OTIS R. BOWEN, SECRETARY OF HEALTH AND HUMAN SERVICES, PETITIONER
V. KENNETH KIZER, DIRECTOR OF CALIFORNIA DEPARTMENT OF HEALTH
SERVICES, ET AL.

   No. 86-863

   In the Supreme Court of the United States

   October Term, 1987

   On Writ of Certiorari to the United States Court of Appeals for the
Ninth Circuit

   Memorandum for the Petitioner Suggesting Mootness

   The Solicitor General, on behalf of the Secretary of Health and
Human Services, respectfully suggests that this case is presently moot
because of the enactment of Section 4106 of the Omnibus Budget
Reconciliation Act of 1987, Pub. L. No. 100-203 (Dec. 22, 1987), and
action taken by the Secretary of Health and Human Services pursuant to
Section 4106.  /1/

   1. This case presents the question whether a proposed amendment to
California's Medicaid plan is consistent with Section 1903(f)(1)(B)(i)
of the Social Security Act, 42 U.S.C. 1396b(f)(1)(B)(i).  Section
1903(f)(1)(B)(i) sets the maximum income level for federal financial
participation purposes under the "medically needy" Medicaid program at
133 1/3% of the highest amount that would ordinarily be paid to a
family of the "same size" under the Aid to Families with Dependent
Children (AFDC) program in the State.  The proposed amendment at issue
in this case -- California State Plan Amendment (SPA) 83-14 -- sets
the medically needy income level for a family consisting of two adults
at 133 1/3% of the amount paid to a family of three under California's
AFDC program.

   Respondent Kizer's predecessor as Director of the California
Department of Health Services formally submitted SPA 83-14 to the
Health Care Financing Administration (HCFA) in the Department of
Health and Human Services in September 1983 (J.A. 22-24).  In a final
decision rendered on January 30, 1985, the Administrator of HCFA
disapproved the proposed amendmant on the ground that it sought
federal financial participation for one category of California
families -- adult couples -- at levels of income that exceeded the cap
imposed by Section 1903(f)(1)(B)(i) (Pet. App. 38a-45a).  On petition
for review, the court of appeals reversed the Administrator's decision
disapproving SPA 83-14 (id. at 1a-19a).  This Court then granted the
Secretary's petition for a writ of certiorari to review the judgment
of the court of appeals, and the case was argued on November 10, 1987.

   Thereafter, on December 22, 1987, the President signed into law the
Omnibus Budget Reconciliation Act of 1987.  Section 4106 of that Act
provides that "(f)or purposes of section 1903(f)(1)(B) of the Social
Security Act, for payments made to California on or after July 1,
1983," the income level for a family consisting of two adults shall,
at California's option, be the amount of AFDC payments that would
ordinarily be made to a family consisting of an adult and two
children.  HCFA had concluded that the special provisions of Section
4106 of the Omnibus Budget Reconciliation Act of 1987, which apply
only to adult couples in California, require that SPA 83-14 be
approved, effective July 1, 1983, without regard to whether such
approval was permitted by the general provisions of Section
1903(f)(1)(B)(i) of the Social Security Act, as the Ninth Circuit held
in this case.  Accordingly, by letter dated February 10, 1988, the
Associate Regional Administrator of HCFA notified the Deputy Director
of the California Department of Health Services that SPA 83-14 has
been approved on the basis of Section 4106 of the 1987 Act, with an
effective date of July 1, 1983.  App. B, infra, 2a-4a.  /2/

   2. This case is presently moot as a result of the enactment of
Section 4106 of the Omnibus Budget Reconciliation Act of 1987 and the
February 10, 1988, letter from the Associate Regional Administrator of
HCFA that approves SPA 83-14 pursuant to Section 4106, with an
effective date of July 1, 1983.  In light of HCFA'S February 10, 1988,
decision, which renders SPA 83-14 valid for the entire period for
which California has sought to have it approved, there is at this time
no case or controversy in this Court regarding the correctness of
HCFA'S January 30, 1985, decision disapproving SPA 83-14 under Section
1903(f)(1)(B)(i) of the Social Security Act.  The Court's "established
practice" when a case that is pending before the Court for decision
becomes moot is to vacate the judgment below and to remand with
directions to dismiss the case as moot.  United States v. Munsingwear,
Inc., 340 U.S. 36, 39-40 (1950).  See, e.g., Deakins v. Monaghan, No.
86-890 (Jan. 12, 1988), slip op. 5-8, 11;  Burke v. Barnes, No. 85-781
(Jan. 14, 1987);  United States Department of State v. Washington Post
Co., 464 U.S. 979 (1983).  /3/ The intervenor-respondents in this case
(Barrier, Bierman and Kwiek) agree that this case is now moot, and
they accordingly filed a Motion to Dismiss as Moot on January 12,
1988.  /4/

   Although this case is presently moot by virtue of the enactment of
Section 4106 of the Omnibus Reconciliation Act of 1987, we have been
informed by the Director of the Office of Management and Budget, by
letter dated February 2, 1988, that the President intends to urge
Congress to repeal Section 4106 as part of a larger package of
proposed amendments to the 1987 Act.  App. D, infra, 7a.  The Director
states that this legislative proposal "will be transmitted to Congress
in the very near future for its prompt consideration" (ibid.).  If
Congress were to act promptly to repeal Section 4106, then this case
would be restored to the same posture it was in when it was briefed
and argued, as if there had been no intervening legislation.  However,
there can of course be no assurance that Congress will take any such
action in the near future, and under the law as it currently stands,
the case is moot.  We shall inform the Court of the formal submission
to Congress of the President's proposal to repeal Section 4106 and of
any action taken by Congress on that proposal.  /5/

                              CONCLUSION

   If Section 4106 of the Omnibus Budget Reconciliation Act of 1987 is
not repealed before the Court chooses to dispose of this case, the
judgment of the court of appeals should be vacated and the case should
be remanded to the court of appeals with directions to dismiss as moot
the petition for review of the January 30, 1985, decision of the
Administrator of the Health Care Financing Administration.

   Respectfully submitted.

   CHARLES FRIED

      Solicitor General

   FEBRUARY 1988

   /1/ We have reproduced Section 4106 of the Omnibus Budget
Reconciliation Act of 1987 as Appendix A to this memorandum (App.,
infra, 1a).  The Act is not yet available as a printed public law,
paginated as it will appear in the Statutes at Large.  We therefore
have reproduced Section 4106 as it appears in the House Conference
Report on the bill (H.R. Conf. Rep. 100-495, 100th Cong., 1st Sess.
(1987)), which is printed in the Congressional Record.  See 133 Cong.
Rec. H12103, H12146 (daily ed. Dec. 21, 1987).  We previously informed
the Court of the enactment of Section 4106 by letter to the Clerk
dated December 30, 1987, and we appended to that letter copies of the
pertinent pages of the House Report (H.R. Rep. 100-391, 100th Cong.,
1st Sess. Pt. 1, at 484-485 (1987)) and the House Conference Report,
as reproduced at 133 Cong. Rec. H12103, H12146, H12310 (daily ed. Dec.
21, 1987).

   /2/ The Associate Regional Administrator of HCFA previously had
informed the California Department of Health Services, by letter dated
December 9, 1986, that SPA 83-14 was approved with an effective date
of July 1, 1983.  See App. C, infra, 5a-6a.  But that letter made
clear that HCFA'S approval was given only conditionally, pursuant to
the court of appeals" mandate (which had not been stayed), and that if
this Court were to reverse the Ninth Circuit's judgment, HCFA'S
approval of SPA 83-14 would be void ab initio (ibid.).  HCFA'S
February 10, 1988, letter approving SPA 83-14 expressly supersedes the
conditional approval given by the December 9, 1986, letter.  See App.
B, infra, 3a.

   /3/ The validity of SPA 83-14 has been the only underlying issue in
this case from the outset:  respondent Kizer's predecessor sought
judicial review in the Ninth Circuit of HCFA'S January 30, 1985,
decision disapproving SPA 83-14, and the opinion and judgment of the
court of appeals simply reversed the Secretary's decision disapproving
SPA 83-14 (Pet. App. 19a,21a).  The court of appeals of course
addressed several legal issues bearing on the validity of SPA 83-14
that went beyond the question whether SPA 83-14 was consistent with
Section 1903(f)(1)(B)(i) of the Social Security Act -- e.g., whether a
provision in an unpublished and since-rescinded 1979 regional office
manual that lent support to California's position was a binding
"legislative rule" for purposes of the Administrative Procedure Act
(APA), and whether the "moratorium" provisions of Section 2373(c) of
the Deficit Reduction Act of 1984 (DEFRA), Pub. L. No. 98-369, 98
Stat. 1112, barred the Secretary from disapproving SPA 83-14.
However, the court's rulings on those legal issues were simply reasons
it advanced for why the Secretary's January 30, 1985, decision
disapproving SPA 83-14 was erroneous;  the correctness of that
decision has at all times been the single underlying legal issue
before the court of appeals and this Court.

   Although HCFA has approved SPA 83-14, it nevertheless is important
that the judgment of the court of appeals be vacated.  That course
would eliminate any precedential effect in other contexts of the court
of appeals' ruling on the APA and "DEFRA moratorium" issues, as well
as the precedential effect for States other than California of the
court of appeals' holding that Section 1903(f)(1)(B)(i), standing
alone, permits a family consisting of two persons to be regarded as
the "same size" as an AFDC family consisting of three persons.

   /4/ The intervenor-respondents do not expressly state in their
Motion to Dismiss as Moot that the judgment of the court of appeals
should be vacated.  However, in the decisions of this Court that the
intervenor-respondents cite (at 3) for the proposition that this case
should be dismissed, the Court vacated the judgment of the lower
court.  See Hall v. Beale, 396 U.S. 45, 49-50 (1969);  Diffenderfer v.
Central Baptist Church, 404 U.S. 412, 414-415 (1972).

   /5/ The February 10, 1988, letter from the Associate Regional
Administrator of HCFA informs the Deputy Director of the California
Department of Health Services that if Congress does repeal Section
4106 of the 1987 Act, HCFA'S approval of SPA 83-14 pursuant to Section
4106 would be void ab initio (App. D, infra, 4a).

   APPENDIX