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From Health Law Daily, March 23, 2016

Action for in-home shift nursing services by disabled children will proceed

By Harold Bishop, J.D.

A potential class action brought against the Director of the Illinois Medicaid agency by six Medicaid-eligible children with disabling and chronic conditions for failing to arrange for adequate in-home shift nursing services was dismissed in part. The court dismissed the action brought by two of the children as moot because they had relocated out of the state and all Illinois Medicaid benefits for those children had been cancelled. With regard to the other four children, the court denied the motion to dismiss. The court also granted the children’s motion for preliminary injunction with regard to their Medicaid Act claims but continued for status on their Americans with Disabilities Act and Rehabilitation Act claims to allow the Medicaid Director the chance to identify any disputed facts that would require an evidentiary hearing (O.B., et al. v. Norwood, March 21, 2016, Kocoras, C.).

The children, O.B., C.F., J.M., S.M., Sa.S., and Sh.S., brought a four-count complaint under 42 U.S.C. § 1983 and various provisions of Title XIX of the Social Security Act (Medicaid Act), 42 U.S.C. §§ 1396et seq. (Counts I and II); the Americans with Disabilities Act (ADA), 42 U.S.C. §§ 12101et seq. (Count III); and the Rehabilitation Act (RA), 29 U.S.C. §§ 701et seq. (Count IV). The children allege that they are Medicaid-eligible children with disabling and chronic health conditions who are eligible for Medicaid-funded in-home shift nursing services. They further allege that Felicia F. Norwood (Norwood), the Director of the Illinois Department of Healthcare and Family Services (HFS), failed to arrange for adequate in-home shift nursing services for them and the class they seek to represent.

Undisputed facts. It is undisputed that the Medicaid Act requires a state participating in the Medicaid program to include early and periodic screening, diagnostic, and treatment services (EPSDT) as part of its State Medicaid plan. In addition, Illinois state law requires that children seeking Medicaid-funded in-home nursing services request prior authorization for such services from HFS and demonstrate the medical necessity for the services. Each child in this case has been approved for EPSDT in-home shift nursing services. Further, while Norwood disputes whether the children will be irreparably injured as a result of not receiving the full component of in-home shift nursing services that HFS approved for them, at no point does she dispute that they are not receiving all such approved services, much less with the reasonable promptness required by 42 U.S.C. §1396a(a)(8).

Moot claims. The court dismissed all the claims (Medicaid, ADA, and RA) brought by two of the children (Sa.S and Sh.S.) as moot because they had relocated out of the state and all Illinois Medicaid benefits for those children had been cancelled.

Motion to dismiss Medicaid Act claims. Norwood argued that the U.S. Supreme Court’s decision in Armstrong v. Exceptional Child Ctr., 135 S. Ct. 1378 (2015), forecloses any private right of action seeking to enforce the Medicaid Act provisions the children assert (Counts I and II) and similarly precludes relief under the ADA and RA (Counts III and IV) (see High court reverses 9th Cir.; won’t allow providers to bring private action to challenge Medicaid reimbursement, March 31, 2015). Norwood further argued that the ADA and RA claims also fail under Seventh Circuit precedent.

The court found that the Seventh Circuit and Illinois district courts have specifically held that the EPSDT provisions of the Medicaid Act (Count I) and the reasonable promptness provision (Count II) create federal rights under §1983 that Medicaid beneficiaries can enforce. The court also pointed out that theArmstrong decision was not on point because it addressed a different statutory provision (i.e., 42 U.S.C. 1396a(a)(30)(A)), was asserted by providers (not beneficiaries), and was based on a different theory (the Supremacy Clause, not §1983). The court also relied on J.E. v. Wong, a Hawaii district court decision, which rejected the application of Armstrong in a case with similar facts (see Children with autism may sue agency for failure to provide necessary treatment, August 31, 2015). As such, the court concluded that the Armstrong decision was distinguishable and did not dictate that the children were deprived of a private right of action to enforce their rights to EPSDT services.

Motion to dismiss the ADA and RA claims. For their ADA and RA claims, the children contend that by failing to arrange for the necessary in-home nursing services, they are facing institutionalization or hospitalization. According to the court, the U.S. Supreme Court and the Seventh Circuit have held that such unjustified institutional isolation of a disabled individual receiving medical care from a state amounts to an actionable form of discrimination under the ADA and RA.

Norwood nevertheless argued that the claims of C.F., J.M., and S.M. were barred by a Seventh Circuit decision holding that there is no legal injury for ADA and RA purposes when the provision of fewer services does not force an individual into a less integrated setting. Therefore, Norwood argued, since the setting in which the children receive their nursing services, their own homes, has not changed, they have no claim.

The children countered with the decision in another case against Norwood (M.A. v. Norwood), which held that the children need not allege actual institutionalization to state ADA and RA claims if the threat of institutionalization is real (see Class action against Illinois Medicaid for terminating children’s in-home services survives, September 24, 2015). The court in M.A. v. Norwood held that the threat of institutionalization is “real” if the state Medicaid Director made no representation that the children would not face imminent institutionalization. The court noted that Norwood declined to give such assurances in this case. The court concluded that the motion to dismiss the ADA and RA claims would be denied as to O.B., C.F., J.M., and S.M.

Motion for preliminary injunction. Because Norwood’s opposition regarding the children’s likelihood of success on their Medicaid Act claims merely repeated the arguments Norwood made in support of her motion to dismiss, the court found that the likelihood of success on Counts I and II was firmly established. The court also found that the children’s lack of an adequate remedy at law and irreparable injury in the event an injunction was denied on Counts I and II was similarly evident, given Norwood’s concession that each child has been approved for in-home shift nursing services, and such approval required proof of medical necessity. As such, the court granted the preliminary injunction as to Counts I and II.

By contrast, however, the court found that the ADA (Count III) and RA (Count IV) claims raised certain factual issues. Although C.F., J.M., and S.M. need not demonstrate actual institutionalization resulting from their non-receipt of all EPSDT services allotted to them, the court decided that they nevertheless must demonstrate a real threat that institutionalization will follow from that deprivation. And while the medical necessity of the services has been resolved, the question of whether the denial of such services would lead to institutionalization was not.

Likewise, for O.B. to support his claim for shift-nursing services in the more integrated setting of his home (as opposed to the hospital where he is now treated), the court decided that O.B. must demonstrate that the state’s treatment professionals find that such treatment is appropriate, and that placement in the community can be reasonably accommodated, taking into account the state’s resources and the needs of others with similar disabilities.

Accordingly, the court refused to grant the preliminary injunction as to the ADA and RA claims and allowed Norwood to request an evidentiary hearing to resolve these factual issues.

The case is No. 15 C 10463.

Attorneys: Robert Hugh Farley, Jr. (Robert H. Farley, Jr., Ltd.) for O. B. John E. Huston, Illinois Attorney General's Office, for Felicia F. Norwood.

Companies: Illinois Department of Healthcare and Family Services

MainStory: TopStory CaseDecisions MedicaidNews CMSNews CoPNews CoverageNews HomeNews LTCHNews IllinoisNews

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