Case 1:09-cv-11156-JLT

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UNITED STATES DISTRICT COURT DISTRICT OF MASSACHUSETTS COMMONWEALTH OF MASSACHUSETTS, Plaintiff, v. UNITED STATES DEPARTMENT OF HEALTH AND HUMAN SERVICES; KATHLEEN SEBELIUS, in her official capacity as the Secretary of the United States Department of Health and Human Services; UNITED STATES DEPARTMENT OF VETERANS AFFAIRS; ERIC K. SHINSEKI, in his official capacity as the Secretary of the United States Department of Veterans Affairs; and the UNITED STATES OF AMERICA, Defendants. AFFIDAVIT OF ROBIN CALLAHAN Robin Callahan, being duly sworn, hereby deposes and says as follows: 1. I am employed at the Massachusetts Executive Office of Health and Human Civil Action No. 1:09-cv-11156-JLT

Services (EOHHS), where I serve as the Director of Member Policy and Program Development in the Office of Medicaid. I have held this position for two years. 2. Through the Office of Medicaid, EOHHS administers a program of medical

benefits called MassHealth. I have been employed for twelve years by EOHHS and the predecessor agency that administered MassHealth. 3. My responsibilities include the development and implementation of MassHealths

policies regarding eligibility, benefits, cost sharing, and enrollment. These policies relate directly to MassHealths compliance with federal Medicaid law and its ability to obtain federal funding.

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4.

Medicaid, established in 1965 as Title XIX of the federal Social Security Act, is a

public assistance program that provides federal funding (also known as federal financial participation or FFP) to states that pay for medical services on behalf of needy individuals. See 42 U.S.C. 1396. 5. MassHealth is the Massachusetts Medicaid program. MassHealth provides

comprehensive health insurance, or assistance in paying for private health insurance, to approximately one million Massachusetts residents. There are several types of MassHealth coverage, each with its own eligibility rules and benefits.1 6. Each year, MassHealth receives billions of dollars in federal funding from the

U.S. Department of Health and Human Services (HHS). For the fiscal year ending on June 30, 2008, MassHealth received approximately $5.3 billion in federal funding. See Commonwealth of Massachusetts, OMB Circular A-133 Report (June 30, 2008) at 9, http://www.mass.gov/Aosc/docs/reports_audits/SA/2008/2008_single_audit.pdf (last visited Feb. 17, 2010). 7. Specifically, HHS reimburses MassHealth for approximately one-half of its

Medicaid expenditures. See 42 U.S.C. 1396b(a)(1), 1396d(b); 42 C.F.R. 433.10. In addition, HHS pays approximately one-half of the costs incurred by MassHealth in administering its Medicaid program. See 42 U.S.C. 1396b(a)(2)-(5), (7); 42 C.F.R. 433.15.2

For the purposes of this affidavit, references to MassHealth include Commonwealth Care, which is part of the Commonwealths Medicaid demonstration project (operated pursuant to approved Medicaid waivers and eligible for federal funding).
2

Section 5001 of the American Recovery and Reinvestment Act, Pub. L. No. 111-5, 123 Stat. 115, 215, provides an increase in the federal medical assistance percentage for expenditures made between October 1, 2008, and December 31, 2010. 2

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8.

To qualify for FFP, MassHealth must submit to the Secretary of HHS (hereinafter,

the Secretary), and have approved, a State plan (Plan) for medical assistance that describes the nature and scope of the MassHealth program. 42 U.S.C. 1396a(a). If the Plan and any subsequent modifications thereto are approved by the Secretary, MassHealth is eligible to receive matching payments from the federal government of the amounts expended . . . as medical assistance under the State plan. Id. 1396b(a)(1), 1396d(b). 9. To qualify for approval by the Secretary and, accordingly, for FFP, a Plan must

meet several statutory requirements. See generally 42 U.S.C. 1396a(a)(1)-(65). These include various criteria for individual eligibility that ensure that state-assisted health care is not provided to persons whose income or resources exceed certain limits. See, e.g., id. 1396a(a)(10)(A)(i)(IV), (VI), (VII); see also id. 1396b(f). Individuals who do not meet the applicable Medicaid eligibility requirements, either due to their income levels or for other reasons, are not eligible for federal benefits under Medicaid and are not required to be covered by a state. HHS does not pay FFP to reimburse for care provided to individuals who are not eligible for Medicaid under an approved Plan. See id. 1396b(a)(1), 1396d(b). 10. If the Secretary determines that a Plan does not comply substantially with

Medicaid law, the Secretary shall notify such State agency that further payments will not be made to the State (or, in his discretion, that payments will be limited to parts of the State plan not affected by such failure), until the Secretary is satisfied that there will no longer be any such failure to comply. 42 U.S.C. 1396c. 11. An individuals marital status is often relevant to that individuals eligibility for

coverage by MassHealth. See generally 130 CODE MASS. REGS. (CMR) 506.001-506.012, 520.001-520.040. Consider a household of same-sex spouses under the age of 65, wherein one

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spouse earns $65,000, while the other is disabled and receives $13,000 per year in Social Security benefits. If the disabled spouse is assessed as married (which is MassHealths practice), the disabled spouse is not eligible for MassHealth coverage, because the total household income ($78,000) is above $43,716 (300% of the federal poverty level). See 130 CMR 506.007. However, the disabled spouse would be eligible for coverage if assessed as single, as required by DOMA, because his income is well below $32,496 (300% of the federal poverty level). In fact, the disabled spouse would qualify for full Medicaid coverage (MassHealths most comprehensive coverage) if assessed as single because his income is below $14,412 (133% of the federal poverty level). Id. In this example, recognition of a marriage between individuals of the same sex actually results in the denial of benefits and, accordingly, a savings of MassHealth funds. 12. Recognition of a marriage between individuals of the same sex can also make an

otherwise-ineligible person eligible for benefits. As a second example, consider a household consisting of two same-sex spouses under the age of 65, one earning $33,000 per year and the other earning only $7,000 per year. Only the spouse earning $7,000 would be eligible if the spouses were treated as single, because the other spouses income is above the $32,496 eligibility threshold. However, treating the two as married, their combined income ($40,000) is below the $43,716 threshold for spouses, such that both would qualify for coverage. 13. Marriage also bears on eligibility in the context of married couples in which one

spouse is receiving care in a long-term care facility (an institutionalized spouse). Persons in long-term care facilities are eligible for MassHealth coverage if they have less than $2,000 in assets. See 130 CMR 520.003. For purposes of eligibility, however, an institutionalized spouse may transfer up to $109,560 in assets to a spouse who is living at home. Id. 520.016.

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Consider a married same-sex couple over 65, in which one spouse is living at home and the other is institutionalized, and each spouse has $50,000 in individually held assets. When assessed as married, the institutionalized spouses assets can be transferred to the other spouse, which renders the institutionalized spouse eligible for MassHealth coverage. If assessed as single, the institutionalized spouse would be ineligible, because the $50,000 in assets (which cannot be transferred to a non-spouse) exceed the $2,000 eligibility threshold.3 14. Because of the Defense of Marriage Act (DOMA), federal law requires

MassHealth to assess eligibility for federal medical assistance of same-sex spouses as though they are single, whereas different-sex spouses must be assessed as married. Additionally, federal law prohibits MassHealth from obtaining FFP for expenditures made for coverage provided to same-sex spouses who qualify for federal medical assistance when their marriages are honored in the eligibility analysis, but who do not qualify when assessed as single. 15. In 2004, after the Massachusetts Supreme Judicial Courts decision in Goodridge

v. Department of Public Health, MassHealth sought clarification from the HHSs Centers for Medicare & Medicaid Services (CMS) as to how to implement Massachusetts recognition of marriages between individuals of the same sex with respect to Medicaid benefits. 16. By letter dated May 28, 2004, CMS responded that MassHealth must apply the

federal definition of marriage, as provided in DOMA, when assessing eligibility for Medicaid benefits. Letter from Charlotte S. Yeh, Regional Administrator, Centers for Medicare & Medicaid Services, to Kristen Reasoner Apgar, General Counsel, Commonwealth of Massachusetts, Executive Office of Health and Human Services (May 28, 2004). A copy of that letter is attached to this affidavit as Exhibit 1.
3

Other factors will necessarily bear on eligibility in any individual case. The preceding examples are simplified to illustrate the effect of marriage on eligibility. 5

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17.

CMS specifically asserted that federal Medicaid law requires MassHealth to

provide coverage to married individuals in same-sex relationships who qualify when assessed as single, even if they would not qualify when assessed as married (see, e.g., 11, above). Ex. 1 at 1. CMS also asserted that MassHealth cannot treat a married individual in a same-sex relationship as eligible for Medicaid benefits on the basis of combined income or assets with a same-sex spouse, if the individual would be ineligible for benefits when assessed as single (see, e.g., 12-13, above). Ex. 1 at 1. CMS also stated that FFP would not be available for the Commonwealths expenditures for such an individual: DOMA does not give [CMS] the discretion to recognize same-sex marriage for purposes of the Federal portion of Medicaid. Id. 18. On July 31, 2008, the Commonwealth enacted the MassHealth Equality Act. The

law provides that [n]otwithstanding the unavailability of federal financial participation, no person who is recognized as a spouse under the laws of the commonwealth shall be denied benefits that are otherwise available under this chapter due to the provisions of [DOMA] or any other federal non-recognition of spouses of the same sex. MASS. GEN. LAWS ch. 118E, 61. 19. In response to enactment of that law, CMS again informed the Commonwealth by

letter dated August 21, 2008, that DOMA limits the availability of FFP by precluding recognition of same sex couples as spouses in the Federal program. Letter from Richard R. McGreal, Associate Regional Administrator, Centers for Medicare & Medicaid Services, to JudyAnn Bigby, M.D., Secretary, Commonwealth of Massachusetts, Executive Office of Health and Human Services (August 21, 2008) at 1. CMS further stated that, because same sex couples are not spouses under Federal law, the income and resources of one may not be attributed to the other without actual contribution, i.e. you must not deem income or resources from one to the other. Id. at 2. A copy of that letter is attached to this affidavit as Exhibit 2.

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20.

CMS further asserted that the Commonwealth must pay the full cost of

administration of a program that does not comply with Federal law. Ex. 2 at 2. 21. MassHealth implemented a new set of protocols for analyzing the eligibility of

married individuals in same-sex couples following the passage of the MassHealth Equality Act. As of October 31, 2008, MassHealth determines eligibility by treating all married individuals as married, not as single, for the purposes of all relevant eligibility analyses. 22. MassHealth has denied coverage to married individuals in same-sex relationships

who do not meet the eligibility criteria when assessed as married, even though those individuals would be eligible for medical assistance if assessed as single pursuant to DOMA. If MassHealth provided coverage to these individuals, it would expend tens of thousands of dollars annually in additional health care costs. It would also risk exposure to lawsuits from married individuals in different-sex couples who are not likewise assessed as single. 23. MassHealth has provided coverage to married individuals in same-sex

relationships who meet the eligibility criteria when assessed as married, even though they would not be eligible if assessed as single, as required by DOMA. MassHealth preliminarily estimates that, to date, CMSs refusal to provide FFP in such cases will cost the Commonwealth at least $640,661 and as much as $2,224,018 in lost FFP.

Signed under the pains and penalties of perjury under the laws of the United States on this _____________ day of February, 2010.

__________________________ Robin Callahan

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Exhibit 1

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DEPARTIIENT OF HEALTH & HUMAN SERVICES Centers f~r Medicare & Medicaid Seivices JFK Federal Building, Government Center Room 2325
Boston, Massachusett 02203 617-565-1188

C~S'
Cci.rr7., tor ;t~'IICA/I'E J~ 'l1EDlCiJ10 j:7t7tlias

Office of the Regional Admiustrator / Region I

May 28,

2004

Knsten Reasoner Apgar

General Counsel

The Commonwealth of Massachusetts Health and Human SerVices Executive Offce of 1 Ashburon Place, Room 4409 Boston, Massachusetts 02408
Re: lrplementation of Go.odridZ decisiQ.U

Dear Ms. Apgar:

This is in response to your letter of

March 22,2004 to Brian Cresta regarding issues arsing from

the Goodridge decision and parcularly how that decision interacts with the Federal Medicaid
statute. In general, the Deparment of

Health and Human Services does not provide legal opinions. However, we certaiy want to help the Commonwealth avoid potential conficts with Federal matcmng fuds. law, which could result in loss of Federal
the Defense of

You are undoubtedly aware that under

Marage Act (DOMA), Pub. L. No. 104~

199; 1 U.S.C. 7,

In determining the meaning of any Act of Congress . . . the word "marrage" means only a legal union between one man and one woman as husband and wife, and the word "spouse" refers only to a person of the opposite sex Who is a husband or a wife.
In large.par, DOMA dictates the response to your seven questions which we will answer below. In short, the DOMA does not give the Cnters for Medicare & Medicaid Services (eMS) the Medicaid. the Federal portion of
discretion to recogne same~sex marage for puroses of

i, If the state determes that the applicant spouse in a same-sex marage is not eligible for Medicaid, but the applicant would be eligible if not marred, would the state's denial of

Medicaid benefits violate Federal Medicaid law?

Yes. If the applicant is eligible for medical assistance under the state plan approved under title xix, the state must provide medical assistance to the applicant or be in violation of Federal Medicaid law. If, for example, under state law the applicant is ineligible because his same sex spouse has income or resources which are deemed to him thereby making him ineligible, this income and
deeming would not be permitted under the Federal Medicaid statute. Deeming of

resources is only pemiitted between spouses, as defined by DOMA, or from a parent to a minor

Case 1:09-cv-11156-JLT
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or disabled child. Because a same sex couple are not spouses under Federal

law, the deemed income or resources which would result in the applicant's ineligibility cannot be recognized
under Federal

law. .

2. Conversely, if

the state determes that the applicant spouse in a same-sex mariage is

eligible for Medicaid, but the applicant would not be eligible, if not-maried (for example, where the spouse's medical expenses are counted to meet applicant's deductible or spenddown), would FFP be available on the state's expenditues for the applicant spouse?
No. If

the reason that the applicant is eligible under the state's determnation is the state's
the same sex parner as a spouse, FFP would not be available in the state's

treatment of

expenditures for the individual. The individual may be eligible for a state only medical assistan.ce benefit.
3. Similarly, if the state treats the same-sex spouse .of an institutionalized applicant as the

"community spouse" under the "spousal impoverishment" rules, and detennes that the .

institutionalized applicant is eligible for Medicaid when the applicant would not be eligible if
not married, would FFP be available on the state's expenditues for the institutionalized

individual?

If the applicant would be ineligible if he or she were treated as being unmaried, no FFP would
be available in.the state's expenditues for that individuaL. The spousal impoverishment community spouse. Under protections only apply to an institutionalized individual with a

DOMA a same sex couple would not qualify as an individual with a spouse.

4. Under Federal Medicaid law, a trst established by the spouse of an institutionalized Medicaid applicant is considered to be established by the applicant. If the same-sex spouse of
an institutionalized Medicaid applicalt establishes a trst, may the state, in dtermning
Medicaid. eligibilty, consider the trst to be established by the institutionalized applicant?

Not in their capacity as a spouse; however,.the rule under which a trust wil be considered to be established by an institutionalized individual also applies when an individual other than a spouse
establishes the trst. The institutionalized individual wil be considered to have established the

trust if his or her assets were used to form all or pait of the corpus of the trust and another individual wllo has the lega. authority to act in olace of or on behalf of the individual establishes
the trust. Whether a paricular individual has the legal authority to act in ths capacity for the

institutionalized individual is a matter of state law.

5. Under federal Medicaid law, if an institutionalized Medicaid applicant tranfers assets for less than fair market value to the applicant's spouse (or for the spouse's benefit), the transfer does not result in a penalty. If an institutionalized Medicaid applicant transfers assets for less than tir market value to his same-sex spouse, may the state treat the transfer as a permissible transfer that results in no penalty?
No. The provision governing asset transfers would not apply in the context of a same sex spouse since under DOlVIA that individual is not a spouse.

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6. Where all federal Medicaid requirements for placing a real estate lien otherwise are present, may the state opt not to place a lien, so long as the same-sex spouse is lawflly residing in the home?
Each state follows its own laws or regulations on imposition of

Hens and on estate recoveries

within Federal guidelines. Federa1language which restricts imposition of liens or adjustment or recovery in tl!e case of a lien unti afer the death of the suriving spouse would not apply to the . surviving member of a same sex couple. However, while imposition of a lien on real propert is optional, estate recovery from real propert subject to a lien is mandatory.
7. Where the state otherwise has a claim inder federal Medicaid law against a deceased the recipient's estate, may the state opt not to require repayment until afer the death of
suiving same-sex spouse? If repayment would otherwise be required under federal

Medicaid law, may the state amend its undue hardship criteria, so as to waive repayment until after the death of the surviving same-sex spouse?

Again, each state follows its own laws and regulations on estate recovery, consistent with Federal guidelines. DOMA, of course, effectvely prohibits the recognti?n of same sex spouses.

I hope this information is helpful as Masachusetts considers its response to the Goodridge decision.
Sincerely,

.. ...

(!ll.... C. t"f-CZ)-~~l?-.-!--(;,
Charlotte S. Yeh, MD, F ACEP

Regional Adminstrator

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Exhibit 2

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DEP AR1Mr-H' OF HEAL'I & HU1AN SEJVICES Centers for Medicare & Medicaid Services JFK Fed"ral Building, Governent Ccnler Room 2275
Boston,. Massachuset 02203

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. ~.; ~'.!.:~ -:"; ~:';: : ' : ; ":.,;. '-;. :' .:'.' ~";':: ''.~"'. ~';~"~;~ : :1: ,"0'; ',rd' d:!.

a/(lFNS h~ tj~S;fUlE ~ ltftl;"lLA/O rlvrCE

Division of Medcaid and Oidr's Heth Opti / Bo Region Ofce

August 21,2008
r21 :~. ":"' t:~ ~ \.~ ,:,' ':'::':' -.~!

JudyAn Bigby, M.D., Secretar

Health and Human Services One Ashburton Place Boston, Massachusetts 02108
Executive Offce of

I.

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t.: t:.J' h ~ ; ~'. 2 t l' ~~.~~ .'

Dear Dr. Bigby:

We understand that recently the legislature passed and the Goveror signed an Act Relative to

Equality in the MassHealth Program. This Act (Chapter 217 ofthc Acts of2008) amended Chapter 1 I 8E ofthc General Laws by adding 6L This section provides that notwithstanding
the unavailability of

Federal fiancial paricipation (FFP), no person who is recgnized as a

spouse under the laws ofthe Commonwealth shall be denied benefits that are otherwise available

under this chapter due to the provisions of 1 U.S.C.' 7 or any other Federl non-recognition of spouses of the same sex.
We are ~nclosing a copy ofa letter we wrote to Kristen Reasoner Apgar on conc(:ming the implcmentatioiiofthe Goodridge decision and the

May 28,2004,

Defense of Marriage Act (DOr.tA), Public Law No, 104-199, 1 U.S.C. 7. i We thought YOll would be attempting to implement the Goodridge decision in MassHealth in accordance with the guidance we provided you in that letter. Apparently, the limitation on FFP prevented you from doing so without

legislative approval. Your current law seems to adress thi.

letter ndicated, an as your new State law appears to recogne, DOMA applies to all Federally funded program including Medicaid. DOMA limits the availability of FFP by precluding recognition of same sex couples as "spouses" in the Federal program DOMA also preclucies the State from narowing Federal Medicaid entitlements by considerng As ur May 28, 2004 individuals as spouses who would not be spouses under Federal

law.

lDOMA provides that iii determining the meaning of any Act of Congress, or of any mling,
rcgulation, or interpretation of the various administrative bureaus and agencies of the 'United

State, the word "mariage" means only a legal union between one man and one woman as husband and wife, and le word "spouse" refers only to a person of the opposite sex who is a

husband Or a wife. '

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Page 2 ~ JudyAnn Bigby, M.D., SecretaTY

All Federal funds, including Title XLX (and Tite XXI) funds, used to re:irburse the State for benefits or administrative costs, arc covered under DOMA. You must pay the full cost,
including the cost of administration, of a program that does not comply with Federal

law. To

assiire there is no conf1ct and for MassHcalth to remain in compliance with all applicable Fcdcrallaws, you can elect to set up a separate State financed and administered program in
which no Federal funds are used if

the State believes that long-ter cae or any other Medicaid

benefits in the form of spousal protections might be provided as a result of a same sex marage under State law. Or, you can elect to apply your same sex rnairage law in the context of
result from the difference between your defiition of

MassHealth, as long as you separately identify IDy serice ard administrative expenditures that spouse and the DOMA definition and do not submit any claims for :FFP fr those expenditures.

In addition, you cannot use State law to deprive anyone ofFcdcral entitlements in those progranls by considering individuals who would not be spouses under Federal law to be spouses iii MassHcalth pursuant to State law. For example, under the Medicaid statute, deeming of
income and resources is only pertted between spouses as defined by DUMA. Therefore,
because same se~ couples are not spom;es u~der r.',~deral law, thp income and resources of one
may not be attributed to the of

her wrtout actual contribution, l,c, you m:;r i10 deem income or

resources from one to iJ 0"t!ler.

\\'e would like to meet \vith you and your staff implementation of Chapter I i 8E of

within the next several weeks to ,discuss the new 61 of the General Laws, Allen Bryan \viII be contacting appropriate stnifto set up a
the Goodridge decision and your planned implementation of

date and time for a meeting, Besides Mr. Bryan, Nancy Ncmon, Irvin Rich, and

I wil attend.

Please contact AIle!1 8r)/an if ymrlmvt; H)r~rlI''t~,before the meeting. tIe can be
reached at (617) 565-1246.

~1JLr
Richard R. McGreal

Sincerely,

Associate Regional Administrator

Enclosure

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CERTIFICATE OF SERVICE I, Jonathan B. Miller, hereby certify that this document filed through the ECF system shall be sent electronically to the registered participants as identified on the Notice of Electronic Filing (NEF) and paper copies shall be sent by first-class mail postage prepaid to: Mark A. Thomas 482 Beacon Street Boston, MA 02115 Proposed Intervenor

/s/ Jonathan B. Miller______ Jonathan B. Miller Assistant Attorney General