367 F. Supp. 3d 944
D. Me.2019Background
- Minnesota's DWRS (Minn. Stat. §256B.4914) sets payment-rate methodology for certain Medicaid waiver services; DWRS includes an automatic inflationary adjustment that first took effect July 1, 2017.
- Three Minnesota session laws enacted earlier a cumulative 7% increase to waiver-service payment rates; those laws remain in effect after an omnibus bill that would have repealed them was vetoed in May 2018.
- DHS Commissioner Emily Johnson Piper announced plans to eliminate the cumulative 7% increase in staged reductions beginning July 1, 2018, with final reductions scheduled for December 31, 2019.
- Plaintiffs: two provider associations (ARRM and MOHR) and four waiver recipients (through guardians). They sued seeking declaratory and injunctive relief, alleging violations of Fourteenth Amendment Due Process and Equal Protection, Title II of the ADA, and the Rehabilitation Act.
- The Commissioner moved to dismiss for lack of subject-matter jurisdiction (standing) and for failure to state claims. The district court granted the motion and dismissed the amended complaint without prejudice.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Individual Plaintiffs' Article III standing for injunctive/declaratory relief | They face imminent harm from funding cuts to providers that will reduce or eliminate services | Alleged harms are speculative/delayed (some not until Dec. 31, 2019); reliance on independent actors makes injury non‑imminent | Individual Plaintiffs lack Article III standing; claims dismissed without prejudice |
| Organizational Plaintiffs' standing under ADA and Rehabilitation Act | Associations can sue on behalf of members who will be harmed by rate cuts that frustrate compliance with disability‑integration obligations | No member has alleged concrete, imminent injury (licenses not revoked; unspecified program changes); allegations are speculative | Organizational Plaintiffs lack associational standing for ADA/Rehab Act claims; Counts III and IV dismissed without prejudice |
| Procedural due process (property interest in 7% rate) | Plaintiffs claim a protected property interest in the cumulative 7% payment increase and inadequate process before its removal | Medicaid participation is voluntary; past precedent holds no constitutionally protected property interest in specific reimbursement rates; statutory context permits official discretion | No protected property interest in a particular Medicaid reimbursement rate; procedural‑due‑process claim fails; Count I dismissed |
| Substantive due process and Equal Protection | Plaintiffs claim the cut "shocks the conscience" and treats similarly situated providers differently | No fundamental right identified; conduct not conscience‑shocking; providers cited as comparators are not similarly situated because DWRS providers received a different automatic inflation adjustment | Substantive due process claim fails; equal‑protection claim fails under rational‑basis review because comparators are not similarly situated; Count II dismissed |
Key Cases Cited
- Clapper v. Amnesty Int'l USA, 568 U.S. 398 (2013) (speculative chains of future events cannot establish imminent Article III injury)
- Lujan v. Defenders of Wildlife, 504 U.S. 555 (1992) (Article III standing requires injury‑in‑fact, causation, and redressability)
- Town of Castle Rock v. Gonzales, 545 U.S. 748 (2005) (expectation of a government benefit does not itself create a protected property interest)
- Mathews v. Eldridge, 424 U.S. 319 (1976) (framework for determining what process is due under procedural due process)
- Hunt v. Wash. State Apple Advert. Comm’n, 432 U.S. 333 (1977) (associational standing principles)
- Minn. Ass’n of Health Care Facilities v. Minn. Dep’t of Pub. Welfare, 742 F.2d 442 (8th Cir. 1984) (Medicaid providers lack a constitutionally protected property interest in a particular reimbursement rate)
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (Rule 12(b)(6) plausibility standard for pleading)