Bethesda Lutheran Homes and Services, Inc. v. Leean

• Decision Date: 14 November 1997
• Docket Number: No. 96-3440,96-3440
• Citation: 122 F.3d 443
• Parties: Medicare & Medicaid Guide P 45,581 BETHESDA LUTHERAN HOMES AND SERVICES, INC., et al., Plaintiffs-Appellants, v. Joseph LEEAN, et al., Defendants-Appellees.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 443

122 F.3d 443

Medicare & Medicaid Guide P 45,581

BETHESDA LUTHERAN HOMES AND SERVICES, INC., et al Plaintiffs-Appellants, v. Joseph LEEAN, et al., Defendants-Appellees.

No. 96-3440.

United States Court of Appeals Seventh Circuit.

Argued April 9, 1997.

Decided Aug. 21, 1997.

Rehearing and Suggestion for Rehearing En Banc Denied Nov. 14, 1997.

Edward S. Marion (argued), Noah D. Fiedler, Murphy & Desmond, Madison, WI, for Plaintiffs-Appellants.

Bruce A. Olsen (argued), Office of the Attorney General, Wisconsin Department of Justice, Madison, WI, for Joseph Leean.

Bruce A. Olsen, Office of the Attorney General, Wisconsin Department of Justice, Barbara J. Janaszek, Kathryn M. West, Whyte, Hirschboeck & Dudek, Milwaukee, WI, for Jefferson County, Wisconsin.

Barbara J. Janaszek, Kathryn M. West, Whyte, Hirschboeck & Dudek, Milwaukee, WI, for Thomas Schleitwiler.

Peggy A. Lautenschlager, Office of the United States Attorney, Madison, WI, Barbara C. Biddle, United States Department of Justice, Washington, DC, for Amicus Curiae.

Before POSNER, Chief Judge, and CUMMINGS and EVANS, Circuit Judges.

POSNER, Chief Judge.

This is a suit under 42 U.S.C. § 1983 by a nonprofit corporation that operates a residential facility for the mentally retarded in Wisconsin, by three current residents of the facility, and by four prospective residents from out of state. The defendants, state and local Wisconsin officials and a local government, are charged with violating these retarded persons' federal constitutional right to travel, and some of their federal statutory rights as well, by enforcing certain state laws and federal Medicaid regulations. In a series of judgments, one rendered after a trial on one of the plaintiffs' right to travel claims, the district court upheld the constitutionality of the state laws and federal regulations. Insofar as the suit seeks damages from a state official in his official capacity, it is clearly barred by the Eleventh Amendment. E.g., Edelman v. Jordan, 415 U.S. 651, 663, 94 S.Ct. 1347, 1355, 39 L.Ed.2d 662 (1974). But the injunctive claim against him can proceed, Ex parte Young, 209 U.S. 123, 28 S.Ct. 441, 52 L.Ed. 714 (1908), as there is no suggestion that the relief sought would invade the sovereign rights of Wisconsin, Idaho v. Coeur D'Alene Tribe of Idaho, --- U.S. ----, ----, 117 S.Ct. 2028, 2043, 138 L.Ed.2d 438 (1997), and so can the claims, both legal and equitable, against the other defendants.

Bethesda Lutheran's facility is located in Watertown, Wisconsin, in Jefferson County. It offers long-term care to the severely retarded. Its residents come from all over the United States. The three current residents on whose behalf the suit was filed range in age from 35 to 40 and have lived in the facility for between 14 and 29 years. All are classified under the federal Medicaid regulations, however, as residents of Illinois because that is where their parents lived when these plaintiffs were admitted to the facility. We shall see that, as Illinois residents, they are entitled to Medicaid benefits from neither Wisconsin nor Illinois, if the regulations are valid; and without those benefits they cannot afford to remain in the Watertown facility. The four prospective residents on whose behalf the suit was also filed range in age from 22 to 42, and they live either with their parents or, in one case, in a group home, all outside Wisconsin. The Wisconsin laws that they challenge prevent them from relocating to the Watertown facility, as they (or more likely their guardians) would like to do. All seven plaintiffs are gravely retarded--their IQs range from 10 to 34--and none is competent to manage his or her own affairs. They are, however, private, paying (with or without the help of Medicaid) patients; and Bethesda Lutheran, the owner of the Wisconsin facility, has standing, along with the patients themselves, to challenge in federal court laws that forbid it to sell its services to potential customers or limit the prices it can charge. Craig v. Boren, 429 U.S. 190, 194-97, 97 S.Ct. 451, 455-56, 50 L.Ed.2d 397 (1976); Rothner v. City of Chicago, 929 F.2d 297, 301 (7th Cir.1991); Wedges- /Ledges of California, Inc. v. City of Phoenix, 24 F.3d 56, 61 (9th Cir.1994).

We begin with the claim involving the four nonresidents. The Watertown facility is classified under Wisconsin law as a "facility for the developmentally disabled," more commonly referred to as an "intermediate care facility for the mentally retarded." Wisconsin law permits the admission of a person to such a facility only (unless there's an emergency) upon the recommendation of the social services agency of the "individual's county of residence," Wis. Stat. § 50.04(2r); Wis. Admin. Code § HFS 134.52(2)(b), plus--if the person is found to be mentally incompetent--upon a court order of "protective placement" in response to a petition "filed in the county of residence of the person to be protected." Wis. Stat. § 55.06(3)(c). See also Wis. Stat. § 55.06; Wis. Admin. Code § HFS 134.52(2)(e). In context, it is apparent, as both sides agree, that by "residence" the statutes mean domicile, rather than where the person happens to be (on the distinction, see, e.g., In re Estate of Daniels, 53 Wis.2d 611, 193 N.W.2d 847, 849 (1972)), and that the references to a "county" are to a Wisconsin county. The upshot is that to be admitted to the Watertown facility the prospective resident must first establish his residence in a Wisconsin county. So nonresidents of Wisconsin are ineligible.

States do not violate the Constitution by giving preference to residents seeking admission to state universities and other facilities owned by the state or its subdivisions. Camps Newfound/Owatonna, Inc. v. Town of Harrison, --- U.S. ----, ----, 117 S.Ct. 1590, 1606, 137 L.Ed.2d 852 (1997); W.C.M. Window Co. v. Bernardi, 730 F.2d 486, 494-96 (7th Cir.1984); SSC Corp. v. Town of Smithtown, 66 F.3d 502, 510-13 (2d Cir.1995); Swin Resource Systems, Inc. v. Lycoming County, 883 F.2d 245, 248-51 and n. 2 (3d Cir.1989). But Bethesda Lutheran is a private facility. For Wisconsin to prohibit its admitting nonresidents is like Illinois' forbidding nonresidents to stay at the Chicago Hilton or attend Northwestern University. Such a law would prima facie violate the right to travel or relocate from one state to another, a right that the Supreme Court has held to be protected by the privileges and immunities clauses in Article IV and the Fourteenth Amendment, the equal protection clause of the Fourteenth Amendment, and the commerce clause of Article I. See Attorney General of New York v. Soto-Lopez, 476 U.S. 898, 901-05, 106 S.Ct. 2317, 2319-22, 90 L.Ed.2d 899 (1986); Shapiro v. Thompson, 394 U.S. 618, 627-38, 89 S.Ct. 1322, 1327-33, 22 L.Ed.2d 600 (1969); Edwards v. California, 314 U.S. 160, 173-74, 62 S.Ct. 164, 166-67, 86 L.Ed. 119 (1941); id. at 181-86, 62 S.Ct. at 171-72 (concurring opinion); Zobel v. Williams, 457 U.S. 55, 73-81, 102 S.Ct. 2309, 2319-23, 72 L.Ed.2d 672 (1982) (concurring opinion). It would be more extreme than the law that the Court invalidated in Camps Newfound/Owatonna, which merely gave a special tax break to charities operated primarily for the benefit of the state's residents.

Yet there is no doubt that Wisconsin can, without violating the Constitution, establish procedures, such as the protective-placement procedure in section 55.06, for making sure that people are not confined to institutions for the mentally incompetent unless they actually are incompetent. It makes no difference whether the institution is public or private, except that if it is public the state would be required by the federal Constitution to adopt such a procedure, Secretary of Public Welfare v. Institutionalized Juveniles, 442 U.S. 640, 649-50, 99 S.Ct. 2523, 2527-28, 61 L.Ed.2d 142 (1979); Heller v. Doe, 509 U.S. 312, 113 S.Ct. 2637, 125 L.Ed.2d 257 (1993); see also Kansas v. Hendricks, --- U.S. ----, ---- - ----, 117 S.Ct. 2072, 2079-80, 138 L.Ed.2d 501 (1997); Parham v. J.R., 442 U.S. 584, 606-07, 99 S.Ct. 2493, 2505-06, 61 L.Ed.2d 101 (1979); Addington v. Texas, 441 U.S. 418, 425-27, 99 S.Ct. 1804, 1808-09, 60 L.Ed.2d 323 (1979), while, if it is private, presumably all the state must do to comply with its constitutional duties is not to place its coercive powers behind private commitments to the institution. Spencer v. Lee, 864 F.2d 1376, 1378-82 (7th Cir.1989) (en banc). The state is not required, even if not constitutionally forbidden, to sit by while greedy or selfish relatives herd the elderly or impaired into private facilities that are more restrictive than the committed individual actually needs. The plaintiffs' challenge, however, is not to their being required to undergo the protective-placement procedure; it is to their being required to become residents (in the sense of domiciliaries) of the state before doing so, which is to say, required to move into the state at the beginning of the process without intending to leave it. Since anyone who is approved for protective placement is by definition incapable of living outside the Watertown facility or its equivalent in restrictiveness, it is unclear where in Wisconsin the applicant for admission to the facility is supposed to live while the placement petition is being processed.

The Attorney General of Wisconsin assures us that the applicant doesn't have to show up in the state until the very day of the hearing on his petition, and if the petition is granted on the spot he can go directly to the Watertown facility. But what if it isn't granted on the spot? And more important, how can someone establish residence whose intent (or, more to the point in these cases, his guardian's intent) is that he shall remain in Wisconsin only if his petition is granted? The legal principles governing the acquisition of a new domicile would not make a person who came to Wisconsin to play the Wisconsin lottery,...