Frederick L. v. Dept, Public Welfare, Pa

• Decision Date: 13 April 2004
• Docket Number: No. 02-3721.,02-3721.
• Citation: 364 F.3d 487
• Parties: FREDERICK L.; Nina S.; Kevin C.; Steven F., on Behalf of Themselves and all Persons Similarly Situated, Appellants v. DEPARTMENT OF PUBLIC WELFARE OF THE COMMONWEALTH OF PENNSYLVANIA; Feather O. Houstoun, in Her Official Capacity as Secretary of Public Welfare for the Commonwealth of Pennsylvania.
• Court: U.S. Court of Appeals — Third Circuit

364 F.3d 487

FREDERICK L.; Nina S.; Kevin C.; Steven F., on Behalf of Themselves and all Persons Similarly Situated, Appellants v. DEPARTMENT OF PUBLIC WELFARE OF THE COMMONWEALTH OF PENNSYLVANIA; Feather O. Houstoun, in Her Official Capacity as Secretary of Public Welfare for the Commonwealth of Pennsylvania.

No. 02-3721.

United States Court of Appeals, Third Circuit.

Argued October 15, 2003.

Filed April 13, 2004.

COPYRIGHT MATERIAL OMITTED

Robert W. Meek, Mark J. Murphy (Argued), Robin Resnick, Disabilities Law Project, Philadelphia, PA, for Appellants.

D. Michael Fisher, Attorney General, Claudia M. Tesoro (Argued), Senior Deputy Attorney General, Calvin R. Koons, Senior Deputy Attorney General, John G. Knorr, III, Chief Deputy Attorney General, Office of Attorney General of Pennsylvania, Philadelphia, PA, for Appellees.

Robert D. Fleischner, Northampton, MA, for Amici-Appellants.

Before SLOVITER, ROTH, and CHERTOFF, Circuit Judges.

SLOVITER, Circuit Judge.

Appellants represent a class of mental health patients institutionalized in the Norristown State Hospital, a large congregate psychiatric hospital located in southeast Pennsylvania, who are qualified for and wish to be placed in a community-care setting.¹ They seek declaratory and permanent injunctive relief to remedy what they claim are violations of their federal statutory rights to a more accelerated program of deinstitutionalization. They appeal from the judgment for the Commonwealth entered by the District Court following a bench trial. Appellants contend that the District Court erroneously interpreted the applicable legal principles. The issue raised is significant as it implicates the extent to which the state may rely on general cost concerns to avoid its statutory responsibility to eliminate disabilities discrimination.

I. FACTS AND PROCEDURAL HISTORY

Appellants represent approximately 300 class members with serious and persistent mental disabilities who are institutionalized at Norristown State Hospital ("NSH"). Approximately 32% of the class members are classified as short-stay patients (approximately 10 months) and 68% of the class members are classified as long-stay patients (approximately 12 and a half years). Appellee Department of Public Welfare of the Commonwealth of Pennsylvania ("DPW") is an agency of the Commonwealth of Pennsylvania ("the Commonwealth") that provides publicly funded mental health care in institutional and community settings. Also named as a defendant is Feather O. Houston in her official capacity as Pennsylvania's Secretary of Public Welfare. The Office of Mental Health and Substance Abuse Services ("OMHSAS") is a department of DPW that has the responsibility to ens ure local access to mental health and substance abuse treatment. App. at 712. OMHSAS operates nine psychiatric facilities and one nursing facility throughout Pennsylvania. NSH is one such facility. App. at 717. Amici curiae represent fourteen former state mental health agency administrators and have submitted a brief in support of Appellants.

Appellants filed this class action lawsuit in September 2000, claiming that, because the class members are qualified and prepared for community-based services, their continued institutionalization violates the anti-discrimination and integration mandates of the Americans with Disabilities Act ("ADA"), 42 U.S.C. §§ 12131-12134 and 28 C.F.R. § 35.130(d) (1998), and Section 504 of the Rehabilitation Act ("RA"), 29 U.S.C. § 794 and 28 C.F.R. § 41.51(d) (1998).² They claim that DPW has failed to provide services to them in the most integrated setting appropriate to their needs and has developed no plan to assure that this be done. They also claim that DPW has failed to require treatment teams to prepare appropriate individualized assessments of the service needs of the class members that are a prerequisite for community placement. In their answer, defendants admit some of the detailed allegations of the amended complaint and deny others. Essentially, defendants assert as an affirmative defense the analysis in Olmstead v. L.C., 527 U.S. 581, 119 S.Ct. 2176, 144 L.Ed.2d 540 (1999), where a plurality of the Supreme Court allowed the states to resist modifications that would effect a fundamental alteration of the states' services and programs. Although Appellants acknowledge that the statutes would not require additional community placements if the increase would require a fundamental alteration of the Commonwealth's policy and budget, Appellants argue that the cost of providing the additional placements would be defrayed by cost-savings from bed closures in NSH. They further argue that cost concerns alone do not provide the Commonwealth grounds for a fundamental-alteration defense to their claims.

On May 6, 2002, the parties filed extensive joint stipulations regarding the facts underlying this case. App. at 710-39. In pertinent part, they stated that between 1976 and 1998, DPW closed thirteen state-operated psychiatric facilities, including two facilities in southeastern Pennsylvania in 1990 and 1998. App. at 717.

The joint stipulations explain that one way in which DPW closed hospitals is by moving qualified patients into community care programs. In order to determine when a patient is ready for community care, NSH county program officers hold "monthly Hospital/County Discharge Planning meetings," at which staff and county representatives conduct "independent, ongoing assessments of each consumer's discharge readiness and aftercare needs," and address "unresolved impediments to discharge." App. at 715. However, NSH does not maintain formal waiting lists for community services. App. at 722.

The parties also stipulated that DPW receives the bulk of its mental health funding from the Commonwealth through a budgetary process set out in 71 P.S. §§ 229-240. App. at 723. Under Pa.Code § 4215.21, county programs must annually develop and submit to DWP and OMHSAS an assessment of needs for community-based mental health services and budget estimates. App. at 724. OMHSAS submits a proposed budget to DPW, which can modify it, and DPW submits the budget to the Governor's Office of Budget. The Governor then formulates a comprehensive budget and submits it to the Legislature, which ultimately enacts DPW's budget. App. at 724.

DPW's primary funding mechanism for new community care placements has been the Community Hospital Integration Projects Program ("CHIPP") and the Southeastern Integration Projects Program ("SIPP"). App. at 15, 725. The number of community care placements has varied widely from year to year: 38 in 1996-97; 155 in 1997-98; 82 in 1998-99; 121 in 1999-2000; 43 in 2000-01; and 60 (proposed) in 2001-02. App. at 726-27.

The stipulations describe instances in which DPW did not request the full amount of mental health monies requested by the counties and instances in which DPW initially requested additional community placements, but the Governor informed DPW that no funding would be available or rejected the request. App. at 725, 729. However, apart from the budget process, DPW has funded 48 additional community care slots through savings in overtime. App. at 730.

Following a three-day bench trial in May 2002, the District Court issued a memorandum opinion on September 5, 2002 in favor of DPW. Frederick L. v. Dep't of Pub. Welfare, 217 F.Supp.2d 581 (E.D.Pa.2002). The District Court held that Appellants were not entitled to the requested relief because it would have required a fundamental alteration of the Commonwealth's programming and budgetary allocations. The District Court also found that providing additional community placements would have negatively affected other state residents with mental disabilities who received services in an institutional setting.

Appellants contend that the District Court erred by stating that the immediate extra cost coupled with a lack of immediate cost-savings associated with their requested relief, without more, provided DPW with a fundamental-alteration defense. Appellants further argue that the District Court erred in finding that DPW's pre-budgetary involvement in the legislative process was "beyond judicial scrutiny." Frederick L., 217 F.Supp.2d at 593.

II. DISCUSSION

We may set aside the District Court's conclusions of fact only for clear error, but we subject its conclusions of law to plenary review. See, e.g., Goldstein v. Johnson & Johnson, 251 F.3d 433, 441 (3d Cir.2001).

A. Statutory Framework

This case arises under Title II of the ADA and Section 504 of the RA. Title II of the ADA provides that "no qualified individual with a disability shall, by reasons of such disability, be excluded from participation in or be denied the benefit of services, programs, or activities of a public entity, or be subjected to discrimination by any such entity." 42 U.S.C. § 12132. The ADA largely mirrors Section 504 of the RA, which states as follows:

No otherwise qualified individual with a disability ... shall, solely by reason of her or his disability, be excluded from the participation in, be denied the benefits of, or be subjected to discrimination under any program or activity receiving Federal financial assistance or under any program or activity conducted by any Executive agency or by the United States Postal Service.

29 U.S.C. § 794(a). We have construed the provisions of the RA and the ADA in light of their close similarity of language and purpose. See Helen L. v. DiDario, 46 F.3d 325, 330-32 (3d Cir.), cert. denied, 516 U.S. 813, 116 S.Ct. 64, 133 L.Ed.2d 26 (1995).

The ADA and RA's anti-discrimination principles culminate in their integration mandates, which direct states to "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). "[T]he most integrated setting appropriate to the needs of qualified individuals with disabilities" is "a setting that...