AK et al v. Hamos et al
Filing
45
OPINION: For the reasons stated, the Collaborative's Motion to Dismiss (d/e 41 ) is GRANTED IN PART and DENIED IN THE PART. The claims against the Collaborative brought by Plaintiffs A.K., by and through his mother, S.K; M.L., by and through his mother, V.L.; T.K., by and through her mother, L.S.; T.W., by and through her mother, M.R., A.F., by and through her parents S.F. and M.F.; B.A., by and through her legal guardian, J.A.; and Sa.F., by and through her mother J.F., are DISMISSE D for failure to state a claim. Plaintiffs P.G., by and through his mother, K.G., and C.S. have, for purposes of the Motion to Dismiss, adequately demonstrated that they have standing to bring their claims against the Collaborative. The Collaborative shall file an Answer to the Second Amended Complaint on or before February 7, 2014. Entered by Judge Sue E. Myerscough on 13-3020. (VM, ilcd)
E-FILED
Friday, 24 January, 2014 08:47:36 AM
Clerk, U.S. District Court, ILCD
IN THE UNITED STATES DISTRICT COURT
FOR THE CENTRAL DISTRICT OF ILLINOIS
SPRINGFIELD DIVISION
P.G., by and through his mother,
)
K.G.; A.K., by and through his
)
mother, S.K.; M.L., by and through
)
his mother, V.L.; T.K., by and through )
her mother, L.S.; T.W., by and through )
her mother, M.R., A.F., by and through )
her parents S.F. and M.F.; B.A., by and )
through her legal guardian, J.A.;
)
Sa.F., by and through her mother J.F.; )
and C.S.,
)
)
Plaintiffs,
)
)
v.
)
)
JULIE HAMOS, in her official capacity)
as Director of the Illinois Department )
of Healthcare and Family Services;
)
MICHELLE R.B. SADDLER, in her
)
official capacity as Secretary of the
)
Department of Human Services; and )
THE ILLINOIS MENTAL HEALTH )
COLLABORATIVE FOR ACCESS
)
AND CHOICE,
)
)
Defendants.
)
No. 13-3020
OPINION
SUE E. MYERSCOUGH, U.S. District Judge:
This cause is before the Court on the Motion to Dismiss filed by
Defendant The Illinois Mental Health Collaborative For Access and
Choice (the Collaborative) (d/e 41). The Motion is GRANTED IN
PART and DENIED IN PART. Plaintiffs A.K., by and through his
mother, S.K; M.L., by and through his mother, V.L.; T.K., by and
through her mother, L.S.; T.W., by and through her mother, M.R.; A.F.,
by and through her parents S.F. and M.F.; B.A., by and through her legal
guardian, J.A.; and Sa.F., by and through her mother J.F., concede that
they have failed to state a claim against the Collaborative. Therefore,
those claims are dismissed. However, Plaintiff P.G., by and through his
mother K.G., and Plaintiff C.S. have sufficiently demonstrated, at this
stage of the litigation, standing to bring their claims against the
Collaborative. The motion to dismiss the claims brought by P.G. and
C.S. is denied.
I. FACTS ALLEGED IN THE COMPLAINT
Because Plaintiffs have conceded that Plaintiffs A.K., M.L., T.K.,
T.W., A.F., B.A., and Sa.F. failed to state a claim against the
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Collaborative, the Court will only recite the factual allegations relating to
P.G. and C.S.’s claims against the Collaborative.
Plaintiffs P.G. and C.S. are Medicaid-eligible children (under age
21) with mental health disorders who allege they are not being provided
with the treatment required by federal law. Plaintiffs filed suit against
Julie Hamos in her official capacity as Director of the Illinois Department
of Healthcare and Family Services; Michelle R.B. Saddler in her official
capacity as Secretary of the Illinois Department of Human Services; and
the Collaborative.
The Illinois Department of Human Services administers the
Individual Care Grant Program, which is partially funded through
Medicaid. Second Am. Compl. ¶ 87. The Individual Care Grant
Program provides funding to parents of severely mentally ill children for
approved clinical programs at residential placements or at community
mental health agencies. Id. ¶ 86.
The Collaborative is an administrative services organization that
oversees services and resources allocated to the Department of Human
Services. Second Am. Compl. ¶ 64. Specifically, the Collaborative
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provides “outsourced administrative functions” to the Department of
Human Services for the Division of Mental Health’s Individual Care
Grant Program. Second Am. Compl. ¶¶ 88-89.
On April 1, 2009, the Collaborative assumed responsibility for the
community-based Individual Care Grant Program. Second Am. Compl. ¶
¶ 94; see also ¶ 92 (as of April 1, 2009, residential and community-based
services were processed through the Collaborative’s billing system).
However, beginning in fiscal year 2012, Individual Care Grant providers
submitted all claims to the Department of Healthcare and Family
Services for processing. Id. ¶ 95. Only Plaintiffs P.G. and C.S. have been
accepted into the Individual Care Grant Program. Id. ¶¶ 112, 199.
Plaintiff P.G. is a Medicaid-eligible, 16 year-old boy who suffers
from the following conditions: Psychotic Disorder, Not Otherwise
Specified; Reactive Attachment Disorder, Inhibitive Type; and
Oppositional Defiant Disorder. Second Am. Compl., ¶ 106. In July
2011, P.G. was accepted into the Individual Care Grant Program. Id. ¶
112.
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In August 2011, P.G. was admitted to Kemmerer Village, a
community residential treatment facility in Assumption, Illinois. Id. ¶
113. P.G.’s placement was funded by the Individual Care Grant
Program. Id. ¶ 114. In January 2013, the Collaborative refused to
authorize funding for P.G.’s placement at Kemmerer Village beyond
January 31, 2013. Id. ¶ 115. On January 25, 2013, Jonna Tyler, a
licensed clinical professional counselor, recommended that P.G. continue
receiving residential treatment. Id. ¶ 117.
Plaintiff C.S. is a 19-year-old male diagnosed with Attention Deficit
Hyperactivity Disorder, Combined Type; Bipolar Disorder, most recently
with a Manic Episode with psychotic feature; and a history of Mild
Mental Retardation. Id. ¶ 197. C.S. was accepted into the Individual
Care Grant Program. Id. ¶ 199. In August 2012, the services C.S.
received through the Individual Care Grant Program were abruptly
terminated. Id. ¶ 200. C.S. attempted to appeal the termination of his
Individual Care Grant services but he never received a response to his
appeal. Id. ¶ 201. On March 15, 2013, Andrew Kim, M.D.,
recommended that C.S. receive residential treatment. Id. ¶ 202.
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Counts I, V, and VI of the Second Amended Complaint are
directed at the Collaborative. Count I alleges pursuant to 42 U.S.C. §
1983 that Defendants are violating the Early and Periodic Screening,
Diagnostic, and Treatment (EPSDT) provisions of the Medicaid Act, 42
U.S.C. § 1396 et seq. Specifically, Plaintiffs allege that Defendants have
failed to provide Plaintiffs with medically necessary services, including
intensive home and community-based services, community residential
services, and/or residential mental health services that Defendants are
mandated to provide under the EPSDT provisions of the Medicaid Act.
In Count V, Plaintiffs P.G. and C.S. bring a claim titled
“Administrative Review—Improper Promulgation of Rule” against
Defendants Saddler and the Collaborative. Plaintiff P.G. alleges that the
Collaborative’s decision to deny P.G. funding for his placement at
Kemmerer Village is a final administrative decision affecting P.G.’s rights.
Second Am. Compl. ¶ 258. Similarly, Plaintiff C.S. alleges that the
Collaborative’s decision to abruptly terminate C.S.’s Individual Care
Grant program benefits is a final decision affecting C.S.’s rights. Id. ¶
259.
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Plaintiffs P.G. and C.S. further allege, on information and belief,
that the Collaborative used criteria other than those specified in 59 Ill.
Admin. Code § 135.20 in deciding to deny Plaintiffs P.G. and C.S.
further funding through the Individual Care Grant Program. Id. ¶ 260.
They claim the Collaborative’s decision to deny Plaintiffs P.G. and C.S.
additional funding was made in reliance on criteria adopted by
Defendants in violation of the Illinois Administrative Procedures Act. Id.
¶ 261. Moreover, according to P.G. and C.S., the decision by Saddler
and the Collaborative to discontinue funding of P.G.’s and C.S’s
treatment was not authorized by Illinois law. Id. ¶ 262.
In Count VI, Plaintiffs P.G. and C.S. bring a claim pursuant to
§ 1983 against Defendants Saddler and the Collaborative. Plaintiffs P.G.
and C.S. allege that as Medicaid recipients, they have a constitutional
right to due process if their requests for Medicaid services are denied,
reduced, terminated, or suspended. Id. ¶ 264. Plaintiff P.G. alleges that
the Collaborative’s decision to deny P.G. funding for his placement at
Kemmerer Village was not made in writing and that Plaintiff P.G. was
not given an opportunity for a fair hearing or an appeal to challenge the
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decision. Id. ¶ 266. Plaintiff C.S. alleges he was not given an
opportunity for a fair hearing or an appeal to challenge the
Collaborative’s decision to deny him funding through the Individual Care
Grant program. Id. ¶ 267.
Plaintiffs P.G. and C.S. seek the following relief: (1) a declaratory
judgment in favor of Plaintiffs declaring that the Defendants’ failure to
comply with the mandates of the Medicaid Act is unlawful; (2) a
permanent injunction enjoining Defendants from subjecting Plaintiffs to
practices that violate their rights under the Medicaid Act; (3) costs,
including reasonable attorney’s fees; and (4) such other relief as the
Court deems just and appropriate.
II. PROCEDURAL BACKGROUND
In January 2013, after the filing of the original Complaint, the
Court granted Plaintiff P.G.’s Motion for Temporary Restraining Order
and ordered Defendants to take immediate and affirmative steps to
arrange and fund Plaintiff P.G.’s medically necessary treatment, including
maintaining P.G.’s placement and Kemmerer Village. See Opinion (d/e
6). The Court scheduled a hearing on P.G.’s Motion for Preliminary
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Injunction. In March 2013, Plaintiff C.S. filed a Motion for Temporary
Restraining Order and a Motion for Preliminary Injunction.
In May 2013, the parties filed a Joint Status Report to the Court.
See d/e 38. The Report indicated that Plaintiffs’ counsel was
withdrawing the motions requesting emergency relief on behalf of P.G.
and C.S. in light of recent changes to the Individual Care Grant Program
that might allow P.G. and C.S. to obtain the needed residential
treatment. Plaintiffs’ counsel sought to withdraw the motions without
prejudice to refiling them if the Individual Care Grant fails to meet P.G.’s
and C.S.’s needs.
In August 2013, the Collaborative filed a Motion to Dismiss the
Second Amended Complaint on two grounds. First, the Collaborative
argues that the claims of Plaintiffs A.K., M.L., T.K., T.W., A.F., B.A., and
Sa.F. against the Collaborative must be dismissed for failure to state a
claim because those Plaintiffs have no connection with the Individual
Care Grant Program. Plaintiffs concede that Plaintiffs A.K., M.L., T.K.,
T.W., A.F., B.A., and Sa.F. have failed to allege a cause of action against
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the Collaborative. Therefore, the claims brought by Plaintiffs A.K., M.L,
T.K., T.W., A.F., B.A., and Sa.F. against the Collaborative are dismissed.
Second, the Collaborative argues that Plaintiffs P.G. and C.S. lack
standing to sue the Collaborative and that the claims against the
Collaborative should be dismissed pursuant to Federal Rule of Civil
Procedure 12(b)(1). The Collaborative argues that Plaintiffs P.G. and
C.S. cannot show that they suffered injuries that are fairly traceable to
action by the Collaborative or that their injuries are likely to be redressed
by a favorable court decision. Plaintiffs P.G. and C.S. respond that they
have standing to sue the Collaborative because they have suffered injuries
that are directly traceable to the Collaborative’s failure to properly
perform its duties.
III. LEGAL STANDARD
The plaintiff, as the party invoking federal jurisdiction, bears the
burden of establishing standing. Scanlan v. Eisenberg, 669 F.3d 838,
841 (7th Cir. 2012). The elements necessary to establish standing are
(1) an injury in fact; (2) an injury that is fairly traceable to the
challenged conduct of the defendant; and (3) a likelihood that the injury
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will be redressed by a favorable decision. Friends of the Earth, Inc. v.
Laidlaw Envtl. Servs. (TOC), Inc., 528 U.S. 167, 180-181 (2000).
When reviewing a motion to dismiss for lack of standing, the court
accepts as true all well-pleaded factual allegations in the complaint and
draws all reasonable inferences in favor of the plaintiff. Scanlan, 669
F.3d at 841. A court may, however, look outside the complaint’s
allegations and consider other evidence submitted by the parties to
determine whether a plaintiff has standing. Warth v. Seldin, 422 U.S.
490, 501 (1975). Moreover, when the defendant produces evidence that
raises a doubt about the plaintiff’s standing, the plaintiff must come
forward with competent proof that standing exists. Apex Digital, Inc. v.
Sears, Roebuck & Co., 572 F.3d 440, 444 (7th Cir. 2009)(distinguishing
between facial and factual challenges to standing).
IV. ANALYSIS
In the Motion to Dismiss, the Collaborative challenges whether
Plaintiffs can show the second and third requirements for standing:
whether the injury is fairly traceable to action by the Collaborative and
whether any injury to P.G. or C.S. is likely to be redressed by a favorable
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decision. Specifically, the Collaborative argues that any injury suffered
by Plaintiff P.G. and C.S. is not fairly traceable to action by the
Collaborative. Collaborative asserts that it had no control over final
decisions made by the Individual Care Grant Program, the Department
of Mental Health, or the funds distributed to providers or children in the
Individual Care Grant Program. Without such control, the Collaborative
contends Plaintiffs cannot trace their injury back to the Collaborative.
The Collaborative further argues that Plaintiffs P.G. and C.S.
cannot demonstrate that their injury is redressable. The Collaborative
asserts that because it lacks the authority to make binding decisions
about a child’s eligibility for Individual Care Grants, any injunctive relief
granted by the Court would not redress Plaintiffs’ alleged injuries.
In support thereof, the Collaborative has submitted the Affidavit of
Scott Permentier, the Chief Executive Officer/Service Center Vice
President of ValueOptions, Inc. d/b/a The Illinois Mental Health
Collaborative for Access and Choice. Aff. ¶ 1. Mr. Permentier states that
in December 2007, Illinois contracted with the Collaborative to provide
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administrative services to the Illinois Department of Mental Health
Individual Care Grant Program. Aff. ¶ 3.
Mr. Permentier asserts that, pursuant to the Contract, the
Collaborative reviewed provider records and parent/guardian submitted
documentation and made funding recommendations to the Individual
Care Grant office regarding initial or continued Individual Care Grant
eligibility for juveniles. Aff. ¶ 4. Funding recommendations made by the
Collaborative were not binding. Aff. ¶ 6. The Collaborative did not pay
Individual Care Grant providers and did not provide benefits to juveniles
in the Individual Care Grant Program. Aff. ¶ 7. The Collaborative was
not the custodian of any funds used to pay benefits under Illinois Care
Grant Program. Aff. ¶ 8. The Collaborative did not own the network of
Individual Care Grant providers and was not involved in the process of
selecting providers or contracting with providers. Aff. ¶ 9. According to
Mr. Permentier, all claims submitted to the Individual Care Grant
Program were adjudicated through the Illinois Department of Health and
Human Services. Aff. ¶ 10. The Collaborative did not participate in the
adjudication of Individual Care Grant claims. Aff. ¶ 10.
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Mr. Permentier further states that the Collaborative did not make
decisions regarding the level of care but only made “funding
recommendations” based on the Illinois Department of Mental Health
Individual Care Grant Medical Necessity Criteria. Aff. ¶ 11. The
Department of Mental Health established all policies and procedures for
the Individual Care Grant provider community. Aff. ¶ 12. The
Collaborative applied such policies and procedures as directed by the
Department of Mental Health. Aff. ¶ 12. According to Mr. Permentier,
the Collaborative neither created nor changed the policies and procedures
of the Individual Care Grant. Aff. ¶ 12. Mr. Permentier further asserts
that the Collaborative did not enforce the provisions of the Individual
Care Grant Program found in 59 Ill. Admin. Code § 135. Aff. ¶ 13.
In contrast to the Collaborative’s evidence, Plaintiffs point to
evidence that shows that the Collaborative had extensive decision-making
authority within the Individual Care Grant Program. See “Individual
Care Grant Program Change in Level of Care Appeal Review Process
Psychiatrist Review of Appeal” (Exhibit D, d/e 43-4) and the “Individual
Care Grant Residential Treatment and Community-Based Provider
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Handbook” (Exhibit E, d/e 43-5). According to the documents
submitted by Plaintiffs, the Collaborative monitored youths’ progress in
treatment by participating in “quarterly staffings,” authorized residential
services, assisted with transition to community services and/or discharge
planning, applied policies and procedures as directed by the Department
of Mental Health, and made decisions to change individuals’ level of
care. See Response, p. 7-10, citing Exhibits D and E.
To meet the “causation” requirement for standing, Plaintiffs P.G.
and C.S. must show that their injury is fairly traceable to action taken by
the Collaborative. See Bennett v. Spear, 520 U.S. 154, 168 (1997).
However, the Collaborative’s action does not have to be the last step in
the chain of causation. See id. It is sufficient that Plaintiffs P.G. and
C.S. demonstrate that the Collaborative’s actions necessarily caused a
third party to injure them. Id. (holding that while an injury is not fairly
traceable if it is the result of independent action of a third party not
before the court, “that does not exclude injury produced by
determinative or coercive effect upon the action of someone else”)
(citations and additional quotations omitted); see also B.J. v. Homewood
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Flossmoor CHSD #233, --- F.Supp.2d ---, 2013 WL 6182906, at *3
(N.D. Ill. Nov. 26, 2013) (noting that the “traceability and redressability
prongs of the standing analysis are problematic when a third party must
act in order for an injury to arise or be redressed, or when an
independent decision precludes relief to a plaintiff” but finding the
allegations in the complaint sufficient to support standing).
At this stage of the litigation, Plaintiffs P.G. and C.S. have
sufficiently demonstrated they have suffered an injury fairly traceable to
the Collaborative’s actions. Plaintiffs have presented evidence that the
Collaborative had extensive decision-making authority regarding the
Individual Care Grant Program. Plaintiffs have also alleged that the
Collaborative made the decision to deny them funding under the
Individual Care Grant Program. Plaintiffs P.G. and C.S. allege that they
have not been given the opportunity to appeal that decision, thereby
making the Collaborative’s decision the final decision.
Further, because Plaintiffs P.G. and C.S. have demonstrated an
injury fairly traceable to the Collaborative’s actions, they have also
demonstrated a likelihood that the injury will be redressed by a favorable
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decision. Plaintiffs seek a declaration that the Defendants’ failures to
comply with the mandates of the Medicaid Act are unlawful. Plaintiffs
also seek an order enjoining Defendants from subjecting them to
practices that violate their rights under the Medicaid Act. Such relief
would redress Plaintiffs P.G.’s and C.S.’s injuries.
The Court recognizes the existing factual disputes and the Court’s
authority to hold an evidentiary hearing. See, e.g., Apex, 572 F.3d at
444-45 (noting the district court’s authority to hold an evidentiary
hearing and noting that once the defendant came forward with evidence
that plaintiff lacked standing, the plaintiff had to come forward with
competent proof of standing). However, the disputed factual issues
would be better addressed after the parties have had the opportunity to
conduct discovery. See, e.g., Access 4 All, Inc. v. Chicago Grande, Inc.,
2007 WL 1438167 (N.D. Ill. May 10, 2007) (denying motion to dismiss
with leave to raise the standing issue after discovery).
Therefore, the Collaborative’s Motion to Dismiss the claims
brought by Plaintiffs P.G. and C.S. is DENIED without prejudice to raise
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the standing issue after jurisdictional discovery is complete. The
Collaborative may also request an evidentiary hearing.
V. CONCLUSION
For the reasons stated, the Collaborative’s Motion to Dismiss (d/e
41) is GRANTED IN PART and DENIED IN THE PART. The claims
against the Collaborative brought by Plaintiffs A.K., by and through his
mother, S.K; M.L., by and through his mother, V.L.; T.K., by and
through her mother, L.S.; T.W., by and through her mother, M.R., A.F.,
by and through her parents S.F. and M.F.; B.A., by and through her legal
guardian, J.A.; and Sa.F., by and through her mother J.F., are
DISMISSED for failure to state a claim. Plaintiffs P.G., by and through
his mother, K.G., and C.S. have, for purposes of the Motion to Dismiss,
adequately demonstrated that they have standing to bring their claims
against the Collaborative. The Collaborative shall file an Answer to the
Second Amended Complaint on or before February 7, 2014.
ENTER: January 24, 2014
FOR THE COURT:
s/ Sue E. Myerscough
SUE E. MYERSCOUGH
UNITED STATES DISTRICT JUDGE
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