H.O.P.E., Inc. v. Eden Mgmt. LLC

• Decision Date: 29 September 2017
• Docket Number: Case No. 13-CV-7391,Case No. 15-CV-9717,Case No. 15-CV-9715,Case No. 15-CV-9719
• Parties: H.O.P.E., INC. d/b/a HOPE FAIR HOUSING CENTER, an Illinois Not-for-Profit Corporation, Plaintiff, v. EDEN MANAGEMENT LLC, et al. Defendants.
• Court: U.S. District Court — Northern District of Illinois

H.O.P.E., INC. d/b/a HOPE FAIR HOUSING CENTER,an Illinois Not-for-Profit Corporation, Plaintiff, v. EDEN MANAGEMENT LLC, et al. Defendants.

Case No. 13-CV-7391

Case No. 15-CV-9715

Case No. 15-CV-9717

Case No. 15-CV-9719

UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS EASTERN DIVISION

September 29, 2017

The Honorable Joan B. Gottschall

MEMORANDUM OPINION AND ORDER

These four related cases stem from H.O.P.E., Inc. v. Eden Management, LLC et al., No. 13-CV-7391.¹ In each case, H.O.P.E., Inc. ("HOPE"), a private, not-for-profit corporation, and in some cases one or more individual plaintiffs bring claims against, among others, various current and former Illinois officials (collectively "State Defendants"). Each case also involves a different group of nonstate defendants which allegedly operates a different Supportive Living Facility ("SLF") in Illinois. Plaintiffs generally allege the State Defendants and the SLF operators have unlawfully excluded individuals with mental disabilities from participating in the Supportive Living Program ("SLP") in violation of the Fair Housing Act ("FHA"), 42 U.S.C. § 3601 et seq.; the Americans with Disabilities Act ("ADA"), 42 U.S.C. § 12101 et seq.; and the Rehabilitation Act, 42 U.S.C. § 794.

The State Defendants have filed motions to dismiss the FHA, ADA, and Rehabilitation Act claims pleaded against them in the complaint in each case, and the parties, by agreement, presented those motions in consolidated briefing. The State Defendants have also filed a motionto dismiss a crossclaim for declaratory relief brought against them by the SLF defendants in one of these cases. For the following reasons, the court denies the State Defendants' motions to dismiss the plaintiffs' FHA, ADA, and Rehabilitation Act claims and grants their motion to dismiss the crossclaim.

I. REGULATORY BACKGROUND

A. The Supportive Living Program

The court described the pertinent statutory and regulatory background in its opinion in H.O.P.E., Inc. v. Eden Management, LLC ("HOPE I"), 128 F. Supp. 3d 1066, 1069-70 (N.D. Ill. 2015). The court repeats that background here with minor updates to provide context.

Medicaid, enacted in 1965 as an amendment to the Social Security Act of 1935, is a joint federal-state program that provides medical assistance to low income individuals.² See 42 U.S.C. § 1396 et seq. Although the federal government does not require states to participate in the Medicaid program, once they do, they "must comply with federal statutes and regulations." Bertrand v. Maram, No. 05-CV-0544, 2006 WL 2735494, at *1 (N.D. Ill. Sept. 25, 2006) (citing 42 U.S.C. § 1396a(a)(10)), aff'd sub nom. Bertrand ex rel. Bertrand v. Maram, 495 F.3d 452 (7th Cir. 2007); see, e.g., 42 C.F.R. §§ 440.210, 440.220 (listing mandatory services a participating state must provide to the "categorically needy" and "medically needy").

The provision of mandatory services is not at issue here. Rather, these cases center on a voluntary program, the Supportive Living Program, which the State of Illinois initiated after "apply[ing] for and receiv[ing] a waiver of Medicaid's normal rules" in order to provide "home and community-based services" ("HCBS"). See Bertrand, 495 F.3d at 454 (citing 42 U.S.C. § 1396n(c)(1)). Under § 1396n(c)(1), a participating state may offer services in communitysettings to qualified individuals who: (a) but for the provision of such services, would require a level of institutional care such as a nursing home; (b) are members of a target group that is included in the waiver; (c) meet applicable Medicaid financial eligibility criteria; (d) require one or more waiver services in order to live in the community; and (e) have the right to participate in the waiver program in lieu of receiving institutional care.

The State of Illinois operates nine separate "Home and Community Based" waiver programs. Each program targets a different segment of the state's population. See https://www.illinois.gov/hfs/medicalclients/hcbs/Pages/default.aspx (last visited Sept. 11, 2017). The waivers are: Children and Young Adults with Developmental Disabilities-Support Waiver; Children and Young Adults with Developmental Disabilities-Residential Waiver; People who are Medically Fragile, Technology Dependent; Persons with Disabilities; Persons with Brain Injuries; Adults with Developmental Disabilities; Persons who are Elderly; Persons with HIV or AIDS; and Supportive Living Facilities. Id.

For an applicant to qualify for the last in the foregoing list of programs, the Supportive Living Facilities program, he or she must:

1) Be age 22 years or over with a disability (as determined by the Social Security Administration) or elderly (age 65 years or over); and

2) Be screened by the Department [of Healthcare and Family Services ("DHFS")] or other State agency screening entity and found to be in need of nursing facility level of care and that Supportive Living Facility placement is appropriate to meet the needs of the individual . . . .; and

3) Be without a primary or secondary diagnosis of developmental disability or serious and persistent mental illness, as determined by a qualified Department of Human Services screening agent; and

4) have [his or her] name checked against [government offender websites and databases].

See Ill. Adm. Code tit. 89 § 146.220(a).³

If an individual satisfies these and other criteria, then an SLF may admit or retain that individual as a resident.⁴

An SLF is a residential setting in Illinois that provides or coordinates flexible personal care services, twenty-four hour supervision and assistance (scheduled and unscheduled), activities, and health related services with a service program and physical environment designed to minimize the need for residents to move within or from the setting to accommodate changing needs and preferences; has an organizational mission, service programs and a physical environment designed to maximize residents' dignity, autonomy, privacy and independence; and encourages family and community involvement.

See Ill. Admin. Code tit. 89 § 146.200.

B. Procedural History

HOPE and Kimberly O'Connor filed the first of these cases in 2013. H.O.P.E., Inc., et al. v. Eden Mgmt., LLC et al., No. 13-CV-7391. O'Connor alleged in her complaint, and these allegations remain in the Second Amended Complaint ("SAC"), that the Eden Management Defendants categorically rejected her from one of their Supportive Living Facilities when shedisclosed that she had been diagnosed with a mental illness. She claimed that Eden Management had a de facto 'no mental illness' policy. Among other things, she sought injunctive relief requiring the State Defendants to modify their administrative rules regarding the SLP and also to modify Illinois' Home and Community Based Services Waiver. O'Connor passed away in August 2016. Resp. to State Defs.' Mot. to Dismiss 8 n.4, ECF No. 229. She was dismissed as a named plaintiff in February 2017. Minute Entry, Feb. 2, 2017, ECF No. 235.

The First Amended Complaint ("FAC") filed September 3, 2014, added Tammy Mormino as a plaintiff. Like O'Connor, Mormino alleges that she was rejected by one of the Eden Management Defendants' Supportive Living Facilities because she disclosed that she had been diagnosed with a mental illness. The FAC also expanded the relief sought against the State Defendants.

The Eden Management Defendants answered the FAC, but the State Defendants moved to dismiss it for lack of subject matter jurisdiction and failure to state a claim. See Fed. R. Civ. P. 12(b)(1) and (6). This court granted their motion in part in September 2015, concluding that the FAC failed to demonstrate a fairly traceable connection between the State Defendants' alleged conduct and the plaintiffs' alleged injuries to give them standing to sue the State Defendants. H.O.P.E., Inc. v. Eden Mgmt. LLC ("HOPE I"), 128 F. Supp. 3d 1066 (N.D. Ill. 2015).

After conducting state-wide testing of other SLFs, HOPE filed three more cases in this court on October 30, 2015. H.O.P.E. Inc. v. Tabor Hills, et al., No. 15-CV-9719; H.O.P.E. Inc. v. Alden Gardens, et al., No. 15-CV-9715; H.O.P.E, Inc. v. Eastgate Manor, et al., No. 15-CV-9717. Based on its testing, it alleges that three additional SLFs unlawfully discriminated against fictitious persons with mental health disabilities and diagnoses on whose behalf testers inquired about obtaining housing and services under the SLP. Unlike the Eden Management case, thecomplaint in each names HOPE as the sole plaintiff; HOPE sues the same State Defendants in each case but a different group of SLF defendants. Each complaint seeks similar relief and brings similar claims under the FHA, ADA, and Rehabilitation Act.

The plaintiffs in the Eden Management case also moved for leave to file a SAC.⁵ While that motion was pending, they reached a settlement with the Eden Management Defendants, and this court entered a consent decree on June 2, 2016. ECF No. 202.

This court granted HOPE's motion for leave to file its SAC in July 2016. HOPE v. Eden Mgmt., LLC, No. 13-CV-7391, 2016 WL 4011225, at *3-5 (N.D. Ill. July 27, 2016). The court also granted the plaintiffs' motion to reassign the other three HOPE cases filed in 2015 to the undersigned judge because they were related and the requirements of Local Rule 40.4 were satisfied. Id. at *5-7.

In opposing the motion for leave to file the SAC, the State Defendants argued that the then-proposed SAC did not demonstrate that plaintiffs had standing, but this court disagreed, finding that the SAC's allegations were independently sufficient to demonstrate standing. Id. at *3-4. The court concluded that:

the Individual Plaintiffs . . . alleged the following: (1) they have suffered an injury in the form of rejection from the SLF; (2) the injury is fairly traceable to the State Defendants' action of promulgating and enforcing a 'no mental illness' policy for the SLFs; and (3) it is likely that the injury will be redressed by

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