Opinion
Civil No. 03-2939 (JRT/FLN)
January 8, 2004
Barnett Rosenfield and Luther Arnold Granquist, MINNESOTA DISABILITY LAW CENTER, Minneapolis MN, for plaintiffs
Margaret Chutich, William A. Szotkowski, and Francis C. Ling, MN, for defendant
MEMORANDUM OPINION AND ORDER DENYING PRELIMINARY INJUNCTION AND DENYING MOTION TO DISMISS
This lawsuit involves the reallocation (or reduction) of Medicaid money to individuals with mental retardation or a related condition who receive services under Minnesota's Home and Community-Based Waiver Program for individuals with Mental Retardation or Related Conditions (the "MR/RC waiver" or "waiver"). In late 2002 and early 2003, the Minnesota Department of Human Services ("DHS"), under the direction of defendant Commissioner Kevin Goodno ("Goodno"), began attempting to implement a cost-saving plan, called the rebase or rebasing plan. The rebase was to impact the way MR/RC waiver funds are distributed. Two groups of plaintiffs brought lawsuits challenging the rebase, and the cases have been consolidated before the Court. The Court has twice enjoined implementation of the rebase; first in March of 2003, the Court issued a Temporary Restraining Order in the companion case, The Association of Residential Resources in Minnesota v. Minnesota Commissioner of Human Services, Civil No. 03-2438 (D. Minn. March 14, 2003). That TRO was later dissolved because the Court found that the ARRM plaintiffs had not established that the Dataphase factors favored continued injunctive relief. Almost immediately following that denial, the second group of plaintiffs (the "Masterman plaintiffs") requested a preliminary injunction. The Court granted a Temporary Restraining Order to preserve the status quo pending full briefing. In the interim, defendant moved to dismiss plaintiffs' complaint.
The Court heard argument on defendant's motion to dismiss, and at the same time the parties argued plaintiffs' motion for a preliminary injunction. For the reasons discussed below, the Court denies in part and grants in part defendant's motion to dismiss. Similarly, the Court denies in part plaintiffs' motion for a preliminary injunction. As set forth in more detail below, the Court enjoins the defendant from authorizing or allowing cuts in the budgets of the named plaintiffs, but the Court cannot continue to enjoin the entire rebase program.
BACKGROUND
I. MEDICAIDThe Court discussed the Medicaid Act at some length in its order dissolving the injunction in the companion ARRM case. See Op. Order Den. Plfs' Mot. for a Temp. Inj., Dated Aug. 29, 2003 ("Aug. 29 Order"). The Court will again summarize the relevant aspects of the Medicaid Act, and in the interest of completeness, the Court also incorporates its previous discussion by reference. The Court will also discuss additional information highlighted by the parties regarding the specific program at issue.
Medicaid is a jointly funded cooperative program between states and the federal government that provides medical assistance to low-income persons and individuals with disabilities. 42 U.S.C. § 1396-1396v; see generally Arkansas Medical Soc'y v. Reynolds, 6 F.3d 519, 521-22 (8th Cir. 1993). State participation in Medicaid is voluntary, but once a state chooses to participate it is bound by Medicaid statutory and regulatory requirements. Arkansas Medical Soc'y at 522 (citing Wilder v. Virginia Hosp. Ass'n, 496 U.S. 498, 502 (1990)). A prerequisite to participation is the creation and approval of a detailed plan, referred to as the "State Plan" which must comply with extensive Medicaid rules. 42 U.S.C. § 1 396a(a); Arkansas Medical Soc'y, 6 F.3d 519.
All state Medicaid plans must include some services, and states can elect to offer additional optional services. Once states offer such optional services, however, the state "is bound to act in compliance with the Act and the applicable regulations in the implementation of those services." Weaver v. Reagen, 886 F.2d 194, 197 (8th Cir. 1989).
II. MINNESOTA ASSISTANCE AND WAIVERS
Defendant Goodno administers Minnesota's Medicaid program, which is known as "Medical Assistance." Minn. Stat. §§ 256B.01; 256B.02, subd. 5; 256B.04, subdl. Medical Assistance offers individuals with mental retardation and related conditions both intermediate care facilities for the mentally retarded ("ICF/MR services") and individuals eligible for ICF/MR services may also be eligible for the MR/RC waiver.
A. Waivers
Since the early 1980s, the federal government has allowed states to apply for waivers to provide developmentally disabled persons with home and community-based care. 42 U.S.C. § 1396n; see also Margaret K. Feltz, Note: Playing the Lottery: HCBS and Other Medicaid Litigation on Behalf of the Developmentally Disabled, 12 Health Matrix 181 (2002). "Waivers are intended to provide the flexibility needed to enable States to try new or different approaches to the efficient and cost-effective delivery of health care services, or to adapt their programs to the special needs of particular areas or groups of recipients." 42 U.S.C. § 1396n; see also Wood v. Tompkins, 33 F.3d 600, 602 (61 Cir. 1994) ("waiver[s] save both the state and the federal government money, because home care is often less expensive than institutional care"). Waivers, by definition, allow exceptions to the State Plan, but "the Secretary may not waive any requirements that protect the well-being of Medicaid recipients." Wood, 33 F.3d at 602.
B. Minnesota's MR/RC Waiver
Minnesota has participated in the waiver program since 1983 and receives federal funds to pay providers of in-home support or supported living services. The MR/RC waiver is an alternative to ICF/MR services. ICF/MR are residential institutions providing health or rehabilitative services to eligible persons with mental retardation in need of specific services. The waivers typically include an array of home- and community-based services and allow individuals to live in a more integrated setting than an ICF/MR. To be eligible for MR/RC waivers, individuals must be assessed as requiring an ICF/MR level of care.
Defendant emphasizes that waiver services, unlike services they describe as "mandatory" and "optional" services, are not required nor specifically defined, and states have broad latitude in administering waiver services. Services available under the regular Medical Assistance program include services provided in home such as nursing services, private duty nursing, home health services, personal care services, respiratory therapy, rehabilitative and therapeutic services, medical supplies and equipment and other benefits.
C. MR/RC Waiver Expansion and the Funding Problem
Defendant Goodno and DHS are ultimately responsible for the operation of the MR/RC Waiver program. The day-to-day administration, however, is largely left to individual counties. DHS allocates money to each county, and the county is then responsible for meeting the needs of all current waiver recipients for whom the county is the county of financial responsibility. Minn. Stat. §§ 256B.0916, subd. 2 and 256B.092, subd. 1.
Before the "rebase" at issue, DHS funded the waiver program by providing counties with a "line of credit." The counties assessed each waiver recipient, and assigned one of four profiles to each individual. Each profile was assigned a specific dollar amount that was based on the historic cost of providing appropriate services to individuals with similar needs.
In 1999, enrollment in the MR/RC Waiver increased after the Minnesota Legislature mandated that DHS spend "all resources budgeted" for the waiver program in each fiscal year. Minn. Laws 1999, ch. 245, Art. 4 § 61. Over 5,000 additional individuals were enrolled in the waiver program. In 2002, the Minnesota Legislature repealed the requirement that DHS spend all forecasted funds. Minn. Laws. 2002, ch. 220, Art. 14 § 20.
Unfortunately, this increase in waiver enrollees coincided with a statewide budget shortfall. Beginning in December 2002, DHS sent a ssries of memoranda to county human service directors that described the DHS plan to "rebase" the budget for home and community-based care waivers. The rebase eschews the profile system of funding and replaces it with a funding formula based on counties actual expenditures for the fiscal year 2002, with a slight adjustment for annualization, acuity and cost of living increases. Defendant also claims that it will review paid waiver claims for calendar year 2003, and make upward adjustments to particular counties' allocations if needed. In fact, defendant claims that since this lawsuit was filed, DHS has added over $39,000,000 to the waiver budgets of individual counties. Defendant suggests that with the new infusion of money, the program will be adequate to meet the needs of all recipients, and drastic cuts to individual budgets will not be necessary.
Defendant's briefing suggested an increase of $29 million, and counsel for the defendant clarified at oral argument that an additional $11 million had been added, for a total adjustment of $39 million. The Court is not sure what to make of such a significant budget adjustment. It is clear from the additional funds, however, that the initial rebase significantly underestimated the budget needs of some counties.
Most of the submissions in this case have been sealed. In the interest of the plaintiffs' privacy the Court only summarizes the relevant information.
Plaintiff Ken Masterman is a 46-year-old man who lives with his sister (who is also his guardian) and brother-in-law. Masterman has autism and mental retardation, and his health and care needs are so extensive as to require nearly around-the-clock care to ensure his safety, and the safety of those around him. Masterman's sister has had to forego outside employment to care for him. She is reimbursed for some of the care she provides her brother, but much of the time she spends caring for him goes uncompensated. Masterman's health and behavioral issues have improved dramatically since his placement with his sister. Masterman received a notice in February that his waiver budget was to be reduced drastically reduced. His guardian negotiated with the County and Masterman's budget was increased somewhat, however, the guardian cannot absorb such an extreme budget cut and has begun to research alternatives such as group home settings and other out-of-home placements for Masterman.
The amended complaint recites plaintiff Masterman's county of residence as Dakota County. Amended Complaint at paragraph 6. Plaintiffs' briefing, however, indicates that plaintiff Masterman resides in Ramsey County. The distinction is not critical to this motion, and the Court anticipates plaintiff's residence will be clarified.
Plaintiff Jennifer M. is a twenty-year-old woman who lives with her parents in Ramsey County. Jennifer M. has cerebral palsy and dystonia, and she also has low vision disability and a seizure disorder. She requires 24-hour care, including substantial assistance with grooming, bathing, eating, dressing, and communication. She is currently in a transitional school-to-work program that will end in June (when she turns 21). Jennifer M. waited 12 years to receive a waiver spot, and once she received the waiver, her family notes that her "life has changed markedly for the better." Jennifer M. received a notice in February that her budget would be cut by over 50%. Jennifer M. claims, "there is no feasible way for her waiver plan to absorb this large a reduction and still ensure her health and welfare."
WebMD provides the following information about dystonia: "Dystonia is a group of movement disorders that vary in their symptoms, causes, progression, and treatments. This group of neurological conditions is generally characterized by involuntary muscle contractions that force the body into abnormal, sometimes painful, movements and positions (postures). Dystonia may be focal (affecting an isolated body part), segmental (affecting adjacent body areas, or generalized (affecting many major muscle groups simultaneously). There are many different causes for dystonia. Genetic as well as non-genetic factors contribute to all forms of dystonia. The most characteristic finding associated with dystonia is twisting, repetitive movements that affect the neck, torso, limbs, eyes, face, vocal chords, and/or a combination of these muscle groups."
Plaintiff Benjamin S. is a four-year-old diagnosed with autism, he has "a myriad of problematic behaviors and developmental delays." Benjamin lives with his parents in Scott County and has received waiver services since May 2001. The waiver allows him to receive behavioral therapy (through a program called Partners in Excellence (PIE)), which has improved significantly his behavior. Benjamin's parents received notice that his budget was to be cut to by nearly half. His parents claim that his cut will adversely impact his health and welfare, and it is hard to imagine how such a cut would not have an adverse effect on Benjamin.
Plaintiff Arc Minnesota (Association of Retarded Citizens) is a non-profit corporation that advocates for persons with disabilities. Arc Minnesota has over 5,000 members in 24 local and regional chapters throughout Minnesota. Arc was instrumental in getting the waiver program started, and in pushing for the "open enrollment" period. Many of Arc's members are either waiver recipients or the parents, guardians, or family members of waiver recipients.
IV. COMPLAINT
Plaintiffs raise several causes of action, as discussed below.
A. Failure to provide sufficient Medicaid services
Various statutes and regulations require parity in the receipt of Medicaid services. For example, 42 U.S.C. § 1396a(a)(10) requires that state plans for Medical Assistance ("MA") provide assistance to all qualified recipients that is not less in "amount, duration or scope" than the assistance provided to other recipients. Medicaid services must be "sufficient in amount, duration, and scope to reasonably achieve [their] purpose[s]." 42 C.F.R. § 440.230(b). Somewhat similarly, 42 U.S.C. § 1396n(c)(2)(A) requires that states assure that "necessary safeguards . . . have been taken to protect the health and welfare of individuals provided services under the waiver." Plaintiffs also claim violations of 42 U.S.C. § 1396n(c)(1) and 1396n(c)(4)(B).
42 U.S.C. § 1396n(c)(1) provides that a waiver may include payment for the cost of approved home or community-based services, which are provided pursuant to a written plan of care to individuals if there has been a determination that the individual would otherwise require the level of care provided in a hospital or a nursing facility or intermediate care facility for the mentally retarded the cost of which could be reimbursed under the State plan.
42 U.S.C. § 1396n(c)(4)(B) provides that a waiver may include the provision of medical assistance for case management services, homemaker/home health aide services and personal care services, adult day health services, habilitation services, respite care, and such other services requested by the State as the Secretary may approve and for day treatment or other partial hospitalization services, psychosocial rehabilitation services, and clinic services (whether or not furnished in a facility) for individuals with chronic mental illness.
Plaintiffs claim that these regulations and statutes are violated by the rebasing because the uneven redistribution of funds to its 87 counties does not ensure access to sufficient services to meet actual, identified recipient needs. Plaintiffs claim that defendant's rebasing provides insufficient funds to Ramsey and Scott Counties, and therefore plaintiffs' health, welfare, habilitation and safety needs cannot be met. Plaintiffs suggest these violations are enforceable through § 1983.
B. Failure to Provide Choice of Services
Minnesota is required to assure that all individuals entitled to MA for services in an ICF/MR are informed of the feasible alternatives, if available under the waiver, to the ICF/MR. 42 U.S.C. § 1396n(c)(2)(C). If feasible alternatives to institutional placement exist, individuals must be given the choice of either of those options. 42 C.F.R. § 441.302(d). Plaintiffs do not allege that they have not been informed of the choice (indeed, they are all waiver recipients). Instead, plaintiffs complain that the rebase prevents the waiver from being a "feasible alternative" to institutionalization because it prevents the counties from meeting the identified service needs of the plaintiffs.
C. Statewideness
Each state's Medicaid plan must be in effect in all political subdivisions of the State, and it must be mandatory upon each political subdivision. 42 U.S.C. § 1396a(a)(1); 42 C.F.R. § 431.50(b)(1). The Statewideness requirement can be waived, but it has not been waived via the current waiver plan. Plaintiffs allege that defendant's rebasing plan has developed separate and distinct service packages for waiver population subgroups and has therefore violated the Statewideness mandate.
D. American with Disabilities Act and Integration Mandate
Plaintiffs claim the cuts to Masterman and Jennifer M.'s waiver budgets threatens them with unnecessary placement in ICFs/MR. The "integration mandate" provides that "A public entity shall administer services, programs, and activities in the most integrated setting appropriate to the needs of qualified individuals with disabilities." 28 C.F.R. § 35.130(d). Courts interpreting the ADA and its implementing regulations hold that this integration mandate precludes policies or practices that threaten program beneficiaries with unnecessary institutionalization. See, e.g., Fisher v. Oklahoma Heath Care Authority, 335 F.3d 1175 (10th Cir. 2003) (interpreting 42 U.S.C. § 12132 "no qualified individual with a disability shall, by reason of such disability, be excluded from participation in or be denied the benefits of the services, programs, or activities of a public entity, or be subjected to discrimination by any such entity" and 28 C.F.R. § 35.130(d)).
ANALYSIS
I. MOTION TO DISMISS
Defendant argues that plaintiffs have no private right of action under any of the Medicaid provisions at issue and therefore cannot maintain a cause of action under § 1983. Defendant also contends that plaintiffs' ADA claims fail as a matter of law because defendant has not discriminated against plaintiffs. Finally, defendant suggests that the plaintiffs lack standing because the rebase did not cause the harm of which plaintiffs complain. Plaintiffs cannot show a causal connection, defendant argues, because their individual service plans ("ISPs") would have been reduced even if the rebase had not occurred. The Court will address each of defendant's arguments, beginning with standing.
A. Standing
"To satisfy the case or controversy requirement of Article III, which is the irreducible constitutional minimum of standing, a plaintiff must, generally speaking, demonstrate that he has suffered injury in fact, that the injury is fairly traceable to the actions of the defendant, and that the injury will likely be redressed by a favorable decision." Rosebud Sioux Tribe v. McDivitt, 286 F.3d 1031, 1036 (8th Cir. 2002) (quoting Bennett v. Spear, 520 U.S. 154, 162 (1997)). Defendant suggests that plaintiffs cannot demonstrate that the injury is fairly traceable to the actions of the defendant. The Court is satisfied that plaintiffs' alleged injuries are fairly traceable to the rebase amendment. Whether the individual plaintiffs' budgets would have been cut absent the rebasing is a factual question that requires the Court to make a credibility determination based on competing affidavits. Plaintiffs have provided the Court with convincing evidence, however, that the rebase played some causal role in the budget cuts. See Morehouse Affidavit at Exhibits 1, 2, and 3 (noting that the rebase will cause or has caused cuts to individual budgets). See also Weeks Affidavit at Exhibits 2 and 9 (noting that budget cuts of at least 20% would be made because of the new budget allotment provided by the rebase).
B. Can Plaintiffs Maintain a § 1983 Cause of Action?
Under 42 U.S.C. § 1983, whenever a state actor deprives a person of "rights, privileges, or immunities secured by the Constitution and laws," the wronged person may bring a private action, at law or in equity, in federal court. 42 U.S.C. § 1983. In Maine v. Thiboutot, 448 U.S. 1 (1980) the Supreme Court interpreted the "and laws" phrase in § 1983 to apply to all federal statutes, as opposed to a "subset" of laws. Id. at 4 ("The question before us is whether the phrase `and laws,' . . . means what it says, or whether it should be limited to some subset of laws. Given that Congress attached no modifiers to the phrase, the plain language of the statute undoubtedly embraces respondents' claim that petitioners violated the Social Security Act.").
Nonetheless, the Supreme Court has since cautioned that not every federal statute creates a private "right" that is enforceable through a § 1983 action. "The determination of whether a federal statute creates a private right . . . turns on Congress's intent." Rolland v. Romney, 318 F.3d 42, 51 (1st Cir. 2003) (citing Alexander v. Sandoval, 532 U.S. 275 (2001) (additional citation omitted)). See also Gonzaga Univ. v. Doe, 536 U.S. 273, 283 (2002) (clarifying the appropriate judicial role in determining whether a statute may be enforced privately and noting that the inquiry "is no different from the initial inquiry in an implied right of action case, the express purpose of which is to determine whether or not a statute `confer[s] rights on a particular class of persons'") (emphasis added) (quoting California v. Sierra Club, 451 U.S. 287 (1981)).
Defendant's analysis seems to improperly superimpose both steps of the "implied private right of action analysis" on § 1983 cases. See Def's Mem. in Supp. of Mot. to Dismiss at 18 ("Thus, to be enforceable, a statute must show that the Congress intended `to create not just a right but also a private remedy."). This is a radical interpretation of Gonzaga that would have the Court conflate the results of implied rights cases with those of § 1983 cases. The result would render § 1983, which has for decades been interpreted to confer the " remedy" where a federal statute confers the " right," essentially meaningless.
In Gonzaga, the Supreme Court's latest word on the issue, the Court determined that individual plaintiffs cannot maintain § 1983 actions for violations of the Family Education Rights and Privacy Act ("FERPA"). 536 U.S. 273. In so holding, the Court clarified the appropriate application of what has been come to be known as the Blessing test.
As the Gonzaga Court explained:
Blessing set forth three "factors" to guide judicial inquiry into whether or not a statute confers a right: "Congress must have intended that the provision in question benefit the plaintiff," "the plaintiff must demonstrate that the right assertedly protected by the statute is not so `vague and amorphous' that its enforcement would strain judicial competence," and "the provision giving rise to the asserted right must be couched in mandatory, rather than precatory, terms."Id. at 282-83 (quoting Blessing v. Freestone, 520 U.S. 329, 340-41 (1997)). The Court then noted that some courts have wrongly interpreted the Blessing test "as allowing plaintiffs to enforce a statute under § 1983 so long as the plaintiff falls within the general zone of interest that the statute is intended to protect." Id. at 283. The Court squarely rejected such a reading, and clarified that "Section 1983 provides a remedy only for the deprivation of `rights, privileges, or immunities secured by the Constitution and laws' of the United States. Accordingly, it is rights, not the broader or vaguer `benefits' or `interests,' that may be enforced under the authority of that section." Id. at 283.
In so doing, Gonzaga did not overrule the Blessing test, or the Court's other § 1983 cases, rather the Court set out to clarify the appropriate method for lower courts to determine whether a particular statute creates a "right" that can be enforced via § 1983. Despite this clarification, courts have not consistently interpreted the impact of Gonzaga on § 1983 claims. For example, some courts note Gonzaga's requirement that a right be "unambiguously conferred," and then apply the Blessing test with that modification. See, e.g., Bryson v. Shumway, 308 F.3d 79, 88-89 (1st Cir. 2002) (citing Gonzaga to note that the three-part Blessing test is simply a guide to determining Congress's intent and holding that Medicaid statute requiring services to be provided with reasonable promptness conferred federal right enforceable under § 1983); see also Rabin v. Wilson-Coker, 266 F. Supp.2d 332, 341 (D. Conn. May 29, 2003) (noting that Gonzaga requires "clear and unmistakable" intent to confer a right, and then applying the Blessing test and holding that Medicaid beneficiaries could maintain a cause of action under § 1983). Other courts appear to read Gonzaga as sub silento overruling pre-Gonzaga § 1983 cases such as Wood v. Tompkins, 33 F.3d 600 (6th Cir. 1994). See, e.g., M.A.C. v. Betit, 284 F. Supp.2d 1298, 1305-08 (D. Utah 2003) (criticizing both pre- and post- Gonzaga cases as relying improperly on the Blessing test without considering whether the statute conferred a "right" as opposed to a "benefit or interest").
The critical flaw in analyzing Gonzaga's impact on Medicaid actions as the district court did in M.A.C. is that such an analysis ignores the reality that "Congress . . . has legislated against the background of private enforcement at least since Thibotout." Sasha Samberg-Champion, Note, How to Read Gonzaga: Laying the Seeds of a Coherent Section 1983 Jurisprudence, 103 Colum. L. Rev. 1838, 1872 (2003). And furthermore, the analysis ignores the binding precedent of Wilder. This broad reading of Gonzaga is in direct conflict with the Eighth Circuit's treatment of the Gonzaga case, as evidenced in Missouri Child Care Ass'n v. Cross, 294 F.3d 1034, 1040 n. 8 (8th Cir. 2002) (providing a narrow reading of Gonzaga).
The Court finds that the appropriate reading of Gonzaga takes into account the Court's clarification of the Blessing test, but also gives proper respect to those pre- Gonzaga cases that the Court explicitly noted as examples of proper use of § 1983. Read in this manner, Gonzaga is fairly interpreted as a caution to lower courts, not a radical shift in the Court's § 1983 jurisprudence.
As other courts in this Circuit have noted, " Gonzaga . . . did not overrule Wilder. Without criticism, [ Gonzaga] stated that in Wilder it had found standing to sue under § 1983 `to enforce a reimbursement provision of the Medicaid Act, on the ground that the provision,. . . in Wilder, explicitly conferred specific monetary entitlements upon the plaintiffs.'" Missouri Child Care Ass'n v. Martin, 241 F. Supp.2d 1032, 1040-41 (W.D. Mo. 2003) (quoting Gonzaga, 536 U.S. at 274). The Gonzaga Court noted that the FERPA is a "far cry from the sort of individualized, concrete monetary entitlement found enforceable in Maine v. Thiboutot, 448 U.S. 1, 100 . . . (1980), Wright [v. Roanoke Redevelopment and Housing Authority, 479 U.S. 418 (1987)], Wilder v. Virginia Hospital Ass'n, 496 U.S. 498 (1990))." Gonzaga, 536 U.S. at 288 n. 6. Finally, the Gonzaga Court noted that "[t]hese administrative procedures squarely distinguish this case from Wright and Wilder, where an aggrieved individual lacked any federal review mechanism and further counsel against our finding a congressional intent to create individually enforceable private rights." Id. at 289-90 (internal citation omitted).
Unlike FERPA, the Medicaid statute at issue has historically been understood as a federal entitlement program providing specific relief to a specific class of beneficiaries. See, e.g., Pennsylvania Pharm. Ass'n v. Houston, 283 F.3d 531 (3rd Cir. 2002) (noting that certain Medicaid directives were "drafted with an unmistakable focus on Medicaid beneficiaries" and were "phrased in terms benefiting Medicaid beneficiaries."); Owasso Indep. Sch. Dist. v. Falvo, 534 U.S. 426, 435 (addressing FERPA, and questioning whether Congress would have intended to allow parents to challenge the accuracy of "the grade on every spelling test and art project the child completes," but reserving the question of whether FERPA provided private parties with a cause of action enforceable under § 1983). And, unlike FERPA, the Medicaid statute does not provide a comprehensive regulatory scheme for remedying individual grievances when provisions of federal law are violated. See, e.g., Kapps v. Wing, 283 F. Supp.2d 866, 879 (E.D.N.Y. 2003) (applying Gonzaga and determining that the Home Energy Assistance Program provides aggrieved individuals with a private right of action). Similarly, the "individualized concrete" entitlements plaintiffs here claim are in direct contrast to the more amorphous "right" to privacy at issue in Gonzaga.
Given this understanding of Gonzaga, the critical question is whether plaintiffs can point to "rights creating language" in the Medicaid statues at issue. The First Circuit addressed this issue in analyzing whether Medicaid statutes created such rights.
"Rights-creating language" can be characterized as language that "explicitly confer[s] a right directly on a class of persons that include the plaintiff." Cannon [v. University of Chicago], 441 U.S. at 690 n. 13, 99 S.Ct. 1946 (1979). Rights-creating language has also been found in provisions that identify "`the class for whose especial benefit the statute was enacted.'" Id. at 688 n. 9, 99 S.Ct. 1946 (quoting Texas Pacific Ry. Co. v. Rigsby, 241 U.S. 33, 39, 36 S.Ct. 482, 60 L.Ed. 874 (1916)). Statutory language that protects the general public, such as that customarily found in criminal statutes, or that is simply a ban on discriminatory conduct by recipients of federal funds, is far less likely to imply a private remedy than rights-creating language. See id. at 690-94, 99 S.Ct. 1946.Rolland v. Fomney, 318 F.3d 42, 52-53 (1st Cir. 2003) (allowing suit to enforce provisions of the Nursing Home Reform Amendments of the Medicaid Act, which require nursing homes to provide residents with certain specialized services).
Having discussed the framework under which the Court must make its private right of action analysis, the Court turns to the individual statutory sections that plaintiffs claim support a private right of action, enforceable through § 1983. Gonzaga, 436 U.S. at 288 (noting that " § 1983 generally supplies a remedy for the vindication of rights secured by federal statutes"). 1. Failure to provide sufficient Medicaid services ( 42 U.S.C. § 1396n(c)(2)(A) (necessary safeguards), 1396a(a)(10)(B) (provision of sufficient services), 1396n(c)(1) and 1396n(c)(4)(B), and 42 C.F.R. § 440.230(b))
Defendant first argues that the waiver provisions themselves show that they do not create a Medicaid entitlement that Congress intended to be federally enforceable by individual waiver recipients. This part of the state's argument is a bit of a non sequiter — because the state can make certain distinctions or limitations for the waiver program as a whole, there must not be a private right of action. This contention also misconstrues plaintiffs' argument. That Congress has allowed states to limit the number of people served by waivers does not mean that Congress meant to allow states to underserve those actually on the waiver, or treat waiver recipients differently, or excuse states from assuring the health and safety of waiver recipients. Most importantly, it does not provide evidence that Congress did not intend Medicaid recipients to benefit from the Medicaid program.
Defendant similarly argues that the language of 1396n(c)(2)(A) does not support finding a private right of action because it speaks to the entity regulated, not the individuals benefited. See Sandoval, 532 U.S. at 289 ("[s]tatutes that focus on the person regulated rather than the individuals protected create `no implication of an intent to confer rights on a particular class of persons.'"). The Court is not persuaded by this argument. Although section 1396n(c)(2)(A) may speak to the state, more importantly, it speaks of beneficiaries. The section requires that the state must provide adequate assurances to the secretary that "necessary safeguards have been taken to protect the health and welfare of individuals provided services under the waiver."
The Court incorporates by reference its discussion of this issue in the Aug. 29 Order, and the Court continues to reject the argument that this language does not support creation of a right enforceable via § 1983. See Aug. 29 Order at 14. The Court finds that the history of Medicaid legislation, in combination with the language of the particular statutes at issue, evidences an intent to allow private enforcement of these provisions. It is clear that plaintiffs are members of'"the class for whose especial benefit the statute was enacted." Rolland, 318 F.3d 42 at 53. The right is not vague or amorphous, and is enforceable by the judiciary.
2. Failure to provide choice of services ( 42 U.S.C. § 1396n(c)(2)(C) and 42 C.F.R. § 441.302(d))
The Court also finds that the "choice of services" provisions contain sufficient "rights creating" language to allow a cause of action under § 1983. Again, the Court finds Woodv. Tompkins useful in its analysis and its ultimate holding. In Wood, the court determined that § 1396n(c)(2)(C) imposed binding obligations on the states. 33 F.3d 600. The language in this section speaks in terms that are "rights creating." For example, the section states that eligible individuals must be informed of their options, if those options are available, and the section speaks of "the choice of such individuals." Such language is unlike that in FERPA, which was too amorphous and nonspecific to be "rights creating." This language amounts to "rights creating" language that is easily mandatory (rather than precatory) and is not so vague or amorphous as to be unenforceable by the judiciary.
3. Statewideness ( 42 U.S.C. § 1396a(a)(1))
Defendant suggests that because the Statewideness provision can be waived, it is not enforceable via § 1983. However, the Statewideness requirement is not waived in the current, approved waiver, therefore it is still applicable to the waiver program. "[T]he State has great discretion in developing its waiver programs, including setting eligibility requirements and limitations for waiver services. Nonetheless, this discretion is not unfettered. Once the State sets up its waiver programs, it is obligated to implement the waiver programs as it has fashioned them." Lewis v. New Mexico Dept. of Health, 275 F. Supp.2d 1319, 1345 (D.N.M. 2003).
The Court is not convinced, however, that the Statewideness provisions can be enforced through § 1983. Absent from the statutory language is the "unmistakably rights creating language" that is more clearly present in the provisions discussed above. One well-reasoned pre-Gonzaga case noted that "[r]ecipients of medical services are the obvious beneficiaries of a requirement that a medical assistance plan be in effect statewide." See, e.g., Sobky v. Smoley, 855 F. Supp. 1123, 1134 (E.D. Cal. 1994). But that same Court recognized that the statutory provision "makes no direct reference to Medicaid recipients." Id. at 1133.
The Court is convinced that the other factors necessary to find a "right" are present, "the section's command to the states is mandatory, specific, and detailed." Sobky, 855 F. Supp. at 1134. The Sobky court carefully synthesized Wilder and Suter v. Artist M., 503 U.S. 347 (1992) to determine that the statewideness requirement created federal right enforceable under § 1983, however, given the Supreme Court's clarification in Gonzaga, the Court cannot adhere to the holding of the district court in Sobky.
Because the Court finds that a § 1983 action cannot be maintained to enforce the "statewideness" requirement, plaintiffs' claims premised on this section must be dismissed.
C. ADA
42 U.S.C. § 12132 and 28 C.F.R. § 35.130(d) are considered the "integration mandate" of the ADA. Plaintiffs base their ADA claim on Olmstead v. Zimring, 527 U.S. 581 (1999), in which the Court interpreted the integration mandate. In Olmstead, the state's refusal to transfer mentally ill patients from institutions to community-based treatment centers (when the community-based centers were appropriate placements according to the plaintiffs' doctors) was held to violate the ADA. Id. at 597. The Eighth Circuit directs a three-part test to determine if a public service or program similarly violates the ADA. First, the plaintiffs must show they are qualified participants in the program. They must show that they were either excluded from participation in or denied the benefits of a public entity's services, programs, or activities or were otherwise discriminated against by the public entity. Finally, they must show that such exclusion, denial of benefits, or discrimination was by reason of the plaintiffs' disabilities.
Plaintiffs are qualified participants in the waiver program, and have received a level of care based on their assessed needs. Plaintiffs claim that the rebasing plan limits the funding available to serve waiver recipients and that the impact of rebasing was felt more harshly in some counties than in others. The impact of the rebase directly causes some counties to cut the waiver budgets, and the waiver services of individual recipients, including plaintiffs. Plaintiffs contend that by authorizing such cuts, defendant denies plaintiffs the full benefit of the waiver program. Plaintiffs further suggest that these actions threaten their ability to receive services necessary to ensure their health and safety, and therefore threaten institutionalization.
Plaintiffs' allegations implicate the integration mandate of the ADA. Defendant argues that plaintiffs' claim fails as a matter of law, because (1) there is no evidence of discrimination on the part of the state, (2) the Commissioner himself has not caused any harm to the plaintiffs, and (3) the plaintiffs are not being deprived of any benefits available only to persons in institutional settings.
As to defendant's first argument, plaintiffs correctly point out that there is no requirement that plaintiffs show evidence of intentional discrimination. Though the ADA integration mandate does prohibit intentional discrimination, it also addresses the exclusion from participation in or the denial of the benefits of the services, programs, or activities of a public entity. It is clear that placement in an ICF/MR would be more restrictive and less integrated than being on the waiver, therefore policies that force individuals off waivers and into institutions implicate the ADA.
Defendant also claims that the Commissioner has not caused any harm directly to the plaintiffs, because it was the counties that made the actual budget cuts. The Commissioner, however, is ultimately responsible for implementing the Medicaid program, and doing so in compliance with federal law. The Commissioner simply cannot pass off on counties these responsibilities, and courts have consistently rejected similar arguments. See, e.g., Bond v. Stanton, 655 F.2d 766, 770, 771 (7th Cir. 1981) ; Alexander v. Hill, 549 F. Supp. 1355, 1356, 1359-62 (W.D.N.C. 1982).
Defendant's final argument is that plaintiffs are not being denied services available to them in institutional settings and that the state offers services other than ICF/MR that plaintiffs could use in lieu of the services they would not be able to obtain once their waiver budgets were cut. However, plaintiffs have alleged (and defendant has not presented evidence to the contrary) that their disabilities are such as to require "active treatment." The plaintiffs have also alleged, and provided evidence in support, that their needs cannot be met by the noninstitutional services cited by the Commissioner, either because those services are not available in their counties or because those services do not provide for their needs.
Plaintiffs' complaint properly states a claim under the ADA in that the state and counties have determined that each plaintiff has a need for a particular set of services, and the proposed rebase threatens to force plaintiffs between staying in the community with inadequate services or entering an institution in order to receive adequate services. Defendant's motion to dismiss plaintiffs' ADA claims is denied.
Defendant has requested permission to file a second affidavit of Laura Doyle. Permission to file the affidavit is granted, and the Court considered the affidavit in its determination of the instant motions.
II. PRELIMINARY INJUNCTION
In determining whether a preliminary injunction is appropriate, a court must consider four factors: (1) the probability of success on the merits, (2) the threat of irreparable harm, (3) the balance between that harm and any injury that the temporary relief would inflict on other parties, and (4) the public interest. Dataphase Systems, Inc. v. CL Systems, Inc., 640 F.2d 109, 113 (8th Cir. 1981). A preliminary injunction is an extraordinary remedy, and as such the burden is on the moving party to demonstrate that it is entitled to the relief sought. Watkins Inc. v. Lewis, 346 F.3d 841, 844 (8th Cir. 2003). See also Hedge v. Lyng, 689 F. Supp. 884, 891 (D. Minn. 1987).
A. Irreparable Harm
The issue of irreparable harm is a threshold issue, and without a finding of irreparable harm, a preliminary injunction cannot be granted. Modern Computer Sys., Inc. v. Modern Banking Sys., Inc., 871 F.2d 734, 738 (8th Cir. 1989) (en banc). See also Watkins, 346 F.3d at 844 (noting that "[f]ailure to show irreparable harm is an independently sufficient ground upon which to deny a preliminary injunction." (citing Adam-Mellang v. Apartment Search, Inc., 96 F.3d 297, 299 (8th Cir. 1996)) (additional citation omitted)).
That the individual named plaintiffs face a likely possibility of irreparable harm cannot seriously be disputed. The Court is not convinced, however, that the harm to those individuals justifies continued, wholesale injunction of the rebase program in its entirety.
Defendant argues that none of the individual plaintiffs face imminent reductions in their individual services. Scott County, for example, has apparently agreed to freeze Benjamin's benefits at his 2002 levels. Defendant suggests that the other plaintiffs have recourse through administrative appeals. The Court is not convinced that the administrative appeal process provides adequate protection. Not only have courts rejected the argument that availability of state administrative appeal process precludes a showing of irreparable harm, but plaintiffs have submitted evidence that the available review cannot address the rebase methodology itself. Without that ability, the administrative process is not adequate because counties are allowed to defend cuts by showing that paying for the services would cause the county to exceed its total waiver allocation. In addition, although benefits remain constant pending an appeal, Medicaid recipients can be forced to "recoup" the state if the appeal is not favorable to the recipient. Defendant represents that it has not used the "recoup" process as a matter of practice, nonetheless, it remains available to DHS, and counsel for the defendant could not assure the Court that plaintiffs would not be faced with recoupment.
New Jersey Hosp. Ass'n v. Waldman, 73 F.3d 509, 513 (3rd Cir. 1995).
Despite the irreparable harm faced by the individual plaintiffs, this lawsuit is not a class action. Although plaintiff ARC suggests that it represents the interests of its members, the Court is not convinced that plaintiffs have submitted sufficient evidence of irreparable harm to continue wholesale injunction of the rebase program in its entirety. Defendant has submitted evidence that some recipients face no budget adjustment under the waiver, and defendant suggests that many recipients will be able to absorb modifications to their waiver budgets.
Plaintiffs ask the Court to enjoin the entire rebase program. However, plaintiffs have not established that the rebase program itself will irreparably harm every waiver recipient. Injunctive relief is an extraordinary remedy, and enjoining changes to a program serving thousands of individuals, based on the circumstances of the three plaintiffs, truly would be extraordinary. Greater Yellowstone Coalition v. Flowers, 321 F.3d 1250, 1256 (10th Cir. 2003) (noting extraordinary nature of preliminary injunction); see also Hanson Trust PLC v. ML SCM Acquisition Inc., 781 F.2d 264, 273 (2d Cir. 1986) (characterizing preliminary injunctions as "one of the most drastic tools in the arsenal of judicial remedies"). Therefore, the Court will not enjoin the rebase program in its entirety. However, as noted above, the Court will require that the budgets of the individual plaintiffs remain at pre-rebase levels until this lawsuit is resolved.
Nothing in this Order shall be construed to prevent increases in funding to the individual plaintiffs, should such increases be necessary to protect the health, safety, or welfare of the individual.
B. Public Interest and Balance of Harms
The scope of the injunctive relief requested also factors into the consideration of these two factors. As the Court noted in the companion case, due to the nature of this dispute, and the difficult policy interests implicated, these two factors are unusually difficult to balance at this stage of the proceedings. There is clearly a significant public interest in complying with Medicaid laws; the failure to do so could result in forfeiture of federal funds. The public interest in fiscal responsibility factors in defendant's favor. In addition, defendant notes that DHS must allocate limited resources for the benefit of numerous programs, and there is a strong public interest in ensuring adequate levels of funding for other important social programs.
Similarly, the potential harms are difficult to balance. Plaintiffs note that the collective costs of institutionalization far outweigh the costs of keeping the waiver program fully funded. Plaintiffs also question the Commissioner's assertion that the state might be forced to eliminate the waiver program. Not only would the elimination be cost-prohibitive, but re-institutionalization of an entire population of persons would run afoul of the ADA's integration mandate. However, the Court is not convinced that these harms will inevitably follow implementation of the rebase program. Because the Court finds that plaintiffs have not established irreparable harm on a program-wide basis and have not clearly established that the balance of harms or the public interest weighs in favor of program-wide relief, such sweeping injunctive relief is inappropriate.
The Court will not address the likelihood of success on the merits.
It is obvious to the Court that defendants' original rebase program did not adequately consider the health and safety of the Minnesota citizens who receive services under the waiver program or the real costs of providing such services. The significant upward adjustments made to counties' allocations supports the Court's observation. Indeed, many recipients who are not part of this lawsuit likely would have valid claims against the state. If defendants intend to move forward and reimplement this budget-cutting program, the Court urges a more thoughtful approach.
ORDER
Based upon the foregoing, the submissions of the parties, the arguments of counsel and the entire file and proceedings herein, IT IS HEREBY ORDERED that
1. Defendant's request for permission to file a second affidavit of Laura Doyle [Docket No. 69] is GRANTED.
2. Plaintiffs' motion for a preliminary injunction [Docket No. 2] is GRANTED IN PART and DENIED IN PART as follows,
a. Plaintiff's motion is GRANTED as to the individually named plaintiffs. Defendant shall take all necessary steps to ensure that no reduction in payments to the individual named plaintiffs results from the challenged administrative order and that benefits to the individually named plaintiffs be maintained at pre-rebase levels for the duration of this litigation;
b. The $1,000 bond [Docket No. 45] filed pursuant to the Court's Order of September 25, 2003 [Docket No. 40] shall be continued, and this Order shall be effective without the posting of additional security.
c. In all other respects, the motion is DENIED.
3. The Temporary Restraining Order [Docket No. 33] is DISSOLVED.
4. Defendant's Motion to Dismiss [Docket No. 6] is GRANTED IN PART and DENIED IN PART as follows:
a. Defendant's Motion to Dismiss plaintiffs' claims of violations of Medicaid's statewideness requirement, Count III of the Amended Complaint [Docket No. 6] is GRANTED. Count III is DISMISSED with prejudice;
b. In all other respects, defendant's motion is DENIED.