Inclusion, Inc. v. Armstrong
835 F. Supp. 2d 960
D. Idaho2011Background
- Plaintiffs are five Idaho corporations providing residential habilitation services to Medicaid participants in supported living settings in Idaho.
- Residential habilitation covers skills training, decision-making, money management, socialization, mobility, behavior management, grooming, bathing, meals, medications, and related tasks.
- Defendants are Richard Armstrong, IDHW Director, and Leslie Clement, IDHW Deputy Director and former Medicaid Administrator.
- Idaho participates in Medicaid under a state plan approved by CMS, with § 30A requiring rates to be set to support efficient, economical, quality care.
- Idaho’s reimbursement rates were set in July 2006 after onsite observations and agency surveys; subsequent cost studies showed higher actual costs, but rates were not amended.
- State law IC § 56-118 required updating reimbursement methodologies based on providers’ actual costs; JVGA conducted cost studies and recommended higher rates, which Idaho did not adopt due to funding constraints.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether IDHW’s inaction to amend rates violates § 30A. | Plaintiffs argue costs exceed 2006 rates and must be reflected. | Defendants contend current rates are consistent with efficiency and quality under budgetary limits. | Yes; summary judgment for Plaintiffs on inaction claim. |
Key Cases Cited
- Indep. Living Ctr. v. Maxwell-Jolly, 572 F.3d 644 (9th Cir. 2009) (requirement to rely on responsible cost studies for rate setting)
- Orthopaedic Hosp. v. Belshe, 103 F.3d 1491 (9th Cir. 1997) (rates must bear a reasonable relationship to costs; cannot rely solely on budgetary reasons)
- Beno v. Shalala, 30 F.3d 1057 (9th Cir. 1994) (cost-based justification required beyond purely budgetary concerns)
- Sanchez v. Johnson, 416 F.3d 1051 (9th Cir. 2005) (historical context for § 1915(c) waivers and community-based services)
- Maxwell-Jolly v. Indep. Living Ctr. of So. Cal., 131 F. Ct. 992 (U.S. Supreme Court cert. denied) (—) (Supreme Court denial of cert. leaves Ninth Circuit framework intact ( Maxwell-Jolly related))