Blogging Live from AHLA: Medicaid Litigation Update – Challenges to Waivers

Reporting live from the American Health Lawyer’s Association 2018 Institute on Medicare and Medicaid Payment Issues in Baltimore, MD, we are back again. This time, we are reporting on a deeply comprehensive program on recent trends in Medicaid litigation led by Alan Dorn, Chief Counsel of HHS Region V in Chicago, and Felicia Y Sze, a partner of Rotenberg & Sze LLP in San Francisco.

The pair delivered a great program highlighting multiple growing areas of Medicaid litigation over the past year. There was a particular interest in litigation arising under Medicaid waivers. We have recently reported on litigation challenging work requirements in the recently approved Kentucky waiver. We expand here on other legal challenges to the administration of state Medicaid programs – in particular potentially viable claims under the Americans with Disabilities Act and the Rehabilitation Act.

There have been a number of challenges to the state Medicaid programs’ reduction of services, the provision of services in the most integrated setting, and delays in waiting lists. These challenges to long waiting lists, choice of services, and reductions in budgets have been found to be sufficient challenges to state Medicaid programs. The overall indication is that there is a variety of factual scenarios that can lead to claims that a waiver initiated program is in some manner illegal.

For example, a case just last year, Ball v. Kasich, 244 F. Supp. 3d 662 (S.D. Ohio 2017), involved allegations that long waiting lists for waiver services resulted from the state’s budget policies favoring Intermediate Care Facility (ICF) services. Adults with intellectual and developmental disabilities alleged that State budget policies that matched federal Medicaid funds for ICF services but required county boards to supplement federal funding for waiver programs resulted in limited access to home and community-based care under Ohio’s waiver programs. Plaintiffs alleged that this policy resulted in significant waiting lists and long wait times for waiver services for those living in large ICFs as well as those still residing in the community. The Ohio District Court decided that there were viable claims of violations of the Americans with Disabilities Act (ADA),  the Rehabilitation Act, and the freedom of choice requirements for waivers.

In another case from last year, Murphy v. Minnesota Department of Human Services, 260 F. Supp. 3d 1084 (D. Minn. 2017), the plaintiffs claimed that waiver beneficiaries residing in community residential facilities were deprived of choice of individualized housing services. The plaintiffs alleged that failure to inform beneficiaries in community group residential facilities of availability of support services in individualized housing states was a violation of the ADA and the reasonable promptness and choice of alternatives requirements under the waiver program. The Minnesota district court concluded that the plaintiffs stated sufficient claims of that these failures deprived them of the services in the most integrated setting in violation of the Medicaid fair hearing requirements, the Medicaid reasonable promptness in the provision of Medicaid services requirement, the ADA, the Rehabilitation Act, and due process.

Finally, a 2017 (unpublished) decision in a case, Michael T. v. Bowling, 2017 U.S. Dist. LEXIS 152962, Sept. 20, 2017, involved a challenge to the denial of requests for funding of waiver services that exceed individual budgets. A class of Medicaid recipients of community waiver services for intellectually and developmentally disabled individuals challenged State Medicaid agency decisions denying their requests for funding of services that exceeded their individual budgets as determined by a third party contractor using a proprietary algorithm applied to the annual functional assessment. The West Virginia district court decided that that the plaintiffs had sufficient claims that these denials resulted in violations of due process, Medicaid notice and fair hearing requirements, the ADA, and the Rehabilitation Act.

There are a number of waiver requests currently pending before CMS. We will be monitoring whether similar challenges are made to the provisions within these waivers following approval. And it will be interesting to see the new theories that are put forth to challenge entirely novel provisions of state waivers. State Medicaid officials should pay close attention to the limitations indicated by these successful legal challenges and structure their waiver requests accordingly.

You can see the materials from the session here:

Session Slides

Session White Paper

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