979 F.3d 426
6th Cir.2020Background
- Michigan’s Habilitation Supports Waiver funds Community Living Support (CLS) services so people with developmental disabilities can live in the community; budgets were historically calculated by costing services in each recipient’s IPOS.
- In 2015 Washtenaw County (via predecessor WCHO, now WCCMH) switched to an all‑inclusive hourly rate for CLS budgets, reducing budget dollars though authorized hours remained unchanged.
- Five individual CLS recipients and the Washtenaw Association for Community Advocacy (WACA) sued State, PIHP (CMHPSM), and county mental‑health defendants, alleging the new budgeting methodology prevents receipt of medically necessary services and violates Medicaid statutes, the ADA and §504 (Olmstead integration), Michigan law, and contract/waiver terms.
- The district court dismissed all claims. The Sixth Circuit reversed in part and remanded, holding many statutory and civil‑rights claims sufficiently pleaded to survive dismissal.
- The panel (Clay, J.): found associational standing for WACA, rejected Eleventh Amendment immunity and administrative‑exhaustion bars for these §1983 claims, held several Medicaid provisions and waiver assurances enforceable under §1983, and concluded plaintiffs plausibly alleged ADA/§504 Olmstead injuries and Michigan Mental Health Code neglect.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Associational standing (WACA) | WACA may sue on members’ behalf because at least one member has standing and interests are germane | WACA lacks standing because named members already received procedural relief and unnamed members weren’t identified | WACA has associational standing: at least one member has standing and suit seeks prospective, organization‑germane relief |
| Eleventh Amendment / Official‑capacity relief | Prospective injunctive relief and §504 waiver of immunity allow suit against state officials | State and PIHP claim sovereign immunity | Ex parte Young permits prospective relief; State waived §504 immunity by accepting federal funds; PIHP not an arm of the state—no sovereign immunity |
| Administrative exhaustion | Plaintiffs need not exhaust state Medicaid admin remedies before §1983 suit | Defendants assert exhaustion is required | §1983 claims need not exhaust state administrative remedies; suit may proceed |
| Medicaid §§1396a(a)(8),(10) — private right | These statutory provisions create individual rights enforceable under §1983 | Defendants argue these provisions are not rights‑creating (rely on Armstrong and §1396a(a)(30)(A) reasoning) | Court holds §§1396a(a)(8) and (10) are enforceable under §1983 using Blessing/Gonzaga factors |
| Medicaid §§1396a(a)(8),(10) — merits | Budget method makes it impossible to obtain medically necessary services promptly/sufficiently (IPOS services unmet; providers unavailable) | Defendants say recipients can use county‑contracted providers or obtain budget adjustments via PCP process | At pleading stage plaintiffs plausibly alleged deprivation of timely and sufficient services; dismissal reversed for Counts III & IV |
| Medicaid §1396n(c)(2)(A),(C) — private right | Waiver assurances (safeguards, informed choice) create enforceable individual rights | Defendants: no private right; Secretary’s enforcement is exclusive | Court finds §§1396n(c)(2)(A) and (C) create enforceable rights under §1983 |
| §1396n(c)(2) — merits | State’s allowance of the new budget method undermines home‑and‑community‑based safeguards and meaningful choice among alternatives to institutionalization | Defendants say setting appropriate budgets is within executive discretion and plaintiffs aren’t effectively homebound | Plaintiffs plausibly alleged the methodology denies meaningful HCBS access/choice; dismissal reversed on these counts |
| ADA/§504 (Olmstead) — risk and home isolation theories | Budget cuts place plaintiffs at serious risk of institutionalization and have effectively institutionalized some at home (reliance on family, reduced community hours) | Defendants: ADA doesn’t reach mere funding disputes or speculative risk; relief would fundamentally alter programs | Court holds Olmstead permits claims for serious risk of institutionalization and for unjustified home isolation; plaintiffs plausibly pleaded both theories and may seek reasonable modifications |
| Third‑party‑beneficiary claim (Waiver/contract) | Plaintiffs are third‑party beneficiaries of the waiver and the Department–PIHP contract entitling them to budgets tied to IPOS costing | Defendants say no private contract right or claim depends on federal statutory claims | Court reversed dismissal and remanded for district court to consider merits in the first instance |
| Michigan Mental Health Code §330.1722 — neglect | Budget methodology denies recipients standard of care and least‑restrictive services, constituting neglect; plaintiffs seek injunctive relief | Defendants claim governmental immunity and insufficient pleading of neglect | Governmental immunity not a bar to injunctive relief here; plaintiffs plausibly alleged neglect; dismissal reversed |
Key Cases Cited
- Waskul v. Washtenaw Cty. Cmty. Mental Health, 900 F.3d 250 (6th Cir. 2018) (prior appellate decision in same litigation addressing standing and preliminary relief)
- Olmstead v. L.C., 527 U.S. 581 (1999) (Title II integration mandate forbids unjustified institutional isolation)
- Armstrong v. Exceptional Child Ctr., Inc., 575 U.S. 320 (2015) (limits private §1983 enforcement of some Medicaid provisions; administrative remedy may preclude §1983 for certain provisions)
- Gonzaga Univ. v. Doe, 536 U.S. 273 (2002) (statute must unambiguously create individual rights to be enforceable under §1983)
- Blessing v. Freestone, 520 U.S. 329 (1997) (three‑factor test for determining whether a federal statute creates enforceable rights under §1983)
- Westside Mothers v. Olszewski, 454 F.3d 532 (6th Cir. 2006) (panel analysis of Medicaid provisions’ enforceability under §1983)
- Ex parte Young, 209 U.S. 123 (1908) (authorizes prospective relief against state officials for ongoing federal‑law violations)
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (pleading standard: plausibility required)
- Lujan v. Defenders of Wildlife, 504 U.S. 555 (1992) (standing requirements)