Guggenberger et al v. State of Minnesota et al

Filing 112

MEMORANDUM OPINION AND ORDER denying 91 Defendant's Motion to Dismiss. (Written Opinion.) Signed by Judge Donovan W. Frank on 07/06/2017. (RLB)

UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA

Maxwell Mikkelson, by his parents and
Guardians, Scott and Annmarie Mikkelson,
and R.H., a minor child by R.H.’s parent,
Heather Heath, and on behalf of others
similarly situated,

Civil No. 15-3439 (DWF/BRT)

Plaintiffs,
v.

MEMORANDUM
OPINION AND ORDER

Emily Johnson Piper, Commissioner of the
Minnesota Department of Human Services,
Defendant.
________________________________________________________________________
Pamela S. Hoopes, Esq., Barnett I. Rosenfield, Esq., and Steven C. Schmidt, Esq.,
Mid-Minnesota Legal Aid, Minnesota Disability Law Center, and Mark R. Azman, Esq.,
and Shamus P. O’Meara, Esq., O’Meara Leer Wagner & Kohl, PA, counsel for Plaintiffs.
Scott H. Ikeda, Ian M. Welsh, and Aaron Winter, Assistant Attorneys General, Minnesota
Attorney General’s Office, counsel for Defendant.
________________________________________________________________________

INTRODUCTION
This matter is before the Court on the Motion to Dismiss filed by Defendant Emily
Johnson Piper (“Commissioner Johnson Piper” or “Defendant”), Commissioner of the
Minnesota Department of Human Services (“DHS”). (Doc. No. 91.) For the reasons set
forth below, the Court denies the motion.

BACKGROUND 1
I.

Minnesota’s Waiver Services for Individuals with Disabilities
The State of Minnesota participates in Medicaid, a health care program operated

and funded jointly by individual states and the federal government. (Doc. No. 80 (“Third
Am. Compl.”) ¶ 18.) Plaintiffs allege that federal Medicaid requirements obligate
Minnesota to provide various services, including treatment in institutional settings, for
persons with developmental disabilities. (Id. ¶ 19.) As an alternative to providing care
and treatment in institutional settings, Plaintiffs allege that Minnesota may provide Home
and Community Based Waiver Services (“Waiver Services”), which encompass a variety
of services and supports which Plaintiffs allege are “designed to help people with
disabilities live in his or her own home and access his or her community.” (Id. ¶¶ 1, 20.)
Plaintiffs allege that states that choose to offer these optional Waiver Services must do so
in accordance with federal law. (Id. ¶ 21.)
Defendant operates four Waiver Services programs for individuals with
disabilities as part of Minnesota’s Medicaid program known as Medical Assistance
(“MA”). (Id. ¶¶ 29, 30.) According to Plaintiffs, these Waiver Services programs
include the Developmental Disabilities (“DD”) Waiver, the Community Alternatives for

1

In its July 28, 2016 Order, the Court summarized the allegations in the Amended
Complaint in this matter. (See Doc. Nos. 54, 41.) Given the substantial similarities
between the Amended Complaint and the Third Amended Complaint currently at issue,
the factual background in this order largely mirrors the Court’s July 28, 2016 Order.
However, the Court has considered Plaintiff’s Third Amended Complaint anew and has
evaluated Defendant’s Motion to Dismiss in light of the current, operative version of the
complaint.
2

Disabled Individuals (“CADI”) Waiver, the Community Alternative Care (“CAC”)
Waiver, and the Brain Injury (“BI”) Waiver. (Id. ¶ 30.) Plaintiffs allege that Defendant
“serves as the ‘single state agency’ responsible for the administration of the Medicaid
program in Minnesota.” (Id. ¶ 16.) Plaintiffs allege that “Defendant is responsible for
developing and implementing the Medicaid Waiver Services to eligible individuals.”
(Id ¶ 14.) According to Plaintiffs, Defendant is also “responsible for overseeing the
agencies which provide or arrange services to all persons with developmental
disabilities.” (Id. ¶ 16.) Plaintiffs allege that they, along with thousands of similarly
situated individuals, have been deemed eligible for Waiver Services but have been put on
waiting lists for services. (Id. ¶ 41.)
Plaintiffs allege that Minnesota “[c]ounties act as ‘local agencies’ of the state and
Defendant’s agency” to aid in the administration of the Waiver Services programs. (Id.
¶¶ 30, 31.) Specifically, Plaintiffs allege that Defendant identifies each county’s total
budget to spend for each Waiver, and the counties “create individual waiver services
budgets and . . . manage those budgets in the aggregate, pursuant to policies created by
Defendant and within amounts specified by Defendant as available to serve eligible
persons under each waiver.” (Id. ¶¶ 32, 33.) Plaintiffs claim that the counties are
authorized by state statute “to reserve a certain portion of the available funding for
unexpected situations that might arise during the year.” (Id. ¶ 34.) In addition, Plaintiffs
allege that “Defendant also withholds funds under each Waiver to address unexpected,
crisis needs.” (Id.) Plaintiffs assert that these additional reserves withheld by Defendant
“eas[e] the burden on counties to handle all unexpected costs at a local level.” (Id.)
3

Plaintiffs allege that Waiver Services funds are returned to the State’s general fund if
unspent in a given year. (Id. ¶ 36; see also id. ¶ 42.) In particular, Plaintiffs assert that
“[u]nspent Waiver funds are not carried over or otherwise reserved for the Waiver
programs to remove people from the waitlists and pay for Waiver Services in future
years.” (Id. ¶ 36.)
II.

The Named Plaintiffs 2
The two named Plaintiffs in this case allege that they “have not moved up or off

the various wait lists at a reasonable pace or received Waiver Services within a
reasonable time” and that the services they seek “could have been and can be provided
with the unspent or currently available Waiver funds.” (Id. ¶¶ 53, 54.) According to
these individuals, the counties in which they reside “have routinely and repeatedly
maintained reserves and failed to spend all of their available Waiver funds, while
Plaintiffs remained on wait lists or were otherwise denied Waiver Services.” (Id. ¶ 52.)
Plaintiff Maxwell Mikkelson (“Mikkelson”) is a twenty-two-year-old individual
with a developmental disability, autism, and language deficits who desires “to be less
isolated from his community and more independent from his family and paid caregivers.”
(Id. ¶¶ 50, 50.A.) Mikkelson currently “receives personal care assistant services and

2

The Court has been made aware of certain factual developments with respect to
the two named Plaintiffs. For purposes of this order on Defendant’s Motion to Dismiss,
the Court recites these background facts as alleged in Plaintiffs’ Third Amended
Complaint. The factual developments of which the Court has been made aware do not
materially impact the Court’s analysis of Defendant’s Motion to Dismiss which has been
limited by agreement of the parties to Defendant’s Eleventh Amendment and
separation-of-powers arguments.
4

attends a sheltered work shop program.” (Id. ¶ 50.A.) Mikkelson alleges that he needs
DD Waiver Services such as assistive technology, staffing, and respite care to live a more
fully integrated life. (Id. ¶ 50.B.) He alleges that he “has been eligible and waiting for
the DD Waiver since he was approximately 8 years old but has been told at various times
that the waiver is ‘unavailable’ and that there is ‘no funding.’” (Id. ¶ 50.C.) In addition,
Mikkelson asserts that “[i]n 2015, his family was told that waivers were available but he
was never ultimately offered one.” (Id.) He alleges that he has received “few updates on
any progress toward obtaining waiver services” and that he not received a written notice
of denial or information about how to challenge being denied Waiver Services. (Id.)
Plaintiff R.H. is a minor with a severe intellectual disability and autism. (Id. ¶ 51,
51.A.) R.H. needs “significant assistance” with many daily tasks and behaviors, is
nonverbal, and “requires ongoing supervision and intervention for . . . severe
self-injurious behavior and physical aggression.” (Id. ¶¶ 51.A, 51.B.) R.H. alleges that
he has been determined to be eligible for DD Waiver Services but instead receives CADI
Waiver Services. (Id. ¶¶ 51.C, 51.D.) According to R.H., the CADI Waiver “provides an
inadequate level of services and supports.” (Id. ¶ 51.D.) Specifically, R.H. alleges, “the
quantity and quality of services available under this waiver, for R.H., are not sufficient”
because R.H. cannot access needed services “to address R.H.’s significant developmental
delays and to allow R.H. to develop the skills necessary to become more independent and
better access R.H.’s community.” (Id.) According to the Third Amended Complaint,
“R.H. has been told that the DD Waiver would offer R.H. a significantly larger services
budget” through which R.H. could hire trained staff and access and pay for water therapy
5

and other community activities. (Id. ¶ 51.E.) Plaintiffs allege “R.H. has been denied
access to and not permitted to choose the DD Waiver” due to an alleged “policy or
practice of prohibiting people currently on the CADI Waiver from being offered or
otherwise accessing the DD Waiver.” (Id. ¶ 51.F.) According to R.H., “[u]nder
Defendant’s new assessment process, R.H. and other similarly situated individuals who
are otherwise eligible for DD Waiver services are categorically denied access to the DD
Waiver if they receive CADI Waiver Services.” (Id.) R.H. claims that DD Waiver
Services have not been offered as an alternative to CADI Waiver Services and that R.H.
has not been provided written notice of the denial of DD Waiver Services. (Id. ¶ 51.G.)
III.

Plaintiffs’ Claims
Plaintiffs bring their claims on their own behalf and on behalf of a putative class

of similarly situated individuals with disabilities 3 in Minnesota who have applied for and
been deemed eligible for DD Waiver Services but “have been denied or otherwise not
offered” such services. (Id. ¶¶ 55, 56.A.) “As of April 1, 2015,” Plaintiffs allege, “there
were 3,586 persons on wait lists for the DD Waiver.” (Id. ¶ 44.) Plaintiffs claim that
Defendant has “fundamentally mismanage[d]” Minnesota’s Waiver Services programs,
“depriv[ing] thousands of persons with disabilities of available services and supports
intended to help them live independent, inclusive lives in their communities.” (Id. ¶ 1.)
Plaintiffs allege that “Defendant has failed to ensure that otherwise eligible individuals
3

Plaintiffs’ putative class includes individuals who are eligible to receive DD
Waiver Services, and Plaintiffs allege that they and the putative class members are
“substantially limited in major life activities such as learning, working, walking and brain
function.” (Doc. No. 80 (“Third Am. Compl.”) ¶¶ 12, 56.A, 81.)
6

are not improperly placed on wait lists for services when money is available under the
Waivers to serve their needs.” (Id. ¶ 43.)
According to Plaintiffs, Defendant has failed to undertake necessary
administrative steps to remedy underspending by Minnesota counties. (Id.) In addition,
Plaintiffs allege that Defendant does not have an effective and comprehensive plan “for
ensuring that Plaintiffs and members of the Plaintiff class be provided with DD Waiver
Services within the funding appropriated by the Legislature each year, rather than placing
them on wait lists, to enable them to live in the most integrated settings possible,
consistent with their needs and preferences.” (Id. ¶ 88.) Plaintiffs allege that
Defendant’s actions have caused them harm and have caused them to remain isolated
from their communities in a discriminatory manner in violation of federal law. (Id. ¶ 2.)
In particular, Plaintiffs allege that the State and DHS, through Commissioner
Johnson Piper, “unlawfully and unnecessarily placed . . . individuals on wait lists”
notwithstanding “an annual availability of funds for Waiver Services programs.” (Id.)
Plaintiffs allege that Defendant has “improperly allow[ed] over $1 billion of funds
legislatively appropriated for [the Waiver Services] programs to go unspent.” (Id. ¶ 1;
see also id. ¶ 40 (providing a chart identifying unspent DD Waiver funds from 1995 to
2010).) Plaintiffs claim that Defendant allows counties to reserve Waiver Services funds
in amounts that “far exceed[] what is reasonable or necessary.” (Id. ¶ 35.) Specifically,
Plaintiffs allege that “[n]early all of the counties end each Waiver year with a large
reserve of unspent money for each Waiver.” (Id.)

7

To support these allegations, Plaintiffs reference multiple DHS reports
documenting unspent reserves in Minnesota counties between 1995 and 2015. (See
generally id. ¶¶ 37-40.) According to Plaintiffs, DHS has recommended in these reports
that counties reduce their reserves, spend additional funding, and reduce their waiting
lists. (See id. ¶¶ 37, 38.) Specifically, one report notes that many counties “had room in
their budgets to provide additional services or add more participants to programs.” (Id.
¶ 37.) Plaintiffs allege that Defendant’s most recent Waiver Services review reported that
72 out of 81 lead agencies (Minnesota counties) had unspent reserves of 4% or more in
their DD Waiver budgets. (Id. ¶¶ 37, 38.) Of these 72 lead agencies, 30 had reserves of
10% or more. (Id. ¶ 38.) Plaintiffs allege that Defendant stated in a 2013 report
regarding Hennepin County, “[T]here is room to add more participants via new or reuse
slots or service optimization to reduce or eliminate the waiting list and enhance the
quality of participant’s lives through services such as supportive [sic] employment.” (Id.)
According to Plaintiffs, this report also stated, “Typically a 1% to 2% allocation reserve
is more than adequate to manage risk for county [sic] of this size.” (Id.)
Plaintiffs allege that “Defendant failed to spend all funds appropriated for Waiver
Services” in the most recent state fiscal year so that appropriated funds reverted to the
State’s general fund. (Id. ¶ 42.) Plaintiffs allege that they could have received the
services they seek without fundamentally altering the State’s programs or imposing an
undue burden on the State. (Id. ¶ 54.) Specifically, Plaintiffs allege that “[t]he requested
services could have been and can be provided with the unspent or currently available
Waiver funds.” (Id.; see also id. ¶ 87 (“It would not fundamentally alter the DD Waiver
8

program to require Defendant Johnson Piper to spend or cause to be spent all or
substantially all of the money legislatively appropriated each year for eligible persons to
receive DD Waiver Services . . . .”).)
According to Plaintiffs, their lawsuit “arises from the mismanagement by
Defendant of Minnesota’s Waiver Services programs, permitting tens of millions of
available monies to go unspent while needlessly and improperly putting persons eligible
for such services on wait lists.” (Id. ¶ 49.) Plaintiffs assert the following claims:
(1) violation of 42 U.S.C. § 1983 through failure to furnish services with reasonable
promptness in violation of 42 U.S.C. § 1396a(a)(8); (2) violation of 42 U.S.C. § 1983
through failure to inform of feasible alternatives and denial of choice of Waiver Services
in violation of 42 U.S.C. § 1396n(c)(2)(C); (3) violation of 42 U.S.C. § 1983 through a
violation of Plaintiffs’ Due Process rights under the Fourteenth Amendment, the
Medicaid Act, and its implementing regulations; (4) violation of the Americans with
Disabilities Act (“ADA”), 42 U.S.C. § 12132; and (5) violation of § 504 of the
Rehabilitation Act, 29 U.S.C. § 794(a). (Id. ¶¶ 57-97.)
Plaintiffs allege that “Defendant has failed to take administrative steps to insure
[sic] that individuals on the wait lists are removed from the list and provided Waiver
Services at a reasonable pace, within a reasonable amount of time.” (Id. ¶ 45.) Plaintiffs
assert that the failure to provide DD Waiver Services with reasonable promptness is
caused by Defendant’s practices of failing to do the following:
(a) sufficiently use appropriated funding for DD Waiver Services programs;
(b) ensure that local agencies minimize the use of reserves and maximize
the use of available DD Waiver funds; and (c) limit the placement of
9

eligible persons on to wait lists to those instances where waiver money is
not currently, and is not reasonably expected to be, available.
(Id. ¶ 63.) Plaintiffs also allege that Defendant “has failed to inform eligible
individuals . . . of the availability of DD Waiver Services . . . and has denied Plaintiffs
their right to choose DD Waiver Services rather than institutional services or other
services that they might be receiving or for which they might be eligible.” (Id. ¶ 70.)
Further, Plaintiffs allege that eligible individuals who are placed on waiting lists
“are routinely denied advance notice of the decision not to offer them Waiver Services,”
are not informed if they fall into a statutory priority group for allocating Waiver Services,
and are not informed why they are placed or kept on waiting lists or when services may
be offered. (Id. ¶ 46.) Without such information, Plaintiffs allege, individuals have a
limited ability to make informed choices about accepting or applying for other services.
(Id. ¶ 47.) Plaintiffs also allege that individuals on waiting lists “are routinely denied the
opportunity to challenge their placement on a wait list in a hearing on the merits.”
(Id. ¶ 48.) Plaintiffs assert that such alleged due process violations combined with
Defendant’s “policies, practice and funding decisions, and . . . acts or omissions of
allowing wait lists for DD Waiver Services despite available funding” result in
continuing harm. (Id. ¶ 76.) Finally, Plaintiffs contend that Defendant’s “[f]ail[ure] to
provide [DD Waiver Services] despite having the funds available to do so, while
providing Plaintiffs with lesser services that do not foster the same degree of
independence, integration or inclusion, is a form of discrimination based on disability
prohibited by” federal law. (Id. ¶¶ 86, 95.)
10

To remedy their claims, “Plaintiffs demand the Defendant promptly comply with
the law by managing appropriated funds so that persons with disabilities may receive the
services they need and to which they are entitled, allowing them to experience life in the
most independent and integrated settings appropriate to their needs and preferences.” (Id.
¶ 4.) In addition, “Plaintiffs further demand that Defendant fund and provide Waiver
Services with reasonable promptness and at a reasonable pace to members of the plaintiff
class and that the Court enter an order that such funds remain available until members of
the plaintiff class are provided such services.” (Id. ¶ 5.)
Plaintiffs ask the Court to allow this action to proceed as a class action pursuant to
Federal Rule of Civil Procedure 23. (See id. at Prayer for Relief ¶¶ A-D.) Plaintiffs seek
declaratory, injunctive, and other relief to enforce their rights and to remedy Defendant’s
violations of federal law. (See id. ¶¶ E-I.) Specifically, Plaintiffs seek a permanent
injunction requiring Defendant to provide DD Waiver Services to Plaintiffs and similarly
situated individuals “in the most integrated setting appropriate to their individual needs
and preferences consistent with applicable law.” (Id. ¶ F.) Plaintiffs also seek an
injunction “requiring that the Defendant provide DD Waiver Services with reasonable
promptness and at a reasonable pace” and “order[ing] that all funds legislatively
appropriated for DD Waiver Services remain available as lawfully appropriate until
members of [the] plaintiff class are provided such services.” (Id. ¶ G.) In addition,
Plaintiffs seek injunctive relief to ensure that “all persons denied DD Waiver Services
receive proper written notice of that denial.” (Id.)

11

IV.

Procedural Background
On August 28, 2015, the original Complaint in this matter was filed by Kyle

Guggenberger, Jay Hannon, Brianna Hoover, Abigail Pearson, and Amber Brick against
the State of Minnesota, the Minnesota Department of Human Services, and Lucinda E.
Jesson, former Commissioner of the Minnesota Department of Human Services. (Doc.
No. 1.) On October 5, 2015, these Defendants filed a Motion to Dismiss the Complaint.
(Doc. No. 17.)
On December 10, 2015, the parties stipulated to the filing of an Amended
Complaint. (Doc. No. 32.) On December 15, 2015, an Amended Complaint was filed by
Kyle Guggenberger, Jay Hannon, Abigail Pearson, and Amber Brick. (See Doc. Nos. 34,
41.) 4 The Defendants filed a Motion to Dismiss the Amended Complaint the same day.
(Doc. No. 35.) On July 28, 2016, the Court granted in part and denied in part
Defendants’ motion, dismissing the State of Minnesota and the Minnesota Department of
Human Services as parties. (Doc. No. 54.) The Court otherwise denied Defendants’
motion. (Id.) See generally Guggenberger v. Minnesota, 198 F. Supp. 3d 973 (D. Minn.
2016).
On January 20, 2017, the parties stipulated to the filing of a Second Amended
Complaint. (Doc. No. 70.) The Second Amended Complaint was filed on the docket on
January 23, 2017. (Doc. No. 72.) On February 15, 2017, the parties stipulated to the
filing of a Third Amended Complaint. (Doc. No. 77.) The Third Amended Complaint
4

The Amended Complaint was filed incorrectly on December 15, 2015 at Doc.
No. 34 and later re-filed at Doc. No. 41.
12

was filed on the docket on February 17, 2017. (Doc. No. 80 (“Third Am. Compl.”).) The
Third Amended Complaint is brought by Maxwell Mikkelson and R.H. (“Plaintiffs”)
against Commissioner Johnson Piper in her official capacity. (See id.)
On February 21, 2017, Plaintiffs filed a Motion for Class Certification. (Doc.
No. 81.) On March 3, 2017, Defendant filed a Motion to Dismiss Plaintiffs’ Third
Amended Complaint. (Doc. No. 91.) Defendant moved to dismiss Plaintiffs’ claims
under Rules 12(b)(1) and 12(b)(6) of the Federal Rules of Civil Procedure. (See Doc.
Nos. 91, 93.) In response to the Court’s March 13, 2017 Text Only Order, the parties
filed a joint letter on March 16, 2017 apprising the Court of the parties’ positions on how
the Court should proceed in hearing the pending motions. (See Doc. Nos. 97, 98.)
According to this letter, the parties agree that “Defendant’s pending motion to dismiss
may be limited to its Eleventh Amendment and separation of powers arguments. Doc.
No. 93 at 19-22.” (Doc. No. 98.) In addition, the parties agree that “Defendant’s other
arguments raised in the Motion to Dismiss are expressly preserved, the parties’
agreement is not a waiver of Defendant’s arguments, and the agreement is made
consistent with Defendant’s reservation of rights in Doc. No. 77.” (Id.)
Consistent with the parties’ agreement, the Court will evaluate Defendant’s
Motion to Dismiss on only the basis of Defendant’s Eleventh Amendment and
separation-of-powers arguments. The Court acknowledges Defendant’s reservation of
rights as outlined in the parties’ March 16, 2017 joint letter.

13

DISCUSSION
I.

Legal Standard
A motion to dismiss under Federal Rule of Civil Procedure 12(b)(1) challenges the

Court’s subject matter jurisdiction. To survive a motion to dismiss for lack of subject
matter jurisdiction, the party asserting jurisdiction has the burden of proving jurisdiction.
V S Ltd. P’ship v. Dep’t of Hous. & Urban Dev., 235 F.3d 1109, 1112 (8th Cir. 2000).
“Subject-matter jurisdiction is a threshold requirement which must be assured in every
federal case.” Kronholm v. F.D.I.C., 915 F.2d 1171, 1174 (8th Cir. 1990).
A motion to dismiss for lack of subject matter jurisdiction may challenge a
plaintiff’s complaint either on its face or on the factual truthfulness of its averments.
Osborn v. United States, 918 F.2d 724, 729 n.6 (8th Cir. 1990). When a defendant brings
a facial challenge—a challenge that, even if truthful, the facts alleged in a claim are
insufficient to establish jurisdiction—a court reviews the pleadings alone, and the
non-moving party receives the same protections as it would defending against a motion
brought pursuant to Rule 12(b)(6). Id. In a factual challenge to jurisdiction, the court
may consider matters outside the pleadings, and the non-moving party does not benefit
from the safeguards of Rule 12(b)(6). Id. at 728-30 nn.4, 6 (holding that on a
Rule 12(b)(1) motion challenging subject-matter jurisdiction, “[t]he district court has
authority to consider matters outside the pleadings”).
In deciding a motion to dismiss pursuant to Rule 12(b)(6), a court assumes all
facts in the complaint to be true and construes all reasonable inferences from those facts
in the light most favorable to the complainant. Morton v. Becker, 793 F.2d 185, 187 (8th
14

Cir. 1986). In doing so, however, a court need not accept as true wholly conclusory
allegations, Hanten v. Sch. Dist. of Riverview Gardens, 183 F.3d 799, 805 (8th
Cir. 1999), or legal conclusions drawn by the pleader from the facts alleged, Westcott v.
City of Omaha, 901 F.2d 1486, 1488 (8th Cir. 1990). 5
II.

Eleventh Amendment Sovereign Immunity
The Court first considers Defendant’s argument that Plaintiffs seek relief that is

barred under the Eleventh Amendment and principles of sovereign immunity. Defendant
acknowledges that a court may order prospective injunctive relief that imposes a financial
burden on the state, but argues that the relief Plaintiffs seek runs afoul of the Eleventh
Amendment due to state sovereignty concerns. First, Defendant argues that state
sovereignty is particularly important here because the waiting lists are governed by state
law and “are not per se unconstitutional.” (Doc. No. 93 at 20.) Second, Defendant
asserts that “Plaintiffs want this Court to interfere with Defendants’ [sic] management of
state funding by requiring the state to keep ‘available’ legislatively appropriated funds
that would otherwise return to the State treasury.” (Id.) Defendant points out that
granting such relief would infringe upon the Minnesota legislature’s ability to make
decisions regarding the allocation of state resources. Third, Defendant argues that

5

Defendant appears to raise both facial and factual challenges in seeking to dismiss
Plaintiffs’ Third Amended Complaint based on Eleventh Amendment and
separation-of-powers arguments. Although Defendant largely argues that Plaintiffs seek
relief that is plainly barred on its face, Defendant also points to evidence outside of the
Third Amended Complaint regarding Defendant’s implementation of the Olmstead Plan
and the DD Waiver Services program. Whether framed as a facial or a factual challenge,
however, the Court reaches the same conclusion that dismissal is not warranted.
15

Plaintiffs’ lawsuit is not about enforcing future compliance with federal law but about
“control[ling] the appropriation of state funds” by requiring that state funds remain
available or forcing counties to spend all of their Waiver Services funds. (Doc. No. 102
at 3.) Defendant argues that the Ex parte Young exception does not apply because
“[r]ather than asking that Defendants be enjoined in some way that might have a merely
ancillary monetary effect, the expenditure of state funds is the essential relief Plaintiffs
seek.” (Id. at 5.) Finally, Defendant argues that the requested relief is improper in light
of Defendant’s progress toward implementing goals in the State of Minnesota’s Olmstead
Plan. Defendant contends that Plaintiffs’ characterization of the relief they seek
contradicts the actual allegations in the Third Amended Complaint. 6
Plaintiffs, on the other hand, assert that Defendant mischaracterizes the relief
sought. According to Plaintiffs, they “do not allege that Defendant must spend all funds
appropriated for Waiver services, or keep funds available ‘indefinitely’ in order to
comply with federal law.” (Doc. No. 99 at 16-17.) Instead, Plaintiffs argue, they allege
that Defendant has refused to properly utilize appropriated funds in accordance with
federal law to provide them with needed services. Because Plaintiffs seek prospective
declaratory and injunctive relief to assure Defendant’s compliance with federal law, they
argue, Defendant’s Eleventh Amendment sovereign immunity argument fails. According
to Plaintiffs, “[t]hat [their] primary demands may ‘affect the state treasury’ in some way
is a permissible ancillary consequence of the State’s obligation to comply with federal
6

To the extent Defendant’s arguments on this issue overlap with Defendant’s
separation-of-powers arguments, the Court addresses those arguments below.
16

law.” (Id. at 15 (citation omitted).) Plaintiffs point out that they made particular
amendments to their Complaint to comply with the federalism concerns Defendant
previously raised. Finally, Plaintiffs contend that the Olmstead Plan does not support
dismissal based on Eleventh Amendment sovereign immunity. 7
The Court has previously evaluated the applicability of Eleventh Amendment
sovereign immunity in this case in ruling on Defendant’s prior Motion to Dismiss. See
Guggenberger, 198 F. Supp. 3d at 997-1004. There, the Court concluded that the
Amended Complaint was not barred by sovereign immunity. Id. at 1002. The arguments
presently advanced by the parties are largely the same as those previously addressed by
the Court. However, the Court has fully evaluated the parties’ current arguments and the
Third Amended Complaint in light of the relevant governing law. In so doing, the Court
concludes that Eleventh Amendment sovereign immunity does not warrant dismissal of
Plaintiffs’ Third Amended Complaint.
Pursuant to the Eleventh Amendment and longstanding Supreme Court precedent,
states and their agencies are immune from suit in federal court absent waiver or valid
Congressional abrogation. Will v. Mich. Dep’t of State Police, 491 U.S. 58, 66 (1989);
7

Plaintiffs also ask the Court to apply the law-of-the-case doctrine and deny
Defendant’s Motion to Dismiss in its entirety because the Court has previously decided
the legal questions raised by Defendant’s current motion. The Court acknowledges that
the legal issues presented are substantially similar to those previously considered by the
Court in its July 28, 2016 Order. See Guggenberger v. Minnesota, 198 F. Supp. 3d 973,
997-1004 (D. Minn. 2016). However, a district court retains discretion to reevaluate its
decisions notwithstanding law-of-the-case principles. Because Plaintiffs’ Third
Amended Complaint supersedes the Amended Complaint, the Court will engage in a
complete analysis of Defendant’s arguments to assure that Plaintiffs’ current complaint is
not barred by the Eleventh Amendment or separation-of-powers concerns.
17

Edelman v. Jordan, 415 U.S. 651, 662-63 (1974); Doe v. Nebraska, 345 F.3d 593, 597
(8th Cir. 2003); Egerdahl v. Hibbing Cmty. Coll., 72 F.3d 615, 619 (8th Cir. 1995).
However, the Supreme Court has repeatedly affirmed an “important limit” on Eleventh
Amendment sovereign immunity under the Ex parte Young doctrine. See Va. Office for
Prot. & Advocacy v. Stewart (“VOPA”), 563 U.S. 247, 254 (2011); Ex parte Young, 209
U.S. 123, 155-56 (1908); see also Dig. Recognition Network, Inc. v. Hutchinson, 803
F.3d 952, 956 (8th Cir. 2015) (“In Ex Parte Young, the Supreme Court established a
significant exception to [Eleventh Amendment] immunity.”).
Under Ex parte Young and its progeny, state actors sued in their official capacity
are not immune from suits seeking prospective injunctive relief to address ongoing
violations of the Constitution or federal law. Mo. Child Care Ass’n v. Cross, 294 F.3d
1034, 1037 (8th Cir. 2002). This exception to Eleventh Amendment sovereign immunity
is “accepted as necessary to ‘permit the federal courts to vindicate federal rights,’”
VOPA, 563 U.S. at 254-55 (quoting Pennhurst State Sch. & Hosp. v. Halderman, 465
U.S. 89, 105 (1984)), and “exists to ‘preserve the constitutional structure established by
the Supremacy Clause,’” Mo. Child Care Ass’n, 294 F.3d at 1037 (quoting Antrican
ex rel. Antrican v. Odom, 290 F.3d 178, 184 (4th Cir. 2002)).
The Ex parte Young exception to sovereign immunity permits federal courts to
grant prospective relief against state officials in order to enjoin their future compliance
with federal law. Edelman, 415 U.S. at 664. This is true even where the prospective
relief results in “a direct and substantial impact on the state treasury.” Milliken v.
Bradley, 433 U.S. 267, 289 (1977); see also id. at 288-90 (finding an injunctive relief
18

order to be proper despite its explicit requirement that the state bear one half of the cost
of developing a comprehensive educational program). Specifically, “relief that serves
directly to bring an end to a present violation of federal law is not barred by the Eleventh
Amendment even though accompanied by a substantial ancillary effect on the state
treasury.” Papasan v. Allain, 478 U.S. 265, 278 (1986); see also id. at 281-82 (declining
to dismiss on Eleventh Amendment grounds plaintiffs’ claim challenging the state’s
unequal allocation of resources to state school districts even if remedying the disparity
“might require the expenditure of state funds”). In Edelman, the Supreme Court noted
multiple cases where the relief imposed had a permissible impact on the state treasury,
explaining:
State officials, in order to shape their official conduct to the mandate of the
Court’s decrees, would more likely have to spend money from the state
treasury than if they had been left free to pursue their previous course of
conduct. Such an ancillary effect on the state treasury is a permissible and
often an inevitable consequence of the principle announced in Ex parte
Young.
415 U.S. at 667-68 (citation omitted).
However, “[f]ederal courts may not award retrospective relief, for instance, money
damages or its equivalent, if the State invokes its immunity.” Frew ex rel. Frew v.
Hawkins, 540 U.S. 431, 437 (2004). The Ex parte Young doctrine does not permit
granting retroactive relief that requires state officials “to use state funds to make
reparation for the past.” Edelman, 415 U.S. at 665 (quoting Rothstein v. Wyman, 467
F.2d 226, 237 (2d Cir. 1972), cert. denied, 411 U.S. 921 (1973)). In other words, a
federal court may not impose a remedy designed to “bestow an award for accrued
19

monetary liability,” Papasan, 478 U.S. at 282, or “compensat[e] . . . for conduct and
consequences completed in the past,” Milliken, 433 U.S. at 290 n.21.
The line between proper relief under Ex parte Young and relief prohibited by the
Eleventh Amendment “will not in many instances be that between day and night.”
Edelman, 415 U.S. at 667. However, the Supreme Court has clarified that “a court need
only conduct ‘a straightforward inquiry into whether [the] complaint alleges an ongoing
violation of federal law and seeks relief properly characterized as prospective’” to
determine whether Ex parte Young applies. Verizon Md., Inc. v. Pub. Serv. Comm’n of
Md., 535 U.S. 635, 645 (2002) (quoting Idaho v. Coeur d’Alene Tribe of Idaho, 521 U.S.
261, 296 (1997)). Consistent with the Supreme Court’s explanation of the
straightforward inquiry required under Ex parte Young, the Eighth Circuit has clarified
that “[t]he proper focus [of our immunity inquiry] must be directed at whether the
injunctive relief sought is prospective or retroactive in nature,’ and not on ‘an
injunction’s impact on the State’s treasury.’” See Mo. Child Care Ass’n, 294 F.3d at
1042 (quoting Antrican, 290 F.3d at 186)). In short, “[s]tate immunity under the
Eleventh Amendment does not apply to awards for prospective relief, but does bar the
award of any retroactive relief for violations of federal law that would require payment of
funds from a state treasury.” Skelton v. Henry, 390 F.3d 614, 617 (8th Cir. 2004)
(citations omitted).
Thus, the Eighth Circuit has found relief to be barred where it is an improper
retrospective monetary award. See Kittle-Aikeley v. Strong, 844 F.3d 727, 742 (8th Cir.
2016) (reversing and vacating a district court order requiring a $50 refund to students
20

who had paid a state college for unconstitutional drug testing); cf. Skelton, 390 F.3d at
617-18 & n.3 (“The relief the plaintiffs seek, for past violations of federal regulations,
would be paid out of the Missouri treasury and falls squarely within the bar of the
Eleventh Amendment.”). It has repeatedly described improper relief under the Eleventh
Amendment as “damages.” See Montgomery v. City of Ames, 829 F.3d 968, 973 (8th Cir.
2016) (“[T]he State and its agencies are immune from suits for damages.”); Serna v.
Goodno, 567 F.3d 944, 952 (8th Cir. 2009) (“[T]he Eleventh Amendment bars damages
claims against the states, but generally does not bar claims for prospective injunctive
relief against public officials in their official capacities.”); Gibson v. Ark. Dep’t of Corr.,
265 F.3d 718, 720 (8th Cir. 2001) (“The Ex parte Young doctrine permits only
prospective injunctive relief; no money damages are available.”).
However, the Eighth Circuit has found no Eleventh Amendment immunity against
prospective relief even if such relief has a monetary impact upon the state. See Love v.
McCown, 38 F. App’x 355, 355-57 (8th Cir. 2002) (affirming order directing state
department of corrections to provide “various kosher food items and weekly deposits of
$15 [for purchasing kosher food]” for an individual in prison); Randolph v. Rodgers, 253
F.3d 342, 344, 348 (8th Cir. 2001) (evaluating district court order directing state to
provide hearing-impaired services pursuant to the ADA and noting that “the cost of
compliance to the state treasury is wholly ‘ancillary’ to the prospective order enforcing
federal law” (quoting Edelman, 415 U.S. at 668)).
To support the view that Plaintiffs’ requested relief is improper, Defendant cites
the Supreme Court’s decision in Virginia Office for Protection and Advocacy v. Stewart
21

(“VOPA”), 563 U.S. 247 (2011). In VOPA, the Supreme Court considered whether an
“independent state agency” could properly assert a claim seeking prospective relief
against officials of the same state under Ex parte Young. Id. at 250-51. The Court
determined—and the parties appeared to agree—that the suit plainly met the
“straightforward inquiry” described above. Id. at 255-256. However, the state officials
argued that Ex parte Young should not apply based on the status of the plaintiff as a state
agency. Id. at 256. The Court disagreed. After noting that certain exceptions to the
Ex parte Young doctrine had evolved to limit “abuses of the doctrine that threaten to
evade sovereign immunity,” the Court held that no similar sovereignty interests were
threatened by the suit. Id. at 256-61.
Citing Edelman, the Court stated in VOPA that “Ex parte Young cannot be used to
obtain an injunction requiring the payment of funds from the State’s treasury.” 563 U.S.
at 256-57. Defendant cites VOPA and quotes this language in arguing that “[w]here, as
here, plaintiffs request relief that would necessarily require the expenditure of state funds,
the Eleventh Amendment serves as a complete bar to plaintiffs’ claims.” (Doc. No. 102
at 4.) However, the Court concludes that the Supreme Court’s statement in VOPA
regarding the expenditure of funds does not carry the weight Defendant advocates. This
sentence followed the Court’s explanation of judicially-developed limits over “abuses of
the [Ex parte Young] doctrine,” and was merely part of a summary explanation of such
limits. Id. at 256-57. The Supreme Court did not indicate that it was overruling previous
cases such as Milliken, Papasan, and Edelman itself which acknowledged that
prospective relief may be granted notwithstanding an ancillary effect on the state
22

treasury. Because the central question presented in VOPA did not require the Court to
address these longstanding principles, its statement regarding “payment of funds from the
State’s treasury,” id. at 256-57, did not materially alter the proper Ex parte Young
analysis described above. 8 See Chester Upland Sch. Dist. v. Pennsylvania,
861 F. Supp. 2d 492, 518 (E.D. Pa. 2012) (“[N]otwithstanding the comments in VOPA
that Ex Parte Young does not permit an injunction affecting the state treasury, the
nuances to this rule as developed in Edelman and Milliken remain intact. This Court will
not dismiss . . . Plaintiffs’ . . . claims for injunctive relief merely because they may
implicate state funds.”). Thus, the Court focuses its inquiry on “whether the injunctive
relief sought is prospective or retroactive in nature,’ and not on ‘[the] impact on the
State’s treasury.’” See Mo. Child Care Ass’n, 294 F.3d at 1042 (quoting Antrican,
290 F.3d at 186)). 9
Applying these principles to Plaintiffs’ Third Amended Complaint, the Court
concludes that Plaintiffs seek relief that falls under the Ex parte Young exception to
8

In Virginia Office for Protection and Advocacy v. Stewart (“VOPA”), 563 U.S.
247 (2011), the Supreme Court also remarked that: “The specific indignity against which
sovereign immunity protects is the insult to a State of being haled into court without its
consent. That effectively occurs, our cases reasonably conclude, when (for example) the
object of the suit against a state officer is to reach funds in the state treasury . . . .” Id.
at 258. As with the language quoted by Defendant, the Court concludes that this
summary reference to suits impacting the state treasury does not override the Supreme
Court’s prior decisions permitting prospective injunctive relief that imposes a substantial
ancillary effect on the treasury.
9

As the Court noted in its prior order addressing the Motion to Dismiss Plaintiffs’
Amended Complaint, the Court declines to adopt the approach advocated in some cases
out of the Sixth and Seventh Circuits that appear to focus on how the requested relief
would impact the state treasury. See Guggenberger, 198 F. Supp. 3d at 999 n.9.
23

sovereign immunity. Plaintiffs have asserted their claims against Commissioner Johnson
Piper in her official capacity, and they plainly seek relief that is prospective in nature and
aimed at remedying the ongoing violations of federal law alleged in the Third Amended
Complaint. To remedy their integration mandate claims under the ADA and the RA,
Plaintiffs seek an injunction requiring Defendant to provide DD Waiver Services to
Plaintiffs “in the most integrated setting appropriate to their individual needs and
preferences consistent with applicable law.” (Third Am. Compl. at Prayer for Relief ¶ F.)
Consistent with their reasonable promptness claim under the Medicaid Act, 42 U.S.C.
§ 1396a(a)(8), Plaintiffs seek “injunctive relief requiring that the Defendant provide DD
Waiver Services with reasonable promptness and at a reasonable pace” and “order[ing]
that all funds legislatively appropriated for DD Waiver Services remain available as
lawfully appropriate until members of [the] plaintiff class are provided such services.”
(Id. ¶ G.) In light of their Due Process claims, Plaintiffs seek an order requiring that “all
persons denied DD Waiver Services receive proper written notice of that denial.” (Id.)
As the Court reads Plaintiffs’ Third Amended Complaint, Plaintiffs seek relief designed
to ensure compliance with federal law in the future. Because the relief sought is
prospective and tied to allegations of ongoing violations of federal law, the fact that
Plaintiffs’ request for relief implicates funds in the state treasury does not preclude their
claims under Ex parte Young.
Multiple federal appellate courts have permitted claims seeking such relief
notwithstanding objections based on state sovereign immunity. See Antrican, 290 F.3d at
186 (“The plaintiffs requested an injunction mandating that in the future, State officials
24

bring the North Carolina Medicaid program into compliance with the Medicaid Act. This
mandate might potentially impact the State treasury, but it is nonetheless prospective.”);
Lewis v. N.M. Dep’t of Health, 261 F.3d 970, 975-78 (10th Cir. 2001) (finding relief
seeking provision of waiver services with reasonable promptness proper under Ex parte
Young); J.B. ex rel. Hart v. Valdez, 186 F.3d 1280, 1283, 1285-87 (10th Cir. 1999)
(permitting claims under the ADA, Medicaid Act, RA, and other federal laws seeking
statewide improvements to disability services system). The Tenth Circuit’s decision in
Lewis is particularly instructive. There, the court explained:
The plaintiffs in the case before us clearly seek prospective equitable relief:
they ask that state officials be compelled to comply with federal statutes
that allegedly entitle them to the reasonably prompt provision of waiver
services. They are not, for example, asking to be reimbursed for past home
or community-based services. The relief sought simply requires that
officials conform their future actions to federal law, and any effect on the
state treasury is, therefore, ancillary.
Lewis, 261 F.3d at 977–78 (internal quotation marks and citation omitted).
In an analogous context, the Eighth Circuit has also permitted a case to proceed
under Ex parte Young where the plaintiffs sought to direct state officials to comply with
federal law governing foster-care and adoption services jointly funded by the federal
government and participating states and administered by states under a
federally-approved plan. See Mo. Child Care Ass’n, 294 F.3d at 1035-1043. Responding
to the defendants’ argument that Ex parte Young should not apply because the state “may
be required to increase its expenditure of state funds to comply with a judgment,” the
Eighth Circuit explained:

25

That as a practical matter this suit may result in an order requiring Missouri
to change the method it employs to calculate foster-care maintenance
payments, and thus going forward to access funds in its treasury, does not
remove this suit from the class of suits allowed under Ex parte Young.
Id. at 1042. Consistent with these cases and in light of the governing law described
above, the Court finds that Plaintiffs seek permissible relief under Ex parte Young.
The Court could grant relief to remedy Plaintiffs’ claims without infringing upon
Eleventh Amendment sovereign immunity, and any impact upon the state treasury would
be ancillary to the relief imposed. Thus, the Court concludes that Eleventh Amendment
sovereign immunity does not support dismissal of Plaintiffs’ Third Amended
Complaint. 10
III.

Separation of Powers
The Court next considers Defendant’s argument that Plaintiffs seek improper relief

in light of federalism and separation-of-powers principles. Defendant argues that “by
requiring Defendants [sic] keep funding available, Plaintiffs’ requested relief improperly
removes from the State’s executive and legislative branches questions of how the state
spends its limited funds.” (Doc. No. 93 at 21.) Defendant suggests that Plaintiff’s Third
10

The Court also notes that Eleventh Amendment sovereign immunity poses no bar
to Plaintiffs’ claim against Commissioner Johnson Piper under § 504 of the
Rehabilitation Act. Under the Rehabilitation Act, a State that accepts federal funds
“waives its [Eleventh Amendment] immunity . . . with regard to the individual agency
that receives them.” Jim C. v. United States, 235 F.3d 1079, 1081 (8th Cir. 2000); see
also 42 U.S.C. § 2000d-7(a)(1). Here, Plaintiffs allege that Minnesota participates in the
Medicaid program jointly funded by the state and the federal government. (Third Am.
Compl. ¶ 18.) Plaintiffs also allege that Commissioner Johnson Piper “serves as the
‘single state agency’ responsible for the administration of the Medicaid program in
Minnesota.” (Id. ¶ 16.) Thus, the Court concludes that Plaintiffs’ Rehabilitation Act
claim is not subject to dismissal based on sovereign immunity.
26

Amended Complaint is “an improper attempt to secure funding for waiver services, a
political decision reserved to [the] Legislature and the Governor.” (Doc. No. 102 at 1.)
Defendant also asserts that that Plaintiffs’ requested relief would invalidate Minnesota
law governing the disposition of unspent funding. Referencing the Court’s previous
order, Defendant notes that the Court has already identified the federalism concerns
inherent in such relief.
Relying on the Court’s prior order in this case, Plaintiffs contend that their
requested relief does not implicate special sovereignty interests. Plaintiffs assert that they
do not seek funding to be kept available indefinitely and emphasize that they “do not ask
the Court to take control of the State’s budget, to infringe on the essential functions of the
executive or legislative branches, or to address the legislative process at all.” (Doc.
No. 99 at 19.) According to Plaintiffs, the Supreme Court’s decision in Olmstead v. L.C.
ex rel. Zimring, 527 U.S. 581 (1999), illustrates how a federal court may properly require
state officials to comply with federal law without violating federalism or
separation-of-powers concerns.
Defendant’s separation-of-powers arguments are closely related to the “special
sovereignty interests” exception to claims arising under Ex parte Young. Under this
exception, even if a claim is proper under Ex parte Young, a court “may also question
whether the suit and the remedy it seeks ‘implicate[] special sovereignty interests’ such
that an Ex Parte Young action will not lie.” Union Elec. Co. v. Mo. Dep’t of
Conservation, 366 F.3d 655, 658 (8th Cir. 2004) (quoting Coeur d’Alene, 521 U.S. at
281). Indeed, while acknowledging the “straightforward inquiry” identified by the
27

Supreme Court, Justice Kennedy noted in a concurring opinion that “our Ex parte Young
jurisprudence requires careful consideration of the sovereign interests of the State as well
as the obligations of state officials to respect the supremacy of federal law.” Verizon
Md., Inc., 535 U.S. at 648 (Kennedy, J., concurring). The Court is mindful of these
competing interests and sensitive to the federalism interests inherent in any case
proceeding under Ex parte Young.
Further, because Plaintiffs’ Third Amended Complaint arises out of the alleged
mismanagement of state funds, the Court agrees with Defendant that the federalism
interests in this case merit close consideration. See Horne v. Flores, 557 U.S. 433, 448
(2009) (“Federalism concerns are heightened when . . . a federal court decree has the
effect of dictating state or local budget priorities.”); see also Rizzo v. Goode, 423 U.S.
362, 378 (1976) (“Where . . . the exercise of authority by state officials is attacked,
federal courts must be constantly mindful of the ‘special delicacy of the adjustment to be
preserved between federal equitable power and State administration of its own law.’”
(quoting Stefanelli v. Minard, 342 U.S. 117, 120 (1951))). Notwithstanding the necessary
caution with which a federal court must proceed in directing remedies against state
officials, however, the Supreme Court has also emphasized that “federal courts must
vigilantly enforce federal law and must not hesitate in awarding necessary relief.”
Horne, 557 U.S. at 450.
The fact that Plaintiffs’ lawsuit arises out of the state’s administration of its
Medicaid program also impacts the Court’s analysis of Defendant’s separation-of-powers
arguments. As the Tenth Circuit noted in another Medicaid Act case, “[a] state’s interest
28

in administering a welfare program at least partially funded by the federal government is
not such a core sovereign interest as to preclude the application of Ex parte Young.” J.B.,
186 F.3d at 1287; see also Antrican, 290 F.3d at 182, 189 (finding no special sovereignty
interests in a § 1983 Medicaid case because it “involve[d] a federally designed healthcare
program in which the federal government has invited the States to participate if they
agree to certain federally established conditions”); Lewis, 261 F.3d at 978 (finding that
claims “challenging the administration of New Mexico’s Medicaid plan” do not infringe
special sovereignty interests). The Eighth Circuit has similarly noted that a state’s choice
to utilize federal funds in a social welfare program obliges the state “either to run its
program in conformity with [governing federal law] or to forego the federal funds.” Mo.
Child Care Ass’n, 294 F.3d at 1042 n.10.
The sovereignty concerns at issue in actions proceeding under Ex parte Young also
affect the scope of relief available. A remedy imposed to address ongoing violations of
federal law may be “extensive.” Fond du Lac Band of Chippewa Indians v. Carlson, 68
F.3d 253, 256 (8th Cir. 1995). “Where necessary to ensure compliance with federal law,
the Supreme Court has approved broad injunctive relief aimed at state officials.” Id. At
the same time, when imposing equitable relief against state officials, federal courts
should “not mandate detailed or burdensome procedures for compliance.” Katie A.,
ex rel. Ludin v. Los Angeles Cty., 481 F.3d 1150, 1157 (9th Cir. 2007). Courts must
“give adequate consideration to the views of state . . . authorities” and “refrain[] from
dictat[ing] precisely what course the State should follow.” Lewis v. Casey, 518 U.S. 343,
362 (1996) (internal quotation marks and citation omitted). Concerns over state
29

sovereignty are properly addressed by involving state officials in developing appropriate
relief. See Frew, 540 U.S. at 442 (“[P]rinciples of federalism require that state officials
with front-line responsibility for administering [a significant federal program] be given
latitude and substantial discretion.”); Katie A., 481 F.3d at 1157 (“[T]he court
appropriately allowed defendants an opportunity jointly to develop the remedial plan
needed to implement the injunction. No further deference was required; the order itself
required only that defendants supply the services that the court found to be required under
federal law.”).
Considering these governing principles, the Court concludes that Plaintiffs’ case
may proceed despite the federalism interests implicated by their claims. Specifically, the
Court concludes that Plaintiffs’ request relating to DD Waiver Services funding does not
warrant dismissal based on principles of federalism or the separation-of-powers. As the
Court noted in its previous order addressing the Motion to Dismiss Plaintiffs’ Amended
Complaint, the request that appropriated funds “remain available” could be construed to
interfere with State funding decisions based on Minnesota law governing unspent
allocations. See Guggenberger, 198 F. Supp. 3d at 1001 n.10; see also Minn. Stat.
§ 16A.28, subd. 3. Plaintiffs amended this request in the Third Amended Complaint to
seek an order directing that “all funds legislatively appropriated for DD Waiver Services
remain available as lawfully appropriate until members of [the] plaintiff class are
provided such services.” (Third Am. Compl. at Prayer for Relief ¶ G (emphasis added).)
The Court again notes that Plaintiffs’ request could be clearer on this point regarding the
relief they seek. However, the Court will adopt its prior approach on this issue and
30

“reserve determination on the precise scope of relief it may impose in the future,
emphasizing that any relief it grants will properly account for the important federalism
concerns Defendant[] [has] raised.” Guggenberger, 198 F. Supp. 3d at 1001 n.10. Even
if the Court ultimately concludes that it lacks authority to direct that certain funds
“remain available,” the Court can properly direct Defendants to comply with the
Medicaid Act by providing DD Waiver Services to eligible individuals in a reasonably
prompt manner. Thus, the Court concludes that this requested relief does not warrant
dismissal of Plaintiffs’ claims at this stage.
Second, the Court does not construe Plaintiffs’ Third Amended Complaint to
request relief that would improperly interfere with state funding decisions or dictate the
allocation of state resources. Specifically, the Third Amended Complaint appears to
focus on the alleged mismanagement of allocated Waiver Services funding and does not
request a supplemental appropriation of funds from the state legislature. 11 If the Court
ultimately concludes that Defendant is administering the state’s DD Waiver Services
program in a manner that violates federal law, the Court could direct Commissioner
Johnson Piper to comply with the law while inviting the state to participate in developing
the precise contours of appropriate relief to be imposed. 12

11

Defendant notes that prior versions of Plaintiffs’ complaint included requests for
“supplemental appropriations” or “freezing funds.” (See Doc. No. 93 at 2-4.) The Court,
however, evaluates the present motion in light of the allegations and relief requested in
the Third Amended Complaint.
12

The Court also concludes that the state’s implementation of the Olmstead Plan
does not preclude Plaintiffs’ claims. While the Olmstead Plan may be a relevant
(Footnote Continued on Next Page)
31

In short, the Court concludes that Defendant’s arguments based on the
separation-of-powers and principles of federalism are largely premature. The Court is
cognizant of the important limits on its authority to order relief in this context, and it
acknowledges the federalism interests at issue in light of Plaintiffs’ claims. However, the
Court must also uphold the federal law and ensure state compliance with such law going
forward. Thus, the Court declines to dismiss Plaintiffs’ Third Amended Complaint based
on separation-of-powers concerns and will withhold determination on the scope of a
proper remedy until such time as the Court concludes that relief is warranted. 13
CONCLUSION
Because Plaintiffs seek prospective injunctive relief against Commissioner
Johnson Piper in her official capacity for ongoing violations of federal law, the Court
concludes that this case may proceed notwithstanding Defendant’s Eleventh Amendment
sovereign immunity arguments. Further, any claim of sovereign immunity with respect
to Plaintiffs’ claim under § 504 of the Rehabilitation Act is waived based on DHS’s
(Footnote Continued From Previous Page)
consideration in evaluating Plaintiffs’ claims on the merits, the mere presence of an
Olmstead Plan outlining goals relating to the provision of DD Waiver Services does not
justify dismissal of Plaintiffs’ claims at this stage.
13

Defendants also argue that Plaintiffs’ requested relief would interfere not only
with state sovereignty, but also with the determinations of the legislative and executive
branches at the federal level. The Court disagrees that federal separation-of-powers
concerns warrant dismissal. As the Court previously concluded in its prior order, such
concerns do not justify dismissal. See Guggenberger, 198 F. Supp. 3d at 1002. Neither
the congressionally-sanctioned limits on the provision of waiver services nor the federal
government’s approval of the state’s DD Waiver Services plan preclude this Court from
considering Plaintiffs’ claims arising out of Defendant’s alleged mismanagement of the
state’s Medicaid program.
32

acceptance of federal funding through participation in the Medicaid program. Finally,
separation-of-powers principles do not justify dismissal of Plaintiffs’ Third Amended
Complaint.
The Court concludes by noting that it believes that the best interests of all parties
could be served by coming together to reach a possible resolution in this matter. Should
the parties wish to utilize the Court’s available resources to facilitate any settlement
discussions, the Court will assist the parties in this regard.
ORDER
Based on the files, record, and proceedings herein, and for the reasons stated
above, IT IS HEREBY ORDERED that Defendant’s Motion to Dismiss (Doc. No. [91])
is DENIED.
Date: July 6, 2017

s/Donovan W. Frank
DONOVAN W. FRANK
United States District Judge

33