Missouri Child Care Ass'n v. Martin, 01-4045-CV-W-NKL.

• Citation: 241 F.Supp.2d 1032
• Decision Date: 13 January 2003
• Docket Number: No. 01-4045-CV-W-NKL.,01-4045-CV-W-NKL.
• Parties: MISSOURI CHILD CARE ASSOCIATION, d/b/a Missouri Coalition of Children's Agencies, Plaintiff, v. Dana K. MARTIN, et al., Defendants.
• Court: U.S. District Court — Western District of Missouri

241 F.Supp.2d 1032

MISSOURI CHILD CARE ASSOCIATION, d/b/a Missouri Coalition of Children's Agencies, Plaintiff, v. Dana K. MARTIN, et al., Defendants.

No. 01-4045-CV-W-NKL.

United States District Court, W.D. Missouri, Central Division.

January 13, 2003.

Joel E. Anderson, Gary L. Gardner, Attorney General's Office, Douglas G. Leyshock, Mo. Atty. Gene. Jefferson City, MO, Jefferson City, MO, for Dana K. Martin, Denice Cross.

David M. Harris, Valerie G. Lipic, Greensfelder, Hemker & Gale, P.C., St. Louis, MI, for Missouri Child Care Ass'n.

MEMORANDUM AND ORDER

LAUGHREY, District Judge.

This case was brought by Plaintiff Missouri Child Care Association ("MCCA") under 42 U.S.C. § 1983 ("Section 1983") seeking declaratory and injunctive relief against Defendants Dana K. Martin ("Martin") and Denise Cross ("Cross") (collectively, the "Defendants"), in their official capacities as Directors of the Missouri Department of Social Services ("DSS") and its Division of Family Services ("DFS"). MCCA alleges that the Defendants have failed to comply with certain provisions of the Child Welfare Act, 42 U.S.C. §§ 670, et seq. ("Title IV-E" or "CWA"). Pending before the Court are cross motions for summary judgment filed by the parties [Docs. 73 and 75]. For the reasons discussed below, the Defendants' motion is denied and MCCA's motion for partial summary judgment is granted in part.

I. Factual Background

A. The Parties

MCCA is a trade organization for approximately 60 different child care agencies in the State of Missouri. These child care agencies operate approximately 90 residential care facilities. MCCA represents the interests of its members with respect to various matters, including those relating to the administration of foster care programs by DFS. MCCA's member agencies contract with DFS to provide both residential and rehabilitative services to abused and neglected children who are wards of the State. Martin is the Director of DSS which oversees DFS.

B. The Child Welfare Act

In 1980, Congress enacted the CWA. The CWA establishes a statutory formula, whereby the federal and state governments share the cost of providing aid to foster children. A State becomes eligible to receive federal funds by submitting a State Plan for financial assistance to the Secretary of the Department of Health and Human Services ("DHHS" or the "Secretary"). In order to have its plan approved, the State agrees to administer its foster care program in accordance with the CWA and the implementing regulations and policies of the Secretary.

DSS is the State agency responsible for submitting the Missouri State Plan to the Secretary for his or her approval. The State of Missouri has and continues to participate in the Child Welfare Program and thereby receives federal matching funds to cover part of the costs for foster care services furnished to eligible program beneficiaries.

For a State to receive federal funds under the CWA, it "shall make foster care maintenance payments" for qualified children. 42 U.S.C. 672. The term "foster care maintenance payments" is defined as follows:

[P]ayments to cover the cost of (and the cost of providing) food, clothing, shelter, daily supervision, school supplies, a child's personal incidentals, liability insurance with respect to a child, and reasonable travel to the child's home for visitation. In the case of institutional care, "foster care maintenance payments" also includes all reasonable costs of administration and operation of such institution as are necessarily required to provide the items described in the preceding sentence.

42 U.S.C. § 675(4)(A). The Child Welfare Manual further defines the term "reasonable" as used in the definition of "foster care maintenance payment." "Reasonable" costs are determined in conformance with OMB Circular A-87, which provides in relevant part that costs are "reasonable" if it does not exceed that which would be incurred by a "prudent person." [Child Welfare Manual, Pltf's Exh. 9 at 7; OMB Circular A-87, Pltf's Exh. 10 at 9].

C. The Provider Agreements

To provide the services mandated by the CWA, DSS through DFS contracts with child-care institutions in the form of a Residential Treatment Contract. The present per diem payment rates are as follows: emergency shelter—$55.18; Moderate Need—$65.89; Severe Need— $83.62; and Intensive Need—$115.88. [See Rehab-RT Contract, Pltf's Exh. 15 and Residential Care Contract, Pltf's Exh. 16]. The per diem rates used in the provider agreements are based on budget considerations. For example, to annually adjust its reimbursement rates paid to child-care institutions for providing foster care maintenance services, DSS multiplies its current budgeted amount for institutional foster care by the percentage increase in its next year's budgeted amount that is appropriated by the legislature and approved by the Governor, and then increases each individual reimbursement rate by an amount equal to that percentage increase.

No analysis is made of the child-care institutions' costs to provide the care that is mandated by the provider contracts; rather, the figures are budget-based. DFS has never attempted an evaluation of the costs associated with providing foster care services by Missouri's child-care institutions. DFS has not undertaken an evaluation of whether the contract rates with the child-care institutions include the reasonable costs for providing the items described as foster care maintenance payments. DFS has never undertaken an evaluation of what costs constitute a reasonable cost for providing foster care services.

MCCA has periodically asked its member organizations to provide it with financial information for costs incurred in providing residential treatment to children placed at member facilities. Information provided by MCCA's members is collected in an annual cost of care report. In requesting such information, MCCA, however, has not provided its member organizations with instructions or information regarding a specific definition of the phrase "foster care maintenance payments" utilized in the CWA. MCCA's own expert, Ken Marx, could not state with reasonable certainty that all costs reported by MCCA's members associated with the provision of residential treatment for children placed in their care were allowable foster care maintenance costs.

D. The Present Contract Rates

The DFS budget request for fiscal year 2002 provides that the present contract rates do not cover the actual costs incurred by the child-care institutions for residential treatment. This conclusion was reached after a review of the historical feedback from the MCCA, including MCCA's cost of care surveys and discussions with the MCCA that contract rates were anywhere between thirty to fifty percent less than actual costs. DFS based the assessment that the actual costs exceed the contract rates on Generally Accepted Accounting Principals.

DFS has admitted that present contract rates are not comparable with the actual costs of administering and providing the services mandated by its contracts with the child-care institutions. See Fiscal Note Request for Senator Patrick Dougherty, Senate Bill 0473. Senate Bill 0473 sought to remedy this disparity by providing for an incremental increase in contract rates to child-care institutions to cover the actual cost of providing services to the children committed to the care of the child-care institutions so that by FY 2008, the contract rates would be comparable to the actual costs of care.

Further, the Residential Task Force composed of members of DSS, DFS and "providers" concluded that DFS reimburses only approximately sixty-one percent of child-care institutions' costs of providing services mandated by the Residential Treatment Contract and Rehab-RT Contract for levels II, III and IV. [See Joint Report of Providers and DFS for the Residential Task Force ("Joint Report"), Pltf's Exh. 22].

E. MCCA's Lawsuit

MCCA brought the present lawsuit pursuant to Section 1983, seeking declaratory and injunctive relief against Martin and Cross, in their official capacities as the directors of DSS and DFS. In its Complaint, MCCA seeks a declaration from the Court that the Defendants' cost reimbursement is unlawful because it "violated, continues to violate and/or will violate 42 U.S.C. § 675(4)(A) ...." MCCA also alleges that the Defendants will continue to violate Section 675(4)(A). Among other things, it seeks injunctive relief to prevent the Defendants from "continuing to utilize the current payment methodology for determining foster care reimbursement ...."

II. Standard of Review

A moving party is entitled to summary judgment "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c). Once the moving party discharges this initial burden, the nonmoving party may not rest upon the mere allegations or denials of the adverse party's pleading, but must set forth specific facts showing that there is a genuine issue for trial. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). When considering a motion for summary judgment, a court must scrutinize the evidence in the light most favorable to the nonmoving party and the nonmoving party "must be given the benefit of all reasonable inferences." Mirax Chem. Prods. Corp. v. First Interstate Commercial Corp., 950 F.2d 566, 569 (8th Cir.1991) (citation omitted).

To establish a genuine issue of fact sufficient to warrant trial, the nonmoving party "must do more than simply show that there is some metaphysical doubt as to the material facts." Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). Instead, the nonmoving party bears the burden of setting forth specific...