133 F. Supp. 3d 1093
N.D. Ill.2015Background
- Four Medicaid-eligible children receiving in-home shift nursing in Illinois challenge HFS Director Norwood after HFS applied an unpublished eligibility assessment between Jan 2014–Feb 2015 that reduced/terminated services for many previously approved recipients.
- Plaintiffs allege notices of reduction/termination used a form template that (1) failed to identify the standard or specific medical reasons for decisions, (2) provided incorrect or incomplete appeal instructions, and (3) omitted whether benefits continue pending appeal.
- Plaintiffs claim the unpublished standard produced dramatic reductions (only 2% retained prior hours among reviewed cases) and that loss of services risks institutionalization or life‑threatening events.
- They assert federal claims: procedural due process and violations of Medicaid/EPSDT requirements, inadequate notice/appeal rights under Medicaid regulations, failure to consider alternative Medicaid programs, and ADA/Rehabilitation Act claims based on risk of segregation.
- Court entered temporary relief preserving services pending litigation; Director moved to dismiss (Rule 12(b)(6) and 12(b)(1)). The court denied most dismissal arguments but granted dismissal of Claim V without prejudice and found ADA/Rehab Act claims justiciable at this stage.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether HFS used an unwritten, arbitrary eligibility standard in violation of due process (Claim I) | HFS applied a new unpublished assessment that changed outcomes and deprived plaintiffs of clearly articulated standards | HFS relies on existing Illinois regs and says determinations are by consulting physicians under established rules | Court: Denied dismissal — allegations that an unpublished standard produced arbitrary deprivation state a plausible due‑process claim |
| Whether notices complied with 42 C.F.R. § 431.210 and provided adequate reasons and regulatory citations (Claims II & III re: notice/hearing) | Notices stated only an ultimate reason (based on "individual assessment and medical documents") and gave incomplete/misleading appeal info, so plaintiffs couldn't prepare fair hearings | Director contends notice language and availability of hearings satisfy regulatory and due‑process requirements | Court: Denied dismissal — notice language inadequately stated reasons and regulations and provided misleading appeal instructions, stating claims under §§ 431.210 and 431.206(b) |
| Whether HFS’s terminations/reductions violate EPSDT/Medicaid by denying medically necessary services (Claim IV) | Plaintiffs allege treating physicians prescribed necessary hours; HFS terminated/reduced services under unpublished standard, risking severe harm | Director says Illinois may define medical necessity and applied consulting‑physician review under existing regs | Court: Denied dismissal — plaintiffs plausibly alleged that terminations/reductions contradict medically necessary care required by Medicaid and that fact‑finder review is appropriate |
| Whether ADA/Rehabilitation Act claims alleging risk of institutionalization are ripe (Claims VI & VII) | Reduction/termination places plaintiffs at real risk of institutionalization or death; relief under integration mandate is warranted now | Director argues no plaintiff has yet been institutionalized, so ADA/Rehab claims are not ripe (citing Amundson) | Court: Treated challenge as facial and distinguished Amundson; found ADA/Rehab claims justiciable to the extent they challenge failure to determine alternative services before termination |
Key Cases Cited
- Carey v. Quern, 588 F.2d 230 (7th Cir. 1978) (due process requires articulated standards for eligibility decisions)
- White v. Roughton, 530 F.2d 750 (7th Cir. 1976) (unwritten standards governing eligibility violate due process)
- Goldberg v. Kelly, 397 U.S. 254 (U.S. 1970) (welfare benefit termination requires clear notice and opportunity to be heard)
- Featherston v. Stanton, 626 F.2d 591 (7th Cir. 1980) (Medicaid hearing regs incorporate Goldberg due‑process principles)
- Rush v. Parham, 625 F.2d 1150 (5th Cir. 1980) (states may define medical necessity but must do so reasonably)
- Moore v. Reese, 637 F.3d 1220 (11th Cir. 2011) (EPSDT required services must be sufficient in amount, duration, and scope; medical‑necessity disputes are fact questions)
- Amundson v. Wisconsin Dep’t of Health Servs., 721 F.3d 871 (7th Cir. 2013) (ADA/Integration claims unripe absent institutionalization or imminent involuntary placement)