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My purpose this morning ... it's not this morning, as you can see and I didn't think we'd be here this long...my purpose this afternoon is not to second-guess the wisdom of either of these regulatory impositions, but to advise this Committee and the Board of the devastating effect that rapid and unsupported policy changes have upon smaller grantees.

Rapid and unsupported policy changes have a devastating effect upon smaller grantees.

discuss a little bit of the history of Legal Services of Northeast Missouri. Our firm was originally funded in 1980 as primarily a staff attorney provider. We opened our doors to clients in May of 1981. We were one of the last field programs funded in the United States by the Legal Services Corporation.

In laying our plans for delivery of services, great care was taken to honor the public trust that the Corporation and the public had placed on us. We rented our office space from the Federal Office Building in order to fully utilize the federal law library maintained by the U.S. District Court, which sits in Hannibal twice a year.

We purchased used office furniture, and basic, by no means extravagant, office equipment. Where possible, to show our good faith and interest in the community, we purchased our goods and supplies from businesses operating within our 14-county service area.

However, as a result of our frugality and our long-range planning, in 1982 we accumulated a surplus of over $80,000 in legal services funds. We developed a five-year plan to expend this surplus, a plan that included the implementation of judicare components. It was our feeling that our clients, in certain types of cases, were more economically served through the utilization of judicare. We also saw judicare as a means by which to educate our small and rurally isolated private bar to the legal needs of the poor.

Our judicare component was developed after months of in-house study. Very little outside support was either in existence or made available for an integrated delivery system.

Shortly thereafter, the corporation saw fit to mandate private attorney involvement and also to restrict the carryover of surplus LSC funds. As a result, Legal Services of Northeast Missouri was required to reduce our surplus to below 10 percent of our annualized budget.

With Corporation approval, we implemented a stepdown program which included the purchase of expensive word processor equipment and the accelerated referral of cases through our judicare component. However, effectuation of this plan caused our agency considerable problems. We had no data or support to guide us when we referred judicare cases but the very short history of our own judicare experiences.

In allocating cases, we used our average cost per case per date to estimate how many cases we had to open in order to spend down our surplus. Unfortunately, the estimated expense was grossly in error. As a result, our annual audit revealed that the program had gone from an $80,000 surplus to a $54,000 LSC deficit from fiscal 1982 through fiscal 1983.

I was appointed interim Executive Director in March of 1983, just about the time that someone from the Corporation realized we were in deficit and called me—an employee who had never in the past been involved in fiscal considerations nor had any training in that area—to fix the problem as soon as possible.

After two very painful years of total austerity, salary give-backs by staff attorneys, and layoffs, our program now enjoys a very modest LSC and non-LSC funding surplus.

Please remember that before you is not just the Executive Director of Legal Services of Northeast Missouri. You have also before you the Chief Fiscal Officer, the Fundraising Officer, General Counsel, Training Coordinator, Litigation Director, PAI Coordinator, Chief Personnel Officer, Managing Attorney, and Public Relations and Community Education Director of Legal Services of Northeast Missouri.

These functions are all performed in addition to that function for which I was primarily hired, that of being a simple country lawyer providing quality legal representation to over 25,000 low-income individuals in northeast Missouri.

As a Committee of One, we, the Committee, urge this Committee to consider patience, caution, and, most importantly, planning in effectuating any policy change, in this instance, the changing of the structure of state, national, and clearinghouse services.

Speaking as a small program director ... it is my feeling that the proposal would virtually eliminate the availability of the many dozens of experts in substantive areas of the law that the various national support centers provide.

Almost daily, we make available to our staff, our judicare and our pro bono counsel Clearinghouse articles, practice manuals, and case assessments and developments. I do not believe that the cost to me of all these collective services would be equal, dollar for dollar, to my increased funding under this proposal. The basis of this belief is founded in my belief that large urban programs would use additional funding to develop or subsidize existing in-house support services. Because the bulk of the funds would not be subgranted, national support centers would have to raise their price in order to make services available to me.

By way of example, in 1986 our program requested a training event in consumer law from a sister agency, a field program. The sister agency was a large urban project. We were required to pay a daily rate for the trainer, plus his expenses. The cost to us was over $220 per day for two days of services. Please compare this two-day event expense with the multitude of practice volumes, Clearinghouse articles, NCLC newsletters, and individual case assessments provided by the National Consumer Law Center. In addition, National Consumer Law Center attorneys conducted training at the NLADA new lawyer training and annual meeting, which members of my program attended.

If NCLC charged us a sum even close to the fees charged by our sister field program, the national support for consumer services alone would far exceed our present annual budget for training and travel in 1987. Now please multiply the cost to me of this one service by 17, representing 17 national

1. See 45 C.FR. Part 1614 (private attorney involvement) and 45

C.E.R. Part 1628 (recipient fund balances).

In addition, I, like perhaps several members of this Committee, can't see subsidizing several separate management entities for national support centers. It would seem to me that some combination or sharing of management might serve to better utilize the limited funding that we all have available to

us.

support centers. 2

Another example. In 1983 and 1984, the Corporation with little or no direction granted almost $4,000 in unsolicited special grant funds for client board training. Though our staff had numerous conversations to discuss the use of these funds, the truth was that we could not effectively cut time out of our caseloads to plan and effectuate a training event.

In 1985, I made a commitment to utilize these funds in 1986. I guess I should have sent the money back, but I made the mistake of believing that, since you all sent it to me for the purpose of client board training, you must have wanted me to train my client board members.

I solved my problem by contacting and requesting assistance from the Midwest Training and Resource Center. The Center planned, prepared materials, solicited the trainer, and generally designed a seminar, which we not only made available to our client board members, but opened to other grantees. We hosted board members from as far away as Nashville, Tennessee, and Omaha, Nebraska. While staff was wholly employed in this event for the week of the training, the hours of time and planning and preparation were performed by the Center. As such, no great amount of disruption occurred in our caseload. This type of support offers my management committee the flexibility to be a good trainer while attending to my caseload.

Finally, please consider that I have a staff that voluntarily accepted pay cuts in order to balance our budget. While avoiding the layoff of a brother attorney was considered when we elected to have paybacks, the primary consideration in the salary give-back was to provide continuity of services to our clients.

Since balancing our budget, raises have been few, small, and irregular. If you placed at my disposal an additional $10,000 or $12,000, how do I justify not granting the money for support to these employees as raises, or even possibly the subsidy of badly needed equipment which we haven't had the funding to either replace or acquire in the first place?

I'm not deluded into believing that there is no room for improvement in support services and in state support-remember that I'm from Missouri. Show me state support even exists before you tell me to fix it.

I might add that the gentleman, Mr. Wallace, has left, but I am one of the radical few in Missouri who has advocated the elimination of seven separate legal services field providers and replacing it with a statewide proposal. By way of analogy though, I'd like to say that, if I were to make that proposal to the six other directors in my state, I suspect I would have the same reaction that Mr. Icahn got from U.S. Air.

The fact of the matter is institutions change very slowly. It might seem self-defeating that I would advocate elimination of the artificial guidelines that created my program, but I would challenge each of you to manage the program that was left after every other field program carved out their counties and their place in the world and left 14 northeast Missouri counties in this nation to be served by one agency.

That's what I'm doing. I've got all the leftovers in this country after everybody else was funded.

Finally, I would prefer that the Corporation clean up its own house. And, inefficient as management of national support is, it is ahead by leaps and bounds of the Corporation because of the rapid staff turnover and the rather fickle change in policy and direction on the part of this Board.

The support provided by the Corporation is virtually nonexistent. By way of graphic example, I have in my hand the letter I received with my refund toward my airline passage to attend a seminar designed by the Corporation to train me in the new CSR procedures and the computer that you all were going to buy me.“

Well, we're a small program. I point out by way of example, three-tenths of one percent of my annualized grant was expended for me to come here this morning ... this afternoon, all day and all weekend. That's because I have to fly economy. And to fly economy, that means I have to be away from my family over a Saturday night and, because we don't have a lot of money, I stay in a fleabag hotel where they wouldn't even turn on the air conditioning for me last night.

The point I'm trying to make is that we have to plan in advance to attend any kind of training, and we have to have the money, and I will assure you all that every penny that's spent by Northeast Missouri Legal Services is in my head and I'm

I'm from Missouri... Show me state support.

I would like to see more funding for Clearinghouse to not only continue to do what they do, but possibly to develop state support services for the seven states, as Missouri, who don't have any state support. I think they (could) develop brief banks and state-by-state substantive articles and review materials.

3. Michael Wallace, an LSC board member, had earlier asked why

legal services funds should not be granted to one provider in a state, which would then make its own decisions on how much state support or local provision of service it wanted. Transcript, LSC Committee on Provisions for the Delivery of Legal Services 226-33

(Mar. 7, 1987). 4. In late 1985, LSC began to provide parts of a computer system to

each field program primarily to standardize the Case Statistics Reporting (CSR) system. Training on using the new system was abruptly cancelled in the spring of 1986. Some programs have yet to receive all of the computer system. Linda Catalano of Legal Assistance of North Dakota stated at the hearing, "We are one of 18 or 20 programs that haven't seen the first piece of our computer equipment from LSC... we've got the screwdrivers. We've got the manuals, and I know, somewhere along the line, we're going to see the computer." Id. at 360-61.

2. Legal Services of Northeast Missouri's budget for training in 1987 is

$4,500, plus $4,500 for all travel, including client-related travel, board travel, and travel for training purposes. Under one estimate, Legal Services of Northeast Missouri would receive an additional 3 percent of its $221,000 LSC grant, or $6,630, with which to subcontract with support entities.

Mr. Mark: I suspect we were one of the last to carve out our field programs and by that time there just wasn't state support money to be had. Rick (Teitelman of Legal Services of Eastern Missouri)... sitting behind me probably knows more about it than I do.

aware of where it is and where it's going, and while $31.95 may not seem like a lot of money to everybody here today, that's what I had to eat, and (I) get nothing for when those training sessions were cancelled and I had to pay a penalty on my airline ticket.

I would have been terribly offended if you hadn't let me address you today, because three-tenths of one percent of my annualized budget would have been spent for nothing.

Finally, I'd like to make one comment and I think this is reinforced by what I've witnessed here today. I have never been to one of these (LSC meetings) before and I assure you I'll never be back.

The Corporation, the support centers, and the field programs have to end the animosity which may be caused by ideological differences, animosity accumulated over the years, (and) try to get along in order that we might better serve our clients.

Mr. Valois: Since you don't have a state support unit, what do you do when you ... you heard these folks today talk about what they perceive to be their need. What do you do?

Mr. Mark: Well, I've heard a lot of concepts here today in discussing state support which I've never heard before. As I pointed out, for training, I purchased it from a sister program for $220 a day.

Mr. Valois: How about if you have what you think is a peculiar or new or discrete legal problem that somebody else in your state may or may not have experienced and you don't have a state support unit to turn to to ask about that. What do you do?

The Corporation, support centers, and field programs have to end the animosity.... We in the field do not care about (ideology .... It] has nothing to do with what we're doing.

Mr. Mark: If the national support center can't address it for us and help us with it, we tell the client, “we can't help you.”

Mr. Valois: Do you have some law schools in Missouri?

Mr. Mark: Yes. The closest is 90 miles away. It's very difficult to utilize those services without adding considerable expense.

Mr. Valois: What kind of library facilities are available to you.?

We in the field don't care, and television has played an important part in rural areas, because I can use your big city terms. We in the field do not care about belt line issues. Ideology has nothing to do with what we're doing.

We daily strive to provide excellent legal assistance to our clients. We do so in a judicious and economical manner. By our perception, legal services has undergone an evolutionary process which, while sometimes painful, has resulted in a unique and successful collaboration of government, private agencies, and private lawyers

In our mind, despite the difficulties, the provision of legal services represents the best of government largesse. Not by your efforts in the Corporation or through the efforts of the support centers, but by and through our efforts out in the country. We simple country lawyers and city lawyers, caring about the needs of our clients.

I thank you for allowing me to address the Committee today.

Chairman Uddo: Thank you. Mr. Mark, it would have been a great loss if we hadn't let you address us today. Your comments were very well taken and I hope you do come back to some of these meetings, because I think you're very insightful and very wise and we could probably stand to hear from you and people with your experiences more often.

Mr. Mark: Right now, as I said, the office space is in the Federal Courthouse and they have a pretty decent federal library. Our in-house library is mainly composed of national support center publications, BNA. We used to buy a lot of CCH, but frankly it just got too expensive for us. We have our own set of Missouri Statutes ... annotated set of Missouri Statutes. It's very probably the smallest field program library in the country, but, as I said, right upstairs and made available to us is a complete federal library. Across the street in the State Courthouse, there is a complete set of West Regional Reporters, so...

In terms of finding the law in those sources, we are pretty lucky. If I had to find legislative history, I would be lost without national support.

I'd just also like to say in listening to what was going on here today, I think this Committee really can understand why the free market wouldn't dictate what services are necessary from national support. I think the best way to analyze this is just to look at what is an average of about $8.50 per poor person across the county. If you just sent out a voucher to every poor person for $8.50 and said, “go for it, get all the legal services you need,” none of those vouchers would be used because there's no such thing as $8.50 worth of legal advice.

Mr. Mark: Thank you.

Chairman Uddo: Do you have any questions, Bob? Why hasn't Missouri had state support?

Mr. Mark: I have no idea.

Thank you.

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Chairman Uddo: Anyone know why...

120

National Health Law

Law Program 2639 S. La Cienega Blvd., Los Angeles, CA 90034, (213) 204-6010; 2025 M St., NW, Suite 400, Washington, DC 20036, (202) 887-5310

I. OBRA-86 and the Lewis Litigation

[graphic]

A. Background

Section 9406 of the Omnibus Budget Reconciliation Act of 1986 (OBRA-86) introduced an alienage restriction into the Medicaid statute for the first time.' Prior to the enactment of the statute, alien eligibility was addressed only by regulation. From 1971 to 1973, under a regulation no longer in effect, the Department of Health and Human Services (HHS, then the Department of Health, Education, and Welfare) interpreted the statute to require eligibility without regard to citizenship status. 2 However, in 1973, the agency promulgated a new regulation limiting eligibility to lawful permanent residents (LPRs) and aliens permanently residing in the United States under color of law” (PRUCOL).

The regulation was challenged in Lewis v. Gross, * a statewide class action suit filed in New York in 1979. The federal district court struck down the Medicaid alienage requirement on the ground that the regulation was not authorized under the Medicaid statute.” The Lewis court rejected HHS's arguments that the statutory alienage requirements under AFDC and SSI were incorporated by reference, and that Congress subsequently ratified the Medicaid regulation by acquiescence. Addressing the argument that the alienage restriction was incorporated under the statute, the court found that the Medicaid statute authorizes medical assistance for AFDC-related and SSI-related recipients because of their financial need. Accordingly, the court held that HHS had no statutory authority to incorporate the alienage requirements under AFDC and SSI for Medicaid eligibility, because Congress "knew how to impose alienage requirements in social welfare programs when it intended, and its refusal to impose such a requirement on Medicaid should be respected."8 The court also rejected the ratification argument,

New Developments in Health

Benefits for Aliens

Under the Omnibus Budget Reconciliation Act of 1986 and the Immigration Reform and Control Act of 1986, alien access to Medicaid benefits has been simultaneously restricted and expanded. The new immigration law has additional impact on public health benefits for newly legalized aliens beyond Medicaid. Below is an analysis of those portions of these acts that concern health benefits for indigent aliens.

1. Omnibus Budget Reconciliation Act of 1986, Pub. L. No. 99-509,

1986 U.S. Code Cong. & ADMIN. News pamphlet 10 (to be codified at 42 U.S.C. § 1396a) (hereinafter OBRA-86). The new

provision took effect on January 1, 1987. 2. 37 Fed. Reg. 1977 (1972) (intended for codification at 42 C.FR. §

248.50). 3. 42 C.FR. $ 435.402(b) (1983). 4. Lewis v. Gross, No. CV-79-1740 (E.D.N.Y. July 14, 1986) (plain

tiffs' motion for summary judgment granted). 5. Id., slip op. at 56. 6. Id. at 44, 49. 7. Id. at 56. 8. Id. at 54.

[blocks in formation]

HCFA has issued a transmittal notice to the states (which is currently under revision),'S that requires all applicants for Medicaid-even applicants for emergency service coverage only—to show proof of alien status. Verification of citizen status is clearly pointless, since such status is irrelevant to eligibility for emergency services coverage. HCFA may also take the position that states must require alien applicants to present or apply for a social security number as a condition of eligibility under the new provision. 16 These two actions by HCFA could create serious barriers to emergency care for the intended beneficiaries of this legislation.

Providers as well as beneficiaries have an enormous stake in this issue. Now that hospitals are required by federal law to give emergency care to any person in need, the hospitals may have to bear the majority of the financial loss; Medicaid reimbursement for emergency care for beneficiaries can substantially reduce this burden on the facilities.

12

All aliens who are otherwise eligible for Medicaid under their state plan are now eligible for Medicaid reimbursement for emergency services.

2. The PRUCOL Definition Under Medicaid

1. Emergency Services

18

19

“Permanently residing under color of law” (PRUCOL), is defined for the first time in the legislative history of OBRA-86 as including “all of the categories recognized by immigration law, policy, and practice.”:17 For purposes of eligibility for Medicaid, the stated definition expands and unifies the definitions that were previously relied upon.

The 1973 Medicaid regulation that restricted eligibility to PRUCOL aliens was adopted from a 1972 statutory provision in the SSI program. The same restrictions were adopted for AFDC by regulation in 1973, and statutory authority was incorporated in 1981. None of the statutes or regulations (nor the Immigration and Nationality Act) define “PRUCOL,” and the phrase has been given differing interpretations under the various programs. In fact, as recently as July 1986, HHS issued interpretive guidelines that establish two separate PRUCOL definitions for Medicaid eligibility. 20 The guidelines implement a broader PRUCOL definition under SSI for SSI-related recipients and a narrower PRUCOL definition under AFDC for AFDC-related recipients. 21

The definition for SSI-related people is based on a consent decree entered in the case of Berger v. Heckler.22 The Second Circuit approved the definition of PRUCOL for SSI

All aliens who are otherwise eligible for Medicaid under their state plan are now eligible for Medicaid reimbursement for emergency services. “Emergency medical condition” is defined as: a medical condition (including emergency labor and delivery) manifesting itself by acute symptoms of sufficient severity (including severe pain) such that the absence of immediate medical attention could reasonably be expected to result in

A) placing the patient's health in serious jeopardy,
B) serious impairment to bodily functions, or
C) serious dysfunction of any bodily organ or part.

This is the same definition as in the Consolidated Omnibus Budget Reconciliation Act of 1985 “anti-dumping” provision,' which requires all hospitals that take Medicare patients to screen and treat anyone who presents him or herself with an emergency medical condition. The two laws working together require hospitals to screen and treat aliens in need of emergency care, and provide states with Medicaid reimbursement for such care for persons eligible for Medicaid except for their citizenship status.

Implementation of these provisions may be slowed by the actions of the Health Care Financing Administration (HCFA).

13

15. Dep't of Health & Human Servs., Health Care Fin. Admin., State

Medicaid Manual Transmittal No. 24 (Jan. 1987). 16. Letter from C. Ross Anthony, Assoc. Adm'r for Program Dev.,

Health Care Fin. Admin., to Judith Waxman, Nat'l Health Law
Program (Mar. 4, 1987). The letter cites section 1137 of the Social
Security Act, 42 U.S.C. § 1320b-7 (1984), which provides that
states must require Medicaid applicants to furnish a social security

account number as a condition of eligibility for benefits. 17. H.R. REP. No. 727, supra note 12, at 111, 1986 U.S. CODE

CONG. & ADMIN. News 3701. 18. 42 U.S.C. § 1382(a)(B). 19. 45 C.ER. § 233.50; 42 U.S.C. § 602(a)(3). 20. Dep't of Health & Human Servs., Health Care Fin. Admin., State

Medicaid Manual Transmittal No. IM-86-3 (July 1986). 21. Id. 22. Berger v. Heckler, 771 F.2d 1556 (2d Cir. 1985). While Berger

created a definition of “PRUCOL” for SSI recipients, AFDC still retains its more limited definition for AFDC eligibility.

9. Id. at 55.
10. OBRA-86 at $ 9406(a).
11. Id.
12. H.R. REP. No. 727, 99th Cong., 2d Sess. 111, reprinted in 1986

U.S. CODE CONG. & ADMIN. News 3607, 3701.
13. OBRA-86 at $ 9406(a).
14. Consolidated Omnibus Budget Reconciliation Act of 1985, Pub. L.

No. 99-272, § 9121, 100 Stat. 82, 164-67 (1986).

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