ARC of California v. Douglas

956 F. Supp. 2d 1113, 2013 WL 3331675, 2013 U.S. Dist. LEXIS 92933
CourtDistrict Court, E.D. California
DecidedJuly 1, 2013
DocketNo. 2:11-cv-02545-MCE-CKD
StatusPublished
Cited by1 cases

This text of 956 F. Supp. 2d 1113 (ARC of California v. Douglas) is published on Counsel Stack Legal Research, covering District Court, E.D. California primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

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ARC of California v. Douglas, 956 F. Supp. 2d 1113, 2013 WL 3331675, 2013 U.S. Dist. LEXIS 92933 (E.D. Cal. 2013).

Opinion

MEMORANDUM AND ORDER

MORRISON C. ENGLAND, JR., Chief Judge.

The present lawsuit challenges several changes California has implemented with respect to its payment for services provided to developmentally disabled individuals under the federally funded Medicaid program.

Plaintiffs are the ARC of California (“ARC”) and the Cerebral Palsy Association of San Diego (“CPA”).1 Arc is a statewide organization comprised of individuals with intellectual and developmental disabilities (“I/DD”), their families and their home and community-based service providers. CPA is an non-profit organization serving the needs of individuals with cerebral palsy in San Diego and is affiliat[1116]*1116ed with the national cerebral palsy association.

Plaintiffs’ Motion for Preliminary Injunction is now before this Court. That Motion seeks to enjoin California from continuing to implement a 1.25 percent pay rate reduction to disabled service providers passed by the Legislature in 2012, as well as enforcement of mandatory unpaid holidays for providers and a “half day billing” rule in which providers cannot be reimbursed for a full day if their client chooses to leave early for whatever reason, even if the provider has to maintain a full day slot for providing services to the individual.

Injunctive relief is sought pursuant to the complaint under three federal sources. Plaintiffs first seek to enjoin the State’s billing reductions under the Medicaid Act. They alternatively seek an injunction under both the Americans with Disabilities Act of 1990, 42 U.S.C. § 12101 et seq. (“ADA”) and the Rehabilitation Act of 1973, 29 U.S.C. § 794, et seq. (“Rehabilitation Act”).

BACKGROUND

Medicaid is a cooperative federal state program designed to provide, pursuant to the Medicaid Act, federal assistance to participating states for the costs of providing medical treatment and services to the poor, elderly and disabled. 42 U.S.C. § 1396. Although state participation in funding available from Medicaid is voluntary, if a state does participate it must comply with the Medicaid Act and its implementing regulations promulgated by the Secretary of Health and Human Services (“HHS”). Wilder v. Va. Hosp. Ass’n, 496 U.S. 498, 502, 110 S.Ct. 2510, 110 L.Ed.2d 455 (1990). Administration of the Medicaid program, however, is entrusted by HHS to CMS.

A state choosing to participate in the Medicaid program must prepare and submit a “State Plan” for federal approval that includes a comprehensive written statement describing the nature and scope of its Medicaid program. A State Plan must also contain assurances that it will be administered in accordance with the dictates of Medicaid law. Wilder v. Virginia Hospital Assn., 496 U.S. 498, 502, 110 S.Ct. 2510. Additionally, if a state wants to change its Medicaid plan once approved, it must obtain approval from CMS in the form of a so-called State Plan Amendment (“SPA”) to do so. Exeter Memorial Hosp. Ass’n v. Belshe, 145 F.3d 1106, 1108 (9th Cir.1998).

Among the prerequisites to participation in the Medicaid program is compliance with the requirements set forth within 42 U.S.C. § 1396(a)(30)(A) (“Section 30(A)”) which requires, inter alia, that payment for services to the disabled be consistent with “efficiency, economy, and quality of care.” Additionally, in 1981, Congress responded to the large percentage of Medicaid resources being used for long-term institutional care for the disabled by authorizing a home and community-based services (“HCBS”) waiver program. 42 U.S.C. § 1396n. Development of that program was prompted by studies showing that many disabled persons then residing in institutions could in fact live at home, or in the community, if additional support services were available. The HCBS waiver program is designed to make such services available to those who would benefit from less restrictive care, but who otherwise would be eligible for Medicaid benefits only in an institutional setting. Id. at § 1396n(c)(1).

In order to obtain a waiver, a State has to certify that its treatment program is cost-neutral in the sense that the costs of providing services to individuals enrolled in the waiver program will be less than or equal to in the cost of institutional care. [1117]*1117Id. at § 1396n(c)(2)(D); Sanchez v. Johnson, 416 F.3d 1051, 1054 (9th Cir.2005).

States must submit their waiver application to the Centers for Medicare and Medicaid Services (“CMS”), the federal agency responsible for administering Medicaid based programs, for review. CMS approval of a submitted application “waives” three requirements of the overall federal Medicaid statute: 1) statewideness; 2) comparability of services; and 3) income and resource rules. Id. at § 1396n(c)(3). All other requirements of the Medicaid Act are deemed satisfied upon CMS’s approval of the waiver request 42 C.F.R. § 400.200; 430.25(g)(1). In the present case, CMS approved California’s waiver program, including the rates paid to regional centers responsible for delivering care, on March 26, 2012, for an additional term of five years.

Unlike other states, California has made its own commitment under the so-called Lanterman Act to pay for services and support to the disabled from its own general funds. The Lanterman Act (Cal. Welf. & Inst.Code § 4500 et seq.) was enacted in 1967, some fourteen years before implementation of the federal HCBS waiver program, to prevent or minimize the institutionalization of developmentally disabled persons. In order to accomplish that objective, disabled persons under the Lanterman Act are entitled to services and supports at California’s expense. Ass’n for Retarded Citizens v. Dept. of Developmental Servs., 38 Cal.3d 384, 391, 211 Cal.Rptr. 758, 696 P.2d 150 (1985). Because of that right, enrollment by Californians in the waiver program is voluntary and serves primarily as a vehicle for the state to recoup expenses it would already have been obligated to pay under the Lanterman Act (the Medicaid matching funds California receives covers about half the costs of services the regional centers provide to the disabled community). See Sanchez v. Johnson, 416 F.3d at 1065. Many of the disabled persons eligible for services under the Lanterman Act in fact lack the extent of impairment qualifying them for federal funds under the HCBS waiver program. Id.

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956 F. Supp. 2d 1113, 2013 WL 3331675, 2013 U.S. Dist. LEXIS 92933, Counsel Stack Legal Research, https://law.counselstack.com/opinion/arc-of-california-v-douglas-caed-2013.