Alexander v. Choate

In response to increasing projected state Medicaid costs, the directors of the Tennessee Medicaid program decided to implement a number of cost saving measures. Among these measures was a proposed reduction in the number of annual days of inpatient hospital care covered by the program from 20 to 14 days per fiscal year.

Respondents, Tennessee Medicaid recipients, brought a class action for declaratory and injunctive relief alleging, among other things, that the proposed limitation would have a discriminatory effect on the handicapped in violation of § 504 of the Rehabilitation Act of 1973 (the Act) and its implementing provisions. Section 504 provides:

No otherwise qualified handicapped individual . . . shall, solely by reason of his handicap, be excluded from the participation in, be denied the benefits of, or be subjected to discrimination under any program or activity receiving Federal financial assistance.

Undisputed statistical evidence indicated that in the 1979-1980 fiscal year, 27.4 percent of all handicapped users of hospital services who received Medicaid required more than 14 days of care, while only 7.8 percent of non-handicapped users required more than 14 days of inpatient care. 

The Court held that § 504 of the Act did not apply only to intentional discrimination against the handicapped. The Court held that “much of the conduct that Congress sought to alter in passing the Rehabilitation Act would be difficult if not impossible to reach were the Act construed to proscribe only conduct fueled by a discriminatory intent.” It stated that discrimination against the handicapped was primarily the result of “thoughtlessness and indifference” rather than “invidious animus.” The Court noted, for instance, that “elimination of architectural barriers was one of the central aims of the Act . . . yet such barriers were clearly not erected with the aim or intent of excluding the handicapped.”

However, the Court rejected respondents’ “boundless notion” that all disparate-impact showings constitute prima facie cases under § 504. Rather, the Court assumed that § 504 extended to at least some conduct that had an unjustifiable disparate impact upon the handicapped, but it held that the need to give effect to the statutory objectives must be balanced against the need to keep § 504 within “manageable bounds.”

The Court held that the Tennessee Medicaid regulation, which reduced the number of annual days of inpatient hospital care covered by the program, did not have a discriminatory effect upon the handicapped contrary to § 504 of the Act. The Court of Appeals thus erred in finding that the Respondents had established a prima facie violation of § 504 and the decision was reversed.

The Court held that the balance struck in Southeastern Community College v Davis, 442 U.S 397 (1979), required that an “otherwise qualified handicapped individual must be provided with meaningful access to the benefit that the grantee offers.” Davis addressed the balance between the statutory right of the handicapped to be integrated into society and “the legitimate interests of federal grantees in preserving the integrity of their programs.”  The Court in Davis noted that “while a grantee need not be required to make fundamental or substantial modifications to accommodate the handicapped, it may be required to make reasonable ones.”

The Court held that the reduction from 20 to 14 days of coverage under the Tennessee Medicaid regulation did not deny Respondents “meaningful access” to Medical services in Tennessee. The Court declared that the reduction was neutral on its face and did not “distinguish between those whose coverage will be reduced and those whose coverage will not on the basis of any test, judgment, or trait that the handicapped as a class [were] less capable of meeting or less likely of having.”

The Court further held that there was nothing in the record to indicate that handicapped persons in Tennessee would be unable to benefit meaningfully from the coverage under the 14-day rule, as both handicapped and non-handicapped Medicaid users would receive “identical and effective hospital services fully available for their use, with both classes of users subject to the same durational limitation.”

Respondents also contended that their greater need for medical care necessitated that, to provide meaningful access to Medicaid services, Tennessee must single out the handicapped for more than 14 days of coverage. The Court rejected this contention and held that the general aim of the Medicaid package was to assure that individuals received necessary medical care, not “adequate health care,” as Respondents’ contention suggested. It held:

Section 504 [sought] to assure evenhanded treatment and the opportunity for handicapped individuals to participate in and benefit from programs receiving federal assistance. The Act [did] not, however, guarantee the handicapped equal results from the provision of state Medicaid, even assuming some measure of equality of health could be constructed.

The Court also held that, generally, the use of annual limitations on the number of inpatient days covered did not deny Respondents meaningful access to Medical services in Tennessee. The Court rejected Respondents’ argument that:

• The effect of the limitations would have a greater effect on the handicapped; and
• The harm could have been avoided by the choice of other Medicaid plans that would meet the State's budgetary constraints without disproportionately disadvantaging the handicapped.

The Court held that the legislative background to § 504 did not indicate any intention of Congress to address the State’s discretion to determine the appropriate combination of amount, scope and duration limitations on state Medicaid services. The Court declared that in any case such a requirement would be “far from minimal” and “well beyond” the “meaningful access” standard required under Davis. The Court held:

 [T]o require that the sort of broad-based distributive decision at issue in this case always be made in the way most favorable, or least disadvantageous, to the handicapped, even when the same benefit is meaningfully and equally offered to them, would be to impose a virtually unworkable requirement on state Medicaid administrators.

“To the extent respondents further suggest that their greater need for prolonged inpatient care means that, to provide meaningful access to Medicaid services, Tennessee must single out the handicapped for more than 14 days of coverage, the suggestion is simply unsound. At base, such a suggestion must rest on the notion that the benefit provided through state Medicaid programs is the amorphous objective of ‘adequate health care.’ But Medicaid programs do not guarantee that each recipient will receive that level of health care precisely tailored to his or her particular needs.” 469 U.S., p. 302-03.

“The 14-day rule challenged in this case is neutral on its face, is not alleged to rest on a discriminatory motive, and does not deny the handicapped access to or exclude them from the particular package of Medicaid services Tennessee has chosen to provide. The State has made the same benefit — 14 days of coverage — equally accessible to both handicapped and nonhandicapped persons, and the State is not required to assure the handicapped ‘adequate health care’ by providing them with more coverage than the nonhandicapped.” 469 U.S., p. 309.