ON APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF PENNSYLVANIA
Before Adams, Gibbons and Weis, Circuit Judges.
The plaintiffs, class representatives, appeal (1) from an order granting defendants' motion to modify a consent final injunction, and (2) from an order denying their motion for additional preliminary injunctive relief supplementing that granted in the consent final injunction. The complaint sought enforcement of those sections of Title XIX of the Social Security Act which require states participating in the federal Medicaid program to provide early and periodic screening, diagnosis and treatment (EPSDT) to eligible individuals under the age of 21. 42 U.S.C. § 1396d(a)(4)(B). The plaintiffs are the Philadelphia Welfare Rights Organization, a voluntary association of welfare recipients, Policy Advisory Committee, an association of parents of children receiving day care services, and several individual parents receiving public assistance, whose children are eligible for EPSDT services. The defendants are the Governor and the Secretary of the Department of Welfare of Pennsylvania, and the Executive Director of the Philadelphia County Board of Assistance. These public officials are responsible for Pennsylvania's compliance with federal Medicaid statutes and regulations. The consent decree which was modified was entered on March 15, 1976. We affirm the order modifying it. The motion for a preliminary injunction granting supplementary relief was made on March 28, 1978 and denied on October 3, 1978. We reverse that order and remand for further proceedings.
FACTS AND PROCEEDINGS IN THE DISTRICT COURT
Under Title XIX of the Social Security Act federal funds are made available to the states to cover the major part of the cost of medical assistance for the poor. As a condition of participation, the statute requires each state to make EPSDT services available to children of eligible poor families. Under the EPSDT program, children are screened for medical abnormalities by physical examinations and a battery of specified medical tests. Most problems discovered by screening are then treated under the EPSDT program, either by the examining physician or by other participating doctors. Children are eligible for screening under the EPSDT program from infancy, on a periodic schedule of one screen every three months up to the age of a year and a half, and thereafter once a year until age 21.
Regulations of the United States Department of Health, Education and Welfare (HEW) promulgated under 42 U.S.C. § 1396d(a)(4)(B) require that participating states establish an administrative mechanism to identify available screening and diagnostic facilities and to assure that eligible children receive EPSDT services. These regulations have two aspects: outreach, which involves the identification and recruitment of patients, 42 C.F.R. § 444.55 (1978), and administration, which involves the delivery of services. 42 C.F.R. § 441.54 (1978). In Pennsylvania the EPSDT program is administered by the Department of Public Welfare. In most localities the Department operates its outreach program through County Boards of Assistance. The Boards are responsible for notifying eligible persons of the existence and nature of the program, for arranging screening appointments if they are desired, and for assisting with transportation. In the Philadelphia and Pittsburgh metropolitan areas the County Boards are responsible only for informing new welfare recipients of their eligibility for EPSDT services. The task of actively seeking out clients, informing them of the available services, and arranging screening appointments is performed by two contractors, Philadelphia Health Management, and Health Screening Corporation. These contractors run an extensive outreach program. The State Department and the contractors also share responsibility for the recruitment and payment of physicians for the program. For in Pennsylvania, unlike many other states, both screening examinations and treatment are performed predominantly by private physicians.
b) Early History of the Litigation
The plaintiffs' complaint was filed on February 13, 1973. Its central allegation was that although Pennsylvania was a Medicaid participant it had not complied with the provisions of Title XIX requiring an EPSDT program. The defendants defaulted, and on September 7, 1973 the district court entered a default judgment. That judgment set forth an injunction directing the defendants to refrain from depriving eligible persons of the screening, diagnosis and treatment required by 42 U.S.C. § 1396d and required the defendants within 30 days (a) to promulgate regulations extending EPSDT coverage to all eligible persons, and (b) to implement a statewide outreach program. The defendants were required to establish, within 60 days, a full statewide program for all eligible children. They were also directed to request appropriations from the Pennsylvania legislature adequate to implement the required EPSDT program.
In December, 1973, the plaintiffs obtained an order directing the defendants to show cause why supplementary relief should not be granted. Negotiations followed, and in early 1974, the parties entered into an agreement providing for supplementary relief. This agreement was approved and adopted by the court as a consent final judgment on March 15, 1974 (the 1974 decree). The decree established a structure for the implementation of an EPSDT Program. It contained an express waiver of Pennsylvania's Eleventh Amendment or Pennsylvania law immunity. The defendants agreed to keep records of all EPSDT screens for two years. At the end of that period, for each eligible recipient for whom the Commonwealth could not show a health screening profile, a voluntary release, or evidence of an appointment for screening within 30 days, it would pay 133% Of the cost of a "full screening visit" under the program. This penalty payment provision was designed to provide an incentive for implementation of an effective outreach program.
In late 1975 the plaintiffs, dissatisfied with the defendants' performance under the 1974 consent decree, moved to hold them in contempt. Before that motion was adjudicated the parties entered into a new agreement. The plaintiffs agreed to a postponement of the payment provisions of the 1974 decree, on condition that the defendants perform 180,000 EPSDT screens during the 1976 calendar year. In the event that the defendants met this goal during 1976 the entire 1974 decree would become void. If not, the payment provisions would remain in effect. The Commonwealth undertook to perform 210,000 screens in 1977, to provide screening appointments within 45 days of a request, and to schedule treatment for medical conditions discovered within 60 days of the screening. The Commonwealth also undertook to make other specific improvements in the Pennsylvania EPSDT program. The district court incorporated the new consent agreement as an order of the court on March 15, 1976 (the 1976 decree). Thus under the 1976 decree the defendants were obliged to achieve 180,000 screens by December 31, 1976 or incur liability for the payments provided for in the 1974 decree.
With the December 31, 1976 deadline approaching, the Commonwealth defendants moved, pursuant to Fed.R.Civ.P. 60(b), to vacate or modify the 1976 consent decree. The motion acknowledged that the goal of 180,000 screens in 1976 would not be met, and suggested that the 210,000 screen goal for 1977 might also be unreachable. The defendants contended that they had attempted good faith compliance, but fell short because of the refusal of EPSDT services by many eligible recipients, the failure of many eligible recipients to show up for scheduled appointments, and a shortfall of participating physicians and dentists. The motion sought, alternatively, complete relief from the decree, or its modification so as to eliminate those provisions with which the defendants were unable to comply. While the defendants' Rule 60(b) motion was pending the plaintiffs filed cross-motions (1) to hold the defendants in contempt for failing to perform 180,000 screens in 1976 and for failing to provide diagnosis and treatment of discovered medical abnormalities within 60 days of screening; and (2) to enforce the payment provisions of the March 15, 1974 decree. A motion filed on March 18, 1977, sought to hold the defendants in contempt for failure to provide any orthodontic services.*fn1 On March 7, 1978, prior to the hearing on the foregoing motions, the plaintiffs filed a third motion to hold ...