K.W. Ex Rel. D.W. v. Armstrong
2015 U.S. App. LEXIS 9399
9th Cir.2015Background
- Idaho’s Developmental Disabilities (DD) Waiver assigns individualized annual budgets to participants; services in a participant’s plan cannot exceed that budget absent appeal.
- In July 2011 Idaho changed its Budget Tool (weights, variables, and constant), after which many participants received lower calculated budgets. 2011 Budget Notices stated only the new budget amount and did not explain why it decreased.
- Plaintiffs (a class of DD Waiver participants and applicants) sued, alleging the 2011 Budget Notices violated Medicaid fair‑hearing notice regulations and the Due Process Clause. They obtained a preliminary injunction restoring pre‑July 2011 service levels and prohibiting reductions without adequate notice and a fair hearing.
- The district court denied the Department’s proposed revised notices (2012 and 2013 versions) as inadequate, certified the class, and extended the injunction to the class. The Department appealed the injunction extension and sought review of the denial of the 2013 Proposed Notice.
- The Ninth Circuit affirmed the extension of the preliminary injunction but declined pendent appellate jurisdiction to review the district court’s denial of the 2013 Proposed Notice.
Issues
| Issue | Plaintiffs' Argument | Defendant's Argument | Held |
|---|---|---|---|
| Ripeness | Challenge to Budget Notices is ripe because reduced budgets already have concrete effects on services. | Not ripe: mere calculation of a lower budget does not deprive property or trigger hearing rights until services are actually denied. | Court: ripe — plaintiffs already felt concrete effects; review may proceed. |
| Medicaid fair‑hearing notice (42 C.F.R. § 431.206/431.210) | 2011 Budget Notices are "actions" (reductions of covered services) and must state reasons; notices lacked required reasons. | Calculating budgets is not an "action" triggering regulatory notice obligations. | Court: calculating a lower individualized budget is effectively a reduction of covered services and triggers regulatory notice; 2011 notices were inadequate. |
| Procedural Due Process (property interest) | Participants have a legitimate entitlement to waiver services as defined by Idaho statutes/regulations; lower calculated budgets deprive property without adequate notice. | Any expectancy is limited by annual reevaluation; no cognizable property interest in continuing budgeted amount year‑to‑year. | Court: participants have a property interest created by Idaho law; lower calculated budgets likely effect deprivation and require adequate notice; 2011 notices were constitutionally inadequate. |
| Eleventh Amendment / prospective relief | Plaintiffs seek injunctive relief restoring budgets prospectively; such relief is permissible against state officials. | Injunction improperly awards retrospective relief against the State. | Court: injunction is prospective (restoring prior budget levels going forward) and allowed under Ex parte Young principles. |
| Pendent appellate jurisdiction over denial of 2013 Proposed Notice | N/A (plaintiffs opposed notice) | Department: appellate review proper alongside appeal of injunction extension. | Court: declines pendent jurisdiction — denial of the proposed notice is neither inextricably intertwined with nor necessary to meaningfully review the injunction extension; Department may seek review after final judgment. |
Key Cases Cited
- Nat’l Park Hospitality Ass’n v. Dep’t of Interior, 538 U.S. 803 (ripeness framework for agency action)
- Abbott Labs. v. Gardner, 387 U.S. 136 (ripeness principles)
- Goldberg v. Kelly, 397 U.S. 254 (procedural due process for termination/reduction of public benefits)
- Bd. of Regents of State Colls. v. Roth, 408 U.S. 564 (property‑interest test for due process)
- Ex parte Young, 209 U.S. 123 (prospective injunctive relief against state officials)
- Edelman v. Jordan, 415 U.S. 651 (limits on retrospective relief under Eleventh Amendment)
- Winter v. Natural Res. Def. Council, 555 U.S. 7 (preliminary injunction standard)
- Meredith v. Oregon, 321 F.3d 807 (pendent appellate jurisdiction limits)
- Swint v. Chambers Cnty. Comm’n, 514 U.S. 35 (standards for appellate review of nonappealable orders)