Inclusion, Inc. v. Armstrong
| Decision Date | 12 December 2011 |
| Docket Number | Case No. 1:09–cv–00634–BLW. |
| Citation | 835 F.Supp.2d 960 |
| Parties | INCLUSION, INC.; Exceptional Child Center, Inc.; Living Independently for Everyone, Inc.; Tomorrow's Hope Satellite Services, Inc.; WDB, Inc., Plaintiffs, v. Richard ARMSTRONG, and Leslie Clement, in their official capacities, Defendants. |
| Court | U.S. District Court — District of Idaho |
OPINION TEXT STARTS HERE
Marty Durand, James Marshall Piotrowski, Herzfeld & Piotrowski, LLP, Boise, ID, for Plaintiffs.
Margaret Peg M. Dougherty, Charina A. Newell, Office of the Attorney General, Boise, ID, for Defendants.
Before the Court are cross Motions for Summary Judgment by Plaintiffs (Dkt. 29) and Defendants (Dkt. 30). As memorialized in Docket Entry Order 27, the parties agreed that this case can be resolved on stipulated facts in lieu of a bench trial. The parties submitted Stipulated Facts (Dkt. 28) and briefing, and the Court heard oral argument on October 31, 2011. Having fully considered the parties' written and oral arguments, and being familiar with the record, including stipulated facts, the Court will grant summary judgment as to Plaintiffs, and deny summary as to Defendants, as more fully expressed below.
Plaintiffs are five Idaho corporations providing “residential habilitation” services to Medicaid eligible individuals in supported living settings in the state of Idaho. Stip. Facts at 2–3, Dkt. 28. Residential habilitation describes an array of services designed and provided to assist Medicaid participants in residing successfully in the community. Id. at 3. Such services include, but are not limited to, skills training, and assistance with decision-making, money management, socialization, mobility, and behavior shaping or management, as well as grooming, bathing, eating, administering medications, meal preparation, laundry, shopping and the like. Id. Services may also include skills training for family and non-family caregivers for participants. Id.
Defendants are Richard Armstrong—Director of Idaho's Department of Health and Welfare (IDHW), and Leslie Clement—an IDHW Deputy Director and former IDHW Division of Medicaid Administrator. Id. at 2. Clement has had the responsibility of administering and operating Idaho's Medicaid program under the direction and supervision of Armstrong at all times relevant to this case. Id.
Medicaid is a cooperative federal-state program that directs federal funding to participating states to provide medical assistance to “families with dependent children, ... [and] aged, blind and disabled individuals, whose income and resources are insufficient to meet the costs of necessary medical services.” 42 U.S.C. § 1396–1; Stip. Facts at 2. States that choose to participate in the Medicaid program—includingIdaho—must comply with the requirements of the Medicaid Act, which includes development of a state plan. 42 U.S.C. § 1396a(a). The state plan must be approved by the Federal Center for Medicaid and Medicare Services (CMS). 42 C.F.R. § 430.10.
In 1981, Congress passed amendment § 1915(c) “in response to ... studies showing that many persons residing in Medicaid-funded institutions would be capable of living at home or in the community if additional support services were available.” Sanchez v. Johnson, 416 F.3d 1051, 1054 (9th Cir.2005). Under the amendment, CMS can waive certain Medicaid Act requirements where a state demonstrates that the cost of caring for an individual in a home and community based program would be less than or equal to the cost of providing institutional care. Id. Idaho has been approved by CMS for three waiver programs, including the Developmentally Disabled Home and Community Based Services Waiver (DD Waiver). Stip. Facts at 2. The services provided by Plaintiffs in this case are pursuant to Idaho's DD Waiver. Id. at 3.
Effective October 1, 2004, the IDHW established reimbursement rates for two separate levels of care—“high support,” and “intense support.” Id. On July 1, 2006, based on onsite observations and a survey of residential habilitation agencies, those rates (see table below) increased slightly. Id.
In 2005, Idaho's Legislature passed Idaho Code § 56–118, requiring the IDHW to “implement a methodology for reviewing and determining reimbursement rates” for Medicaid services that incorporates providers' actual costs of providing services. I.C. § 56–118(1), (2). In response, the IDHW contracted Johnson, Villegas–Grubb and Associates (JVGA) to conduct applicable studies. Stip. Facts at 4. JVGA's efforts were overseen by Sheila Pugatch, Principal Financial Specialist at IDHW, who manages the Office of Reimbursement Policy and has primary responsibility for setting Medicaid reimbursement rates in Idaho. Id. at 6.
JVGA surveyed Medicaid providers regarding the cost of providing services. Id. at 4. Based on its survey, JVGA submitted a report to the Idaho Legislature on November 30, 2006, recommending increases in reimbursement rates. JVGA continued to conduct studies, and in 2009, the IDHW submitted revised proposed rates that reflected further analysis. The current rates (implemented in July 2006), as well as those based on JVGA's surveys are set forth as follows:
+---------------------------------------------------------------------------+
¦ ¦Current rate, ¦JVGA rate ¦ ¦
¦ ¦effective July ¦proposed ¦IDHW rate ¦
¦ ¦1, 2006 ¦November 30, ¦proposed in 2009¦
¦ ¦ ¦2006 ¦ ¦
+------------------------+----------------+----------------+----------------¦
¦Daily Rate—High Support ¦$225.32 ¦$228.48 ¦$248.40 ¦
+------------------------+----------------+----------------+----------------¦
¦Daily Rate—Intense ¦$268.36 ¦$342.72 ¦$496.56 ¦
¦Support ¦ ¦ ¦ ¦
+---------------------------------------------------------------------------+
Despite, the proposed amendments based on JVGA's studies, the IDHW has not changed the reimbursement rates implemented in July 2006. According to Pugatch, the rate changes proposed in 2009 would have increased Idaho's Medicaid expenditures by $4 million. Id. at 6. Because Idaho's Legislature did not appropriate the necessary funds, the IDHW did not implement the proposed rate changes. Id. at 6. Thus, the current reimbursement rates are not based on the cost studies performed by JVGA between 2006 and 2009. Id. at 6.
There are currently 61 residential habilitation agencies, such as Plaintiffs, in Idaho.Id. at 7. There are 6,202 participants receiving supported living services. Id. Services covered by the DD Waiver are readily available to eligible participants; there are no waiting lists for any Medicaid services in Idaho. Id. The IDHW Critical Incident and Complaint Data Base, used to track Medicaid benefits and services complaints, including complaints related to access to services, shows no unresolved complaints for supported living services. Id. Neither plaintiff agency has turned away a prospective client based on an inability to afford providing them supported living services. Id.
Plaintiffs challenge the IDHW's compliance with the Medicaid Act, and seek prospective and injunctive relief. Where a movant shows “there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law,” the court shall grant summary judgment in favor of the movant. Fed.R.Civ.P. 56(a). The parties in this case have stipulated to all relevant facts and filed cross motions for summary judgment, arguing that each is entitled to judgment as a matter of law. The Court now applies the relevant law to the stipulated facts before it.
The federal statutory provision at issue here is “§ 30A” of the Medicaid Act. Under that provision, participating states must set forth in their state plan, a process for the use of, and payment for, Medicaid Plan services. 42 U.S.C. 1396a(a)(30)(A). The plan should prevent unnecessary use of care and services, and ensure that payments “are consistent with efficiency, economy, and quality of care and are sufficient to enlist enough providers” to meet the need for care and services in the geographic area. Id.
The Ninth Circuit has interpreted § 30A as having both “substantive and procedural requirements.” Indep. Living Center v. Maxwell–Jolly, 572 F.3d 644, 651 (9th Cir.2009). Substantively, the agency administering its state's Medicaid program must set reimbursement rates “that bear a reasonable relationship to efficient and economical ... costs of providing quality services.” Orthopaedic Hosp. v. Belshe, 103 F.3d 1491, 1496 (9th Cir.1997). To accomplish this, the agency must perform and “rely on responsible cost studies ... that provide reliable data as a basis for its rate setting.” Indep. Living Center, 572 F.3d at 651. Where rates fail to “substantially reimburse providers their costs,” there must be some justification other than “purely budgetary reasons.” Belshe, 103 F.3d at 1499 n. 3 (citing Beno v. Shalala, 30 F.3d 1057, 1069 (9th Cir.1994)).
Ninth Circuit cases addressing alleged violations of § 30A have involved changes to reimbursement rates or methodologies, not maintenance of existing rates. Cf. Indep. Living Ctr. v. Shewry, 543 F.3d 1047 (9th Cir.2008); Indep. Living Ctr. v. Shewry, 543 F.3d 1050 (9th Cir.2008); Indep. Living Ctr. v. Maxwell–Jolly, 572 F.3d 644;Indep. Living Ctr. v. Maxwell–Jolly, 590 F.3d 725 (9th Cir.2009); Cal. Pharmacists Ass'n v. Maxwell–Jolly, 596 F.3d 1098 (9th Cir.2010); Dominguez ex rel. Brown v. Schwarzenegger, 596 F.3d 1087 (9th Cir.2010); Indep. Living Ctr. v. Maxwell–Jolly, 374 Fed.Appx. 690 (9th Cir.2010). Indeed, this Court has addressed the validity of a reimbursement rate reduction, and rejected the rate change based on the...
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...entered summary judgment for the providers, holding that Idaho had not set rates in a manner consistent with § 30(A). Inclusion, Inc. v. Armstrong, 835 F.Supp.2d 960 (2011). The Ninth Circuit affirmed. 567 Fed.Appx. 496 (2014). It said that the providers had "an implied right of action unde......
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