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Mikkelson v. Piper

United States District Court, D. Minnesota

July 6, 2017

Maxwell Mikkelson, by his parents and Guardians, Scott and Annmarie Mikkelson, and R.H., a minor child by R.H.'s parent, Heather Heath, and on behalf of others similarly situated, Plaintiffs,
Emily Johnson Piper, Commissioner of the Minnesota Department of Human Services, Defendant.

          Pamela S. Hoopes, Esq., Barnett I. Rosenfield, Esq., and Steven C. Schmidt, Esq., Mid-Minnesota Legal Aid, Minnesota Disability Law Center, and Mark R. Azman, Esq., and Shamus P. O'Meara, Esq., O'Meara Leer Wagner & Kohl, PA, counsel for Plaintiffs.

          Scott H. Ikeda, Ian M. Welsh, and Aaron Winter, Assistant Attorneys General, Minnesota Attorney General's Office, counsel for Defendant.


          DONOVAN W. FRANK United States District Judge


         This matter is before the Court on the Motion to Dismiss filed by Defendant Emily Johnson Piper (“Commissioner Johnson Piper” or “Defendant”), Commissioner of the Minnesota Department of Human Services (“DHS”). (Doc. No. 91.) For the reasons set forth below, the Court denies the motion.

         BACKGROUND [1]

         I. Minnesota's Waiver Services for Individuals with Disabilities

         The State of Minnesota participates in Medicaid, a health care program operated and funded jointly by individual states and the federal government. (Doc. No. 80 (“Third Am. Compl.”) ¶ 18.) Plaintiffs allege that federal Medicaid requirements obligate Minnesota to provide various services, including treatment in institutional settings, for persons with developmental disabilities. (Id. ¶ 19.) As an alternative to providing care and treatment in institutional settings, Plaintiffs allege that Minnesota may provide Home and Community Based Waiver Services (“Waiver Services”), which encompass a variety of services and supports which Plaintiffs allege are “designed to help people with disabilities live in his or her own home and access his or her community.” (Id. ¶¶ 1, 20.) Plaintiffs allege that states that choose to offer these optional Waiver Services must do so in accordance with federal law. (Id. ¶ 21.)

         Defendant operates four Waiver Services programs for individuals with disabilities as part of Minnesota's Medicaid program known as Medical Assistance (“MA”). (Id. ¶¶ 29, 30.) According to Plaintiffs, these Waiver Services programs include the Developmental Disabilities (“DD”) Waiver, the Community Alternatives for Disabled Individuals (“CADI”) Waiver, the Community Alternative Care (“CAC”) Waiver, and the Brain Injury (“BI”) Waiver. (Id. ¶ 30.) Plaintiffs allege that Defendant “serves as the ‘single state agency' responsible for the administration of the Medicaid program in Minnesota.” (Id. ¶ 16.) Plaintiffs allege that “Defendant is responsible for developing and implementing the Medicaid Waiver Services to eligible individuals.” (Id. ¶ 14.) According to Plaintiffs, Defendant is also “responsible for overseeing the agencies which provide or arrange services to all persons with developmental disabilities.” (Id. ¶ 16.) Plaintiffs allege that they, along with thousands of similarly situated individuals, have been deemed eligible for Waiver Services but have been put on waiting lists for services. (Id. ¶ 41.)

         Plaintiffs allege that Minnesota “[c]ounties act as ‘local agencies' of the state and Defendant's agency” to aid in the administration of the Waiver Services programs. (Id. ¶¶ 30, 31.) Specifically, Plaintiffs allege that Defendant identifies each county's total budget to spend for each Waiver, and the counties “create individual waiver services budgets and . . . manage those budgets in the aggregate, pursuant to policies created by Defendant and within amounts specified by Defendant as available to serve eligible persons under each waiver.” (Id. ¶¶ 32, 33.) Plaintiffs claim that the counties are authorized by state statute “to reserve a certain portion of the available funding for unexpected situations that might arise during the year.” (Id. ¶ 34.) In addition, Plaintiffs allege that “Defendant also withholds funds under each Waiver to address unexpected, crisis needs.” (Id.) Plaintiffs assert that these additional reserves withheld by Defendant “eas[e] the burden on counties to handle all unexpected costs at a local level.” (Id.) Plaintiffs allege that Waiver Services funds are returned to the State's general fund if unspent in a given year. (Id. ¶ 36; see also Id. ¶ 42.) In particular, Plaintiffs assert that “[u]nspent Waiver funds are not carried over or otherwise reserved for the Waiver programs to remove people from the waitlists and pay for Waiver Services in future years.” (Id. ¶ 36.)

         II. The Named Plaintiffs [2]

         The two named Plaintiffs in this case allege that they “have not moved up or off the various wait lists at a reasonable pace or received Waiver Services within a reasonable time” and that the services they seek “could have been and can be provided with the unspent or currently available Waiver funds.” (Id. ¶¶ 53, 54.) According to these individuals, the counties in which they reside “have routinely and repeatedly maintained reserves and failed to spend all of their available Waiver funds, while Plaintiffs remained on wait lists or were otherwise denied Waiver Services.” (Id. ¶ 52.)

         Plaintiff Maxwell Mikkelson (“Mikkelson”) is a twenty-two-year-old individual with a developmental disability, autism, and language deficits who desires “to be less isolated from his community and more independent from his family and paid caregivers.” (Id. ¶¶ 50, 50.A.) Mikkelson currently “receives personal care assistant services and attends a sheltered work shop program.” (Id. ¶ 50.A.) Mikkelson alleges that he needs DD Waiver Services such as assistive technology, staffing, and respite care to live a more fully integrated life. (Id. ¶ 50.B.) He alleges that he “has been eligible and waiting for the DD Waiver since he was approximately 8 years old but has been told at various times that the waiver is ‘unavailable' and that there is ‘no funding.'” (Id. ¶ 50.C.) In addition, Mikkelson asserts that “[i]n 2015, his family was told that waivers were available but he was never ultimately offered one.” (Id.) He alleges that he has received “few updates on any progress toward obtaining waiver services” and that he not received a written notice of denial or information about how to challenge being denied Waiver Services. (Id.)

         Plaintiff R.H. is a minor with a severe intellectual disability and autism. (Id. ¶ 51, 51.A.) R.H. needs “significant assistance” with many daily tasks and behaviors, is nonverbal, and “requires ongoing supervision and intervention for . . . severe self-injurious behavior and physical aggression.” (Id. ¶¶ 51.A, 51.B.) R.H. alleges that he has been determined to be eligible for DD Waiver Services but instead receives CADI Waiver Services. (Id. ¶¶ 51.C, 51.D.) According to R.H., the CADI Waiver “provides an inadequate level of services and supports.” (Id. ¶ 51.D.) Specifically, R.H. alleges, “the quantity and quality of services available under this waiver, for R.H., are not sufficient” because R.H. cannot access needed services “to address R.H.'s significant developmental delays and to allow R.H. to develop the skills necessary to become more independent and better access R.H.'s community.” (Id.) According to the Third Amended Complaint, “R.H. has been told that the DD Waiver would offer R.H. a significantly larger services budget” through which R.H. could hire trained staff and access and pay for water therapy and other community activities. (Id. ¶ 51.E.) Plaintiffs allege “R.H. has been denied access to and not permitted to choose the DD Waiver” due to an alleged “policy or practice of prohibiting people currently on the CADI Waiver from being offered or otherwise accessing the DD Waiver.” (Id. ¶ 51.F.) According to R.H., “[u]nder Defendant's new assessment process, R.H. and other similarly situated individuals who are otherwise eligible for DD Waiver services are categorically denied access to the DD Waiver if they receive CADI Waiver Services.” (Id.) R.H. claims that DD Waiver Services have not been offered as an alternative to CADI Waiver Services and that R.H. has not been provided written notice of the denial of DD Waiver Services. (Id. ¶ 51.G.)

         III. Plaintiffs' Claims

         Plaintiffs bring their claims on their own behalf and on behalf of a putative class of similarly situated individuals with disabilities[3] in Minnesota who have applied for and been deemed eligible for DD Waiver Services but “have been denied or otherwise not offered” such services. (Id. ¶¶ 55, 56.A.) “As of April 1, 2015, ” Plaintiffs allege, “there were 3, 586 persons on wait lists for the DD Waiver.” (Id. ¶ 44.) Plaintiffs claim that Defendant has “fundamentally mismanage[d]” Minnesota's Waiver Services programs, “depriv[ing] thousands of persons with disabilities of available services and supports intended to help them live independent, inclusive lives in their communities.” (Id. ¶ 1.) Plaintiffs allege that “Defendant has failed to ensure that otherwise eligible individuals are not improperly placed on wait lists for services when money is available under the Waivers to serve their needs.” (Id. ¶ 43.)

         According to Plaintiffs, Defendant has failed to undertake necessary administrative steps to remedy underspending by Minnesota counties. (Id.) In addition, Plaintiffs allege that Defendant does not have an effective and comprehensive plan “for ensuring that Plaintiffs and members of the Plaintiff class be provided with DD Waiver Services within the funding appropriated by the Legislature each year, rather than placing them on wait lists, to enable them to live in the most integrated settings possible, consistent with their needs and preferences.” (Id. ¶ 88.) Plaintiffs allege that Defendant's actions have caused them harm and have caused them to remain isolated from their communities in a discriminatory manner in violation of federal law. (Id. ¶ 2.)

         In particular, Plaintiffs allege that the State and DHS, through Commissioner Johnson Piper, “unlawfully and unnecessarily placed . . . individuals on wait lists” notwithstanding “an annual availability of funds for Waiver Services programs.” (Id.) Plaintiffs allege that Defendant has “improperly allow[ed] over $1 billion of funds legislatively appropriated for [the Waiver Services] programs to go unspent.” (Id. ¶ 1; see also Id. ¶ 40 (providing a chart identifying unspent DD Waiver funds from 1995 to 2010).) Plaintiffs claim that Defendant allows counties to reserve Waiver Services funds in amounts that “far exceed[] what is reasonable or necessary.” (Id. ¶ 35.) Specifically, Plaintiffs allege that “[n]early all of the counties end each Waiver year with a large reserve of unspent money for each Waiver.” (Id.)

         To support these allegations, Plaintiffs reference multiple DHS reports documenting unspent reserves in Minnesota counties between 1995 and 2015. (See generally Id. ¶¶ 37-40.) According to Plaintiffs, DHS has recommended in these reports that counties reduce their reserves, spend additional funding, and reduce their waiting lists. (See Id. ¶¶ 37, 38.) Specifically, one report notes that many counties “had room in their budgets to provide additional services or add more participants to programs.” (Id. ¶ 37.) Plaintiffs allege that Defendant's most recent Waiver Services review reported that 72 out of 81 lead agencies (Minnesota counties) had unspent reserves of 4% or more in their DD Waiver budgets. (Id. ¶¶ 37, 38.) Of these 72 lead agencies, 30 had reserves of 10% or more. (Id. ¶ 38.) Plaintiffs allege that Defendant stated in a 2013 report regarding Hennepin County, “[T]here is room to add more participants via new or reuse slots or service optimization to reduce or eliminate the waiting list and enhance the quality of participant's lives through services such as supportive [sic] employment.” (Id.) According to Plaintiffs, this report also stated, “Typically a 1% to 2% allocation reserve is more than adequate to manage risk for county [sic] of this size.” (Id.)

         Plaintiffs allege that “Defendant failed to spend all funds appropriated for Waiver Services” in the most recent state fiscal year so that appropriated funds reverted to the State's general fund. (Id. ¶ 42.) Plaintiffs allege that they could have received the services they seek without fundamentally altering the State's programs or imposing an undue burden on the State. (Id. ¶ 54.) Specifically, Plaintiffs allege that “[t]he requested services could have been and can be provided with the unspent or currently available Waiver funds.” (Id.; see also Id. ¶ 87 (“It would not fundamentally alter the DD Waiver program to require Defendant Johnson Piper to spend or cause to be spent all or substantially all of the money legislatively appropriated each year for eligible persons to receive DD Waiver Services . . . .”).)

         According to Plaintiffs, their lawsuit “arises from the mismanagement by Defendant of Minnesota's Waiver Services programs, permitting tens of millions of available monies to go unspent while needlessly and improperly putting persons eligible for such services on wait lists.” (Id. ¶ 49.) Plaintiffs assert the following claims: (1) violation of 42 U.S.C. § 1983 through failure to furnish services with reasonable promptness in violation of 42 U.S.C. § 1396a(a)(8); (2) violation of 42 U.S.C. § 1983 through failure to inform of feasible alternatives and denial of choice of Waiver Services in violation of 42 U.S.C. § 1396n(c)(2)(C); (3) violation of 42 U.S.C. § 1983 through a violation of Plaintiffs' Due Process rights under the Fourteenth Amendment, the Medicaid Act, and its implementing regulations; (4) violation of the Americans with Disabilities Act (“ADA”), 42 U.S.C. § 12132; and (5) violation of § 504 of the Rehabilitation Act, 29 U.S.C. § 794(a). (Id. ¶¶ 57-97.)

         Plaintiffs allege that “Defendant has failed to take administrative steps to insure [sic] that individuals on the wait lists are removed from the list and provided Waiver Services at a reasonable pace, within a reasonable amount of time.” (Id. ¶ 45.) Plaintiffs assert that the failure to provide DD Waiver Services with reasonable promptness is caused by Defendant's practices of failing to do the following:

(a) sufficiently use appropriated funding for DD Waiver Services programs;
(b) ensure that local agencies minimize the use of reserves and maximize the use of available DD Waiver funds; and (c) limit the placement of eligible persons on to wait lists to those instances where waiver money is not currently, and is not reasonably expected to be, available.

(Id. ¶ 63.) Plaintiffs also allege that Defendant “has failed to inform eligible individuals . . . of the availability of DD Waiver Services . . . and has denied Plaintiffs their right to choose DD Waiver Services rather than institutional services or other services that they might be receiving or for which they might be eligible.” (Id. ¶ 70.)

         Further, Plaintiffs allege that eligible individuals who are placed on waiting lists “are routinely denied advance notice of the decision not to offer them Waiver Services, ” are not informed if they fall into a statutory priority group for allocating Waiver Services, and are not informed why they are placed or kept on waiting lists or when services may be offered. (Id. ¶ 46.) Without such information, Plaintiffs allege, individuals have a limited ability to make informed choices about accepting or applying for other services. (Id. ¶ 47.) Plaintiffs also allege that individuals on waiting lists “are routinely denied the opportunity to challenge their placement on a wait list in a hearing on the merits.” (Id. ¶ 48.) Plaintiffs assert that such alleged due process violations combined with Defendant's “policies, practice and funding decisions, and . . . acts or omissions of allowing wait lists for DD Waiver Services despite available funding” result in continuing harm. (Id. ¶ 76.) Finally, Plaintiffs contend that Defendant's “[f]ail[ure] to provide [DD Waiver Services] despite having the funds available to do so, while providing Plaintiffs with lesser services that do not foster the same degree of independence, integration or inclusion, is a form of discrimination based on disability prohibited by” federal law. (Id. ¶¶ 86, 95.)

         To remedy their claims, “Plaintiffs demand the Defendant promptly comply with the law by managing appropriated funds so that persons with disabilities may receive the services they need and to which they are entitled, allowing them to experience life in the most independent and integrated settings appropriate to their needs and preferences.” (Id. ¶ 4.) In addition, “Plaintiffs further demand that Defendant fund and provide Waiver Services with reasonable promptness and at a reasonable pace to members of the plaintiff class and ...

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