Fourth Circuit Upholds PI in Personal Care Cut Case

Yesterday, the United States Court of Appeals for the Fourth Circuit issued an opinion in Pashby v. Delia, --- F.3d ----, 2013 WL 791829 (4th Cir., Mar. 5, 2013).  In this case, North Carolina had tightened the eligibility requirements for in-home personal care services (PCS) under Medicaid.  A number of PCS recipients filed suit under the Medicaid Act, the ADA, and Section 504 of the Rehabilitation Act.  The district court granted a preliminary injunction to halt the cuts and certified a plaintiff class.  The state appealed.  Yesterday's decision addressed the state's appeal from the preliminary injunction.

Upholding the district court's conclusion that the plaintiffs were likely to succeed on the merits of their ADA/Section 504 claims, the Fourth Circuit held that the district court had not abused its discretion in concluding that the new eligibility standards placed them at a significant risk of institutionalization.  After the new eligibility standards were put in place, the plaintiffs argued, it would be easier to obtain personal care services in a congregate "adult care home" than in one's own home.  The state argued that the ADA does not prohibit placing people with disabilities at risk of institutionalization.  The Fourth Circuit, deferring to the views of the Department of Justice, disagreed:

Because Congress instructed the DOJ to issue regulations regarding Title II, we are especially swayed by the DOJ's determination that “the ADA and the Olmstead decision extend to persons at serious risk of institutionalization or segregation and are not limited to individuals currently in institutional or other segregated settings.” U.S. Dept. of Justice,Statement of the Department of Justice on the Integration Mandate of Title II of the ADA and Olmstead v. L.C.,http://www.ada.gov/olmstead/q & a_ olmstead .htm (last updated June 22, 2011); see also Olmstead, 527 U.S. at 597–98 (“Because the Department is the agency directed by Congress to issue regulations implementing Title II, its views warrant respect.” (citation omitted)). Moreover, the Tenth Circuit has held that “there is nothing in the plain language of the regulations that limits protection to persons who are currently institutionalized.” Fisher v. Okla. Health Care Auth., 335 F.3d 1175, 1181 (10th Cir.2003). In sum, individuals who must enter institutions to obtain Medicaid services for which they qualify may be able to raise successful Title II and Rehabilitation Act claims because they face a risk of institutionalization.

The state also argued that adult care homes are not institutions.  But the Fourth Circuit, again deferring to the views of the Department of Justice, disagreed.  And the state argued that "continuing to offer in-home PCS to the class members and named Appellees constitutes a fundamental alteration due to the administrative and financial burdens it entails."  The Fourth Circuit rejected that argument, too.  The court "join[ed] the Third, Ninth, and Tenth Circuits in holding that, although budgetary concerns are relevant to the fundamental alteration calculus, financial constraints alone cannot sustain a fundamental alteration defense."

The Fourth Circuit also concluded that the plaintiffs satisfied the other three requirements for a preliminary injunction (irreparable harm, balance of hardships, and the public interest), so it agreed that a PI was warranted.  The court remanded, however, because it concluded that the preliminary injunction issued by the district court failed to satisfy Rule 65's specificity requirement.  It thus directed the district court to describe the enjoined conduct in greater detail.

Judge Agee dissented.  He concluded that the plaintiffs had not shown a sufficient risk of institutionalization to establish a likelihood of success on the merits.  He also concluded that the state had presented a sufficient fundamental alteration defense to make the plaintiffs unlikely to succeed.