Murphy v. Harpstead

          Joseph W. Anthony, Esq., Peter McElligott, Esq., and Steven M. Pincus, Esq., Anthony Ostlund Baer & Louwagie PA; Laura Farley, Esq., and Steven Andrew Smith, Esq., Nicholas Kaster PLLP; Barnett I. Rosenfeld, Esq., and Justin H. Perl, Esq., Mid-Minnesota Legal Aid; Eren Ernest Sutherland, Esq., Justin M. Page, Esq., and Steven C. Schmidt, Esq., Mid-Minnesota Legal Aid, Minnesota Disability Law Center, counsel for Plaintiffs.

          Aaron Winter, Brandon L. Boese, Janine Wetzel Kimble, and Scott H. Ikeda, Assistant Attorneys General, Minnesota Attorney General’s Office, counsel for Defendant.

          Pari McGarraugh, Esq., and Samuel D. Orbovich, Esq., Fredrikson & Byron, counsel for amicus ARRM.

          MEMORANDUM OPINION AND ORDER

          Donovan W. Frank, United States District Judge.

         INTRODUCTION

         This matter is before the Court on Plaintiffs’ motion for partial summary judgment (Doc. No. 495), and Defendant’s motion for summary judgment (Doc. No. 480). For the reasons set forth below, the Court grants in part and denies in part Plaintiffs’ motion, and denies Defendant’s motion.

         BACKGROUND

         I. Factual Background

         The Court previously detailed the background of this case in its May 18, 2017 Memorandum Opinion and Order (Doc. No. 54 (“May 2017 Order”)) and the Court only briefly summarizes the facts here.^[1] In short, Plaintiffs are individuals with disabilities and Medicaid recipients who receive Home and Community Based Disability Waivers (“Disability Waivers”) from the State of Minnesota under the direction of Defendant Jodi Harpstead (“Defendant”), Commissioner of the Minnesota Department of Human Services (“DHS”).^[2] Plaintiffs reside, or did reside^[3], in Community Residential Setting (“CRS”) facilities, known as corporate adult foster care (“CFC”)^[4]-and wish to access various individualized housing services available under the Disability Waivers to pursue more integrated housing options (“IHO”).^[5] Plaintiffs assert that CFC facilities isolate and segregate them from their communities in violation of federal law.

         Plaintiffs assert the following claims against Commissioner Jodi Harpstead in her official capacity: (1) failure to furnish Medicaid services with reasonable promptness under 42 U.S.C. § 1396a(a)(8), enforced under 42 U.S.C. § 1983 (Count I); (2) violation of Plaintiffs’ Due Process rights under the Fourteenth Amendment and the Medicaid Act’s advance notice and fair hearing requirements, enforced under 42 U.S.C. § 1983 (Count II); (3) violation of Title II of the ADA (Count III); and (4) violation of § 504 of the RA (Count IV). (Doc. No. 33 (“Am. Compl.”) ¶¶ 1-32.)

         Plaintiffs assert their claims on behalf of themselves and a Class of similarly situated individuals. (See Id . ¶¶ 92-101.) Plaintiffs assert that they and the Class “have a common remedy: modifications to Defendant’s residential service system to provide individuals with choices and prevent needless segregation of individuals in segregated residential settings.” (Id. ¶ 101.) Plaintiffs seek “access to Waiver services that will allow them to plan, explore options, and ultimately move out of their CFC facilities and into the most integrated setting appropriate to their needs.” (Doc. No. 499 (“Pl. Memo.”) at 3-4 (citing Pl. Resp. to Interrog. at 266-269).) Plaintiffs seek declaratory and injunctive relief to remedy Defendants’ alleged violations of the law, attorney fees and costs, and other relief deemed necessary to protect the rights of Plaintiffs and the Class. (See Am. Compl. at Prayer for Relief ¶¶ 2-6.)

         Specifically, Plaintiffs seek declaratory judgment that: (1) Defendant is violating the Medicaid Act by not providing services with reasonable promptness and violating Plaintiffs’ Constitutional and Medicaid due process rights; and (2) Defendant is violating the ADA and RA by segregating Plaintiffs “while failing to provide them with individualized housing services for which they are eligible.” (Id. at Prayer for Relief ¶¶ 2-3.)

         Plaintiffs seek injunctive relief requiring Defendant to: (1) “[p]romptly ensure every Disability Waiver recipient living in a CRS facility receives notice about eligibility for and access to individualized housing services, including person-centered planning;” (2) “[s]pecifically provide access and take prompt steps to make individualized housing services, including person-centered planning, available to Plaintiffs in a reasonable amount of time . . .”; and (3) “[t]ake such other steps as necessary to enable Plaintiffs to receive residential services in the most integrated setting appropriate to their needs . . .” (Id. at Prayer for Relief ¶ 4.) Under items (2) and (3), above, Plaintiffs identify in detail the proposed relief they seek to modify the state’s residential service system. (Id. at Prayer for Relief ¶¶ 4(b)-4(c).)

         Defendant contends that of the 45, 438 Disability Waiver recipients in 2018, only 31% lived in CFC facilities, and only 1.3% of those living in CFC facilities are putative class members.^[6] (Def. Memo. at 9, 48.) Accordingly, she argues that she is not over-relying on CFC facilities, nor do her policies prevent individuals from moving to their preferred setting. She further contends that her policies and practices comply with federal law, and to the extent any alleged harm has occurred, she may not be held liable in her official capacity.

         II. Procedural History

         Plaintiffs filed an initial complaint against Defendant and Minnesota Department of Human Services (“DHS) (collectively, “Defendants”) on August 3, 2016. (Doc. No. 1.) Defendants filed a motion to dismiss Plaintiffs’ complaint on September 14, 2016. (Doc. No. 10.) On May 18, 2017, the Court granted Defendants’ motion to dismiss insofar as it sought dismissal of DHS as a party and denied the motion in all other respects.^[7] (May 2017 Order.)

         Plaintiffs filed an Amended Complaint on February 23, 2017. (Am. Compl.) On February 27, 2017, Plaintiffs filed a motion for class certification. (Doc. No. 35.) On September 29, 2017, the Court granted Plaintiffs’ motion for class certification, certifying the following class: “All individuals age 18 and older who are eligible for and have received a Disability Waiver, live in a licensed Community Residential Setting, and have not been given the choice and opportunity to reside in the most integrated residential setting appropriate to their needs.” (Doc. No. 99 at 35.)

         On November 15, 2018, Plaintiffs moved for partial summary judgment on Count II of their Amended Complaint, asking the Court to declare that Defendant’s current notice policy for Disability Waiver recipients violates federal law. (See Pl. Memo.) On the same day, Defendant also moved for summary judgment, asking the Court to grant summary judgment in her favor on all of Plaintiffs’ claims. (See Def. Memo.) Also on November 15, 2018, Defendant filed a motion to decertify the class (Doc. No. 418), and both parties moved to exclude expert testimony (Doc. Nos. 468, 488). The Court held a hearing on the motions on January 25, 2019. (Doc. No. 623.) The Court delayed ruling on the motions pending settlement discussions that ultimately proved unsuccessful. (Doc. No. 636.)

         On July 26, 2019, the Court denied Defendants’ motion to decertify the class. (Doc. No. 640 (“July 2019 Order”).) On August 6, 2019, Defendants requested permission for leave to file a motion for reconsideration of the July 2019 Order. (Doc. No. 642 (“Request”).) The Court denied Defendant’s Request on August 14, 2019. (Doc. No. 646.)

         On August 7, 2019, the Court granted Plaintiffs’ motion to exclude the expert testimony of John Patterson, and denied Defendant’s motion to exclude the expert testimony of David Michael Mank, Ph.D., and Dennis F. Price. (Doc. No. 644.)

         The Court now considers Plaintiffs’ motion for partial summary judgment (Doc. No. 495) and Defendant’s motion for summary judgment (Doc. No. 480).

         DISCUSSION

         I. Legal Standard

         Summary judgment is appropriate if the “movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). Courts must view the evidence and all reasonable inferences in the light most favorable to the nonmoving party. Weitz Co., LLC v. Lloyd’s of London, 574 F.3d 885, 892 (8th Cir. 2009). However, “[s]ummary judgment procedure is properly regarded not as a disfavored procedural shortcut, but rather as an integral part of the Federal Rules as a whole, which are designed ‘to secure the just, speedy, and inexpensive determination of every action.’” Celotex Corp. v. Catrett, 477 U.S. 317, 327 (1986) (quoting Fed.R.Civ.P. 1).

         The moving party bears the burden of showing that there is no genuine issue of material fact and that it is entitled to judgment as a matter of law. Enter. Bank v. Magna Bank of Mo., 92 F.3d 743, 747 (8th Cir. 1996). The nonmoving party must demonstrate the existence of specific facts in the record that create a genuine issue for trial. Krenik v. Cty. of Le Sueur, 47 F.3d 953, 957 (8th Cir. 1995). A party opposing a properly supported motion for summary judgment “may not rest upon mere allegation or denials of his 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, 256 (1986).

         A. Plaintiffs’ Motion for Partial Summary Judgment

         Plaintiffs move for partial summary judgment on Count II of their Amended Complaint and ask the Court to declare that Defendant’s current notice policy for Disability Waiver recipients violates federal law. (Pl. Memo. at 2.) Specifically, Plaintiffs allege that Defendant’s policy violates their due process rights under both the Fourteenth Amendment’s Due Process Clause and the Medicaid Act’s fair hearing requirements.

         Plaintiffs argue that federal law requires Defendant to provide a legally sufficient written notice (“Notice of Action”) to Disability Waiver recipients when Defendant denies access to Waiver Services or fails to act on a request for Waiver Services with reasonable promptness.^[8] (Id. at 13-16.) Plaintiffs claim that while Defendant has a formal written policy that instructs Lead Agencies to send a Notice of Action Form “each time [the case manager/planer] takes action in the support plan that denies, terminates, or reduces the person’s service, ” the policy does not explain what constitutes an action that denies, terminates, or reduces the person’s service, nor does it set forth any instructions that must be sent if a request for services is not acted upon within a certain timeline or with reasonable promptness. (Schmidt Aff. 1 ¶ 7, Doc. No. 503-1, Ex. 6 (“Notice of Action Policy”) at 288.) Plaintiffs contend that because “Defendant has not provided a clear and objective standard to the Lead Agencies that she is legally obligated to direct, the denial process has been handled inconsistently and unlawfully throughout the State.” (Pl. Memo. at 8.)

         Plaintiffs argue that under Defendant’s current policy, Lead Agencies are only required to provide a Notice of Action when they have made a formal, final decision that they will not authorize specific Disability Waiver services and that no Notice of Action is required while the Lead Agency purportedly attempts to assist Disability Waiver recipients in some way with their request for services, regardless of how long their attempt lasts. (See Id . at 12.) Citing Black’s Law Dictionary, Plaintiffs argue that every time Lead Agencies deprive or withhold individualized housing services from a Disability Waiver recipient, or fail to act on a request in a reasonably prompt manner, the services are effectively “denied” and Notice of Action is required. (Id. at 15-16.)

         Plaintiffs allege that Defendant’s amorphous policy leaves the decision of what constitutes a “denial” entirely within the discretion of individual Lead Agencies, and that Defendant’s lack of guidance causes Lead Agencies to believe they are not required to provide Notice of Action as long as they think that they are working on a Disability Waiver recipient’s case and believe that progress is being made. (Id. at 18.)

         Plaintiffs argue that the practical effect of Defendant’s policy is that Plaintiffs go months and sometimes years without services or explanatory notice of a denial in violation of their federal rights.^[9] (Id. at 12-14; 19-29.)

         Plaintiffs ask the Court to direct Defendant to issue a new policy that requires a timely, written Notice of Action to be issued whenever a Lead Agency denies any individualized housing services or fails to act on a request for individualized housing services with reasonable promptness. (Id. at 2.)

         Defendant first contends that Plaintiffs’ claim for violation of the Medicaid Act must be denied because the Medicaid Act contains no private right of action.^[10] (Doc. No. 550 (“(Def. Opp.”) at 14-15.) Defendant relies on Does v. Gillespie, 867 F.3d 1034 (8th Cir. 2017), to argue that “nothing short of an unambiguously conferred right will support a cause of action under § 1983, ” and that the Medicaid Act is “phrased as a directive to the federal agency charged with approving state Medicaid plans, not as a conferral of the right to sue upon the beneficiaries of the State’s decision to participate in Medicaid.”^[11] (Doc. No. 482 (“Def. Memo.”) at 31 (citing Does, 867 F.3d at 1040-41).) Defendant further contends that Congress did not intend to create a private right “because other sections of the [Medicaid] Act provide mechanisms to enforce the State’s obligation under § 23(A), ” and “statues with an ‘aggregate’ focus do not give rise to individual rights.” (Id. (citing Does, 867 F.3d at 1041-42).)

         Defendant next argues that even if the Medicaid Act was privately enforceable, her policies comply. (Def. Opp. at 15.) Defendant contends that the plain language of the Medicaid Act requires only that an opportunity for a fair hearing must exist and that she provides such an opportunity through routine notices about the right to appeal.^[12] (Id. at 1, 14-15.)

         Defendant contends that Plaintiffs misinterpret the notice requirements imposed by § 431.206(c)(2) of the Medicaid Act by using an improper definition of “denial, ” and for failing to recognize that short of denial, Notice of Action is only available to individuals who specifically ask for it. (Id. at 15-20.)

         Defendant disputes Plaintiffs’ definition of “denial” and contends that pursuant to the Medicaid Act, “[Notice of Action] is triggered by an objectively verifiable, decisional event: ‘[a]t the time the agency denies an individual’s claim for eligibility, benefits or services.’” (Id. at 17 (citing 42. C.F.R. § 431.206(c)(2)).) Defendant argues that a “claim” for “medical assistance” requires an individual to “make[] application for assistance.” (Id.) Accordingly, Defendant argues that Plaintiffs rely on an “an inapposite, freestanding concept of ‘denial’ unconnected to a ‘claim, ’” so no denial actually occurs when a simple request for services is deprived, withheld, or not acted upon in a reasonable amount of time. (See id at 17-19.)

         Defendant further contends that short of a denial, the plain language in 42 C.F.R. 431.220(a)(1) triggers Notice of Action only upon specific request for a hearing by an individual who believes the agency has denied his or her claim for eligibility, covered benefits or services, or has not acted upon the claim with reasonable promptness. (Id. at 19-20 (citing 42 C.F.R. 431.220(a)(1)).) Defendant argues that because Plaintiffs do not complain of any rejection of, or failure to act upon, any application for a Disability Waiver service, Plaintiffs’ actual concern amounts to allegedly inadequate case manager performance in response to a general request to explore moving, or external events allegedly inhibiting a request to move. (Id. at 21-24.)

         Moreover, Defendant contends that her policies already require notice of the right to challenge allegedly deficient case manager performance outside of the claim denial context so Disability Waiver recipients are not “left in limbo” as Plaintiffs contend. (Id. at 25.) Specifically, she contends that pursuant to Minn. R. 9525.0024, subp. 3, Disability Waiver recipients “must be informed-upon development of their required individual service plan and at least annually thereafter-of their right to a conciliation conference under [Minn. Stat.] section 256.045.” (Id. at 25.)

         Defendant contends that because her policies comply with the Medicaid Act, any alleged procedural due process violation also fails. (Id. at 27) Moreover, Defendant argues that Plaintiffs do not have a property interest in any “individualized housing service” not actually applied for, and that Plaintiffs do not identify any actual Disability Waiver service allegedly denied. (Id. at 28) She further contends that Plaintiffs do not have a property interest in “a guarantee” that they will move in response to a request to do so. (Id. at 29.) Notwithstanding, Defendant argues that the routine notice she provides related to reasonable promptness and challenges to case manager performance satisfies procedural due process. (Id.)

         Finally, Defendant argues that Plaintiffs’ requested injunction violates Fed.R.Civ.P. 65 as impossibly vague because Plaintiffs: (1) do not identify which actual services available under Defendant’s Waivers they believe qualify as “individualized housing services, ” leaving Defendant to guess whether a particular serviced allegedly denied is an “individualized housing service;” (2) do not explain how Defendant is to know when a case manager’s assistance with an individual’s request for moving assistance is sufficiently delayed or deficient to constitute a deprivation or withhold; and (3) only request notice related to moves to “a more integrated setting” which is a highly individualized determination. (Id. at 33.)

         The Court first observes that it has already addressed Defendant’s argument that the Medicaid Act does not provide a private right action. (See May 2017 Order at 29.) Specifically, the Court concluded that the reasonable promptness and fair hearing provisions are privately enforceable under § 1983 for eligible individuals. (Id. at 22) The Court again incorporates and adopts its analysis and holding in Guggenberger v. Minnesota, 198 F.Supp.3d 973, 1006-07, 1022 (D. Minn. 2016), and continues to find that both §§ 1396a(a)(8) and 1396a(a)(3) are privately enforceable.^[13] Does does nothing to change the Court’s analysis. As the Court previously stated, “[t]he enforceability of a particular Medicaid Act must be independently assessed by the Court; the fact that one provision fails to establish a private cause of action does not govern the enforceability of a separate and distinct provision.” Guggenberger, 198 F.Supp.3d at 1006. Does addressed only § 23(A) of the Medicaid Act, the “freedom of choice” provision. There, the Eighth Circuit stated, “we see significant difficulties with the contention that § 23(a) unambiguously creates an enforceable federal right, ” and ultimately concluded that it did not. Does, 867 F.3d at 1041, 1046. Accordingly, Does has no impact on the Court’s holding that the “reasonable promptness” or “the fair hearing” provision of the Medicaid Act are privately enforceable.

         The Court next addresses Defendant’s interpretation of the Medicaid Act. In short, the Court finds Defendant’s narrow reading of the Medicaid Act overly restrictive. 42 U.S.C. §1396a(a)(3) states, “[a] State plan for medical assistance must provide for granting an opportunity for a fair hearing before the State agency to any individual whose claim for medical assistance under the plan is denied or is not acted upon with reasonable promptness.” 42 U.S.C. §1396a(a)(3). While Defendant contends that Notice of Action is trigged only when a specific application for eligibility, benefits, or services is denied, this interpretation does not follow naturally from the plain language of the ...