On October 16, 2014, the plaintiffs, three individuals with significant physical disabilities requiring substantial medical care, filed this lawsuit against the California Department of Health Care Services (“DHCS”) in the U.S. District Court for the Central District of California. The plaintiffs alleged that the state had violated Section II of the Americans with Disabilities Act (“ADA”) and Section 504 of the Rehabilitation Act, which require public entities to provide services to persons with disabilities in the most integrated setting appropriate to their needs and to prevent unnecessary institutionalization. The plaintiffs sought declaratory and injunctive relief, including a temporary restraining order and preliminary injunction preventing DHCS from reducing at-home medical care and support for the plaintiffs, and a permanent injunction preventing unnecessary institutionalization in the future. They also sought attorney's fees. The plaintiffs were represented by Disability Rights California.

At the time, the plaintiffs, who were once institutionalized because of their disabilities, were living in their own homes where they received Medicaid-funded nursing and attendant care through the California Medi-Cal Home and Community Based Nursing Facility/Acute Hospital Waiver Program (“Waiver Program”). They alleged that they were at risk of institutionalization because DHCS maintained unnecessarily low cost limits for these services.

On January 29, 2015, the plaintiffs filed their first amended complaint. The amended complaint added an organizational plaintiff, In Spirit, a non-profit organization that provided financial assistance to persons with disabilities to receive medical care in their home.

On July 7, 2015, the plaintiffs filed a second amended complaint. This complaint added a new named plaintiff, dismissed one of the existing named plaintiffs, elaborated on the factual information, and added a third claim for violations of California state law. On September 23, 2015, In Spirit was voluntarily dismissed as a party in the lawsuit.

On January 26, 2016, the parties held mediation but were unable to reach an agreement. Throughout the mediation, the parties continued to engage in discovery disputes. On March 8, 2016, the defendants filed a motion to dismiss for lack of subject-matter jurisdiction. On March 10, 2016, the plaintiffs moved for summary judgement. District Judge Fernando Olguin denied both motions on April 27, 2016. He further set out deadlines for continued discovery.

On March 29, 2016, The United States Department of Justice, Civil Rights Division ("DOJ") filed a Statement of Interest (SOI) to clarify the defendant’s obligations under the ADA. The DOJ explained that the ADA prohibits unjustified institutionalization and requires individuals with disabilities receive support and services in the most integrated setting as mandated in Olmstead v. L.C., 527 U.S. 581 (1999). The DOJ also clarified that the defendants could not administer the Medicaid waiver without accounting for individual needs and that the integration mandate protects individuals at serious risk of institutionalization. The DOJ filed subsequent SOIs on August 4, 2016 and September 16, 2016, which further clarified the states’ ADA obligations in light of DHCS’s arguments against the plaintiff’s motion for summary judgement.

On July 18, 2016, the plaintiffs again moved for summary judgement, which Judge Olguin denied on August 4, 2016 due to continued factual disputes. Judge Olguin also noted being “deeply troubled” by the defendants’ repeated failure to comply in good faith with discovery requests and threatened to impose sanctions.

On September 7, 2016, the plaintiffs again filed a motion for summary judgement. On June 5, 2017, the Court denied that motion, finding that genuine issues of material fact remained regarding whether or not the California waiver program’s cost limits created a serious risk of institutionalization and whether California Health Services had an existing deinstitutionalization scheme in place that was effective. 2017 WL 10560533.

On June 26, 2017, Judge Olguin issued a scheduling order, establishing deadlines for additional discovery, the plaintiff’s third amended complaint, and a status conference in December 2017.

The parties continued with discovery and it appears they continued engaging in settlement talks as well. On March 14, 2018, the plaintiffs moved to voluntarily dismiss their case without prejudice, and on March 19, 2018, the court granted this motion for voluntary dismissal of most of the case. There was some continued litigation over whether the plaintiffs were entitled to costs and attorneys fees.

The dismissal seems to come from the fact that the Department eventually changed the waiver application process so that decisions would be based on medical necessity without any mention of cost limits. In their motion opposing attorneys fees, the defendants asserted that this made the plaintiffs' claims moot, and that there was no basis for awarding attorneys fees or costs. The plaintiffs argued that the overall course of events demonstrated that this litigation was a significant factor prompting defendants to eliminate waiver cost limits, which created a presumption that plaintiffs were a catalyst and, because defendants could not rebut that presumption, plaintiffs were entitled to attorneys fees and costs under a state statute.

On May 30, 2019, Judge Olguin granted the plaintiffs' motion for attorneys fees. The court found that the plaintiffs litigation led to the elimination of DHCS's cost limits conferred a significant benefit for potentially thousands of people. The elimination of cost limits would ensure that Waiver participants will not have to resort to litigation to secure needed services and that they will be able to remain in their homes, and avoid segregation and isolation.

Sean Mulloy - 10/16/2017
Chris Pollack - 04/24/2019


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