Arc of Washington State Inc. v. Braddock

• Decision Date: 14 October 2005
• Docket Number: No. 03-35605.,03-35605.
• Citation: 427 F.3d 615
• Parties: The ARC OF WASHINGTON STATE INC., a Washington Corporation on behalf of its members; Guadalupe E. Cano, by and through her guardian Delia C. Cano; Olivia Murguia, by and through her guardian Teri L. Hewett; Lorianne V. Ludwigson, by and through her guardians Donald and Sheryl Ludwigson, Plaintiffs-Appellants, v. Dennis BRADDOCK, in his official capacity as the Secretary of the Washington Department of Social and Health Services;<SMALL><SUP>*</SUP></SMALL> Department of Social & Health Services State of Washington; Financial Management Office of the State of Washington; Marty Brown, in his official capacity as Director of the Washington Office of Financial Management; Timothy R. Brown, in his official capacity as the Director of the Washington State Division of Developmental Disabilities; Developmental Disabilities Division; Christine Gregoire,<SMALL><SUP>**</SUP></SMALL> in her capacity as Governor of the State of Washington, Defendants-Appellees.
• Court: U.S. Court of Appeals — Ninth Circuit

427 F.3d 615

The ARC OF WASHINGTON STATE INC., a Washington Corporation on behalf of its members; Guadalupe E. Cano, by and through her guardian Delia C. Cano; Olivia Murguia, by and through her guardian Teri L. Hewett; Lorianne V. Ludwigson, by and through her guardians Donald and Sheryl Ludwigson, Plaintiffs-Appellants, v. Dennis BRADDOCK, in his official capacity as the Secretary of the Washington Department of Social and Health Services;^* Department of Social & Health Services State of Washington; Financial Management Office of the State of Washington; Marty Brown, in his official capacity as Director of the Washington Office of Financial Management; Timothy R. Brown, in his official capacity as the Director of the Washington State Division of Developmental Disabilities; Developmental Disabilities Division; Christine Gregoire,^** in her capacity as Governor of the State of Washington, Defendants-Appellees.

No. 03-35605.

United States Court of Appeals, Ninth Circuit.

Argued October 4, 2004.

Submitted March 29, 2005.

Filed October 14, 2005.

Susan Delanty Jones, Preston Gates & Ellis LLP, and Larry A. Jones and Christine Thompson Ibrahim, Seattle, WA, for the plaintiffs-appellants.

Rob McKenna, Attorney General, and William M. Van Hook and Edward J. Dee, Assistant Attorneys General, Olympia, WA, for the defendants-appellees.

Appeal from the United States District Court for the Western District of Washington; Franklin D. Burgess, District Judge, Presiding. D.C. No. CV-99-05577-FDB.

Before KOZINSKI, FERNANDEZ, and CLIFTON, Circuit Judges.

Opinion by Judge KOZINSKI; Concurrence by Judge FERNANDEZ.

ORDER

The petition for rehearing is GRANTED. The petition for rehearing en banc is DENIED as moot. The opinion filed March 29, 2005, and reported at 403 F.3d 641, is withdrawn, and is replaced by the Opinion and concurrence, 03-35605. Further petitions for rehearing and rehearing en banc will be accepted. See Fed. R.App. P. 35; Fed. R.App. P. 40.

OPINION

KOZINSKI, Circuit Judge.

We navigate once again the murky waters between two statutory bodies: Medicaid and the Americans with Disabilities Act (ADA). Specifically, we examine whether a state violates the ADA when it limits the number of people that can participate in a Medicaid waiver program providing disabled persons with alternatives to institutionalization.

Facts

Medicaid is a program under which the federal government provides financial assistance to participating states to help them furnish care to low-income persons. If a state chooses to participate—which all fifty do—it must submit a plan for approval by the federal regulators. See Children's Hosp. & Health Ctr. v. Belshe, 188 F.3d 1090, 1093 (9th Cir.1999).

Washington State Department of Social and Health Services (the Department) devised a plan which provided for two types of services to certain Medicaid-eligible developmentally disabled individuals. First, it funded Intermediate Care Facilities for the Mentally Retarded (ICF/MR), which are generally large public institutions made available to any person who meets the eligibility requirements for admission. See 42 U.S.C. § 1396d(a)(15), (d). In addition, the plan used some ICF/MR funds to support smaller, privately operated residences that serve between six and forty individuals each. Second, in an effort to offer alternatives to institutionalization, the Department sought and received a waiver of certain ICF/ MR rules. See id. § 1396n(c)(1); 42 C.F.R. § 441.300. That waiver program is known as the Home and Community-Based Services waiver (HCBS).¹ HCBS provides a variety of noninstitutional care options for qualified persons, enabling them to remain more integrated in the community than if they were institutionalized.

Central to the question presented to us is the limitation on HCBS services to a particular number of individuals—9,977 when this action was filed. Such a cap is expressly contemplated by the Medicaid waiver provisions, see 42 U.S.C. § 1396n(c)(9), (10); 42 C.F.R. § 441.303(f)(6), and there is no indication that Washington is failing to use all of its allocated slots. The Arc of Washington State, Inc., and three developmentally disabled individuals (collectively the Arc), complain that because the program is full, eligible individuals must await openings before they can be enrolled. The Arc asserts that Title II of the ADA, Pub.L. No. 101-336, § 202, 104 Stat. 327, 337 (codified at 42 U.S.C. § 12132), prevents Washington from maintaining any fixed HCBS cap. Instead, it argues, the state must make the HCBS waiver program available to every developmentally disabled person who could qualify for an ICF/MR setting, but who prefers HCBS. The district court disagreed, and granted partial summary judgment against the Arc.²

Discussion

1. As an alternative to institutionalized care for the disabled, the Medicaid statute and regulations allow states to apply for waiver programs for home and community-based care. However, Congress envisioned such programs as limited in scope, and therefore included the following language in 42 U.S.C. § 1396n(c), the waiver portion of the statute:

(9) In the case of any waiver under this subsection which contains a limit on the number of individuals who shall receive home or community-based services, the State may substitute additional individuals to receive such services to replace any individuals who die or become ineligible for services under the State plan.

(10) The Secretary shall not limit to fewer than 200 the number of individuals in the State who may receive home and community-based services under a waiver under this subsection.

The regulations implementing the statute go farther, requiring states to place a limit on the number of waiver program participants, and requiring states to adhere to the limitation:

The State must indicate the number of unduplicated beneficiaries to which it intends to provide waiver services in each year of its program. This number will constitute a limit on the size of the waiver program unless the State requests and the Secretary approves a greater number of waiver participants in a waiver amendment.

42 C.F.R. § 441.303(f)(6).

Approaching the problem from the opposite direction, the ADA provides that "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." 42 U.S.C. § 12132. The regulations that flesh out that provision state: "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).

We have previously described the ADA as containing an "integration mandate." See Townsend v. Quasim, 328 F.3d 511, 515-18 (9th Cir.2003). Under this mandate, states are required to provide care in integrated environments for as many disabled persons as is reasonably feasible, so long as such an environment is appropriate to their mental-health needs. See id.; see also Olmstead v. L.C. ex rel. Zimring, 527 U.S. 581, 592, 600-01, 119 S.Ct. 2176, 144 L.Ed.2d 540 (1999). This requirement serves one of the principal purposes of Title II of the ADA: ending the isolation and segregation of disabled persons. See 42 U.S.C. § 12132; 28 C.F.R. § 35.130(d). In order to comply with the integration mandate, states are required to make "reasonable modifications in policies, practices, or procedures" that are "necessary to avoid discrimination on the basis of disability." Id. § 35.130(b)(7).

The integration mandate has its own limitations. In administering services, programs and activities, a state is not required to make "modifications [that] would fundamentally alter the nature of the service, program, or activity." Id. The Supreme Court has instructed courts to be sympathetic to fundamental alteration defenses, and to give states "leeway" in administering services for the disabled. Olmstead, 527 U.S. at 605, 119 S.Ct. 2176; see Townsend, 328 F.3d at 520. Despite the integration mandate, therefore, we have held that we normally "will not tinker with" comprehensive, effective state programs for providing care to the disabled. See Sanchez v. Johnson, 416 F.3d 1051, 1067-68 (9th Cir.2005).

2. The Arc's claim is that Washington's HCBS program is too small to accommodate the state's population of eligible participants. According to the Arc, Washington must request federal authorization for an increase in the size of its HCBS waiver program. Whether the state may be required to seek such an increase depends on whether this would be a "reasonable modification" (which is required) or a "fundamental alteration" (which is not).

The Supreme Court has addressed this distinction in the specific context of Medicaid waiver programs for the disabled. In Olmstead v. L.C. ex rel. Zimring, the Court recognized that "[t]he State's responsibility, once it provides community-based treatment to qualified persons with disabilities, is not boundless." 527 U.S. at 603, 119 S.Ct. 2176.³ Although the "unjustified isolation" of disabled persons in institutions would violate the ADA, the Court recognized certain state justifications that would defeat an ADA-based challenge, for example "the States' need to maintain a range of facilities for the care and treatment of persons with diverse mental disabilities, and the States' obligation to administer services with an even hand." Id. at 597, 119 S.Ct. 2176. Further, a state could avoid having to modify its waiver program if it "were to demonstrate that it had a comprehensive, effectively working plan for placing qualified persons with mental disabilities in less restrictive settings, and a waiting list that moved at a reasonable pace." Id. at 605-06, 119 S.Ct. 2176.

The Supreme Court in Olmstead did not consider whether a forced change in the...