Bryson v . NHDHHS, et a l . 99-CV-558-SM 09/29/06 UNITED STATES DISTRICT COURT

DISTRICT OF NEW HAMPSHIRE

BONNIE BRYSON and CLAIRE SHEPARDSON, on behalf of themselves and all others similarly situated, Plaintiffs Civil N o . 99-cv-558-SM v. CLASS ACTION Opinion N o .

JOHN STEPHEN, in his capacity as Commissioner of the State of New Hampshire Department of Health and Human Services; and MATTHEW E R T A S , in his capacity as Director of the State of New Hampshire Bureau of Developmental Services, Defendants

O R D E R

As noted by Judge Kozinski, exploring the relationship

between Medicaid and the integration mandates of the Americans

with Disabilities Act (“ADA”) and Section 504 of the

Rehabilitation Act (“RA”) requires navigating in murky waters.

ARC of Washington State, Inc. v . Braddock,

(9th

Cir. 2005). Here, the plaintiff class, consisting of persons who

have acquired brain disorders (“ABDs”) and who qualify for home

and community-based care services (“HCBC”) under New Hampshire’s

Medicaid ABD waiver program1, contend that the State’s

1 The plaintiff class, as certified, consists of individuals with acquired brain disorders who are currently institutionalized in nursing homes, psychiatric hospitals, administration of that program operates to discriminate against

them based upon disability. Specifically, plaintiffs complain

that the State is depriving them of rights to community

integration mandated by Title II of the Americans with

Disabilities Act,

, and its implementing

regulations, as well as Section 504 of the Rehabilitation Act of

1973,

9 4 , and its implementing regulations. They

seek declaratory and injunctive relief under

,

requiring the State to modify its Medicaid program to accommodate

their participation in the ABD waiver program, by increasing the

cap on the number of persons admitted to the program to the point

that the waiting list is eliminated.

Most of the issues originally presented in this case have

been resolved earlier by this court, by the court of appeals, see

Bryson v . Shumway,

(1st Cir. 2002), or by agreement

of the parties. The remaining issues — those raised in Counts 3

and 4 of the complaint as described above — were tried to the

court. Simultaneously with this order, the court has ruled on

the parties’ numerous requests for findings of fact and rulings

general hospitals, rehabilitation facilities, or other settings, who are able to be discharged into a less restrictive community setting, or they are individuals who are in the community but who, in the absence of home and community-based services, are likely to be placed in a nursing home, psychiatric facility, rehabilitation facility or other institution.

2 of law, but, generally, the pertinent facts are largely

undisputed. The basic point of contention is whether plaintiffs

are entitled to declaratory and injunctive relief forcing the

State to obtain enough additional ABD waiver program slots to

afford all members of the class prompt placement into that

program. Under the circumstances presented in this case, they

are not.

Discussion

New Hampshire, like every other state, participates in the

federal Medicaid program, “an optional plan under which the

federal government, through the states, partially funds medical

assistance to needy individuals.” Bryson, 308 F.3d at 81-2

(citations omitted). “Medicaid is a payment scheme, not a scheme

for state-provided medical assistance, as through state-owned

hospitals,” and involves the provision of “financial assistance

rather than . . . actual medical services.” Bruggeman v .

Blagojevich,

(7th Cir. 2003).

Under the Medicaid program, states may apply for certain

waivers. If approved, such waivers permit the states to operate

model programs in which home and community-based care services,

not otherwise authorized, may be provided free of some of the

3 usual requirements (like statewide availability of services, and

availability of such services to all persons equally).

The Medicaid waiver programs are “designed to allow states

to experiment with methods of care, or to provide care on a

targeted basis, without adhering to the strict mandates of the

Medicaid system.” Bryson,

2 . Those programs, as the

court of appeals previously noted, are in theory expenditure-

neutral. That is to say, “the average estimated per capita

expenditure under the waiver plans must not be more than the

average estimated expenditure absent the waiver program.”

(citation omitted). But, “[i]n practice, the waiver programs may

be costly to the states, because even though the individuals

served by the waiver plan are no longer being served by nursing

homes or other [institutional] care facilities, other patients

may take those nursing home spots.” Id. at 82-83. And, “[m]any

patients not currently being served under Medicaid may also apply

for the waiver program.” Id. at 82 (citation omitted). “The

states thus have a financial incentive to keep their waiver

programs small, or at least, to begin with small programs and

grow them incrementally.” Id.

In 1993, New Hampshire applied for, and obtained, federal

approval of an ABD waiver program, authorizing it to provide home

4 and community-based services to persons with acquired brain

disorders. The ABD waiver program offers a community-based

alternative to institutional care for persons with ABDs. That

program has been renewed periodically and continues through the

present time. Since its inception, New Hampshire’s ABD waiver

program has grown steadily. Initially, the State funded 15

places in the ABD waiver program and now funds 132 places.

Demand for home and community-based ABD services, however, has

always exceeded the number of available places in the waiver

program. But as the number of program places has steadily

expanded, the number of persons on the waiting list has remained

fairly constant. In the first year, 25 people were on the

waiting list and, recently, in 2005, approximately 24 people were

awaiting placement in the program.

The State does not intentionally leave waiver program slots

unfilled. Rather, as existing slots become open, and new slots

are added, people on the waiting list are “earmarked” for those

slots, following which placement planning commences. There i s ,

of course, some delay between a spot becoming available and it

being filled by someone on the waiting list. But, those delays

generally are due to ordinary and necessary administrative

requirements, like planning, obtaining, and organizing services

and service-providers for the person moving off the waiting list

5 and into a community placement. New Hampshire’s ABD waiver

program operates at full capacity in all practical respects - all

slots are filled as they become available.

In the remaining counts in dispute, plaintiff class members

argue that defendants are violating the integration mandates of

the ADA and RA by artificially limiting the number of people who

can participate in the program, thereby frustrating their rights

not to be unjustifiably isolated in institutional care settings,

and denying them the home and community-based medical care for

which they are otherwise eligible and which they are willing to

accept. They assert that requiring them to remain in

institutional settings, or face the prospect of placement in an

institutional setting, until a slot in the waiver program becomes

available, constitutes unwarranted discrimination based upon

disability.

The Medicaid waiver program contemplates state waiver plans

with definite limits on the number of persons to be served, and

states “certainly have the right to include a limit on the number

of waiver slots they request.” Bryson,

6 . And, New

Hampshire’s Department of Health and Human Services (“DHHS”) sets

its ABD waiver program limit, or cap, according to the amount of

matching funds the legislature appropriates to support the

6 program. Importantly, however, the ADA provides that “no

qualified individual with a disability shall, by reasons of such

disability, be excluded from participation in or be denied the

benefits of services, programs, or activities of a public entity,

or be subjected to discrimination by any such entity.”

. And, implementing regulations require that “[a] public

entity shall administer services, programs, and activities in the

most integrated setting appropriate to the needs of qualified

individuals with disabilities.”

(d). The

Rehabilitation Act contains a similar provision, requiring states

to “administer services, programs and activities in the most

integrated setting appropriate to the needs of qualified

individuals with disabilities.” P a . Prot. & Advocacy, Inc. v .

P a . Dep’t of Pub. Welfare,

(3d Cir. 2005) (quoting

(d) and citing

(d)).

Those statutory and regulatory requirements are generally

known as the “integration mandate.” That i s , under those

statutes, states are required to provide services in integrated

environments for as many disabled persons as is reasonably

feasible, consistent with their medical needs. See Olmstead v .

L.C. ex rel. Zimring,

8 1 , 5 9 2 , 600-01 (1999). “In

order to comply with the integration mandate, states are required

to make ‘reasonable modifications in policies, practices, or

7 procedures’ that are ‘necessary to avoid discrimination on the

basis of disability.’” ARC of Washington State Inc.,

(citing

(b)(7)).

The obligation to make reasonable modifications in policies,

practices, and procedures as necessary to provide integrated

services does not, however, include an obligation to make

“modifications [that] would fundamentally alter the nature of the

service, program, or activity.”

Because the Supreme Court

has instructed courts to give states “leeway” in administering

services for the disabled, courts will normally not tinker with

comprehensive and effective state service delivery programs.

(citing Olmstead and Sanchez v . Johnson,

(9th Cir. 2005)).

The principal issue here, then, is quite similar to that

raised in ARC of Washington State, i.e., whether New Hampshire

must seek additional ABD waiver program slots in order to meet

its obligations under the integration mandates as established by

the ADA and the RA, and as explained in Olmstead. Plaintiffs’

contention is straight-forward. They say the ABD waiver program

is too small, and the State can easily enlarge it by allocating

additional funds to support i t . But whether New Hampshire must

seek a cap increase and expand the waiver program “depends on

8 whether this would be a ‘reasonable modification’ (which is

required) or a ‘fundamental alteration’ (which is not).” ARC of

Washington,

.

The ABD waiver program is an existing State program. That

program does facilitate integration into the community of people

who otherwise would be treated in nursing homes or other

institutions (or, who face the prospect of placement in such

facilities) — people for whom institutional care would be

isolating and unjustified. Generally, the unjustified isolation

of disabled persons in institutions is properly characterized as

a violation of the ADA and RA. See Olmstead, 527 U.S. at 600.

Accordingly, New Hampshire is generally obligated under the ADA

and RA to make reasonable modifications to its program as

necessary to provide community-based treatment to qualified

persons with disabilities, to the extent feasible and equitable,

given available resources and the “responsibility the State has

undertaken for the care and treatment of a large and diverse

population of persons with mental disabilities.” Olmstead 527

U.S. at 604. But, as the Supreme Court has held, “[t]he State’s

responsibility, once it provides community-based treatment to

qualified persons with disabilities, is not boundless.”

Olmstead, 527 U.S. at 603.

9 While recognizing that unjustified isolation of disabled

persons in institutions does violate the ADA (and R A ) , still, the

Supreme Court also recognized that there are some state

justifications that will serve to defeat integration mandate

challenges to its programs. See ARC of Washington,

. S o , for example, a state’s need to maintain a range of

facilities for the care and treatment of persons with diverse

disabilities, and to administer services across a broad spectrum

of need with an even hand, equitably apportioning limited

resources, may suffice. Id.; Olmstead 527 U.S. at 604. Where

community integration is accomplished through a Medicaid waiver

program, a state could avoid having to modify its waiver program

if it “were to demonstrate that it had a comprehensive,

effectively working plan for placing qualified persons with

mental disabilities in less restrictive settings, and a waiting

list that moved at a reasonable pace not controlled by the

State’s endeavors to keep its institutions fully populated.”

Olmstead, 527 U.S. at 605-606.

In two cases very similar to this one, the Court of Appeals

for the Ninth Circuit had occasion to determine whether a state

must seek an increase in a Medicaid waiver program cap in order

to meet its integration mandate obligations. In both, the court

held that requiring such a change would amount to a fundamental

10 alteration of the state’s programs, and so rejected the

plaintiffs’ challenge. ARC of Washington State,

Sanchez v .

In Sanchez, the appeals court examined the record and found

that the state had, over time, regularly applied for an increase

in the size of the Medicaid waiver program; state expenditures

for integrated community-based treatment had consistently

increased over the prior decade; and the state’s

institutionalized population had decreased by over 20% during the

prior four years. The court concluded that the state was

genuinely and effectively engaged in the process of

deinstitutionalizing disabled persons “with an even hand,”

Olmstead, 527 U.S. at 605-06, and that its program was

successfully integrating disabled persons into the community.

Although a waiting list was maintained, the state did not allow

waiver program slots to go unused and, once a program slot became

open, that slot was available to every otherwise qualified

disabled person awaiting placement. Under those circumstances,

the court concluded, the existence of a cap on the slots

available in the waiver program did not violate the integration

mandate, and the state was not required to seek an increase in

the number of program slots.

11 In ARC, similar considerations dictated an identical result.

Plaintiffs in ARC challenged the size, and, therefore, the

adequacy of a Medicaid waiver program in light of the integration

mandates. The appeals court again focused on whether the waiver

program served as an acceptable plan for deinstitutionalization,

the disruption of which would involve a fundamental alteration of

the program. Noting in ARC that Washington’s commitment to

deinstitutionalization was as genuine, comprehensive, and

reasonable as California’s in Sanchez, the court observed that

Washington’s waiver program was substantial in size; all waiver

slots were filled; all Medicaid-eligible disabled persons were

afforded the opportunity to participate in the waiver program

once a space became available, based solely on their individual

needs and position on the waiting list; and when a slot became

available, new participants were admitted from the waiting list.

The court also noted that the waiver program increased

dramatically in size over approximately fifteen years, from 1,227

to 9,957 slots, and the annual state budget for the program

roughly doubled between 1994 and 2001, despite significant

cutbacks or minimal budget growth for many other state agencies

during the same period.

Although more can always be done, the reality is that states

must make difficult decisions when allocating necessarily limited

12 resources. Neither the ADA nor the RA require states to raise,

appropriate, and spend whatever amount is necessary to

immediately afford all qualified disabled persons community-based

services, without regard to other needs and spending priorities.

Here, defendants have proven that they maintain a comprehensive

and effective working plan for placing qualified persons with

ABDs in less restrictive settings through the ABD waiver program.

They have also shown that requiring the State to increase the cap

on program participants would involve a fundamental alteration of

that program.

New Hampshire’s commitment to deinstitutionalization is as

genuine as California’s in Sanchez and Washington’s in ARC.

Where there is evidence that a State has in place a comprehensive deinstitutionalization scheme, which, in light of existing budgetary constraints and the competing demands of other services that the State provides, including the maintenance of institutional care facilities, see Olmstead, 527 U.S. at 5 9 7 , 119 S . C t . 2176, is “effectively working,” id. at 605, 119 S . C t . 2176, the courts will not tinker with that scheme. Olmstead does not require the immediate, state-wide deinstitutionalization of all eligible developmentally disabled persons, nor that a State’s plan be always and in all cases successful. Id. at 606, 119 S . C t . 2176 (“It is reasonable for the State to ask someone to wait until a community placement is available.”) . . . .

The ARC,

(quoting Sanchez,

).

13 New Hampshire’s plan to provide community-based services to

plaintiffs takes advantage of the Medicaid waiver program’s

flexibility to move institutionalized Medicaid-eligible persons

with ABDs into community settings. New Hampshire’s ABD waiver

program has also been expanded significantly and regularly since

its inception, at the State’s request. In 1993, the program

began with 15 available slots in the first year, 26 in the

second, and 37 in the third, with each increase representing a

proportional increase in state-allocated funding. The waiver

program has been renewed twice since 1996, each time for a 5 year

period. Currently the program has 132 available slots, all of

which are either being used or are actively in the process of

being filled. The State does not intentionally maintain empty

slots in the ABD waiver program, and consistently expends all

funds budgeted for the program.

Additionally, the State’s budgeting for the waiver program

has also dramatically increased since the program began. Since

2001, the State has increased the budgeted allocations for the

ABD waiver program from $6.6 million to approximately $11.2

million, and the Department of Health and Human Services is

14 committed to seeking another substantial increase in the next

biennial budget, to over $13 million.2

The ABD waiver program has always had a waiting list. It

seemingly holds steady at about 20-24 persons (as of December 1 5 ,

2005, the list included 17 persons). On average, about four

program slots become available each year through natural

vacancies, and additional slots have been regularly added through

funding increases. The vast majority of Medicaid-eligible

disabled persons with ABDs who want community-based care are

participating in the program - as noted, about 20 persons are on

the waiting list while more than 130 are participating in the

waiver program. The list moves at a reasonable pace given that

the number of persons on the list has remained fairly stable

2 The funding history of the ABD waiver program does disclose a budget reduction when, at the legislature’s direction, amounts previously appropriated for developmental disabilities programs, among others, were “rescinded.” Defendants refer to these recisions as “back of the budget reductions.” Such reductions are particularly difficult for agencies because appropriations are typically spent in a proportional fashion over the two year biennium. A reduction of already appropriated amounts in mid-biennium means that the entire reduction amount must be taken out of what remains of the already spent-down original appropriation. Such a reduction was directed in the State’s 2004 fiscal year, with $650,000 of state funds ($1.3 million taking into account the federal match) coming from the ABD waiver budget. But, because the State staggered service dates and delayed implementation of the recision (the State and federal fiscal years are not identical), no ABD waiver participants were adversely affected.

15 while new slots have been added and vacant ones filled — though

plaintiffs do plausibly suggest that that situation may become a

problem in the future should program funding become static, or

shrink in amount.

While there are exceptions due to circumstances peculiar to

the individual needs of persons on the list, by and large the

wait for an open slot in the program is about a year — shorter

for some, longer for others. As to the class as a whole, the

wait is reasonable. The parties quarrel somewhat about the

appropriate time computation of a typical stay on the waiting

list, but a fair measure is the time between when a potential

participant applies and is determined to be eligible for the

program and when the State “earmarks” appropriated and available

funds associated with, or designates an available slot for him or

her. After the slot is “earmarked,” participant-specific

planning and resource acquisition unique to that individual

client necessarily requires some effort and time. An average

wait of approximately twelve months on the list, from

qualification to assignment of a program slot, is not an

unreasonable period.

Because people on the waiting list have different degrees of

disability and different needs, some are more easily placed in

16 community settings than others (specifically tailored and

appropriate services must not only be identified, but providers

capable of delivering those specialized services must be found

and retained as well). Accordingly, the State has developed a

waiting list priority system which reasonably, as to the class,

seeks to equitably allocate places in the ABD waiver program

based not only upon time waiting for a slot, but also upon

critical need. The priority system is not based on degree of

disability. That system also appears reasonable as presented.

It i s , however, only reasonable to the extent it does not operate

to condemn some people to exorbitant delays in placement o r ,

worse, condemn them to perpetual waiting list status. The State

also appears to be committed to promptly placing those who have

waited the longest due to planning, resource acquisition, or

other difficulties unique to those individual plaintiffs.

Certainly, however, if those individual circumstances are not

reasonably addressed in a timely manner relative to others on the

waiting list, those disadvantaged individuals may, of course,

bring legal claims on their own behalf. (It should be noted, as

well, that not all persons on the waiting list are currently

isolated in institutional facilities.)

With regard to cost allocations, it is apparent that as

people are moved from institutional care to the ABD waiver

17 program, vacated institutional beds are filled relatively

promptly. Overall, then, the State does not experience

significant net cost savings as a result of moving persons into

the waiver program. In fact, as noted by the court of appeals

for this circuit, movement of an institutional client to the ABD

waiver generally results in a net increase in overall costs —

because institutional care programs are also in demand and places

made available when someone moves to the ABD waiver are generally

filled within the same fiscal year as they become available.

Accordingly, absent additional funding by the legislature, the

State cannot easily allocate substantial additional funds to the

ABD program without also imposing disadvantages on other

developmentally disabled persons dependent upon the State for

similar services. An immediate shift of resources from other

program line items in the Bureau of Developmental Disabilities’

budget to the ABD waiver program would, then, be inequitable in

that such action would necessarily adversely affect services for

other disabled persons. See Williams v . Wasserman,

9 1 , 638 (D. Md. 2001). Nevertheless, the Department has

shown that it has some ability, as well as the commitment, to

obtain supplemental funding for the ABD waiver budget as

necessary to keep the waiting list moving at a reasonable pace.

Plainly, that continuing obligation will remain a legitimate

subject for scrutiny.

18 Plaintiffs argue, in part, that the reasonableness of the

modification to the ABD waiver they seek is illustrated by the

fact that the State has readily available resources that are more

than sufficient to cover the State’s share of costs necessary to

expand the waiver to cover all class members. They point to

general DHHS budget “lapses” as representing resources available

to the ABD program.

The implication that “lapsed” funds from the overall DHHS

budget represent freely available surplus money certainly

overstates the matter. The State has many priorities, and

deficits in one arena necessarily call for savings in others.

The record is not sufficiently developed to permit the court to

determine that lapsed DHHS funds flowing back to the State’s

general fund qualify as resources available to the ABD waiver

program, and on that point plaintiffs failed to meet their burden

of proof.

The “available resources” test properly focuses on the

State’s mental health budget, not the overall DHHS budget or the

State’s general budget. See Olmstead, 527 U.S. at 597. Here,

that budget admits of no easily redirected funds — at least not

without imposing disadvantages upon other equally deserving

persons with disabilities. The State’s budget for services to

19 those with mental disabilities is strained, and DHHS i s , by and

large, doing what it can with the limited resources that have

been provided by the legislature. As defendants point out,

amounts budgeted to serve those with developmental disabilities

are uniformly spent fully and for that purpose.

New Hampshire’s ABD waiver program i s , comparatively,

substantial in size, in that it accommodates the vast majority of

qualified disabled persons with ABD’s seeking community-based

care services. While the program does not serve all who wish to

participate, the cap on the number of participants has regularly

and steadily been increased. All available program slots are

used; the program is available to all eligible persons as slots

become open, or are added due to increased funding; and, the

budget growth for the program has been significant, and has been

at least in line with or exceeding budget growth for other state

programs. That budget growth demonstrates a commitment by the

State to continued progress in making the program available to as

many as qualify for and desire to participate in it as is

feasible given its other obligations and resources. And, the

pace of movement on the waiting list is not controlled by the

State’s endeavors to keep its institutions fully populated. With

the occasional exception of a client residing in New Hampshire

Hospital, New Hampshire does not maintain public institutions for

20 the care of persons with ABDs, and, to the extent it provides

Medicaid reimbursement for costs associated with institutional

care for such persons, those expenditures would more than likely

continue even if a client were moved to the waiver program, as

there are waiting lists for those institutional services as well

and vacated spaces are promptly filled, usually within the same

fiscal year.

New Hampshire’s program, as currently operated, constitutes

a “comprehensive, effectively working plan for placing qualified

persons with mental disabilities in less restrictive settings,

and a waiting list that move[s] at a reasonable pace not

controlled by the State’s endeavors to keep its institutions

fully populated,” Olmstead, 527 U.S. at 605-06. Moreover, the

State has shown that its commitment to deinstitutionalization is

“genuine, comprehensive, and reasonable.” Sanchez,

; ARC,

. As in ARC, this court does not hold

that forced expansion of a state’s Medicaid waiver program can

never be a reasonable modification required by the ADA or RA, but

only that in this case, given the evidence presented, defendants

have met their burden of proving that forcing such an expansion

would fundamentally alter the existing program, which i s , of

course, a model program designed to allow states to experiment

with targeted care, without meeting the strict mandates of the

21 Medicaid system. To require an immediate expansion of the

limited program, and a concomitant appropriation of the necessary

state funds, sufficient to promptly include all class members in

the ABD program, would fundamentally alter the nature of the

program.

Conclusion

At the risk of repetition, but for clarity’s sake, the court

finds as follows:

1. The State’s ABD waiver program is sizeable, given the number of people participating in the program relative to the number of people currently on the waiting list seeking to participate.

2. The ABD waiver program is full, the State fills vacant slots in a reasonably prompt amount of time, and the waiting list moves at a reasonable pace.

3. The State’s waiver program is available to all qualified Medicaid-eligible disabled persons as slots become available, based only on their medical and critical care needs, and not on any discriminatory criteria (such a s , for example, monetary need).

4. The State has consistently applied for increases in the size of the ABD waiver program - although it began by serving only fifteen individuals in 1993, it currently serves more than 130.

5. The State’s appropriations and expenditures for integrated community-based treatment under the ABD waiver program have substantially increased over time.

6. The State’s commitment to the deinstitutionalization of those for whom community integration is desirable is genuine, comprehensive, and reasonable, though obviously not complete.

22 Given the circumstances as they currently exist, as proven

at trial, granting plaintiffs the relief they seek — immediate

required expansion of the ABD waiver program to promptly include

all plaintiffs — would constitute a fundamental alteration of the

State’s program, which is not required by the ADA or Section 504

of the Rehabilitation Act.

The court has entered contemporaneous rulings on the

parties’ requests for findings of fact and rulings of law. The

parties may, but are not required t o , file supplemental requests,

or motions to clarify, within ten (10) days of the date of this

order should they think any request has been overlooked,

incorrectly or inconsistently decided, or if they believe other

pertinent factual or legal rulings are appropriate but have not

been presented and are not resolved in this order.

Plaintiffs’ requests in Counts 3 and 4 of the complaint for

declaratory and injunctive relief are denied. Judgment for

defendants on Counts 3 and 4 shall be entered and the case

closed.

23 SO ORDERED.

____________ Steven J . McAuliffe Jnited States District Judge

September 2 9 , 2006

cc: Amy B . Messer, Esq. Suzanne M . Gorman, Esq.

24