U.S. Court In Michigan Says State Policy May Not
Allow Pharmacists To Refuse To Fill Prescriptions Of Medicaid
Beneficiaries With Past-Due Balances
A state policy that allowed pharmacists to refuse to fill
prescriptions of Medicaid beneficiaries with current or past due
cost-sharing amounts violates federal law, the U.S. District Court for
the Eastern District of Michigan held February 17.
While current federal law does not prevent participating providers
from charging cost-sharing amounts, it does not allow them to withhold
medical services or medication as a means of collecting that amount from
those who are unable to pay, the court said in granting plaintiff
Medicaid recipients a permanent injunction.The court refused to address
what, if any, effect the recently enacted Deficit Reduction Act (DRA)
would have on the questions at issue.
Plaintiffs, current Medicaid beneficiaries living in Michigan, filed
an action under 42 U.S.C. � 1983 against the directors of the
Michigan Department of Community Health and the Department of Human
Services, which administer and provide information on the state's
Plaintiffs take a number of medications for various serious
conditions and contended that Michigan�s policy allowing
pharmacists to refuse to fill prescriptions for Medicaid recipients who
are unable to pay co-payments and have delinquent balances for past
prescriptions violates federal Medicaid law.
Plaintiffs also charged that the state had failed to inform Medicaid
beneficiaries about their rights to receive services when they cannot
pay contrary to federal requirements. Both parties moved for summary
The U.S. District Court for the Eastern District of Michigan held the
state policy violated federal law and enjoined the state from
authorizing pharmacists to engage in such practices. The court denied
plaintiffs' request, however, that the state be prevented from charging
any co-payments to Medicaid recipients until it supplies information on
the right to receive services when a recipient is unable to pay.
As a threshold matter, the court found all but one of the four named
plaintiffs had standing to bring the challenge. In so holding, the court
rejected each of defendants� three arguments that plaintiffs
First, defendants contended that the plaintiffs were not injured
because in most cases they eventually were able to obtain their
prescriptions. Finding this argument without merit, the court found that
having to search around for a pharmacy to fill a prescription and
switching providers regularly amounted to a disruption in the continuity
of care�an injury sufficient to support standing.
Second, defendants argued that, even if plaintiffs were injured, the
injury was not caused by state action but by �renegade
pharmacists� violating state law. But the state policy itself
allowed Medicaid providers to deny �services based on a history of
bad debt, including unpaid co-payments,� the court noted. Although
state law required pharmacies to give �appropriate verbal notice
and a reasonable opportunity for payment,� defendants failed to
explain what actions meet this standard, the court said.
Finally, defendants said that plaintiffs were not
in �imminent danger� because they would have the money
to make the co-payments if they managed their finances better. Rejecting
this argument, the court pointed out that two of the plaintiffs had
incomes below $8,000/year, while a third had an income of around
Turning to the merits of the � 1983 action, the court found the
particular Medicaid provision at issue, 42 U.S.C. � 1396o(e),
created a privately enforceable right. Section 1396o(e) requires state
Medicaid plans to require participating providers not to deny services
based on an individual�s inability to pay cost-sharing
In so holding, the court noted that � 1396o(e) was clearly
intended to benefit Medicaid recipients like plaintiffs, that the
statute imposes binding obligations on the states in terms of what their
Medicaid plans must require, that the rights plaintiffs sought are
not too vague, and that the statute does not otherwise foreclose
enforcement by the plaintiffs.
Next, the court held that Michigan�s polices at issue
violated federal requirements.
Applicable federal law and regulations are clear and
unambiguous�stating that Medicaid participants remain liable for
non-payment of cost-sharing charges, but at the same time prohibiting
providers from withholding medical or prescription services based on the
inability to pay. The court found the state�s
interpretation�that pharmacists could refuse to fill prescriptions
based on a history of past due charges�clearly at odds with what
federal law requires.
In the court�s view, pharmacists are protected from substantial
losses because the requirement applies only to those Medicaid recipients
with an inability to pay.
The court noted that certain cost-sharing provisions in the recently
enacted DRA may have some impact on � 1396o(e), but declined to
express any view on what the effect may be at this time. �Neither
party has addressed the question of whether Congress intended to
jettison the safety-net protection section 1396o(e) affords, and the
Department of Health and Human Services has not issued regulations that
interpret the legislation,� the court observed.
The court rejected the other relief plaintiffs sought, finding no
provision of the Medicaid Act �that confers a right �in
clear and unambiguous terms� to require the State to publish and
distribute� information regarding a Medicaid recipients rights
Beeker v. Olszewski, No. 05-10089-BC (E.D. Mich. Feb. 17, 2006).