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Pfaff v. State

December 8, 2008

NATASHA PFAFF, PLAINTIFF,
v.
STATE OF WASHINGTON; DEPARTMENT OF SOCIAL AND HEALTH SERVICES, ET AL., DEFENDANTS.
LEYA REKHTER, ET AL., PLAINTIFF,
v.
STATE OF WASHINGTON DEPARTMENT OF SOCIAL AND HEALTH SERVICES, ET AL., DEFENDANTS.



The opinion of the court was delivered by: Robert J. Bryan United States District Judge

ORDER ON MOTIONS FOR SUMMARY JUDGMENT AND ORDER OF REMAND

This matter comes before the Court on Defendants' Motion for Partial Summary Judgment Regarding Remaining Federal Claims (Dkt. 167) and on Class Plaintiffs' Omnibus Motion for Partial Summary Judgment on Federal Claims (Dkt. 168). The Court has considered the motions, responses to the motions, and the remainder of the file herein.

In this order, the Court has gone to substantial effort to set out the parties' positions on the various issues in the "Discussion" section beginning at page ten. Those sections of the opinion may not be necessary reading for all interested parties. The Court's ruling is at page fifty-six, and its rationale can be found in the "Analysis" sections at pages sixteen, twenty-four, thirty-three, thirty-eight, forty-one, and fifty-one.

I. PROCEDURAL HISTORY

On May 4, 2007, Rekhter v. State of Washington, et al. (Rekhter) was filed in Thurston County Superior Court, cause number 07-2-00895-8. Dkt. 1, Exhibit A. On June 20, 2007, the Rekhter case was removed to federal court. Dkt. 1. On May 8, 2007, Pfaff v. Arnold-Williams, (Pfaff) was filed in Thurston County Superior Court under cause number 07-2-00911-3. Dkt. 1, Exhibit A. On May 18, 2007, Ms. Pfaff filed a First Amended Complaint (Class Action). Dkt. 1, Exhibit B. On June 6, 2007, the Pfaff case was removed to federal court. Dkt. 1, Exhibit B.

A third case, SEIU 775 v. Robin Arnold-Williams, King County No. 07-2-17710-8SEA, was filed in King County Superior Court during May of 2007. On December 13, 2007, Judge Armstrong of the King County Superior Court stayed SEIU 775 pending resolution of Rekhter and Pfaff. Dkt. 66.

On August 17, 2007, this court consolidated the Pfaff and Rekhter cases and ordered that future documents be filed in the Pfaff case. Dkt. 26, at 8.

On November 27, 2007, the court granted Plaintiff Pfaff's Motion for Certification of the Class of Medicaid Beneficiaries and Plaintiff Rekhter's Motion for Class Certification. Dkt. 57. The Order stated that the motions were granted insofar as the classes are certified only for purposes of determining whether defendants are liable to plaintiffs. Dkt. 57. Gregory A. McBroom and Kevin B. Hansen of Livengood Fitzgerald & Alskog were appointed as class counsel. Dkt. 57, at 12.

On December 14, 2007, the court granted the parties' stipulation to amend the class definition. Dkt. 65. The amended class definition is as follows:

1. All persons who (1) were determined eligible for Medicaid funded in-home personal care assistance and (2) had their base hours adjusted by fifteen percent because of the operation of Wash. Admin. Code § 388-106-130(b)(3) (or its predecessor), except to the extent that they (3) requested an adjudicative proceeding pursuant to Wash. Rev. Code § 74.08.080 challenging the downward adjustment and have received or will receive back benefits as a result.

2. All providers of Medicaid-funded in-home personal care employed by persons who (1) were determined eligible for Medicaid funded in-home personal care assistance and (2) had their base hours adjusted by fifteen percent because of the operation of Wash. Admin. Code § 388-106-130(b)(3) (or its predecessor), except to the extent that they (3) requested an adjudicative proceeding pursuant to Wash. Rev. Code § 74.08.080 challenging the downward adjustment and have received or will receive back benefits as a result.

Dkt. 65, at 2-3.

SECOND AMENDED CLASS ACTION COMPLAINT

On October 6, 2008, Plaintiffs filed a Second Amended Class Action Complaint (Dkt. 165), which is the complaint now before the court. The second amended complaint named as defendants the State of Washington; the Department of Social and Health Services (DSHS); Robin Arnold-Williams, Secretary of DSHS, in her individual and official capacities; Dennis Braddock, former Secretary of DSHS, in his individual and official capacities; Kathy Leitch, Assistant Secretary for the Aging and Disability Services Administration, in her individual and official capacities; and Jane and John Doe Nos. 1 thru [sic] 100. Dkt. 165, at 1-2.

The second amended complaint alleges the following causes of action on behalf of Medicaid recipients and their care providers: (1) Medicaid Comparability Statute, 42 U.S.C. § 1396a(a)(10)(B), 42 C.F.R. § 440.240(b) and 42 C.F.R. § 440.230(b)(Comparability Claim); (2) Fifth Amendment constitutional taking, incorporated through the Fourteenth Amendment (federal constitutional takings claim); (3) Civil Rights Acts claims, pursuant to 42 U.S.C. § 1983 (§ 1983 claims); (4) Title II of the Americans with Disabilities Act, 42 U.S.C. Chapter 126 and 28 C.F.R. Part 35 (ADA claim); (5) Section 504 of the Rehabilitations Act of 1973, 29 U.S.C. § 1984 (RA claim); (6) Federal Impairment of Contracts, U.S. Constitution, Article I, § 10 (federal impairment of contracts claim); (7) breach of contract (state breach of contract claim); (8) Washington wage laws, chapter 49.52 RCW (Washington wage claim); (9) unjust enrichment; and (10) quantum meruit. Dkt. 165.

In their causes of action in the second amended complaint, Plaintiffs do not list a specific cause of action under the Medicaid Choice of Provider provision of the Medicaid Act, 42 U.S.C. § 1396a(a)(23). However, in ¶ 1.13 of the second amended complaint, plaintiffs allege as follows:

"Further, Medicaid laws do not permit DSHS to restrict a Medicaid recipient's choice of a willing an qualified care provider in the manner prescribed by the Shared Living Rule." Dkt. 165, at 5. The second amended complaint also references the Medicaid Choice of Provider requirements in ¶ 2.26. Dkt. 165, at 12. Plaintiffs have arguably stated a claim that the Shared Living Rule violated the Medicaid Act Choice of Provider requirements. In addition, the parties addressed the Medicaid Choice of Provider issues in their briefing and documentation submitted in support of and in response to the pending motions. Accordingly, the Court assumes that Plaintiffs have also pled a claim in the second amended complaint that the Shared Living Rule violated the Medicaid Choice of Provider requirements (choice of provider claim).

MEDICAID FUNDED PROGRAMS AND SHARED LIVING RULE

This case involves claims on behalf of classes of recipients of personal care services and providers of personal care services through four public assistance programs administered by defendant Washington State Department of Social and Health Services (DSHS). The four programs are: (1) the Community Options Program Entry System (COPES) (42 U.S.C. § 1396(c)) and RCW 74.39A.030(2)); (2) the Medicaid Personal Care (MPC) program (42 U.S.C. § 1396d(a)(24) and RCW 74.l09.520(2)); (3) the Medically Needy In-Home Waiver program (42 U.S.C. § 1396n(c)), RCW 74.09.700(2)(a)(I) and RCW 74.39.041(1)); and (4) the Chore Program (RCW 74.39A.220). While each program is somewhat different, they all have both functional disability and financial eligibility standards that recipients must meet in order to be eligible for benefits. The first three programs are Medicaid programs for which the federal government reimburses slightly more than fifty percent of the state's expenditures. The Chore Program is entirely state funded.

Under these programs, DSHS pays for eligible recipients to receive assistance with activities of daily living such as bathing, dressing, eating, and toilet use. These services are designed to enable the recipients to reside in their homes instead of in institutional settings. Recipients who are developmentally disabled receive services through the DSHS Division of Developmental Disabilities, and other disabled adults receive services through the DSHS Division of Aging. The methodology of determining the level of personal assistance for which the recipient is eligible is the same for all recipients.

The standard assessment process used by DSHS for determining both eligibility and the number of hours of assistance that will be provided is known as the Comprehensive Assessment and Reporting Evaluation (CARE) process. The CARE process is set forth in WAC 388-106-0080 through -0145. Prior to June 29, 2007, pursuant to former WAC 388-106-130(3)(b), recipients who chose to have providers who lived with them received fifteen percent fewer hours of paid assistance than those recipients whose providers were not part of the recipients' households. This was known as the "Shared Living Rule."

JENKINS CASE

In Jenkins v. Washington State Dept. Of Social and Health Services, 160 Wn.2d 287 (2007), the Washington Supreme Court resolved three different administrative appeals of DSHS decisions determining the number of hours that individual recipients were eligible for under the COPES and MPC programs.

The first two cases involved two recipients of Medicaid-funded home health care, Venetta Gasper and Tommye Myers, who filed actions in Thurston County Superior Court, seeking review of administrative decisions and a declaratory judgment invalidating the Shared Living Rule. The two cases were consolidated. The trial court invalidated the Shared Living Rule and reversed the two administrative decisions, ruling that DSHS exceeded its statutory authority by violating federal choice of provider protections and comparability requirements. See Gasper-Myers v. DSHS, 132 Wn. App. 42, 48-49 (2006). On appeal, the Washington Court of Appeals, Division 2, held that the Shared Living Rule violated the Medicaid Comparability requirements but did not violate the Medicaid Choice of Provider requirements. See id. DSHS filed a petition for review with the Washington Supreme Court.

In the third case, David Jenkins, a recipient of Medicaid-funded home health care, filed suit in King County Superior Court, appealing an adverse administrative decision. See Jenkins v. Washington State Dept. Of Social and Health Services, 160 Wn.2d at 294. The state courts held that the Shared Living Rule violated Medicaid Comparability requirements. The Jenkins case was certified to the Washington Supreme Court for direct review; the Washington Supreme Court consolidated Jenkins with Gasper-Myers and granted review. Id. at 294.

Appellant, DSHS, in Jenkins appealed the following claims to the Washington Supreme Court: (1) violation of the federal Medicaid Comparability requirements under 42 U.S.C. § 1396;

(2) violation of the federal Medicaid free Choice of Provider guaranty under 42 U.S.C. § 1396;

(3) violation of Title II of the Americans with Disabilities Act of 1990 under 42 U.S.C. § 12132;

(4) violation of the privileges and immunities clause under article I, section 12 of the Washington Constitution; (5) violation of the equal protection clause of the fourteenth amendment to the United States Constitution; and (6) violation of the due process clause of the fourteenth amendment to the United States Constitution. Id. at 290.

On May 3, 2007, the Washington Supreme Court, in a 6-3 decision, held that former WAC 388-106-0130(b)(3) (the Shared Living Rule) violated the Medicaid Comparability requirements of 42 U.S.C. § 1396a(a)(10)(B)(I). The majority in Jenkins held that (1) the Shared Living Rule was invalid to the extent that it presumed that certain needs of the recipient are met without an individualized determination, and that the presumption results in an automatic fifteen percent reduction in the recipient's assessed number of allotted care hours based only on the fact that the recipient lives with a caregiver; and (2) the COPES program was not exempt from the federal comparability requirements. Id. at 300-301.

Three justices dissented from the majority in Jenkins, concluding that the Shared Living Rule does not violate Medicaid Comparability requirements. The dissenting justices opined that

(1) the court should have deferred to the DSHS interpretation of the Medicaid Comparability requirements and the adoption of the Shared Living Rule; (2) the Shared Living Rule was developed as part of a "uniform system for assessing functional disability to support equitable allocation of the State's all-too-limited resources across the pool of eligible recipients" (Id. at 310); (3) the Shared Living Rule operates as only one of the many irrebuttable presumptions that comprise the CARE tool; (4) the entire CARE process is based on presumptions and approximations, regardless whether an individual does or does not live with his or her caregiver; and (5) because the majority had not demonstrated a principled basis for distinguishing between the Shared Living Rule and other CARE tool rules, and given the most minimal deference to DSHS' expertise, the Shared Living Rule did not violate Medicaid Comparability requirements. Id.

The Washington Supreme Court remanded the case "for determination, consistent with the opinion, of the amount of personal care hours DSHS wrongfully withheld from the respondents for their unmet need for assistance with housekeeping, shopping, meal preparation services, and wood supply, retroactive to the date the shared living rule was applied to their cases." Id. at 302-03.

DSHS repealed the Shared Living Rule on an emergency basis, effective June 29, 2007 (Dkt. 7-2), and on a permanent basis, effective February 22, 2008 (Wash. State Register No. 08-03-111).

DSHS filed a motion for reconsideration in Jenkins, seeking clarification as to whether the remand was to the superior courts that heard the administrative appeals or to DSHS pursuant to RCW 34.05.574. Dkt. 77 at 4. On August 16, 2007, the Washington Supreme Court denied DSHS' motion for reconsideration. Dkt. 77 at 4. Following remand, all issues in Jenkins were resolved.

FIRST SET OF MOTIONS FOR PARTIAL SUMMARY JUDGMENT

The first set of motions for partial summary judgment concerned only Plaintiffs' claims that the Shared Living Rule violated Medicaid Comparability and Choice of Provider requirements. Dkts. 77, 78. On May 29, 2008, the Court issued an Order on the parties' first set of motions for partial summary judgment. Dkt. 141. The Court denied Class Plaintiff's Motion for Summary Judgment (Dkt. 77), and granted Defendants' Motion for Summary Judgment re: Medicaid Act Claims (Dkt. 78). All Plaintiffs' claims that the Shared Living Rule violated the Medicaid Comparability requirements, 42 U.S.C. § 1396a(a)(10)(B)(I) and the Medicaid Choice of Provider Requirements, 42 U.S.C. § 1396a(a)(23) were dismissed because they did not meet the requirements for relief under 42 U.S.C. § 1983. The Court did not rule on the merits of whether the Shared Living Rule violated the Medicaid statutes.

PRESENT SET OF MOTIONS FOR SUMMARY JUDGMENT

The motions for partial summary judgment now before the Court were filed by the parties on October 9, 2008.

Class Plaintiffs' Omnibus Motion for Partial Summary Judgment on Federal Claims. In their partial motion for summary judgment, Class Plaintiffs contend (1) that the Court should apply the doctrine of collateral estoppel to the Jenkins case as to the issues of whether the Shared Living Rule violated Medicaid comparability and whether the care recipients should be awarded relief under the state public assistance recipient protection law RCW 74.08.080(3); (2) alternatively, that the Court should certify the collateral estoppel issue to the Washington State Supreme Court; (3) that the Court should find the Shared Living Rule violated Medicaid comparability requirements; (4) that the Court should find the Shared Living Rule violated Medicaid free choice of provider requirements; (5) that the Court should find the Shared Living Rule violated the Americans with Disabilities Act (42 U.S.C. § 12132) and Section 504 of the Rehabilitation Act of 1973 (29 U.S.C. §794(a)); (6) that the Court should find the Shared Living Rule violated the Contracts Clause of the United States Constitution; (7) that the Court should find that the Shared Living Rule violated the Takings Clause of the United States Constitution; and (8) that the Court should find that the Shared Living Rule violated the Due Process and Equal Protection Clauses of the United States Constitution. Dkt. 168.

In their response to Plaintiffs' motion for partial summary judgment, Defendants assert that (1) the Washington Administrative Procedures Act (WAPA) (RCW 34.05), RCW 74.08.080(3), and Jenkins do not provide for the restitution remedy requested by Plaintiffs; (2) the Shared Living Rule did not violate either Medicaid comparability requirements or Medicaid choice of provider requirements; (3) the Shared Living Rule did not violate the ADA or the Rehabilitation Act; (4) Plaintiffs are not entitled to relief under the Takings Clause of the Fifth Amendment of the United States Constitution; (5) the Shared Living Rule did not result in an unconstitutional impairment of contracts; and (6) Plaintiffs are not entitled to damages based on due process or equal protection. Dkt. 175.

In reply, Plaintiffs argue that (1) collateral estoppel should be applied, and the Department misstates the facts of Pub. Util. Dist. No. 1 v. Tombari Family Ltd. P'ship, 117 Wn.2d 803 (1991); (2) the Department violated Medicaid comparability requirements and the case law demonstrates the absurdity of the "payment levels" defense; (3) the Department misstates the standard for an ADA claim involving facial discrimination that excludes certain beneficiaries from program benefits; (4) the Department's arguments regarding the WAPA and RCW 74.08.080(3) were directly rejected by the State Supreme Court in Jenkins and plaintiffs were not required to exhaust administrative remedies because the Shared Living Rule could not be challenged administratively; (5) RCW 74.08.080(3) provides a remedy for class recipients; however, the case also meets all the elements for invoking a remedy under the implied rights of action doctrine; (6) 42 U.S.C. § 1396a(a)(3) and the Department's failure to offer a fair hearing for benefits denied under the Shared Living Rule provides a basis for an implied right of action under the Medicaid Act; and (7) qualified immunity is not appropriate because the Department failed to engage in even a modicum of inquiry into the assumptions underlying the Shared Living Rule and the effect on the vulnerable care recipients. Dkt. 186.

Defendants' Motion for Partial Summary Judgment Regarding Remaining Federal Claims. In their motion for partial summary judgment, Defendants contend that (1) the Shared Living Rule did not violate the Americans with Disabilities Act or Section 504 of the Rehabilitation Act; (2) the Shared Living Rule did not violate the Equal Protection Clause or the Due Process Clause of the United States Constitution; (3) the Shared Living Rule did not result in a compensable taking; and (4) promulgation of the shared living rule did not violate the Constitutional prohibition against impairment of contracts.

In their response to Defendants' motion for partial summary judgment, Plaintiffs maintain that (1) the Department falsely infers that the Shared Living Rule did not affect the level of public assistance services provided to care recipients; (2) the Department violated Title II of the ADA by disparately allocating services and by failing to provide the services to the care recipients in the least restrictive setting; (3) the Department violated Equal Protection and Due Process because its actions were arbitrary and capricious, not rationally related to a legitimate public purpose, and contrary to the express intentions of the State legislature; (4) the Department's contention that public assistance benefits have no pecuniary value or that the class had an obligation to bring an inverse condemnation claim lacks substance both on factual and legal grounds; and (5) the Department violated the Impairment of Contracts Clause of the United States Constitution because it substantially impaired contracts with the care providers in violation of the law. Dkt. 176.

In their reply, Defendants argue that (1) there is no evidence that recipients suffered actual harm; (2) the ADA and Section 504 of the Rehabilitation Act were not violated; (3) there was not an equal protection or due process violation; (4) the Shared Living Rule did not result in a taking of any property of recipients; (5) the Shared Living Rule did not result in a taking of any property of care providers; (6) Plaintiffs cannot claim a Fifth Amendment takings violation; and (7) the Shared Living Rule did not violate the Contracts Clause. Dkt. 185.

II. DISCUSSION

A. SUMMARY JUDGMENT STANDARD

Summary judgment is proper only if the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(c). The moving party is entitled to judgment as a matter of law when the nonmoving party fails to make a sufficient showing on an essential element of a claim in the case on which the nonmoving party has the burden of proof. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1985). There is no genuine issue of fact for trial where the record, taken as a whole, could not lead a rational trier of fact to find for the nonmoving party. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986) (nonmoving party must present specific, significant probative evidence, not simply "some metaphysical doubt"). See also Fed. R. Civ. P. 56(e). Conversely, a genuine dispute over a material fact exists if there is sufficient evidence supporting the claimed factual dispute, requiring a judge or jury to resolve the differing versions of the truth. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 253 (1986); T.W. Elec. Serv., Inc. v. Pac. Elec. Contractors Ass'n, 809 F.2d 626, 630 (9th Cir. 1987).

The determination of the existence of a material fact is often a close question. The Court must consider the substantive evidentiary burden that the nonmoving party must meet at trial -- e.g., a preponderance of the evidence in most civil cases. Anderson, 477 U.S. at 254; T.W. Elec. Serv., Inc., 809 F.2d at 630. The Court must resolve any factual issues of controversy in favor of the nonmoving party only when the facts specifically attested by that party contradict facts specifically attested by the moving party. The nonmoving party may not merely state that it will discredit the moving party's evidence at trial, in the hopes that evidence can be developed at trial to support the claim. T.W. Elec. Serv., Inc., 809 F.2d at 630 (relying on Anderson, supra). Conclusory, nonspecific statements in affidavits are not sufficient, and missing facts will not be presumed. Lujan v. Nat'l Wildlife Fed'n, 497 U.S. 871, 888-89 (1990).

B. MOTIONS TO STRIKE

Defendants, in their reply in support of their motion for partial summary judgment (Dkt. 185), request that the Court strike the declaration of Frank Fox (Dkt. 177), which the Class Plaintiffs submitted with their response to Defendants' motion for summary judgment. The Court has reviewed the motion to strike, the pleadings filed in support of and in opposition to the motion, and the remainder of the file herein. The Court, finding no violation of discovery rules associated with Class Plaintiffs' filing of the declaration of Frank Fox, should deny Defendants' motion to strike (Dkt. 185).

Class Plaintiffs, in responding to Defendants' motion to strike, bring a cross motion to strike a portion of the testimony of Bea-Alise Rector regarding the exception to administrative rule process. Class Plaintiffs argue that Ms. Rector made contradictory statements in her fifth declaration and in her deposition, regarding obtaining an exception to the Shared Living Rule through the administrative process. Class Plaintiffs request that Ms. Rector's declaration be stricken because of these contradictory statements. The Court should assess all testimony given by Ms. Rector, and give appropriate consideration to any inconsistent statements found therein. Class Plaintiffs' motion to strike the declaration testimony of Ms. Rector should be denied.

C. ADA (42 U.S.C. § 12132)/SECTION 504 OF THE REHABILITATION ACT (29 U.S.C. § 794(a)) CLAIMS

1. Class Plaintiffs' Motion for Summary Judgment (Dkt. 168)

Class Plaintiffs, in their motion for summary judgment, argue that the Shared Living Rule violated the ADA and Section 504 of the Rehabilitation Act. Class Plaintiffs assert that each of the care recipients is a qualified individual with a disability, that the care recipients were denied paid Medicaid benefits through the Shared Living Rule, and that the denial of benefits was by reason of the care recipients' disabilities. Class Plaintiffs argue that the ADA and Section 504 prohibit the Department from providing a particular service to some while denying that service to other disabled persons, and that under federal regulation, the Department may not impose eligibility criteria that screen out any class of individuals with disabilities from fully and equally enjoying any service, program, or activity.

Class Plaintiffs argue that the Department, by denying Medicaid benefits to the care recipients solely on the basis of the status of their care providers, imposed eligibility requirements that resulted in care recipients not receiving the same benefits provided to those with live-out care providers.

Additionally, Class Plaintiffs assert that the Shared Living Rule violated the ADA's "integration regulation," which requires public services to be administered in the most integrated setting appropriate to the needs of qualified individuals with disabilities. Finally, Class Plaintiffs argue that a "fundamental alteration" defense would not apply to the present case.

2. Defendants' Motion for Summary Judgment (Dkt. 167)

Defendants argue that the Shared Living Rule did not violate either the ADA or Section 504 of the Rehabilitation Act. Defendants point out Class Plaintiffs' admission that the alleged discrimination was on the sole basis of the live-in status of the care provider. Defendants argue that this admission alone warrants dismissal of Class Plaintiffs' ADA/Section 504 claims because it demonstrates that the discrimination, if any, was not based solely on the disabilities of Class Plaintiffs. Defendants also assert that the Ninth Circuit has held that plaintiffs have no claim under the ADA or the Rehabilitation Act against any defendant sued in his or her individual capacity under 42 U.S.C. § 1983.

Defendants contend that both the ADA and Section 504 prohibit discrimination in the form of exclusion from participation in or denial of benefits, services, programs, or activities of a public entity. Defendants further argue that such exclusion must be solely by reason of an individual's disabilities. Defendants argue that here, the Shared Living Rule was applied to care recipients, not by reason of a disability, but because they chose a live-in provider. Therefore, Defendants assert that the Shared Living Rule did not discriminate based solely on the basis of disability, but on basis of the care recipients' living arrangements with their chosen providers.

Defendants also deny that the Shared Living Rule violated the ADA' integration requirements. Defendants assert that none of the named recipient class representatives stopped receiving the particular services that the Shared Living Rule affected, but rather, that all of the Class Plaintiff providers testified that they continued to reside with their recipients, and that none of them stopped providing services to the home that they both shared. Defendants argue that the Shared Living Rule did not force any recipient into a less integrated setting, and that had a preferred live-in provider become unwilling to provide services at the rate offered, the recipient could simply have chosen a live-out provider to provide the services, thus negating the necessity of the recipient going into institutionalized care.

3. Class Plaintiffs' Response (Dkt. 176)

In their response, Class Plaintiffs assert three reasons why the Department's implementation of the Shared Living Rule violated the ADA. First, Class Plaintiffs contend that the Department eliminated paid care services for care recipients with live-in providers while providing paid care services to recipients with live-out providers, even though all the care recipients had the same individualized need for the services based upon their disabling conditions. Next, Class Plaintiffs argue that the Department's flat 15% cut to the care recipients' base hours resulted in more disabled persons receiving a greater cut in paid care services than less disabled individuals received. Third, Class Plaintiffs contend that without the intervention of third party informal supports, the care recipients would have been forced into institutionalized care due to the elimination of essential life-sustaining services.

Class Plaintiffs argue that no showing of intentional discrimination or denial of benefits is necessary to make out a violation of the ADA. Class Plaintiffs contend that Defendants' argument, that the Shared Living Rule does not discriminate on the basis of disability but rather on the basis of the provider's living arrangement, ignores the Rule's discriminatory effect. Class Plaintiffs contend that Defendants are arguing that a regulation could not violate the ADA unless its express language evidenced discrimination on the basis of disability, and that such an argument would render the ADA meaningless.

Class Plaintiffs further contend that Weinrich v. Los Angeles County Metro. Transp. Auth., 114 F.3d 979 (9th Cir. 1997) is distinguishable from the present case, and that here, the Shared Living Rule created two classes of care recipients. Class Plaintiffs contend that the Shared Living Rule's 15% reduction necessarily resulted in greater cuts for the more disabled: that the greater the disability, the larger the cut in public assistance. Moreover, Class Plaintiffs argue that the Department's use of the word "choice" is misleading, because many of the care recipients require a live-in provider because of their disabling conditions.

Class Plaintiffs reassert their argument that the Shared Living Rule violated the ADA's integration requirements. Class Plaintiffs reject Defendants' assertion that "none of the named recipient class representatives stopped receiving the particular services that the shared living rule affected," (Dkt. 176, at 18) arguing that this contention ignores Bonnie Drewes' testimony that a care provider quit as a result of the impact of the Shared Living Rule. Class Plaintiffs further argue that each of the care recipients testified that they continued to provide the services to the care recipients to prevent them from being placed into higher institutionalized care, and that some care providers planned to quit if the benefit hours were not restored.

Finally, Class Plaintiffs maintain that the Department failed to provide paid benefits for shopping, housekeeping and meal preparation services in a community-based setting for care recipients with live-in care providers. Class Plaintiffs argue that the location of services is an issue in this case, and that Townsend v. Quasim, 328 F.3d 511 (9th Cir. 2003) and Olmstead v. L.C., 527 U.S. 581 (1999), are controlling authority.

4. Defendants' Response (Dkt. 175)

In their response, Defendants reassert the arguments made in their motion for summary judgment. Defendants reassert that the discrimination here, if any, was not based solely on the disabilities of the care recipients, but rather on the status of their care providers. Defendants also deny that the Shared Living Rule violated the ADA's integration requirements.

Additionally, Defendants argue that Plaintiffs' assertion that they are entitled to monetary damages under the ADA and Section 504, or under RCW 74.08.080, should be rejected. Defendants argue that in the Ninth Circuit, compensatory damages are not available under Title II or § 504 absent a showing of discriminatory intent.Defendants acknowledge that the Ninth Circuit has not yet determined whether "discriminatory animus" or "deliberate indifference" is the appropriate standard of proof, but argue that in either case, Class Plaintiffs have not met their burden to show that the Shared Living Rule arose out of intentional discrimination against people with disabilities.

Defendants also argue that plaintiffs must have suffered an "injury in fact" to recover monetary damages under Title II or § 504, and that here Class Plaintiffs have failed to show any injury in fact. Defendants argue that Class Plaintiffs' own evidence shows that the named recipients suffered no injury because they continued to receive the same level of care from their providers despite the Shared Living Rule.

5. Class Plaintiffs' Reply (Dkt. 186)

In their reply, Class Plaintiffs argue that Defendants' reliance on Ferguson v. City of Phoenix, 157 F.3d 668 (9th Cir. 1998), for the proposition that every ADA case requires a showing of "deliberate indifference" or "discriminatory animus" is misplaced. Class Plaintiffs argue that the Ninth Circuit has held that in cases involving "facial discrimination" in the form of the wrongful exclusion of disabled persons from public services, a plaintiff need only demonstrate that the exclusion of services resulted in disparate treatment of individuals. Class Plaintiffs argue that if this case goes to trial, the "facial discrimination" standard should be applied. However, Plaintiffs also contend that even if the facial discrimination standard is not applied here, Class Plaintiffs would still satisfy either of the standards mentioned by Defendants, because the evidence demonstrates that the Department's actions were arbitrary and capricious and deliberately indifferent toward the needs of the care recipients.

6. Defendants' Reply (Dkt. 185)

Defendants, in their reply, reject Plaintiff recipients' claims that they were denied benefits allegedly available to other less-disabled individuals and that they require live-in providers because their disabling conditions are so severe. Defendants assert that a great many recipients who have the highest level of acuity actually receive services from live-out providers.

Defendants also argue that the Class Plaintiffs' reliance on one hearsay declaration from a family member who claims that the provider quit, in part, because of the shared living rule, is insufficient to defeat Defendants' summary judgment motion or to support a ruling on liability in Class Plaintiffs' favor.

Finally, Defendants argue that there has been no unjustified isolation of the disabled here, and thus no violation of the ADA's integration rules. Defendants assert that Class Plaintiff's reliance on Townsend is misplaced, and that Class Plaintiffs have failed to establish a prima facie case of "integration discrimination."

7. ANALYSIS

Discrimination Claim under the ADA and Section 504 To state a claim under Section 504 of the Rehabilitation Act, a plaintiff must allege:

(1) he is an individual with a disability; (2) he is otherwise qualified to receive the benefit; (3) he was denied the benefit of the program solely by reason of his disability; and (4) the program receives federal financial assistance.

O'Guinn v. Lovelock Correctional Center, 502 F.3d 1056, 1060 (9th Cir. 2007) (internal quotation marks omitted).

Similarly, to state a claim under Title II of the ADA, a plaintiff must allege: (1) he is an individual with a disability; (2) he is otherwise qualified to participate in or receive the benefits of some public entity's services, programs, or activities; (3) he was either excluded from participation in or denied the benefits of the public entity's services, programs, or activities, or was otherwise discriminated against by the ...


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