Arrm v. Piper

• Decision Date: 15 February 2019
• Docket Number: Case No. 18-cv-1627 (WMW/BRT)
• Parties: ARRM, a Minnesota non-profit association incorporated under the laws of Minnesota, on behalf of itself and its members; Minnesota Organization for Habilitation and Rehabilitation (MOHR), a Minnesota non-profit association incorporated under the laws of Minnesota, on behalf of itself and its members; and Karla Dee Marder, by her guardian Judy Marder; Robert Clapper, by his guardian James Clapper; Kathryn Smith, by her guardian Gerald Smith; and Cara Pedrelli, by her guardian Nino Pedrelli, on behalf of other waiver recipients similarly situated, Plaintiffs, v. Emily Johnson PIPER, in her Official Capacity as Commissioner of the Minnesota Department of Human Services, Defendant.
• Court: U.S. District Court — District of Minnesota

367 F.Supp.3d 944

ARRM, a Minnesota non-profit association incorporated under the laws of Minnesota, on behalf of itself and its members;

Minnesota Organization for Habilitation and Rehabilitation (MOHR), a Minnesota non-profit association incorporated under the laws of Minnesota, on behalf of itself and its members; and

Karla Dee Marder, by her guardian Judy Marder; Robert Clapper, by his guardian James Clapper; Kathryn Smith, by her guardian Gerald Smith; and Cara Pedrelli, by her guardian Nino Pedrelli¹ , on behalf of other waiver recipients similarly situated, Plaintiffs,

v.Emily Johnson PIPER, in her Official Capacity as Commissioner of the Minnesota Department of Human Services, Defendant.

Case No. 18-cv-1627 (WMW/BRT)

United States District Court, D. Minnesota.

Signed February 15, 2019

Pari McGarraugh, Samuel D. Orbovich, Fredrikson & Byron, PA, Minneapolis, MN, for Plaintiffs.

Michael N. Leonard, Scott H. Ikeda, Minnesota Attorney General's Office, St. Paul, MN, for Defendant.

ORDER GRANTING DEFENDANT'S MOTION TO DISMISS

Wilhelmina M. Wright, United States District Judge

This matter is before the Court on Defendant's motion to dismiss Plaintiffs' amended complaint for lack of subject-matter jurisdiction and failure to state a claim on which relief can be granted. (Dkt. 38.) For the reasons addressed below, Defendant's motion is granted and the amended complaint is dismissed without prejudice.

BACKGROUND

This case involves funding reductions to Minnesota's "waiver services" payment rates. Waiver services are services for which the federal government agrees, in limited circumstances, to waive certain statutory and regulatory requirements that ordinarily would govern Medicaid assistance funding. See 42 C.F.R. §§ 430.25, 441.300. The state agency that administers a state's Medicaid program may apply to the Centers for Medicare and Medicaid Services (CMS) for authorization to establish home and community-based waiver services, which are designed to enhance the ability of persons with disabilities to live in the community rather than in an institutional setting. Waiver services are administered by states but jointly funded by state and federal governments.

In Minnesota, the Department of Human Services (DHS) is the state agency responsible for licensing, certifying, and enrolling providers of waiver services. DHS also computes and approves waiver service payment rates according to Minnesota law. The Minnesota Disability Waiver Rate System (DWRS) provides a mathematical framework for establishing provider payment rates for approved waiver services. See Minn. Stat. § 256B.4914. Enacted by the Minnesota Legislature, DWRS went into effect on January 1, 2014. Pursuant to DWRS, waiver service payment rates adjust automatically every five years to account for inflation. The first automatic inflationary adjustment occurred on July 1, 2017.

In addition to the DWRS automatic inflationary adjustments, the Minnesota Legislature separately enacted three session laws that increased waiver service payment rates, with effective dates in 2014 and 2015. See 2014 Minn. Laws, Ch. 312, Art. 27, § 75; 2013 Minn. Laws, Ch. 108, Art. 7, §§ 34, 60. These session laws, which cumulatively increased waiver service payment rates by 7%, affected all payment rates for Minnesota waiver service recipients without regard for the type of waiver services received or whether the payment rates had been set by DWRS.

During the 2018 legislative session, the Minnesota Legislature passed an omnibus bill that, as relevant here, would have repealed the cumulative 7% waiver service payment rate increase and replaced it with different appropriations. However, Minnesota Governor Mark Dayton vetoed that omnibus bill in May 2018. Consequently, the three session laws that provide for the 7% waiver service payment rate increases remain in effect. Shortly thereafter the Commissioner of DHS, Defendant Emily Johnson Piper (Commissioner), announced that DHS intends to eliminate the 7% waiver service payment rate increase. The elimination of this rate increase will occur in multiple stages. The first funding reduction occurred on July 1, 2018, and the final funding reduction is scheduled to occur on December 31, 2019.

Plaintiffs ARRM and Minnesota Organization for Habilitation and Rehabilitation (MOHR) (collectively, "Organizational Plaintiffs") are nonprofit associations incorporated under Minnesota law. ARRM advances Minnesota's home and community-based service programs that support people living with disabilities, and its members include more than 200 service providers, businesses, and stakeholders, including nonprofit and for-profit entities that are certified to provide such services. MOHR is an association with more than 100 members that provide services to persons with disabilities. Plaintiffs Karla Dee Marder, Robert Clapper, Kathryn Smith, and Cara Pedrelli, through their respective guardians (collectively, "Individual Plaintiffs"), receive waiver services subject to DWRS. Plaintiffs commenced this action to enjoin the Commissioner from implementing the anticipated 7% funding reduction to Minnesota's waiver service payment rates.

Plaintiffs sought a temporary restraining order and preliminary injunction, which this Court denied in a June 28, 2018 Order. Plaintiffs filed an amended complaint on July 13, 2018. Count I alleges that the Commissioner's 7% funding reduction violates the Due Process Clause of the Fourteenth Amendment to the United States Constitution. Count II alleges that the Commissioner's 7% funding reduction violates the Equal Protection Clause of the Fourteenth Amendment. Count III alleges that the Commissioner's 7% funding reduction violates Title II of the Americans with Disabilities Act (ADA), Title 42, United States Code, Sections 12101 et seq. And Count IV alleges that the Commissioner's 7% funding reduction violates the Rehabilitation Act, Title 29, United States Code, Sections 793 et seq. The Commissioner moves to dismiss, arguing that this Court lacks subject-matter jurisdiction over Plaintiffs' claims and that the amended complaint fails to state a claim on which relief can be granted.

ANALYSIS

The Commissioner moves to dismiss Plaintiffs' amended complaint in part pursuant to Federal Rule of Civil Procedure 12(b)(1), arguing that this Court lacks subject-matter jurisdiction over the Individual Plaintiffs' claims because the Individual Plaintiffs lack standing. The commissioner also moves to dismiss Plaintiffs' amended complaint pursuant to Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim.

Under Rule 12(b)(1), a defendant may challenge a plaintiff's complaint for lack of subject-matter jurisdiction either on its face or on the factual truthfulness of its averments. See Fed. R. Civ. P. 12(b)(1) ; Titus v. Sullivan , 4 F.3d 590, 593 (8th Cir. 1993). In a facial challenge, as presented here, the nonmoving party "receives the same protections as it would defending against a motion brought under Rule 12(b)(6)." Osborn v. United States , 918 F.2d 724, 729 n.6 (8th Cir. 1990).

Under Rule 12(b)(6), a complaint must be dismissed if it fails to state a claim on which relief can be granted. Fed. R. Civ. P. 12(b)(6). To survive a Rule 12(b)(6) motion, the complaint must allege sufficient facts that, when accepted as true, state a facially plausible claim to relief. Ashcroft v. Iqbal , 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009). When determining whether the complaint states such a claim, a district court accepts as true all factual allegations in the complaint and draws all reasonable inferences in the plaintiff's favor. Blankenship v. USA Truck, Inc. , 601 F.3d 852, 853 (8th Cir. 2010). The factual allegations need not be detailed, but they must be sufficient to "raise a right to relief above the speculative level" and "state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly , 550 U.S. 544, 555, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). A plaintiff, however, must offer more than "labels and conclusions" or a "formulaic recitation of the elements of a cause of action." Id. at 555, 127 S.Ct. 1955. Legal conclusions that are couched as factual allegations may be disregarded by the district court. See Iqbal , 556 U.S. at 678-79, 129 S.Ct. 1937.

I. Standing

Because questions of standing implicate the Court's subject-matter jurisdiction, the Court addresses the Commissioner's standing arguments first. Faibisch v. Univ. of Minn. , 304 F.3d 797, 801 (8th Cir. 2002). The jurisdiction of federal courts extends only to actual cases or controversies. U.S. Const. art. III, § 2, cl. 1 ; accord Neighborhood Transp. Network, Inc. v. Pena , 42 F.3d 1169, 1172 (8th Cir. 1994). To satisfy the case-or-controversy requirement of Article III of the United States Constitution, a plaintiff must establish standing as an "indispensable part of the plaintiff's case." Lujan v. Defs. of Wildlife , 504 U.S. 555, 561, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992) ; accord Hargis v. Access Capital Funding, LLC , 674 F.3d 783, 790 (8th Cir. 2012). To meet this standing requirement, the plaintiff must (1) have suffered an injury in fact, (2) establish a causal relationship between the contested conduct and the alleged injury, and (3) show that a favorable decision would redress the injury. Lujan , 504 U.S. at 560-61, 112 S.Ct. 2130 ; accord Hargis , 674 F.3d at 790.

The Commissioner argues that the Individual Plaintiffs lack standing as to all of the claims asserted in the amended complaint and that the Organizational Plaintiffs lack standing as to the ADA and Rehabilitation Act claims asserted in the amended complaint. The Court addresses each standing argument in turn.

A. Individual Plaintiffs

Because the Individual Plaintiffs have not alleged an imminent injury in fact, the Commissioner argues, the Individual Plaintiffs lack standing to seek injunctive relief.² To allege an "injury in fact" that confers standing to seek injunctive...