Ortiz v. Eichler: What Process is Due?
POSTED ON - February 14, 2020
Written By Krause Financial Services
In keeping with the theme of recent posts, we have another case that discusses the important procedural rights afforded to benefit applications. In Ortiz v. Eichler, 794 F.2d 889 (3d Cir. 1986), the Third Circuit addressed two key elements: (1) the state’s pre-hearing notice requirements under the 14th amendment; and (2) the extent to which applicants are afforded the right to confront witnesses at a hearing.
Eichler was initiated as a class-action lawsuit by recipients of and applicants for public assistance benefits administered by the Delaware Department of Health and Social Services (DDHSS). The Plaintiffs sought relief from the DDHSS’s procedures in denying and terminating benefits from various programs, including the state Medicaid program. The Plaintiffs argued that the procedures used by DDHSS violated the laws governing those programs. Specifically, the Plaintiffs alleged that the notices provided by the DDHSS in denying/terminating benefits failed to explain the reason for the action taken or to present calculations justifying the action.
In ruling on the case, the District Court entered an order in favor of the Plaintiffs and issued an opinion identifying the policies and procedures the parties would need to follow in order to comply with the Court’s order. The District Court specifically ruled that the DDHSS could not consider statements from adverse witnesses without providing an opportunity for cross-examination and that all adverse action notices must comply with all regulatory and due process requirements required by law. The District Court also issued an opinion laying out the requirements of the hearing notices:
At a minimum, these notices shall… 3) provide a detailed individualized explanation of the reason(s) for the action being taken, which includes, in terms comprehensible to the claimant, an explanation of why the action is being taken and, if the action is being taken because of the claimant’s failure to perform an act required by a regulation, an explanation of what the claimant was required by the regulation to do and why his or her actions failed to meet this standard; and 4) if calculations of income or resources are involved, set forth the calculations used by the agency, including any disregards or deductions used in the calculations, explanations of what income and/or resources the agency considers available to the claimant and the source or identity of these funds, and the relevant eligibility limits and maximum benefit payment levels for a family or assistance unit of the claimant’s size.
The DDHSS appealed contending the pre-hearing notice requirements prescribed by the District Court went beyond the minimum requirements of due process and applicable regulations. In the Eichler decision, the Third Circuit dispensed with and distinguished the cases cited by DDHSS, which related to notices on “mass changes” rather than individual cases. The Third Circuit was “persuaded that the district court’s formulation was the product of thoughtful analysis supported by reasoned decisions in other courts,” and affirmed the District Court’s decision.
At issue in Eichler was also the DDHSS’s practice of relying on adverse statements from declarants who were not available for cross-examination at the hearing on denial/termination of benefits. The District Court agreed with the Plaintiffs that this practice violated their rights under applicable federal regulation. The DDHSS contended that the District Court’s ruling on this issue was “an overbroad proscription of the use of hearsay evidence when the declarant was unavailable,” focusing on the limitations of the constitutional right to witness confrontation in the administrative setting.
The District Court’s decision on the issue of witness confrontation was based on federal regulations applicable to the administrative proceedings. The DDHSS’s argument, relying on constitutional limitations, essentially amounted to the contention that federal regulations do not mean what they say, without citing authority in support of that contention. The Third Circuit found this argument unconvincing and, again, affirmed the District Court’s decision.
The Eichler decision is another in a line of cases that affirm the rights of applicants for government benefits. The Third Circuit, in issuing its decision, harkened back to tenets set forth in a case previously discussed – Goldberg v. Kelly. While the fight to sustain the rights of applicants and recipients of government benefits (including Medicaid) continues, Goldberg and Eichler provide a strong backbone to any argument in support of those individuals’ procedural rights.