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Mitchell v. Community Mental Health of Central Michigan

United States District Court, E.D. Michigan, Southern Division

March 22, 2017

THOMAS MITCHELL, through his Guardian, JOHN MITCHELL Plaintiffs,
v.
COMMUNITY MENTAL HEALTH OF CENTRAL MICHIGAN, MICHIGAN DEPARTMENT OF HEALTH AND HUMAN SERVICES, NICK LYON, and GOVERNOR RICK SNYDER, Defendants. JACOB HARTSHORNE, through his Guardians, NANCY and THOMAS HARTCHORNE, Plaintiffs,
v.
COMMUNITY MENTAL HEALTH OF CENTRAL MICHIGAN, MICHIGAN DEPARTMENT OF HEALTH AND HUMAN SERVICES, NICK LYON, and GOVERNOR RICK SNYDER, Defendants.

          Patricia T. Morris Magistrate Judge

          OPINION AND ORDER DENYING MOTIONS FOR PRELIMINARY INJUNCTION AND MOTIONS TO DISMISS

          DAVID M. LAWSON United States District Judge

         These two lawsuits were filed on behalf of two developmentally disabled individuals, Thomas Mitchell and Jacob Hartshorne, who had been receiving in-home Community Living Support (CLS) services through the Michigan Department of Health and Human Services (HHS), administered by a local contract provider, defendant Community Mental Health of Central Michigan (CMHCM). Although the plaintiffs had been receiving 24-hour care, CMHCM reduced the level of covered services furnished to them by eliminating payment for supervisory care while they slept. The change, says CMHCM, was provoked by an internal audit by a newly-employed “Utilization Manager” that disclosed that CMHCM was authorized to furnish CLS services only for face-to-face time with the client and could not be used during periods when the client was asleep. That new interpretation resulted in the service reduction, despite no changes in the law or the plaintiffs' medical status.

         The plaintiffs allege in their complaints that the manner in which CMHCM reduced CLS services violated their right to procedural due process in violation of the Fourteenth Amendment, and it amounts to discrimination under the Americans with Disabilities Act and the Rehabilitation Act. Both plaintiffs filed motions for a preliminary injunction, and the defendants filed motions to dismiss. The two cases were consolidated before this Court for adjudication of the motions.

         After the motions were argued, the Mitchells sought relief again in an administrative appeal, this time successfully, at least for their claim going forward. The Administrative Tribunal ordered CMHCM to provide Medicaid-covered CLS services to Thomas Mitchell, even when he is sleeping. The Mitchells' motion for a preliminary injunction, therefore, is moot, as it seeks only prospective relief.

         The Hartshornes have not sought any additional relief from the state. However, there is no requirement that the plaintiffs must exhaust administrative remedies before baring their claims under 42 U.S.C. § 1983 for violation of their rights to procedural due process or for violations of the ADA or the Rehabilitation Act. Because they have stated viable claims under those statutes, the Court will deny the motions to dismiss. The Hartshornes have alleged in their motion for a preliminary injunction that they will suffer irreparable harm if the supervisory care during sleep hours is eliminated. However, that care continues, albeit at the plaintiff's expense, and, judging from the Mitchells' experience, it appears that the care could be restored if they pursued their administrative remedies. Therefore, the Court will deny the motion for preliminary injunction because they have not demonstrated irreparable harm adequately.

         I. Facts

         These cases were filed in the Northern Division of this Court and were subsequently reassigned to judges in the Southern Division for docket management. At the time of the reassignment, each case had two motions to dismiss and a preliminary injunction motion pending and fully briefed. Because the issues in the pending motions were substantially similar, it was decided that Hartshorne v. Community Mental Health of Central Michigan, Case No. 16-11607, would be reassigned temporarily to the undersigned for the purpose of hearing and deciding motions filed by the parties under Rule 12(b) and Rule 65 of the Federal Rules of Civil Procedure.

         The respective plaintiffs, Thomas Mitchell and Jacob Hartshorne, are two individuals suffering from various forms of developmental disabilities. They both were receiving in-home healthcare under Michigan's Medicaid CLS program until 2015 through defendant HHS. Defendant Rick Snyder, as governor, oversees all departments in Michigan, and defendant Nick Lyons is the director of HHS (collectively “State defendants”). The Medicaid services in the plaintiffs' region are administered by defendant CMHCM. The plaintiffs' services were reduced, omitting nighttime coverage while they are sleeping.

         After the plaintiffs' services were reduced, their guardians each filed requests for administrative hearings challenging the reductions. Mitchell had a full hearing and received a written decision by an Administrative Law Judge finding that the reduction of services was appropriate. Hartshorne withdrew his request the day before his hearing in order to pursue federal claims. The ALJ dismissed the action for failure to appear at the hearing.

         The plaintiffs filed substantially similar three-count complaints alleging a violation of their right to procedural due process under the Fourteenth Amendment via 42 U.S.C. § 1983(Count 1); disability discrimination in violation of Title II of the ADA (Count 2); and violation of the Rehabilitation Act (Count 3).

         A. Medicaid and CLS Services

         Medicaid is a federal program that subsidizes state medical services furnished to, among others, “disabled individuals, whose income and resources are insufficient to meet the costs of necessary medical services.” 42 U.S.C. § 1396-1. The plaintiffs in these related cases are adults with developmental disabilities who qualify for benefits under Medicaid. Under Medicaid, they are eligible for long-term institutional care. The Medicaid statute originally “reflected a congressional policy preference for treatment in the institution over treatment in the community.” Olmstead v. L.C. ex rel. Zimring, 527 U.S. 581, 601 (1999). Since 1981, however, “Medicaid has provided funding for state-run home and community-based care through a waiver program.” Id. at 601(citing 42 U.S.C. § 1396n(c)). Through that program, Congress recognized that allowing individuals with disabilities to reside in a community setting can both save money and improve care. See Price v. Medicaid Dir., 838 F.3d 739, 742-43 (6th Cir. 2016). The plaintiffs' CLS services were authorized under a Medicaid waiver program. See Michigan's Medicaid Provider Manual at 102. They have chosen to live with their respective families in a community setting.

         The State of Michigan, through HHS, provides mental health services to qualified individuals. Defendant CMHCM is under contract with HHS to provide Medicaid-covered services to people who reside in a specified service area. As part of the plaintiffs' Habilitation Supports Waiver Program, they received CLS services, which the plaintiffs allege included medically necessary supervisory care at night while the plaintiffs slept. Mitchell received the nighttime supervision for approximately seven months, and Hartshorne received the services for approximately five years. In the summer of 2015, the plaintiffs' CLS services were reduced by eliminating the nighttime supervisory care.

         The plaintiffs contend that the reduction of services was erroneous because CLS services are intended to increase or maintain personal self-sufficiency, facilitating an individual's achievement of his goals of community inclusion and participation, independence or productivity. The defendants contend that they had misinterpreted their Medicaid Service Provider Manual, and that their actions amounted to a correction, as CLS is available only for face-to-face encounters, which excludes sleep time. They reason that the purpose of CLS is not to furnish supervision, but to assist in skill development. CLS cannot be provided when a client is asleep, they say, because there would be no training or learning component.

         B. Thomas Mitchell

         Plaintiff Thomas Mitchell is a 30-year-old Medicaid beneficiary with severe intellectual disabilities and a seizure disorder, who qualifies as a person with a developmental disability under Michigan Compiled Laws 330.1100a(25). Mitchell alleges that he moved from a licensed adult foster care home in August 2014 to his own apartment in the lower level of his father's Mount Pleasant, Michigan home. On March 6, 2015, Thomas's father met with CMHCM's case manager, Lorraine Crawford, who informed him that CMHCM would no longer pay for any CLS services while Thomas was asleep at night. The Mitchells allege that at no time did CMHCM send a termination notice of the CLS nighttime supervision to them, detailing the reasons for the change in coverage, as required by law.

         The Mitchells' complaint does not make clear whether the notice was not provided at all or was merely deficient. It appears that CMHCM understood the plaintiffs' allegation to mean there was no notice whatsoever. Therefore, rather than responding to an allegedly deficient notice, CMHCM responded by attaching to its motion a March 6, 2015 Action Notice that it asserts Mitchell received at a meeting on that same day. CMHCM does not discuss the adequacy of the Action Notice.

         The Action Notice, in part, says the following:

This is to notify you that CMH for Central Michigan has made the following decision(s) about the service(s) you have asked for or the service(s) you get from us. This does not mean that you will lose your Medicaid and will not affect other Medicaid services you are receiving, or may need in the future.
The Action we have take is:
The service(s) you requested will be Authorized per your revised Individual Plan of Service. H2015 - Comprehensive Community Support Services T2002 - Non-emergency Transportation; per diem T1016 - Supports Coordination T2025 - Fiscal Intermediary Services T2036 - Therapeutic Camping, Overnight H2015 TT -Comprehensive Community Support Services H2014 TT - Skill Building & Training/ Out-of-Home Non-Vocational Habilitation (HAB).
Effective Date: 3/6/2015 The reason for the Action is:
Other: Medicaid Provider Manual Community Living Supports section 15.1 CLS may be provided as a complement to, and in conjunction with, not to supplant home help.

         Mitchell CMHCM MTD, dkt. #10, Ex. A, Action Notice (emphasis in original). Additionally, the Action Notice explained the plaintiff's rights should he disagree with the action taken. It also contains the following provision:

IMPORTANT NOTE: If you file an appeal and/or a hearing you may ask your primary clinician or their supervisor that your services remain in place if you appeal within 12 calendar days of this notice, if the authorization has not expired, if the action is a reduction, termination, or suspension, and if the authorization was ordered by an authorized provider. If services remain in place, you may have to repay the cost of these services if the hearing or appeal upholds the decision, if you withdraw your appeal or hearing request, or if you or your representative does not attend the hearing.

Ibid.

         After the date of the Action Notice, the Mitchells learned, although they do not say how, that the reason for the reduction of CLS services was because CMHCM had interpreted the CLS provisions to exclude supervisory care provided to consumers while they sleep. The plaintiff alleges that this new interpretation of the CLS services occurred despite there being no changes in the law and no changes in Thomas's medical status. Nor were there any changes in Michigan's Habilitation Supports Waiver or the Michigan Medicaid Provider Manual. The plaintiffs contest the defendants' interpretation and alleges that CMH's Pre-Paid Inpatient Health Plan codes expressly provide for consumer care while they sleep. They also allege that without payment for the medically necessary supervisory care while he sleeps, Thomas's condition will likely deteriorate and he will be in danger of institutionalization, or of being placed into a more restrictive setting.

         The Mitchells filed a request for a hearing before an administrative law judge (ALJ) through the State of Michigan Administrative Hearing System for the Department of Health and Human Services. CMHCM furnished a transcript of the hearing as an exhibit to its motion to dismiss. Although not part of the pleadings, the transcript discloses that, according to the ALJ, Thomas's father received the Action Notice on March 6, 2015; he filled out a request for a hearing on March 9, 2015; filed it on March 16, 2015; and an in-person administrative hearing was held on July 30, 2015. The ALJ made a factual finding that on March 6, 2015, Thomas's guardian met with a CMHCM case manager to complete an addendum to Thomas's Person Centered Plan. At the meeting, Thomas's father was informed that the CLS hours had to be for face-to-face time with Thomas and could no longer be used during periods when Thomas was asleep. Following the meeting, Thomas's CLS hours were reduced from 97 hours per week to 80.73 hours per week. The sole issue before the ALJ was whether CMHCM properly reduced Thomas's CLS services and instructed his guardian that CLS could no longer be used while Thomas was sleeping.

         During the July 30, 2015 hearing, Thomas's father testified that he had been informed months in advance that the use of CLS services while consumers were sleeping was going to be discontinued. He also testified that he was not informed that the CLS services could continue while an appeal was pending. The ALJ reviewed the CLS definitions and determined that allocation of CLS hours cannot be used while Thomas is asleep. The ALJ's decision concluded with the explanation that Thomas's father could appeal the ALJ's decision within 30 days. No such appeal was filed.

         C. Jacob Hartshorne

         Plaintiff Jacob Hartshorne is a 26-year-old Medicaid beneficiary who is blind, deaf, and has severe intellectual disabilities and qualifies as a person with a developmental disability under Michigan Compiled Laws § 330.1100a(25). Jacob's parents, Nancy and Timothy Hartshorne, were appointed Jacob's plenary guardians on June 1, 2007. Jacob resides in his parents' home in Mount Pleasant, Michigan. He has been receiving CLS services since June 2010, which include medically necessary supervision at night due to his medical conditions.

         In the summer of 2015, the Hartshornes allege, defendant CMHCM unilaterally reduced Jacob's CLS hours despite no change in Jacob's medical condition, no change in the law, and no change in Michigan's Habilitation Supports Waiver or the Michigan Medicaid Provider Manual. The Hartshornes allege that the effective date of the reduction of services was July 13, 2015. They likewise allege that the defendants did not send a termination notice of the CLS nighttime supervision to them detailing the reasons for the change in coverage, as required by law. Defendant CMHCM contends that the Hartshornes did in fact receive notice and attached to its motion to dismiss an Action Notice with an effective date of June 19, 2015, which includes a statement that the services would be extended until July 13, 2015. The plaintiff does not contest that the notice was received.

         The Action Notice, in part, says the following:

This is to notify you that CMH for Central Michigan has made the following decision(s) about the service(s) you have asked for or the service(s) you get from us. This does not mean that you will lose your Medicaid and will not affect other Medicaid ...

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