344 F. Supp. 3d 856
United States District Court2018Background
- Plaintiffs challenged DHHR's 2014 I/DD Waiver service-authorization system, which used a proprietary APS algorithm to set individualized budgets and allegedly resulted in widespread benefit reductions and inadequate accommodation for people with intellectual/developmental disabilities.
- APS (now Kepro) conducted annual assessments, applied a secret algorithm to produce budgets, and formerly approved services above budget; after cost overruns BMS required second-level BMS approval for exceptions beginning September 2014.
- Plaintiffs sued in 2015 asserting procedural due process (§ 1983), violations of the Medicaid Act, the ADA, and the Rehabilitation Act; the court granted a 2016 preliminary injunction restoring 2014 budgets for affected named plaintiffs.
- DHHR later replaced the challenged system with a transparent budget matrix, revised notices, and an exceptions process; the court found in 2018 that the new system cured the specific due-process problems that supported the injunction and allowed the injunction to phase out.
- Defendant moved to dismiss or for summary judgment asserting the original claims are moot because the challenged system has been abandoned; Plaintiffs counter that harms persist and the new system incorporates problematic elements.
- The court concluded the old system was substantially revised, Defendant met the heavy burden to show voluntary cessation/mootness, Plaintiffs did not amend their complaint to challenge the new system, and no plaintiff had exhausted exceptions/fair-hearing remedies under the new system; the court dismissed the case as moot and denied Plaintiffs’ partial summary judgment.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Mootness / voluntary cessation — whether abandonment of the old system moots the case | The new system still causes harm and incorporates core features of the old system; therefore the dispute remains live | DHHR replaced the challenged system with a substantially different regimen and will not revert; voluntary cessation moots claims | Court: Moot — Defendant met heavy burden; voluntary cessation exception does not apply; claims against old system dismissed |
| Whether Plaintiffs may litigate challenges to the new system under the existing complaint | The Complaint's counts (Medicaid, ADA, Rehab Act) should apply to the new system because it continues prior harms | The Complaint contains no factual allegations about the new system; challenges to the new system require a new/amended complaint | Court: Plaintiffs did not amend; claims in Complaint do not reach the new system; new-system challenges belong in a new suit |
| Ripeness / exhaustion of remedies under the new exceptions process | Plaintiffs contend some class members are already harmed under the new process | Most identified class members had not yet been assigned budgets under the new system or had not used the exceptions/fair-hearing procedures | Court: Not ripe — Plaintiffs failed to show any member exhausted the new remedies or presented concrete instances for review |
| Prudential discretion to withhold relief even if not moot | Plaintiffs seek injunctive/declaratory relief restoring prior practices and budgets | Defendant argues relief is unnecessary because the new system addresses prior defects; court should defer until practices are demonstrated in operation | Court: Exercise of discretion to withhold relief appropriate; better to allow full implementation and let future plaintiffs challenge unlawful features if they arise |
Key Cases Cited
- Friends of the Earth, Inc. v. Laidlaw Envtl. Servs. (TOC), 528 U.S. 167 (2000) (defendant asserting mootness after voluntary cessation bears heavy burden)
- Turner v. Rogers, 564 U.S. 431 (2011) (capable-of-repetition-yet-evading-review standard articulated)
- Lamar Advertising of Penn, LLC v. Town of Orchard Park, 356 F.3d 365 (2d Cir. 2004) (amendment of challenged ordinance can moot claims not amended in the complaint)
- Valdivia v. Brown, 956 F. Supp. 2d 1125 (E.D. Cal. 2013) (substantially different replacement policy requires new litigation to test due process)
- Grutzmacher v. Howard County, 851 F.3d 332 (4th Cir. 2017) (government met burden to show it would not revert to challenged policies based on official sworn statements)
- Phillips v. McLaughlin, 854 F.2d 673 (4th Cir. 1988) (prospective relief based on a regulation that no longer applies does not present a live case or controversy)