L.S. by and through Ron S. v. Delia, Eastern District of North Carolina and Fourth Circuit Court of Appeals

Executive Summary

This class action was filed on behalf of a class of North Carolinians with intellectual and developmental disabilities who received letters from their regional managed care organization, Piedmont Behavioral Health (known as PBH and later Cardinal Innovations Healthcare), informing them that, based on their Supports Intensity Scale (SIS) assessment, they were assigned a budget category according to the Supports Needs Matrix and they needed to adjust their plans of care to meet that new maximum allowed budget for their home and community-based waiver services. No appeal rights or an adequate explanation of the scoring system or what it meant for the plaintiffs’ services were included in the letters. Plaintiffs also contended that care coordinators and other PBH employees repeatedly told them that they could not appeal, limited access to any exceptions process, pressured them into signing plans that did not meet their needs under threat that services would end, and used other coercive tactics. The plaintiffs alleged that such actions violated due process because of the lack of ascertainable non-arbitrary standards, Medicaid notice and hearing requirements, and the Fourteenth Amendment of the Constitution.
The District Court granted class certification and a preliminary injunction in March of 2012 ordering the defendants to reinstate plaintiffs’ services to their prior levels and enjoining defendants from reducing those services without a hearing. PBH appealed the preliminary injunction, but the Fourth Circuit Court of Appeals dismissed the appeal because the State Medicaid agency, which is the single State agency responsible for administering the Medicaid state plan, did not join in the appeal. K.C. ex rel. Africa H. v. Shipman, 716 F.3d 107 (4th Cir. 2013). The case was settled in April 2015 with agreements about the use of SIS scores and information provided, content of the Supports Needs Matrix base budget letters, discouragement protections, stakeholder education, and other provisions.
Plaintiffs’ counsel filed an action in state court to enforce the settlement agreement in December 2017. By that time, the use of the SIS and Supports Needs Matrix had extended statewide and waiver participants were experiencing problems similar to what the L.S. v. Delia settlement was intended to prevent. This included allowing the SIS score to overly dictate an individual’s budget, repeatedly denying services requested in excess of the assigned budget, requiring intensive review to obtain excess services, discouraging class members from requesting services outside of their assigned budget, sending inadequate notice regarding waiver services, and failing to provide continued services pending an appeal. The parties negotiated and one of the results was a communication bulletin from the State to the regional managed care entities explaining that the SIS score can only be used as guidance and one piece of evidence of the medical necessity for services, never the sole piece of evidence, and providing directions and examples of language that could and could not be used regarding the SIS score and budgeting.

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