Litigation Concerning Medicaid Services for Persons with Developmental Disabili

Executive Summary

This periodic report tracks the status of lawsuits that revolve around home and community based services for people with disabilities.

I. Introduction
The past seven years have seen a flood of lawsuits concerning home and community services for people with disabilities. Many lawsuits challenge state policies that limit access to Medicaid home and community services. Others aim at securing community services in the most integrated setting for institutionalized persons as provided by the Americans with Disabilities Act (ADA). Still others challenge state policies that prevent individuals with disabilities from accessing the full range of community services. 
This periodic report tracks the status of lawsuits that revolve around home and community services for people with disabilities. We caution that the report is not necessarily inclusive of all lawsuits in this arena. The report tracks three broad categories of lawsuits: 
  • Access to Medicaid Home and Community Services. These lawsuits challenge state policies that prevent people with disabilities from promptly obtaining Medicaid home and community services. Most of these lawsuits involve people with developmental disabilities who are waiting for services. Individuals with other disabilities who want but cannot obtain home and community services also have filed several lawsuits. The plaintiffs in these lawsuits include individuals who are in nursing or other facilities but want to return to the community as well as persons who face institutionalization absent community services.
  • Community Placement of Institutionalized Persons. These lawsuits principally (but not exclusively) involve persons served in publicly-operated institutions who could be supported in the community. 
  • Limitations on Medicaid Home and Community Benefits. These lawsuits challenge state policies that affect the scope and quality of Medicaid services in the community. Some lawsuits concern the adequacy of state payments for community services. Others challenge state restrictions on services available through the Medicaid program. 
In the following sections of this report, the issues that have prompted these lawsuits are discussed and the lawsuits are summarized, including their current status. 
II. Access toMedicaid Home and Community Services
A. Medicaid Home and Community Services
The Medicaid program underwrites more than one-half of the costs of long-term services for individuals of all ages. Because the Medicaid program looms so large in the provision of long-term services, it has attracted a high volume of litigation. 
In the past and still today, the majority of Medicaid long-term dollars pay for institutional services in nursing facilities, intermediate care facilities for the mentally retarded (ICFs/MR) and other settings. Federal Medicaid law (Title XIX of the Social Security Act) requires that every state include nursing facility services in its Medicaid program. Since 1971, states have had the option to offer ICF/MR services. Initially, ICF/MR services were concentrated in state-operated institutions. Now, the majority of ICF/MR residents are served by non-state providers and the number of public institutions has decreased. (Prouty et al., 2004). 
Medicaid home and community services include home health care, personal care/assistance provided as a Medicaid state plan benefit, and home and communitybased services (HCBS) furnished under federal waivers. All states must provide home health in their
Medicaid programs. States may elect to provide personal care/assistance and/or operate HCBS waiver programs. 
The HCBS waiver program allows a state to offer community services as an alternative to institutional services (e.g., nursing facility and ICF/MR) to persons who meet institutional eligibility criteria. A state may offer services that it could but does not provide under
its regular Medicaid program (e.g., personal care) and other services that cannot be offered as regular Medicaid benefits but aid individuals to remain in the community. Federal law (§1915(c) of the Social Security Act) allows a state to select the services that it offers in a waiver program and target waiver services to Medicaid beneficiary target groups (e.g., individuals with developmental disabilities). (ASPE, 2000) A state also can limit the number of persons who participate in an HCBS waiver program. 
While institutional spending still dominates Medicaid long-term services, states have substantially boosted spending for home and community services. For more than a decade, spending for Medicaid home and community services has grown more rapidly than institutional services. Between 1994 and 2004, HCBS waiver expenditures increased about six-fold, reaching $21.2 billion. The share of Medicaid long-term services expenditures devoted to home and community services was 36% in 2004 compared to a little over 10% in 1990.1  In developmental disabilities services, HCBS waiver spending surpassed ICF/MR institutional spending in 2001. 2
Several critical factors have prompted lawsuits to expand access by people with disabilities to Medicaid home and community services. The most important is that growing numbers of individuals with disabilities want to remain in and be supported in their own homes and communities rather than institutions. Despite the expansion of Medicaid home and community services, most states have not kept pace with upward spiraling demand for long-term services. (Smith, 1999) Demographic and other factors lie behind rising
demand for community services. Since the supply of community services has not kept pace with demand, the result has been wait listing individuals for services and a backlog of persons in nursing facilities and other institutional settings who cannot return to the
community. Mounting frustration over the shortage of community services has boiled over into litigation.  Under Medicaid law, there is an entitlement to the institutional services included in a state?s Medicaid program. The aim of the lawsuits is to establish that
Medicaid beneficiaries with disabilities have access to community services on equal footing with ?entitled? institutional services. Until seven years ago, there had been relatively little litigation concerning Medicaid home and community services. In the arena of  developmental disabilities services, the 1998 11 th U.S. 
Circuit Court of Appeals decision in the Doe v. Chiles lawsuit held that a state cannot simultaneously limit access to entitled ICF/MR services. This decision (described below) triggered lawsuits elsewhere to challenge state authority to restrict access to Medicaid
services by people with developmental disabilities. In 1999, the U.S. Supreme Court issued its landmark Olmstead v. L.C. ruling that Title II of the American with Disabilities Act requires states to make diligent efforts to serve individuals in the most integrated 
setting. The decision sparked lawsuits to secure community services for institutionalized persons as well as others who potentially face institutionalization absent community services. While there are differences among the lawsuits, at heart their common theme is to ensure that individuals with disabilities who need long-term services can obtain them promptly in the community not just institutional settings. 
B. Legal Issues
Lawsuits in this category assert that federal Medicaid law obliges a state to furnish home and community services to eligible individuals when needed, challenging the premise that states have the authority to restrict the availability of these services. In many cases, the U.S. Supreme Court?s Olmstead ruling also serves as the grounds for pleadings that the ADA dictates that states must furnish home and community services in the most integrated setting. 
In most cases, these lawsuits have been filed in federal court, although a few have been filed in state court when violations of state law also are alleged. Federal Medicaid law does not specifically provide for a beneficiary?s seeking relief through the federal courts
for alleged violations of Medicaid law. Federal law requires that a state operate an administrative appeals process (called Fair Hearing) through which a person may appeal adverse decisions concerning eligibility or services. Otherwise, if a state does not comply with Medicaid law and regulations, the principal federal remedy is to withhold or deny payments to the state. In order to bring suit in federal court, plaintiffs rely on provisions of the U.S. Constitution and/or federal law in seeking relief. In particular, the Civil Rights Act of 

1871 (42 U.S.C. §1983) grants citizens a private right of action to seek relief in federal court when state officials are alleged to violate the Constitution or federal law. This Act has long served as the basis for bringing lawsuits in federal courts involving Medicaid services. 

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