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Case Name L.S. v. Delia PB-NC-0003
Docket / Court 5:11-cv-00354-FL ( E.D.N.C. )
State/Territory North Carolina
Case Type(s) Disability Rights-Pub. Accom.
Public Benefits / Government Services
Special Collection Olmstead Cases
Attorney Organization Legal Services/Legal Aid
NDRN/Protection & Advocacy Organizations
Case Summary
In July 2011, a group of minor children with developmental disabilities filed this civil rights class action in the U.S. District Court for the Eastern District of North Carolina to prevent reductions in Medicaid waiver services. The plaintiffs sued the Secretary of the North Carolina Department of ... read more >
In July 2011, a group of minor children with developmental disabilities filed this civil rights class action in the U.S. District Court for the Eastern District of North Carolina to prevent reductions in Medicaid waiver services. The plaintiffs sued the Secretary of the North Carolina Department of Health and Human Services (NCDHHS) and Piedmont Behavioral Healthcare (PBH). The plaintiffs had received home-based Medicaid-funded services through the North Carolina "Innovations Waiver." On July 1, 2011, it was announced that the plaintiffs' services would be reduced because Piedmont Behavioral Health (PBH), a contractor of the state health department, implemented a new system to determine which services were "medically necessary." The plaintiffs claimed that although their medical conditions remained constant, essential health services had been unreasonably and arbitrarily reduced by PBH's "Support Needs Matrix" and that they had not been offered an avenue to appeal their service reductions. They alleged that some plaintiffs would be threatened with placement in institutional settings far from their communities if the services needed to remain at home were not reinstated. According to the plaintiffs, this new reduction of services violated the U.S. Constitution's guarantee of due process and the federal Medicaid statute. They requested class certification, declaratory relief, preliminary relief, permanent injunctive relief, and attorneys' fees.

The plaintiffs filed for class certification and for a preliminary injunction on August 29, 2011. After a period of discovery and a controversy regarding the disqualification of counsel and a motion to intervene, the plaintiffs moved for a temporary restraining order on December 20, 2011. District Judge Louise Wood Flanagan denied this motion on December 28, 2011, but noted that the motion for preliminary injunctive relief was still pending. After resolving the disqualification issue, the court held a hearing on the motion for preliminary relief in March 2012. On March 29, the court granted the plaintiffs' motion and certified the class. The court found that the plaintiffs had demonstrated a likelihood of success on the merits, in part because federal Medicaid provides that adequate notice and a fair hearing process be made available before denying benefits, and there was no notice or available appeal here. Such a process is also required by the Constitution and the plaintiffs had also demonstrated irreparable harm.

PBH appealed the preliminary injunction to the U.S. Court of Appeals for the Fourth Circuit, which affirmed the District Court's decision on May 10, 2013. K.C. ex rel. Africa H. v. Shipman, 716 F.3d 107 (4th Cir. 2013). The Fourth Circuit held that it was speculative at best whether a decision in the appeal would enable PBH to engage in the conduct that the District Court enjoined. The Court explained that, because the NCDHHS had not appealed the grant of the preliminary injunction, the NCDHHS would remain obligated to obey the injunction, thus making PBH bound to comply with the injunction regardless of any appellate decision. The Court cited two reasons why PBH would still be required to follow the injunction. First, Federal Rule of Civil Procedure 65(d)(2) requires that any injunction binding named parties also binds the parties' agents. Because PBH was an agent of the NCDHHS due to its contract to administer plaintiffs’ Medicaid services on behalf of the state, it would be bound to follow the injunction under Rule 65(d)(2). Second, the Medicaid statute requires each state to designate a single state agency to administer its Medicaid plan, which is the NCDHHS in this case. Therefore, the NCDHHS's decision not to appeal the preliminary injunction controls.

Following the Fourth Circuit's decision in May 2013, the parties engaged in extensive efforts to reach a settlement agreement. On December 12, 2014, the parties submitted a settlement agreement to the court for preliminary approval, notice to class members, scheduling of a fairness hearing, and clarification of the class definition. On January 2, 2015, the court preliminarily approved the proposed settlement agreement pending an opportunity for class members to object. Following a fairness hearing, the court approved the settlement agreement on April 6, 2015. Pursuant to the terms of the settlement agreement, the court dismissed the action with prejudice on December 31, 2015.

The settlement agreement provided for improved notification and grievance-filing procedures with respect to changes or reductions in services. Additionally, the defendants agreed not to reduce any participant's base budget for one year after the implementation of the agreement and before dismissal of the case. For the two-year period following dismissal of the case, the defendants agreed to notify participants of any base budget reduction. The agreement also provided for increased procedural protections for individuals requesting an authorization of services. The defendants agreed to pay the plaintiffs $375,000 for attorneys' fees, expenses, and costs incurred during the litigation.

The agreement remained in effect for a two-year monitoring period following the dismissal of the case in December 2015. After the monitoring period, no further litigation had taken place and the case is now closed.

Beth Kurtz - 03/05/2013
Eva Richardson - 01/10/2019


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Issues and Causes of Action
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Issues
Benefit Source
Medicaid
Constitutional Clause
Due Process
Content of Injunction
Preliminary relief granted
Defendant-type
Hospital/Health Department
Jurisdiction-wide
Disability
disability, unspecified
Integrated setting
Least restrictive environment
Mental impairment
Discrimination-basis
Disability (inc. reasonable accommodations)
General
Deinstitutionalization/decarceration
Habilitation (training/treatment)
Public benefits (includes, e.g., in-state tuition, govt. jobs)
Reassessment and care planning
Mental Disability
Intellectual/developmental disability, unspecified
Plaintiff Type
Private Plaintiff
Causes of Action 42 U.S.C. § 1983
Declaratory Judgment Act, 28 U.S.C. § 2201
Title XIX of the Social Security (Medicaid) Act, 42 U.S.C §1396
Defendant(s) NC Department of Health and Human Services
Piedmont Behavioral Healthcare (PBH)
Plaintiff Description Individuals with developmental disabilities who receive home-based Medicaid-funded services under North Carolina's "Innovations Waiver."
Indexed Lawyer Organizations Legal Services/Legal Aid
NDRN/Protection & Advocacy Organizations
Class action status sought Yes
Class action status granted Yes
Filed Pro Se No
Prevailing Party Plaintiff
Public Int. Lawyer Yes
Nature of Relief Preliminary injunction / Temp. restraining order
Attorneys fees
Injunction / Injunctive-like Settlement
Source of Relief Settlement
Form of Settlement Court Approved Settlement or Consent Decree
Order Duration 2015 - 2017
Filing Year 2011
Case Closing Year 2017
Case Ongoing No
Additional Resources
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Docket(s)
5:11−cv−00354 (E.D.N.C.)
PB-NC-0003-9000.pdf | Detail
Date: 12/31/2015
Source: PACER [Public Access to Court Electronic Records]
General Documents
Class Action Complaint [ECF# 6]
PB-NC-0003-0001.pdf | Detail
Date: 08/01/2011
Source: PACER [Public Access to Court Electronic Records]
Order Denying Temporary Relief [ECF# 19] (E.D.N.C.)
PB-NC-0003-0003.pdf | Detail
Date: 08/12/2011
Source: PACER [Public Access to Court Electronic Records]
Motion for Preliminary Injunction [ECF# 31]
PB-NC-0003-0011.pdf | Detail
Date: 08/24/2011
Source: PACER [Public Access to Court Electronic Records]
Memorandum of Law in Support of Motion for Preliminary Injunction [ECF# 32]
PB-NC-0003-0018.pdf | Detail
Date: 08/24/2011
Source: PACER [Public Access to Court Electronic Records]
Plaintiff's Motion for Class Certification [ECF# 34]
PB-NC-0003-0006.pdf | Detail
Date: 08/29/2011
Source: PACER [Public Access to Court Electronic Records]
Memorandum in Support of the Plaintiff's Motion for Class Certification [ECF# 35]
PB-NC-0003-0004.pdf | Detail
Date: 08/29/2011
Source: PACER [Public Access to Court Electronic Records]
Answer and Affirmative Defenses of Defendants Pamela L. Shipman and PBH [ECF# 38]
PB-NC-0003-0008.pdf | Detail
Date: 08/29/2011
Source: PACER [Public Access to Court Electronic Records]
Order on Intervention [ECF# 67] (2011 WL 6030075) (E.D.N.C.)
PB-NC-0003-0020.pdf | WESTLAW | Detail
Date: 12/05/2011
Source: PACER [Public Access to Court Electronic Records]
Motion for Temporary Restraining Order [ECF# 70]
PB-NC-0003-0009.pdf | Detail
Date: 12/20/2011
Source: PACER [Public Access to Court Electronic Records]
Memorandum of Law in Support of Motion for Temporary Restraining Order [ECF# 71]
PB-NC-0003-0007.pdf | Detail
Date: 12/20/2011
Source: PACER [Public Access to Court Electronic Records]
Defendants Pamela L. Shipman and PBH's Initial Response to Certain Plaintiffs Motion for Temporary Restraining Order [ECF# 73]
PB-NC-0003-0010.pdf | Detail
Date: 12/21/2011
Source: PACER [Public Access to Court Electronic Records]
Plaintiff's Reply in Support of Motion for Temporary Restraining Order [ECF# 75]
PB-NC-0003-0012.pdf | Detail
Date: 12/22/2011
Source: PACER [Public Access to Court Electronic Records]
Order Denying Temporary Restraining Order [ECF# 82] (E.D.N.C.)
PB-NC-0003-0002.pdf | Detail
Date: 12/28/2011
Source: PACER [Public Access to Court Electronic Records]
Defendant Cansler's Response in Opposition to the Motion for Class Certification [ECF# 101]
PB-NC-0003-0013.pdf | Detail
Date: 02/01/2012
Source: PACER [Public Access to Court Electronic Records]
Defendants Pamela L. Shipman and PBH's Memorandum in Opposition to Plaintiffs' Motion for Class Certification [ECF# 103]
PB-NC-0003-0014.pdf | Detail
Date: 02/01/2012
Source: PACER [Public Access to Court Electronic Records]
Defendants Pamela L. Shipman and PBH's Response in Opposition to Plaintiff's Motion for Preliminary Injuction [ECF# 104]
PB-NC-0003-0015.pdf | Detail
Date: 02/01/2012
Source: PACER [Public Access to Court Electronic Records]
Order [ECF# 154] (E.D.N.C.)
PB-NC-0003-0016.pdf | Detail
Date: 03/29/2012
Source: PACER [Public Access to Court Electronic Records]
Notice of Interlocutory Appeal [ECF# 160]
PB-NC-0003-0017.pdf | Detail
Date: 04/27/2012
Source: PACER [Public Access to Court Electronic Records]
Opinion [Ct. of App. ECF# 46] (716 F.3d 107)
PB-NC-0003-0021.pdf | WESTLAW| LEXIS | Detail
Date: 05/10/2013
Source: PACER [Public Access to Court Electronic Records]
Settlement Agreement [ECF# 193]
PB-NC-0003-0022.pdf | Detail
Date: 12/12/2014
Source: PACER [Public Access to Court Electronic Records]
show all people docs
Judges Flanagan, Louise W. (E.D.N.C.) show/hide docs
PB-NC-0003-0002 | PB-NC-0003-0003 | PB-NC-0003-0016 | PB-NC-0003-0020 | PB-NC-0003-9000
Plaintiff's Lawyers Bills, Jennifer L. (Massachusetts) show/hide docs
PB-NC-0003-0001 | PB-NC-0003-0004 | PB-NC-0003-0006 | PB-NC-0003-0007 | PB-NC-0003-0009 | PB-NC-0003-0011 | PB-NC-0003-0012 | PB-NC-0003-0018 | PB-NC-0003-9000
Dhillon, Jina (North Carolina) show/hide docs
PB-NC-0003-0009 | PB-NC-0003-0011 | PB-NC-0003-0012 | PB-NC-0003-0018
McAdoo, Morris Fonville (North Carolina) show/hide docs
PB-NC-0003-0007 | PB-NC-0003-0012 | PB-NC-0003-9000
Perkins, Martha Jane (North Carolina) show/hide docs
PB-NC-0003-0001 | PB-NC-0003-0004 | PB-NC-0003-0006 | PB-NC-0003-0007 | PB-NC-0003-0009 | PB-NC-0003-0011 | PB-NC-0003-0012 | PB-NC-0003-0018 | PB-NC-0003-9000
Rittelmeyer, John R. (North Carolina) show/hide docs
PB-NC-0003-0001 | PB-NC-0003-0004 | PB-NC-0003-0006 | PB-NC-0003-0007 | PB-NC-0003-0009 | PB-NC-0003-0011 | PB-NC-0003-0018 | PB-NC-0003-9000
Sea, Douglas Stuart (North Carolina) show/hide docs
PB-NC-0003-0001 | PB-NC-0003-0004 | PB-NC-0003-0006 | PB-NC-0003-0007 | PB-NC-0003-0009 | PB-NC-0003-0011 | PB-NC-0003-0012 | PB-NC-0003-0018 | PB-NC-0003-9000
Defendant's Lawyers Bost, Alison R. (North Carolina) show/hide docs
PB-NC-0003-9000
Hollander, Reed J. (North Carolina) show/hide docs
PB-NC-0003-0010 | PB-NC-0003-0014 | PB-NC-0003-0015 | PB-NC-0003-0017 | PB-NC-0003-9000
Hollowell, Wallace C. (North Carolina) show/hide docs
PB-NC-0003-0008 | PB-NC-0003-0010 | PB-NC-0003-0014 | PB-NC-0003-0015 | PB-NC-0003-0017 | PB-NC-0003-9000
Martin, Stephen D. (North Carolina) show/hide docs
PB-NC-0003-0008 | PB-NC-0003-0010 | PB-NC-0003-0014 | PB-NC-0003-0015 | PB-NC-0003-0017 | PB-NC-0003-9000
Smith, Belinda A. (North Carolina) show/hide docs
PB-NC-0003-0013 | PB-NC-0003-9000
Stauffer, Iain (North Carolina) show/hide docs
PB-NC-0003-0013 | PB-NC-0003-9000
Wilder, Raboteau T. Jr. (North Carolina) show/hide docs
PB-NC-0003-9000
Wood, Michael T. (North Carolina) show/hide docs
PB-NC-0003-9000

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