grant of $146, 42 U.S.C. § 1382 (f), plus a $20 state supplement, a total of $166.
On the other hand, plaintiff is not eligible for the "white card" Medicaid benefit until she has "spent down" to the state's General Assistance level currently set at $147 even though she is "disabled" under the same criteria governing the SSI program (compare § 416(i) and § 423(d) of the SSA program to § 1382c (a)(3) in the SSI program). Thus, while "disabled persons" under the SSI program receive a total cash grant of $166 plus the Medicaid white card entitling them to prescriptions without cost, plaintiff must spend approximately $49 for prescriptions before she qualifies for the same Medicaid benefit. Moreover, SSI benefits are granted to "disabled" persons who did not accumulate the working history necessary for SSA benefits. In essence, plaintiff has been penalized for working.
This disparate treatment of similarly situated "disabled" persons under Pennsylvania's Medicaid Program raises a substantial constitutional question of equal protection under the Fourteenth Amendment -- whether this classification of disabled individuals rationally furthers a legitimate state interest. Shapiro v. Thompson, 394 U.S. 618, 22 L. Ed. 2d 600, 89 S. Ct. 1322 (1969); U.S. Department of Agriculture v. Moreno, 413 U.S. 528, 37 L. Ed. 2d 782, 93 S. Ct. 2821 (1973). We hold that this constitutional question is sufficiently substantial to confer jurisdiction under 28 U.S.C. § 1343. Accordingly, we have the power to reach the merits of the pendent statutory claim.
The Medicaid Program and Pennsylvania participation
In order to assess the merits of plaintiff's statutory claim, we turn to the applicable federal legislation from which her argument springs. In Title XIX of the Social Security Act, Medicaid, 42 U.S.C. § 1396 et seq., Congress created a federal-state cooperative program designed to deliver aid in the form of medical assistance to "* * * aged, blind or disabled individuals, whose income and resources are insufficient to meet the costs of necessary medical services. * * *"
Under this program Congress mandates payment of federal funds for Medicaid to states which have submitted plans for medical assistance which meet the statutory criteria set forth in 42 U.S.C. § 1396a. Under the federal legislative scheme, however, states are given leeway in devising plans with respect to the extent of medical assistance granted, see e.g., 42 U.S.C. § 1396d(a), and with respect to the qualifications for eligibility, see e.g., 42 U.S.C. § 1396a(a)(10). The plans, however, are subject to certain limitations. For example, 42 U.S.C. § 1396a(a)(17) requires that the state plan for medical assistance must:
"* * * include reasonable standards * * * for determining eligibility for and the extent of medical assistance under the plan which (A) are consistent with the objectives of this subchapter, [and] (B) provide for taking into account only such income and resources as are, as determined in accordance with standards prescribed by the Secretary, available to the applicant or recipient * * *".
The various options open to the states under the federal scheme are also described in the regulations issued by the Secretary, 45 CFR § 248.
Pennsylvania's Medicaid plan includes two different categories of assistance recipients -- the "categorically needy", § 1396a(a)(10)(A) and the "medically needy", § 1396a(a)(10)(C) -- as set out in 62 P.S. § 441.1.
The cost of prescription medications is included in assistance to the "categorically needy",
but is not included in assistance to the "medically needy".
The "categorically needy" include all those individuals in Pennsylvania who are currently receiving benefits under Title XVI, Supplemental Security Income for the Aged, Blind and Disabled, 42 U.S.C. § 1381 et seq.9
Plaintiff's Statutory Argument
Plaintiff argues that the defendant's determination that she must spend down to the General Assistance level of need to become eligible for Medicaid as a "categorically needy" individual is contrary to the mandate of the federal statutory scheme.
She argues as follows: her monthly SSA benefits total $195.40, but the monthly cost of her prescribed medications ($71.70 for September, 1974) reduces her available income to $123.70 to pay for all of her basic necessities -- food, clothing and shelter, etc. The defendant's determination that she must "spend down" to $147.00 before she is eligible for "white card" benefits in effect requires her to spend approximately $48.40 of her SSA income for prescription medications before she has reached the "level of need" at which General Assistance
recipients become eligible for "categorically needy" benefits. She points out that while disabled persons receiving SSI benefits plus the $20.00 monthly state supplement are automatically granted "categorically needy" benefits, giving them $166.00 to meet the costs of food, clothing, and shelter, she is left with only $147.00 per month for these same basic necessities. This disparity, she argues, is grossly unfair because the only difference between her "disabled" status for the purpose of qualification for Medicaid and the "disabled" status of SSI recipients is that she worked long enough to qualify for the insurance benefits under SSA, despite the fact that her medical needs are equally as compelling as those under SSI. In other words, she argues she would qualify for SSI, the state supplement and categorically needy benefits but for the fact that she has a 30-year work history spanning a period from 1933 to 1969. Accordingly, she contends that the state's decision to make the $20.00 payment to disabled persons under the SSI program has raised the "level of need" for "disabled persons" to $166.00 so that she should not be required to "spend down" below that level, i.e., to $147.00 as currently required, to become eligible for "white card" benefits.
To support her argument that the federal scheme has been violated, plaintiff points to the pertinent federal legislation and regulations as well as a recent Pennsylvania case, Crammer v. Commonwealth, 449 Pa. 528, 296 A.2d 815 (1972). Specifically, she contends that Pennsylvania's option to include SSI recipients as "categorically needy", 62 P.S. § 441.1, and the concomitant decision to grant each SSI recipient a $20.00 state supplement, 62 P.S. § 432, has a two-fold effect. First, the state's "level of need" for "disabled" persons for purposes of Medicaid eligibility has been raised from $147.00 (the General Assistance "level of need") to $166.00. Second, for Medicaid purposes, she argues that 42 U.S.C. § 1396a(a)(17) and attendant regulations require that necessary medical expenses be deducted from plaintiff's income to determine the actual income available for necessities, and once these medical expenses are deducted, the mandate of 42 U.S.C. § 1396a(a)(10)(c)(i) and (ii) requires that she be treated as "categorically needy". Finally, plaintiff points out that the federal regulations require this result, specifically 45 CFR § 248.1(a)(1) which states:
"In order to be considered as categorically needy for purposes of Title XIX, an individual must in general be receiving financial assistance or sufficiently in need to be financially eligible for financial assistance under Title IV-A or XVI of the Social Security Act, or under a State supplement to Title XVI assistance." 45 CFR § 248.1(a)(1)(i). (Emphasis added)
Plaintiff argues that once the "spend down" provision of 42 U.S.C. § 1396a(a)(17) is applied to her income, she is left with income so low that it renders her "* * * eligible to receive cash assistance grants under this article", 62 P.S. § 441.1, i.e., her income is less than $166.00, the total grant to "disabled" persons under Pennsylvania law. As such, Crammer requires that for Medicaid purposes only, she has established "eligibility" for a cash payment under 62 P.S. § 432(2.1) the same "eligibility" which triggers the "categorically needy" Medicaid benefits.
Defendant contends that no federal legislative mandate has been violated and cites 45 CFR § 248.1(b) as its justification for applying to plaintiff the General Assistance level of need at $147.00 rather than the $166.00 figure. The state, it is argued, is not required under the latitude created in the federal scheme to grant categorically needy benefits to individuals until they have "spent down" to the top of the SSI mandatory benefit, $146.00, as required in Title XVI, 42 U.S.C. § 1382f. In addition, the fact that the state has chosen, at its option under § 1382e, to grant a state supplement, 62 P.S. § 432(1.0) to those persons receiving SSI, 62 P.S. § 432(2.1), does not create a different "level of need" for Medicaid eligibility purposes. Moreover, defendant argues, Crammer conclusively establishes the proposition that the state's determination of different "levels of need" to trigger eligibility for "medically needy" and "categorically needy" benefits is not open to question, provided that the minimal requirements of the federal mandate are satisfied. According to 45 CFR § 248.1(b)(2)(i), defendant contends, the only required coverage of the "categorically needy" is to include:
"(i) individuals receiving a benefit under Title XVI (SSI)." This, defendant argues, is precisely what Pennsylvania's Medicaid Plan does.
Statutory Issue and Conclusions
The issue thus presented is whether the Social Security Act mandates that "categorically needy" Medicaid benefits be granted to a "disabled" person (who receives SSA) at the same level of available income at which disabled persons receiving SSI and the optional state supplement receive "categorically needy" benefits. In order to resolve this issue, we first consider the limitations placed on the states in assigning different eligibility requirements for granting categorically needy benefits under a Medicaid program entitled to federal funding. As previously discussed, these limitations are set forth in 42 U.S.C. § 1396a(a)(10) and a(a)(17), as well as in 45 CFR § 248.
The dispute in this case centers on § 1396a(a)(10)(C) which requires that a state plan provide:
"(C) if medical assistance is included for any group of individuals who are not described in clause (A) and who do not meet the income and resources requirements of the appropriate state plan, or the supplementary security income program under subchapter XVI of this chapter, as the case may be, as determined in accordance with standards prescribed by the Secretary --
(i) for making medical assistance available to all individuals who would, except for income and resources, be eligible for aid or assistance under any such State plan or to have paid with respect to them supplemental security income benefits under subchapter XVI of this chapter, and who have insufficient (as determined in accordance with comparable standards) income and resources to meet the costs of necessary medical and remedial care and services, and