Uniform Commercial Code). Rather, this action attacks the legality of conduct of the State itself.
My resolution of the state action question does not imply, however, that defendants' arguments on this issue lack relevance to the resolution of this case. The Supreme Court's decision in Blum v. Yaretsky stands for the proposition that state action does not attach to a provider's judgment as to level of care needed by a medicaid recipient -- at least where the provider's decision is not affirmatively mandated by State regulations. Blum v. Yaretsky, 457 U.S. at 1005. The absence of state responsibility for a multitude of provider decisions may affect the analysis of the question whether, on the merits, the Commonwealth must afford recipients notice and an opportunity for a hearing differently than it has thus far. This consideration, nevertheless, relates to the likely strength of plaintiffs' case on the merits, not to whether the challenged regulations are imbued with the color of state law.
V. Irreparable Harm
A primary factor in deciding whether a preliminary injunction should issue is the risk of irreparable harm faced by the moving party in the absence of an order preventing such harm before trial of the case on the merits.
Plaintiffs argue that they face irreparable harm for two reasons: First, relying on Elrod v. Burns, 427 U.S. 347, 49 L. Ed. 2d 547, 96 S. Ct. 2673 (1976), plaintiffs assert that "allegations that constitutional rights have been violated are in and of themselves a sufficient showing of irreparable injury. . . ." Plaintiffs' Memorandum in Support of a Preliminary Injunction at 4. Second, plaintiffs contend that, given their already impoverished state, the burden of copayment will force them to economize on medically necessary services, and thus incur the risk of serious illness.
A. Alleged Constitutional Deprivation
In Elrod v. Burns, the Supreme Court established that political patronage dismissal of most non-policymaking state employees violates the First Amendment. Affirming the Seventh Circuit Court of Appeals, the Court also ruled that the appellate court properly directed the district court to enter a preliminary injunction against further enforcement of that practice. The Supreme Court reasoned that "the loss of First Amendment freedoms, for even minimal periods of time, unquestionably constitutes irreparable injury." 427 U.S. at 373.
In affirming the preliminary injunction, the Elrod Court relied heavily on the principle that exercise of free speech, the most fundamental political freedom, should not be hampered or delayed by governmental action. As the Court has long recognized, the special character of First Amendment freedoms demands that their exercise be timely in order to be effective. Near v. Minnesota, 283 U.S. 697, 75 L. Ed. 1357, 51 S. Ct. 625 (1931); New York Times Co. v. United States, 403 U.S. 713, 29 L. Ed. 2d 822, 91 S. Ct. 2140 (1971) (per curiam).
Plaintiffs' reliance on Elrod v. Burns to establish irreparable harm in this case, however, fails to take note of the legal and factual differences between Elrod and the case at bar. On a factual level, the predicate for the Supreme Court's constitutional ruling in Elrod -- that public employees were discharged by the Sheriff of Cook County, Illinois because of partisan politics -- was accepted as true because of the procedural posture of that case. See Elrod v. Burns, 427 U.S. at 350 & n.1. The instant case, by contrast, involves conflicting legal interpretations drawn from an incomplete factual record. See Kershner v. Mazurkiewicz, 670 F.2d 440, 443-44 (3d Cir. 1982) (en banc) (despite allegation of constitutional deprivation, preliminary injunction properly denied where prisoners failed to demonstrate foreclosure from access to courts).
The legal distinction between Elrod and this case is of even greater significance. Elrod rested on the premise that, because of their special character, deprivation of First Amendment rights, without more, constitutes irreparable harm. The same cannot be said for the broad range of economic entitlements, individual or corporate, that have been accorded constitutional protection. See, e.g., Flower Cab Company v. Petitte, 685 F.2d 192, 195 (7th Cir. 1982) (deprivation of taxicab license). This is not to belittle the significance of the deprivation claimed by plaintiffs; the point is that they cannot establish that such harm is irreparable simply by showing that the interest they seek to vindicate is one protected by the Due Process Clause.
B. Threat to Recipients' Health
Plaintiffs' claim that they are threatened with irreparable harm thus turns on an evaluation of the health risks posed by the challenged system as it currently operates.
Plaintiffs contend that defects in, or the absence of, advance notice of the copayment requirement establish the risk of irreparable harm. Plaintiffs also contend copayment will deter utilization of medical services, particularly by those least able to pay, and that medicaid recipients' health status is likely to deteriorate because of their failure to receive preventive care. Defendants respond that safeguards in the copayment program assure the delivery of needed care to those unable to make the nominal payment. In order to resolve this dispute I must make findings as to how copayment operates in Pennsylvania and as to the level of medical risk imposed by copayment. Then I must evaluate the harm threatened by copayment in light of the irreparable harm standard.
1. Findings: Pennsylvania's Copayment System
The Department of Public Welfare considered and adopted recipient cost-sharing in its administration of medicaid as a cost-containment measure. With a budget of $ 1.7 to $ 1.8 billion, DPW annually processes 33 to 35 million claims filed on behalf of 1.1 million recipients who receive services from 32 to 33 thousand providers. Copayment as a cost-containment device has been adopted in some form in approximately 26 states. In Pennsylvania, the program is expected to reduce medicaid expenditures by $ 10 million (less rebates to recipients who accumulate more than $ 90 in copayments in a six month period), chiefly through deterring utilization of medical services. 14 Pa. Bull. at 2933.
Collection of copayments is assigned to providers. The current copayment for doctor's visits is $ 1, and, for pharmacy services, 50 cents for prescriptions, over-the-counter medications, and refills. For inpatient hospital services, recipients are required to contribute $ 3 per day to a maximum of $ 21 per admission. A $ 1 charge is imposed on diagnostic radiology, nuclear medicine, radiation therapy, and medical diagnostic services when such services are billed as to their technical component alone (the professional component is exempt), or as to the total cost of the service. For other services, the copayment varies according to the amount DPW will reimburse a provider for performing a service. Thus if the MA fee is $ 1 to $ 10, the copayment is 50 cents; if the MA fee is $ 10.01 to $ 25, the copayment is $ 1; if the MA fee is $ 25.01 to $ 50, the copayment is $ 2; and if DPW will reimburse $ 50.01 or more, the recipient is assessed $ 3.
Two features of Pennsylvania's copayment plan are designed to limit the impact of the program on medicaid recipients. First, DPW calculates the amount of copayments assessed against a particular recipient every six months, and refunds to recipients any amount contributed in excess of $90. Second, in accord with Federal mandate, DPW regulations state that "No provider participating in the Program may deny covered care or services to any eligible Medical Assistance recipient because of the recipient's inability to pay the copayment amount." 14 Pa. Bull. at 2935.
Recipients confronted with a provider's refusal to furnish services because the recipient cannot make the copayment have at least two remedies: (1) The recipient can contact the local County Assistance Office for assistance in resolving a dispute, or (2) the recipient can seek needed care from other providers willing to abide by the regulation. Testimony at the hearing on plaintiffs' motion established that, at least with respect to witnesses who testified, the latter recourse was viable because sufficient providers existed in their neighborhoods.
Providers are not permitted to waive copayment or to compensate recipients for making the payment, but when they do furnish covered services without receipt of a copayment, they are entitled to enforce the unpaid amount as a debt. Because providers initially opposed the copayment system, DPW increased provider reimbursement fees by 25 cents for prescriptions, and 50 for visits to a physician as an additional incentive to assume the burden.
There are a number of exemptions and exceptions from the copayment requirement. Indeed, it has been estimated that 46% of Pennsylvania's MA population is exempt from the program. Groups of recipients exempt from cost-sharing include persons under 18 years of age, pregnant women, and residents of public psychiatric hospitals and certain other health care facilities. Services excepted from copayment include the following: