Ninth Circuit Protects Idaho’s Disabled

PORTLAND, Ore. (CN) - The Ninth Circuit affirmed that Idaho cannot cut benefits to residents with disabilities by more than 50 percent.

The June 5 ruling affirmed an Idaho Federal Court order that expanded a preliminary injunction preventing Idaho's Department of Health and Welfare from cutting benefits to residents with disabilities without adequate notice or explanation.

The Developmental Disabilities Waiver program, administered through the state's Department of Health and Welfare, provides Medicaid services for people with home-based care that includes "residential habitation services, chore services, supported employment, non-medical transportation, specialized medical equipment, home delivered meals and skilled nursing."

In 2011, the state agency changed how it determines the benefits, drastically reducing the benchmark budget of $54,965 to $24,476 - nearly 55 percent.

The cuts left many adults with developmental disabilities unable to get the care they needed, and blocked some from receiving any care at all, according to a 2012 class action from more than a dozen named plaintiffs.

The March 2014 consolidated complaint claims the defendant Idaho Department of Health and Welfare sent notices of the budget cuts without giving recipients adequate time to prepare appeals: time which is required by state and federal laws.

The class also claimed the agency refused to disclose a "secret" mathematical algorithm it used to determine each person's benefits plan and budget, in violation of the Due Process Clause and the fair hearing requirement of the Medicaid Act.

The Idaho Department of Health and Welfare "informed them that their Medicaid assistance will be substantially reduced for this year but do not explain why," the March 25, 2014 consolidated class action states.

"In fact, the reasons why have been 'secrets' according to IDHW itself. The secrets are the methodologies used to calculate the amount of Medicaid resources the plaintiffs will have available for the year."

The plaintiffs said their individual benefits were cut by as much as 42 percent.

After their original lawsuit against the state on Jan. 18, 2012, the court granted a preliminary injunction, barring the budget cuts, in March 2012.

U.S. District Judge B. Lynn Winmill ordered the Department of Health and Welfare to restore and continue the benefits.

The IDHW then sought court approval of a budget notice that included a general explanation of its budget calculation method and individual budget calculations.

But the court found that notice "inadequate" because the state failed to "explain why participants' individual budgets had changed" in the first place.

Before the court could rule on the plaintiffs' May 17, 2013 motion to extend the preliminary injunction, the IDHW filed a motion to approve a new budget notice, which the court rejected.

The state's appeal of the March 25, 2014 ruling extending the preliminary injunction was argued before the Ninth Circuit on Nov. 18, 2014. The three-judge panel affirmed the order on June 5, extending the injunction.

Judge Milan Smith, writing for the panel, found that it was "reasonable for the district court to conclude that, as a practical matter, calculating a lower budget decreases a participant's Medicaid services, thereby triggering the notice requirements of the Medicaid regulations," and that "plaintiffs were likely to show that the 2011 budget notices did not comply with the notice requirements of the Medicaid regulations."

He added: "The district court did not abuse its discretion in holding that the 2011 budget notices were inadequate under the Due Process Clause. 'Due process requires notice that gives an agency's reason for its action in sufficient detail that the affected party can prepare a responsive defense.' The 2011 budget notices were inadequate because they did not specify why participants' budgets had decreased."

Finally, the panel found that it lacked jurisdiction to review the district court order "denying the department's motion to approve a proposed revised budget notice to the class because this order was not inextricably intertwined with whether the district court abused its discretion in expanding the preliminary injunction."

Ninth Circuit Judge Richard Clifton, dissenting in part, wrote that the appeals court does have jurisdiction "because if the revised notices were adequate, then the plaintiffs would not have established an ongoing violation, and there would have been no good reason to extend the preliminary injunction."

Judge Andrew Hurwitz completed the panel.

Follow the Money

The Idaho Department of Health and Welfare gets about 70 percent of its funding from the federal government, through Medicaid, with the remaining 30 percent coming from the state.

Class co-counsel James Piotrowski said the benefit cuts stemmed in part from a growing population of disabled people.

"The problem is that the population is growing and the budget is not," Piotrowski, with Herzfeld & Piotrowski in Boise, told Courthouse News.

"It mainly affects a subset of the larger population, mostly adults with developmental disabilities, but the Legislature doesn't increase the budget."

That subset includes adults with epilepsy, muscular dystrophy, Down syndrome, schizophrenia and other developmental disabilities of differing severities, according to the amended complaint.

Piotrowski said he was uncertain whether the state cut benefits for the disabled to fund other budget items, where the state's presumed savings at the expense of the disabled are going, and whether the calculation algorithm was used to squeeze more money out of the disability program.

"Health and Welfare claims it's just a matter of a mathematical tool," Piotrowski said. "As far as we know, the budgetary process goes about it in a way that effectively obscures the reasons behind it. Until we filed the lawsuit, they literally refused to show the formula to anyone."

Piotrowski said the new calculation method affects more than half of Idaho's disabled people, and means most of them are likely to be denied individualized care.

But he said the state will pay in one way or another, because decreased care can lead to legal problems, and even to sentences in state prisons.

"If they don't get the care they need, they have a greater chance of having run-ins with law enforcement and can end up in jail or state prison, which of course is absolutely the wrong environment for people who are developmentally disabled. They are vulnerable to various types of abuse," the attorney said.

Decreased care could cost the state in others ways, too.

"They could be institutionalized, and that can happen in a couple of different ways. They can be put in intermediate care facilities, similar to a nursing home, which is very expensive, or the other option is the state school and hospital, which is even more expensive."

Lead counsel for the class is Richard Eppink with the American Civil Liberties Union of Idaho Foundation.

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