ARRM et al v. Emily Johnson Piper

Filing 32

ORDER denying 6 Motion for TRO and Preliminary Injunction. (Written Opinion) Signed by Judge Wilhelmina M. Wright on 6/28/2018. (TJB)

UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA

ARRM, a Minnesota non-profit association
incorporated under the laws of Minnesota,
on behalf of itself and its members;

Case No. 18-cv-1627 (WMW/BRT)

Minnesota Organization for Habilitation and
Rehabilitation (MOHR), a Minnesota nonprofit association incorporated under the
laws of Minnesota, on behalf of itself and its
members; and
Karla Dee Marder, by her guardian Judy
Marder; Robert Clapper, by his guardian
James Clapper; Kathryn Smith, by her
guardian Gerald Smith; and Cara Pedrille,
by her guardian Nino Pedrille, on behalf of
other waiver recipients similarly situated,

ORDER DENYING PLAINTIFFS’
MOTION FOR TEMPORARY
RESTRAINING ORDER AND
PRELIMINARY INJUNCTION

Plaintiffs,
v.
Emily Johnson Piper, in her Official
Capacity as Commissioner of the Minnesota
Department of Human Services,
Defendant.
This matter is before the Court on Plaintiffs’ motion for a temporary restraining
order and preliminary injunction. (Dkt. 6.) Plaintiffs seek to enjoin Defendant Emily
Johnson Piper, in her official capacity as Commissioner of the Minnesota Department of
Human Services (DHS), from taking any action that reverses, circumvents, ignores,
violates, avoids, or bypasses certain payment rate increases provided for under Minnesota
law. For the reasons addressed below, the Court denies the motion.

BACKGROUND
This case involves anticipated funding reductions to Minnesota’s “waiver services”
payment rates. Waiver services are services for which the federal government agrees, in
limited circumstances, to waive certain statutory and regulatory requirements that
ordinarily would govern Medicaid assistance funding. See 42 C.F.R. §§ 430.25, 441.300.
The state agency that administers a state’s Medicaid program may apply to the Centers for
Medicare and Medicaid Services (CMS) for authorization to establish home and
community-based waiver services, which are designed to enhance the ability of persons
with disabilities to live in the community rather than in an institutional setting. Waiver
services are administered by states but jointly funded by state and federal governments.
In Minnesota, DHS is the state agency responsible for licensing, certifying, and
enrolling providers of waiver services. Acting through the Commissioner, DHS also
computes and approves waiver service payment rates according to Minnesota law. The
Minnesota Disability Waiver Rate System (DWRS) provides a mathematical framework
for establishing provider payment rates for approved waiver services. See Minn. Stat.
§ 256B.4914. Enacted by the Minnesota Legislature, DWRS went into effect on January
1, 2014. Pursuant to DWRS, waiver service payment rates adjust automatically every five
years to account for inflation. The first automatic inflationary adjustment occurred on July
1, 2017.
In addition to the DWRS automatic inflationary adjustments, the Minnesota
Legislature separately enacted three session laws that increased waiver service payment
rates, with effective dates in 2014 and 2015. See 2014 Minn. Laws, Ch. 312, Art. 27, § 75;

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2013 Minn. Laws, Ch. 108, Art. 7, §§ 34, 60. These session laws, which cumulatively
increased waiver service payment rates by 7%, affected all payment rates for Minnesota
waiver service recipients without regard for the type of waiver services received or whether
the payment rates had been set by DWRS.
During the 2018 legislative session, the Minnesota Legislature passed an omnibus
bill that, as relevant here, would have repealed the cumulative 7% waiver service payment
rate increase and replaced it with different appropriations. However, Minnesota Governor
Mark Dayton vetoed that omnibus bill in May 2018. Consequently, the three session laws
that provide for the 7% waiver service payment rate increases remain in effect. Shortly
thereafter, the Commissioner announced that DHS nonetheless intends to eliminate the 7%
waiver service payment rate increase. The elimination of this rate increase will occur in
multiple stages, with the first funding reduction scheduled to occur on July 1, 2018, and
the final funding reduction scheduled to occur December 31, 2019.
Plaintiffs ARRM and Minnesota Organization for Habilitation and Rehabilitation
(MOHR) (collectively, “Organizational Plaintiffs”) are nonprofit associations incorporated
under Minnesota law. ARRM advances Minnesota’s home and community-based service
programs that support people living with disabilities, and its members include more than
200 service providers, businesses, and stakeholders, including nonprofit and for-profit
entities that are certified to provide such services. MOHR is an association with more than
100 members that provide services to persons with disabilities. Plaintiffs Karla Dee
Marder, Robert Clapper, Kathryn Smith, and Cara Pedrille, through their respective
guardians (collectively, “Individual Plaintiffs”), receive waiver services subject to DWRS.

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Plaintiffs commenced this action to enjoin the Commissioner from implementing the
anticipated 7% funding reduction to Minnesota’s waiver service payment rates.
Plaintiffs now seek a temporary restraining order and preliminary injunction. The
Commissioner opposes Plaintiffs’ motion, arguing that the Individual Plaintiffs lack
standing and that Plaintiffs have not established that they are entitled to preliminary
injunctive relief.
ANALYSIS
I.

Standing

The Commissioner argues that the Individual Plaintiffs lack standing to seek
injunctive relief because they have not alleged an imminent injury in fact. The Court
addresses this issue first because questions of standing implicate the Court’s subject-matter
jurisdiction. Faibisch v. Univ. of Minn., 304 F.3d 797, 801 (8th Cir. 2002).
The jurisdiction of federal courts extends only to actual cases or controversies. U.S.
Const. art. III, § 2, cl. 1; accord Neighborhood Transp. Network, Inc. v. Pena, 42 F.3d
1169, 1172 (8th Cir. 1994). To satisfy the case-or-controversy requirement of Article III
of the United States Constitution, a plaintiff must establish standing as an “indispensable
part of the plaintiff’s case.” Lujan v. Defs. of Wildlife, 504 U.S. 555, 561 (1992); accord
Hargis v. Access Capital Funding, LLC, 674 F.3d 783, 790 (8th Cir. 2012). To meet this
standing requirement, the plaintiff must (1) have suffered an injury in fact, (2) establish a
causal relationship between the contested conduct and the alleged injury, and (3) show that
a favorable decision would redress the injury. Lujan, 504 U.S. at 560-61; accord Hargis,
674 F.3d at 790. Only the injury-in-fact requirement is at issue here.

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To allege an “injury in fact” that confers standing to seek injunctive relief, a plaintiff
must face a threat of ongoing or future harm. Park v. Forest Serv. of the U.S., 205 F.3d
1034, 1037 (8th Cir. 2000). An injury in fact “must be concrete, particularized, and actual
or imminent.” Clapper v. Amnesty Int’l USA, 568 U.S. 398, 409 (2013) (internal quotation
marks omitted). The purpose of the imminence requirement “is to ensure that the alleged
injury is not too speculative for Article III purposes—that the injury is certainly
impending.” Id. (internal quotation marks omitted). Allegations of a possible future injury
are insufficient to confer standing. Id.
In Clapper, the Supreme Court of the United States held that the plaintiffs lacked
standing because a “speculative chain of possibilities” could not establish an injury in fact
based on potential future injuries. Id. at 414. The plaintiffs in Clapper sought a declaration
that Section 702 of the Foreign Intelligence Surveillance Act of 1978 is unconstitutional
and an injunction against surveillance authorized by that section. Id. at 401. The plaintiffs
attempted to establish an injury in fact based on an objectively reasonable likelihood that
their communications would be acquired pursuant to the challenged law at some point in
the future. Id. In rejecting that argument, the Court observed that the plaintiffs’ possible
future injury depended on a “highly speculative fear” that a lengthy chain of events would
occur:
(1) the Government will decide to target the communications of non-U.S.
persons with whom [plaintiffs] communicate; (2) in doing so, the
Government will choose to invoke its authority under § 1881a rather than
utilizing another method of surveillance; (3) the Article III judges who serve
on the Foreign Intelligence Surveillance Court will conclude that the
Government’s proposed surveillance procedures satisfy § 1881a’s many
safeguards and are consistent with the Fourth Amendment; (4) the

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Government will succeed in intercepting the communications of
respondents’ contacts; and (5) respondents will be parties to the particular
communications that the Government intercepts.
Id. at 410.
It is undisputed here that the Individual Plaintiffs’ alleged injuries are exclusively
future injuries because the Commissioner’s anticipated funding reductions have not
occurred. As such, to establish standing, the Individual Plaintiffs must demonstrate that
their future injuries are “certainly impending” as opposed to mere “allegations of possible
future injury.” Id. at 409 (internal quotation marks omitted). Several factors demonstrate
that the Individual Plaintiffs have not satisfied this burden.
As an initial matter, it is undisputed that the waiver services received by Plaintiffs
Marder and Smith will not be affected by the Commissioner’s anticipated funding
reductions—if at all—until December 31, 2019. Because these possible future injuries will
not occur for more than 18 months, they are not “imminent” as is required to establish
Article III standing. Moreover, these injuries are highly speculative given that one or more
events could occur in the next 18 months that might prevent these alleged injuries from
ever arising—including, but not limited to, administrative, legislative, or judicial action.
For these reasons, Plaintiffs Marder and Smith have not alleged an injury in fact as is
necessary to establish Article III standing to obtain injunctive relief.
Plaintiffs Clapper and Pedrille have alleged that the Commissioner’s anticipated
funding reductions will affect the waiver services they receive beginning on October 1,
2018, and July 1, 2018, respectively. The timing of these alleged injuries is relatively
sooner than the injuries alleged by Plaintiffs Marder and Smith. However, as in Clapper,

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Plaintiffs Clapper and Pedrille allege possible future injuries that depend on a “speculative
chain of possibilities” that may or may not occur. Id. at 414. First, the Commissioner’s
funding reductions would have to occur as anticipated, without any administrative or
legislative intervention. Second, the providers of the waiver services received by Plaintiffs
Clapper and Pedrille would have to choose to discontinue or otherwise limit waiver
services rather than seeking alternative funding or seeking to account for the
Commissioner’s funding reductions in some other manner that would not materially affect
waiver services. Third, those service providers would have to discontinue or otherwise
limit the particular waiver services that Plaintiffs Clapper and Pedrille receive, as opposed
to other waiver services.1 Fourth, Plaintiffs Clapper and Pedrille would have to seek, and
be denied, individualized waiver services payment rate increases by submitting “exception
requests” as provided under DWRS. See Minn. Stat. § 256B.4914, subd. 14. Fifth, the
entities that provide waiver services to Plaintiffs Clapper and Pedrille also would have to
appeal—unsuccessfully—the Commissioner’s waiver service payment rate determination.
The foregoing series of events that would have to occur for an injury to befall
Plaintiffs Clapper and Pedrille requires an attenuated and speculative chain of inferences.
“Plaintiffs cannot rely on speculation about ‘the unfettered choices made by independent
actors not before the court’ ” to establish standing based on a possible future injury.

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The Individual Plaintiffs do not directly receive the waiver service funds at issue
here; rather, they receive waiver services from providers, and the providers of those waiver
services receive the waiver service funds. Nothing in the record suggests that the providers
of waiver services to Plaintiffs Clapper and Pedrille plan to discontinue or otherwise limit
the particular waiver services that Plaintiffs Clapper and Pedrille receive as a result of the
Commissioner’s anticipated funding reductions.
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Clapper, 568 U.S. at 414 n.5 (quoting Lujan, 504 U.S. at 562). The chain of events
described above depends, at least in part, on future choices made by independent actors not
before this Court, including waiver service providers, administrative agencies, and the
Minnesota Legislature. As in Clapper, this “speculative chain of possibilities does not
establish that injury based on potential future [occurrences] is certainly impending.” Id. at
414.
In summary, because the Individual Plaintiffs have not satisfied their burden to
demonstrate that their future injuries are certainly impending, as opposed to mere
allegations of possible future injuries, the Individual Plaintiffs lack Article III standing and
this Court lacks subject-matter jurisdiction over the Individual Plaintiffs’ claims for
injunctive relief. See Faibisch, 304 F.3d at 801 (stating that standing implicates the court’s
subject-matter jurisdiction); see also Fed. R. Civ. P. 12(h)(3) (providing that, if a court
determines it lacks subject-matter jurisdiction over a claim, such claims must be
dismissed). Accordingly, the Individual Plaintiffs’ claims are dismissed without prejudice
for lack of subject-matter jurisdiction to the extent that the claims seek injunctive relief
against the Commissioner.
II.

Injunctive Relief as to the Organizational Plaintiffs

When determining whether a temporary restraining order or preliminary injunction
is warranted, four factors are considered: (1) the probability that the movant will succeed
on the merits, (2) the threat of irreparable harm to the movant, (3) the balance between this
harm and the injury that the injunction will inflict on other parties, and (4) the public

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interest. Dataphase Sys., Inc. v. C L Sys., Inc., 640 F.2d 109, 114 (8th Cir. 1981).2 The
burden to establish that injunctive relief should be granted rests with the movant. Watkins
Inc. v. Lewis, 346 F.3d 841, 844 (8th Cir. 2003).

A preliminary injunction “is an

extraordinary remedy never awarded as of right.” Winter v. Nat. Res. Def. Council, Inc.,
555 U.S. 7, 24 (2008). Because the “failure to show irreparable harm is an independently
sufficient ground upon which to deny a preliminary injunction,” Novus Franchising, Inc.
v. Dawson, 725 F.3d 885, 893 (8th Cir. 2013) (internal quotation marks omitted), the Court
begins its analysis with this Dataphase factor.
A. Irreparable Harm
A party must establish the threat of irreparable harm to obtain preliminary injunctive
relief. See Dataphase, 640 F.2d at 114. “Irreparable harm occurs when a party has no
adequate remedy at law, typically because its injuries cannot be fully compensated through
an award of damages.” Gen. Motors Corp. v. Harry Brown’s, LLC, 563 F.3d 312, 319 (8th
Cir. 2009). When an adequate remedy exists under state law, injunctive relief is not
appropriate. See Pulliam v. Allen, 466 U.S. 522, 542 & n.22 (1984); Sterling v. Calvin,
874 F.2d 571, 572 (8th Cir. 1989) (per curiam); see also Aviles-Wynkoop v. Neal, 978 F.
Supp. 2d 15, 22 (D.D.C. 2013) (concluding that, “in light of the extensive administrative
remedies available to plaintiff, the Court would be hard-pressed to conclude that it is likely
that plaintiff will face irreparable harm unless the Court issues the injunction”).

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The Organizational Plaintiffs seek both a temporary restraining order and a
preliminary injunction. The same legal standard applies to both forms of relief. See S.B.
McLaughlin & Co. v. Tudor Oaks Condo. Project, 877 F.2d 707, 708 (8th Cir. 1989).
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The Organizational Plaintiffs argue that, if the Commissioner’s anticipated funding
reductions are not prospectively enjoined, they will suffer irreparable harm because the
Eleventh Amendment to the United States Constitution prohibits retrospective monetary
relief from state agencies based on sovereign immunity. See Chamber of Commerce of
U.S. v. Edmondson, 594 F.3d 742, 770-71 (10th Cir. 2010) (concluding that “[i]mposition
of monetary damages that cannot later be recovered for reasons such as sovereign immunity
constitutes irreparable injury”).

The Commissioner counters that the Organizational

Plaintiffs have an adequate remedy under state law—namely, a statutory appeal process
through which providers of waiver services can dispute payment rate determinations.
“A provider may appeal from a determination of a payment rate established pursuant
to this chapter . . . if the appeal, if successful, would result in a change to the provider’s
payment rate . . . .” Minn. Stat. § 256B.50, subd. 1. Subsequent subdivisions within
Section 256B.50 describe the procedures for filing an appeal, the appeals review process,
and how a prevailing party may recover attorneys’ fees and costs. Id., subds. 1b, 1c, 1e.
The Organizational Plaintiffs do not dispute that this appeals process exists. To the
contrary, they rely on the existence of this appeals process to support their motion for
injunctive relief, asserting that these “statutory appeal rights demonstrate that the rates set
by DHS and paid to providers by Defendant constitute protectible property rights.”
The Organizational Plaintiffs contend, however, that the statutory appeals process
would be futile because any appeal would be decided by the Commissioner, who intends

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to implement the 7% funding reduction.3 But Section 256B.50 addresses this concern. If
a “provider disagrees with the appeal determination, the provider may file with the
commissioner a written demand for a contested case hearing to determine the proper
resolution of specified appeal items.” Id., subd. 1c(c). A contested case demand is referred
to the Office of the Attorney General, and the contested case is heard by an administrative
law judge. Id., subd. 1c(c), (d). Minnesota law also provides for judicial review of
contested cases. See Minn. Stat. §§ 14.63-14.69. Moreover, mandamus relief is available
in Minnesota courts to compel a state governmental agency “to perform a duty [that] the
law clearly and positively requires . . . where there is no other plain, speedy, and adequate
remedy available.” In re Welfare of S.L.J., 782 N.W.2d 549, 553, 557-58 (Minn. 2010).
For these reasons, the Organizational Plaintiffs’ argument that they have no adequate or
non-futile state-law remedy lacks merit.
The Organizational Plaintiffs rely in part on St. Otto’s Home v. Minnesota
Department of Human Services, 437 N.W.2d 35 (Minn. 1989), in support of their motion.
But St. Otto’s Home belies the Organizational Plaintiffs argument that they lack an
adequate state-law remedy. The relators in St. Otto’s Home were nursing homes that
challenged a rate-setting determination by DHS. 437 N.W.2d at 36. After the nursing
homes administratively appealed DHS’s decision, DHS initiated contested case

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Although Plaintiffs advance additional arguments as to why the statutory appeals
process is inadequate, those arguments are specific to exception requests and the
subsequent appeal process available to individual waiver service recipients. See Minn.
Stat. §§ 256.045, 256B.4914, subd. 14. In light of the conclusion in Part I of this Order
that the Individual Plaintiffs lack standing, the Court need not address these arguments.
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proceedings in which an administrative law judge ultimately recommended that DHS’s
determinations be upheld. Id. The nursing homes appealed to the Minnesota Court of
Appeals, which affirmed. Id. The Minnesota Supreme Court reversed and remanded to
the commissioner of DHS “for reimbursement” to the nursing homes, holding that the
commissioner’s interpretation of the governing rules was improper. Id. at 39-45. Both the
procedural background and the disposition in St. Otto’s Home suggest that the
Organizational Plaintiffs have a state-law remedy.
Because the Organizational Plaintiffs have an adequate state-law remedy, they have
not established irreparable harm such that injunctive relief is warranted.
B. Remaining Dataphase Factors
The Organizational Plaintiffs’ failure to show irreparable harm is, by itself, a
sufficient basis to deny a preliminary injunction. Gelco Corp. v. Coniston Partners, 811
F.2d 414, 418 (8th Cir. 1987). In light of this determination, the Court declines to address
the remaining Dataphase factors. See, e.g., Medtronic, Inc. v. Ernst, 182 F. Supp. 3d 925,
935 (D. Minn. 2016) (denying temporary restraining order based solely on plaintiff’s
failure to demonstrate irreparable harm); Jackson v. Macalester Coll., 169 F. Supp. 3d 918,
922 (D. Minn. 2016) (same).
ORDER
Based on the foregoing analysis and all the files, records and proceedings herein, IT
IS HEREBY ORDERED:

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1.

The claims asserted by Plaintiffs Karla Dee Marder, Robert Clapper, Kathryn

Smith, and Cara Pedrille are DISMISSED WITHOUT PREJUDICE for lack of subjectmatter jurisdiction to the extent that these plaintiffs seek injunctive relief; and
2.

Plaintiffs ARRM and MOHR’s motion for a temporary restraining order and

preliminary injunction, (Dkt. 6), is DENIED.

Dated: June 28, 2018

s/Wilhelmina M. Wright
Wilhelmina M. Wright
United States District Judge

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