Rogers et al v. Cohen, et al

Filing 59

ORDER granting 40 Motion to Dismiss for Failure to State a Claim; granting 40 Motion to Dismiss for Lack of Jurisdiction; granting 42 Motion to Dismiss; denying as moot 23 Motion to Dismiss for Failure to State a Claim; denying as moot 23 Motion to Dismiss for Lack of Jurisdiction; denying as moot 26 Motion to Dismiss. Signed by District Judge James C. Dever III on 2/25/2019. (Sellers, N.)

IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF NORTH CAROLINA
WESTERN DMSION
-No. S:18-CV-193-D
JOANNE ROGERS, by and through
her Guardian MARY ROGERS, and
SUZANNA HARE,
Plaintiffs,
v.
MANDY COHEN, et al.,
Defendants.

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ORDER

On May 2, 2018, Joanne Rogers ("Rogers"), by and through her guardian Mary Rogers, and

Suz.anna Hare ("Hare"; collectively, ''plaintiffs") filed a complaint against ])r. Mandy Cohen
("Cohen"), in her official capacity as the Secretary ofthe North Carolina Department of Health and
Human Services, Alliance Behavioral Healthcare ("Alliance"), and Vaya Health (''Vaya";
collectively, "defendants") [D.E. 1]. On June 28, 2018, Cohen moved to dismiss the complaint for
failure to state a claim or forlack ofjurisdiction [D.E. 23] and filed a memorandum in support [D.E.
24]. On June 29, 2018, Alliap-ce and Vaya moved to dismiss the complaint [D.E. 26] and filed a
memorandum in support [D.E. 27].
On July 26, 2018, plaintiffs filed an amended complaint [D.E. 36]. Plaintiffs raise numerous

claims; (l)denial ofprocedural due process, (2) denial of substantive due process, (3) violations of
Title II of the Americans with Disabilities Act ("ADA"), (4) violations of Section 504 of the
Rehabilitation Act, (S) violation of the North Carolina Persons with Disabilities Protection Act, (6)
violation of the Medicaid Act's comparability requirement, (7) violation of the "statewidedness"
requirementsof42U.S.C. § 1396a(a)(l),and(8)violationoftheMedicaidreasonablenessstandards.

See id. Plaintiffs seek declaratory and injunctive relief. See id. On August 27, 2018, Cohen moved
to dismiss the amended complaint for failure to state a claim or for lack ofjurisdiction [D.E. 40] and
filed a memorandum. in support [D.E. 41 ]. On the same day, Alliance and Vaya moved to dismiss
the amended complaint [D.E. 42] and filed a memorandum. in support [D.E. 45]. On November 16,
2018, plaintiffs responded in opposition [D.E. 53, 54] .1 On December 14, 2018, defendants replied

[D.E. 57, 58]. As explained below, the court grants defendants' motions to dismiss.
I.

Hare and Rogers both have exceptional medical needs. See Am. Compl. [D.E. 36] ff 11, 35.
'

Hare has cerebral palsy, which, along with related medical conditions, has caused her to be
profoundly physically disabled. See id. ,r 11. Hare requires constant individualized attention to meet
her "extremely high" levels of medical need. id. ,r 12. For example, Hare has "a very limited ability
to move," and caregivers must carefully move her throughout the day to relieve pain, promote
circulation, and reduce the likelihood ofbedsores. Id. ff 13-18. Hare's caregivers must be present
at all hours to monitor her feeding and baclofen pumps, catheters, and colostomy and to be able to
move Hare in the event ofan emergency. See id. ff 19--27. In short, Hare is ''medically fragile" and,
because her health can "deteriorate quickly resulting in hospitalization," she requires ''total care
nearly 24 hours per day." Id. ff 32-34.
Rogers has a rare chromosomal abnormality, known as "karyotyped 4Q-;10Q+," which has
caused numerous medical issues that cause her to be intellectually and physically disabled. See id.

ff 35, 37 (listing at least 31 medical issues that result from Rogers' s rare chromosomal abnormality).
Lik:e·Hare, Rogers requires extremely high levels of one-on-one care nearly 24 hours per day. See

1

On the same day, plaintiffs also voluntarily dismissed counts five and eight [D.E. 50].

2

id. ft 36, 40--44. For example, Rogers follows a strict daily routine and any disruption can trigger
self-injurious behavior. See id. ft 38-39. Moreover, Rogers is generally unable to "independently
perform almost all activities of daily living." Id. ,r 44.
Both Rogers' sand Hare's chronic medical problems qualify them for institutional placement.
See id. ft 4S-46. Neither, however, wishes to be placed in an institutional setting because both can
thrive in an integrated setting with available medical resources and services. See id.

ft 46, 48.

Moreover, because Rogers suffers from chronic immune dysfunction, she would be at extreme risk
of exposure to disease in an institution. See id. ,r 47. Accordingly, both Hare and Rogers want to
remain in their current communities instead of an institution. See id. ,r 48.
Both Hare and Rogers receive Medicaid services under the North Carolina Innovations
Waiver (the "Waiver"). See id. ,r 49. "The Medicaid Act authorizes states to obtain Home and
Community Based Services waivers" with approval from the Centers for"Medicare and Medicaid
Services. Id. ,r S3. Plaintiffs receive services under a Home and Community Based Services waiver
''that offers Medicaid services to individuals like plaintiffs with developmental disabilities who
would otherwise qualify for services in an institutional facility." Id. ,r S4; see id. ,r S6. As part of
the Waiver, the comparability requirements are waived and replaced with services specified in the
waiver application. See id. ft S8-S9.
In North Carolina, the Department ofHealthandHuman Services ("DHHS") administers the
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state Medicaid plan, and DHHS' s Division ofMedical Assistance ("DMA") directs "the day-to-day
administration ofthe Medicaid program." Id. ft 62-63. Alliance and Vaya operate as managed care
organizations ("MCOs"). See id. ,r 66. DMA contracted with Alliance and Vaya ''to arrange for and
manage the delivery of services and to perform other Waiver operational functions through their
respective, prepaid inpatient health plans ... for Medicaid recipients." Id. ,r 67. North Carolina
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provides capitated payments for each Waiver participant to Vaya and Alliance. See id. ft 70-71;
Reuss Aff. [D.E. 44] ,r 5; Goodfellow Aff. [D.E. 47] ,r 3. Plaintiffs allege that the nature ofcapitated
payments incentivizes Alliance and Vaya to cut services and costs unnecessarily or to eliminate
expensive Waiver participants from the system. See Am. Compl. [D.E. 36] ft 72-73.
Under the Waiver program, Vaya and Alliance do not provide healthcare services directly,
but instead they contract with provider agencies to ''provide caregivers and other services for Waiver
participants." Id. ,r 74; see Reuss Aff. [D.E. 44] ,r 6; Goodfellow Aff. [D.E. 47] ,r 4. The provider
agency contracts with the MCO ''for the hours or days a caregiver works for a Waiver participant,
and the provider agency pays the caregiver for the hours the caregiver works." Am. Compl. [D.E.
36]

,r 75.

The provider agency retains some of the funds it receives from the MCO. See id. ft

76-78. Plaintiffs allege that, although the MCO contracts directly with the provider agency, Waiver
participants are "always the beneficiary ofthe services request and approved and of any payments."
Id.

,r 80.

Vaya and Alliance contend, however, that they are not responsible for payments to

caregivers. See Reuss Aff. [D.E. 44] ,r 15 (''Vaya does not control the rates [that a provider] pays
it[s] direct care staff."); Goodfellow Aff. [D.E. 47] ,r 5 ("Alliance controls only the rate at which it
reimburses network providers; it has no control over the rates at which a provider pays its direct care
staff who deliver services to members.").

Waiver participants meet annually with an MCO to assess eligibility for Waiver services and
to develop an Individual Support Plan ("ISP"), which includes a Waiver participant's annual budget.

See Am. Compl. [D.E. 36] ,r 81. The ISP "specifies the services requested to be authorized for the
next twelve month period." Id. Waiver participants "are entitled to receive the level of Waiver
services that are medically necessary," and the program sets a guideline maximum amount of
$135,000 per year. See id. ft 83-89; Parker Aff. [D.E. 46] ft 5-8. Plaintiffs allege that DMA
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policy 8-P details the process by which Waiver participants ''may request enhanced pay rates for
caregivers." Am. Compl. [D.E. 36] ff 90-91.
Rogers's MCO is Alliance. See id. ,r 102. Under the Waiver program, Rogers has received
Alternative Family Living ("AFL") services, which allow Rogers to live in the home ofher caregiver
and receive care at all times. See id.

ff

105--07. The care that Rogers receives 1s extremely

demanding. See id. ff 109--10. Because ofthe level of care that Rogers requires, Rogers' s caregiver
has indicated that she will stop providing services to Rogers if she is .not paid more. See id. ff
111-12. If that occurred, Rogers alleges that it would be difficult or impossible to locate a
replacement for her current caregiver given the nature of the care that she requires; See id.

ff

113-14.
In August 2017, Rogers's mother and guardian of the person ("GOP"), Macy Rogers,

submitted a formal request for a higher daily rate for Rogers's caregiver through New Beginnings
ofNorth Carolina, LLC ("New Beginnings"), Rogers's provider agency at the time. See id. ff_ 115,
119--22. Rogers alleges that her Waiver services have been "well below the $135,000 maximum for
a plan participant," id. ,r 108, and that even with the requested enhanced rate, Rogers' s budget would
have been less than $135,000. See id. ,r 125. Nonetheless, Alliance denied Rogers's request for an
enhanced rate. Id. ,r 124. Plaintiffs allege that Alliance did not provide to Rogers a notice of action
concerning the denial and that Alliance told New Beginnings that Rogers did not have a right to
appeal its decision outside of Alliance's internal grievance process. See id. ff 126-27, 130-33.
However, Alliance approved Rogers for all services requested. See Parker Aff. [D.E. 46] ff 23-24..
Hare's MCO is Vaya, and Hare's provider agency was formerly New Beginnings. See Am.
Compl. [D.E. 36] ff 136-37. Hare began receiving AFL services in 2017. See id. ff 138--41.
Hare's sister and brother-in-law serve as Hare's AFL caregivers, and Vaya approved Hare for an

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enhanced rate for her AFL caregivers in 2017. See id. ,r 142, 176. Like Rogers, Hare is at risk of
losing her AFL caregivers unless they are paid a higher rate each year. See id.

,r,r 154--55.

In

December 2017, New Beginnings submittedaformalrequestto Vayafor an enhanced rate for Hare's
caregivers for 2018. See id. ,r,r 145-46. Vaya d~ed Hare's request even though Hare's medical
needs had increased during 2017. See id. ,r,r 153, 156-58. As with Rogers, plaintiffs allege that
Vaya did not provide a notice of action to Hare, and Vaya told Hare that she had no right to appeal
other than Vaya's internal grievance process. See id. ,r,r 159-61, 164--66. Hare filed a grievance,
and Vaya upheld its decision. Id. ,r 162. Notably, Hare and Rogers have not been denied service.
On July 1, 2018, New BeginningR ceased working~ Hare's and Rogers's provider. See id.

,r 137; Parker Aff. [D.E. 46] ,r 26; Smith Aff. [D.E. 43] ,r,r 20, 29.

Hare and Rogers have yet to

submit a request for an enhanced rate through their new providers. See Am. Compl. [D.E. 36] ,r,r
134, 152.
II.

A motion to dismiss under Rule 12(b)(1) of the Federal Rules of Civil Procedure tests
subject-matter jurisdiction, which is the court's "statutory or constitutional power to adjudicate the
case." Steel Co. v. Citizens for a Better Env't, 523 U.S. 83, 89 (1998) (emphasis omi1fed); see
Holloway v. Pagan River Dockside Seafood, Inc., 669 F.3d 448, 453 (4th Cir. 2012); Constantine
v. Rectors & Visitors of George Mason Univ., 41 l F.3d 474, 479-80 (4th Cir. 2005). A federal court
''must determine that it has subject-matter jurisdiction over the case before it can pass on the merits

ofthat case." Constantine, 411 F.3d at 479-80. As the party invoking federal jurisdiction, plaintiffs
bear the burden of establishing that this court has subject-matter jurisdiction. See, ~ Steel Co.,
523 U.S. at 104; Evans v. B.F. Perkins Co., 166 F.3d 642, 647 (4th Cir. 1999); Richmond,
Fredericksburg&PotomacR.R. v. United States, 945 F.2d 765, 768 (4thCir.1991). In considering
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a motion to dismiss for lack of subject-matter jurisdiction, the court may consider evidence outside
the pleadings without converting the motion into one for summary judgment. See, ~. Evans, 166
F.3dat647.
A.

Federal courts "are not at liberty to resolve every grievance over government policy, no
matter how significant" to the plaintiffs. Doe v. Ob~ 631 F.3d 1S7, 160 (4th Cir. 2011). To

invoke the power ofa federal court, plaintiffs must demonstrate that they have standing under Article
ill ofthe Constitution. See id. Absent Article ill ~ding. the court lacks subject-matter jurisdiction

to hear plaintiffs' claims. See White Tail Park, Inc. v. Stroube, 413 F.3d 4S1, 4S8-S9 (4th Cir.
200?)- To establish Article ill standing, a plaintiff must show that "(1) [the plaintiff] has suffered
an injury in fact that is (a) concrete and particularized and (b) actual or imminent, not conjectural or
hypotheticaJ.; (2) the injury is fairly traceable to the challenged action of the defendant; and (3) it is
likely, as opposed to merely speculative, that the injury will be redressed by a favorable decision."
Friends of the Earth, Inc. v. Laidlaw Envtl. Servs. (fOC), Inc., S28 U.S. 167, 180-81 (2000); see
!

Lujan v. Defs. of Wildlife, S04 U.S. SSS, S60--61 (1992); Doe, 631 F.3d at 160. These requirements
are ''the irreducible constitutional minimum of standing." Lujan, S04 U.S. at S60.
The first element requires a plaintiff to demonstrate an injury in fact to a "legally protected
interest." Id. Additionally, the injury in fact ''must be concrete in both a qualitative and temporal
sense.'~ Whitmorev.Arkansas,49S U.S.149, 15S (1990); seeBeckv. McDonald, 848F.3d262,271
(4th Cir. 2017). When an injury is threatened, that injury must be "certainly impending." ClaPl)Cf
~

v. Amnescy: lnt'l USA, S68 U.S. 398, 409 (2013) (emphasis omitted). "'Allegations of possible
future injury' are not sufficient." Id. (emphasis omitted) (quoting Whitmore, 49S U.S. at 1S8). The
"certainly impending" requirement ensures ''that the alleged injury is not too speculative for Article

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III purposes." Luj~ 504 U.S. at 564 n.2; see Beck, 848 F.3d at 271. When a plaintiff seeks
injunctive relief, the plaintiff's injury in fact requires more than simply an allegation ofpast exposure
to illegal conduct. See,~ Lujm 504 U.S. at 563--64; City of Los Angeles v. Lyons, 461 U.S. 95,
101--06 (1983); Suhrev. HaywoodCty.• 131 F.3d 1083, 1090--91 (4th Cir. 1997). Aplaintiffmust
show a substantial likelihood of a "real or immediate threat that [she] will be wronged again."
Lyons, 461 U.S. at 111.
Plaintiffs have failed to show that they have suffered or imminently will suffer an injury in
fact to a legally protected interest. Plaintiffs have not shown that they have a legally protected
interest in receiving enhanced rates, and plaintiffs have not shown that defendants violated any
procedural rights in rejecting plaintiffs' requests for enhanced rates. Moreover, plaintiffs' injuries
are too speculative under Article III. Plaintiffs argue that they will be institutionalized .if the
enhanced rates are not approved. Assuming that institutionalization is ·an injury, this injury depends
on the occurrence of multiple preceding events, including that plaintiffs' caregivers quit, that
plaintiffs cannot timely locate replacements, and that no feasible alternatives to institutionalization
exist. The role of the provider further complicates the standing analysis because plaintiffs fail to
establish that, if the providers receive an enhanced rate, this rate will translate into larger payments
for plaintiffs' caregivers. This fact compounds the speculative nature of plaintiffs' alleged injury.
In opposition, plaintiffs cite Guggenberger v. Minnesom, 198 F. Supp. 3d 973 (D. Minn.
2016). In Guggenberger, however, the plaintiffs alleged that they were "currently lacking necessary
supports and services" because they were on a Medicaid waiver waiting list. See id. at 992. By
contrast, plaintiffs have not demonstrated that they are presently lacking any supports or services.
Plaintiffs were approved for all services that they require. Furthermore, plaintiffs do not allege that
they have been deprived of any _medically necessary care. Accordingly, plaintiffs have failed to

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establish an injury in fact, and therefore do not have standing.
Even assuming that plaintiffs alleged an injury in fact, plaintiffs fail to show that defendants
caused plaintiffs' injury in fact or that a favorable decision will redress their injury. For an injury
to satisfy the redressability prong of Article ill standing, "it must be 'likely,' as opposed to merely
'speculative,' that the injury will be 'redressed by a favorable decision."' Lujan, 504 U.S. at 561
(quoting Simon v. Eastern.Ky. Welfare Rights Org., 426 U.S. 26, 41-42 (1976)); see United States
v. Batato, 833 F.3d 413, 422 (4th Cir. 2016). The asserted injury also must be ''fairly traceable to
the challenged action of the defendant, and not the result of the independent action of some third
party not before the court." Luj~ 504 U.S. at 560 (alterations and quotation omitted). Plaintiffs'
injury depends on the possible conduct of their caregivers. Although plaintiffs' caregivers have
indicated that they might quit, there is no guarantee that their caregivers will quit ifthe enhanced rate
is not approved or that their caregivers will stay ifthe enhanced rate is approved. In fact, plaintiffs'
caregivers did not quit during 2018 even after defendants did not approve plaintiffs' requests for
enhanced rates. Moreover, New Beginnings (or any other provider) is not a party, and it is
speculative whether approving an. enhanced rate for payment .to New BegjnningR would result in
higher pay for plaintiffs' caregivers. Thus, plaintiffs' alleged injury depends on the conduct ofthird
parties not before the court, is speculative, and may not be redressed by a favorable ruling.
Accordingly, plaintiffs fail to establish that they have standing to assert their claims, and the court
grants defendants' motions to dismiss.

B.
Alternatively, defendants argue that plaintiffs' claims are not ripe. "The doctrine ofripeness.
prevents judicial consideration of issues until a controversy is presented in clean-cut and concrete
form." Millerv. Bro~ 462 F.3d 312, 318--19 (4th Cir. 2006) (quoting Rescue Armyv. Mun. Court
9

of L.A., 331 U.S. 549, 584 (1947)); see Scoggins v. Lee's Crossing Homeowners Ass'~ 718 F.3d
. 262, 269--70 (4th Cir. 2013); Lansdowne on the Potomac Homeowners Ass'n v. OpenBand at
Lansdowne, LLC, 713 F.3d 187, 198 (4th Cir. 2013). The purpose of the ripeness doctrine "is to
require courts to avoid taking premature judicial action, thereby preventing them from becoming
entangled in abstract disagreements." Scoggins, 718 F.3d at 270 (quotation omitted). In considering
whether a claim is ripe, courts balance ''the fitness of the issues for judicial decision with the
hardship to the parties of withholding court consideration." Miller, 462 F.3d at 319 (quotation
omitted). "A claim is not ripe for adjudication if it rests upon contingent future events that may not
occur as anticipated, or indeed may not occur at all." Texas v. United States, 523 U.S. 296,300
(1998) (quotations omitted); see Scoagjns, 718 F.3d at 270; Miller, 462 F.3d at 319. The hardship
prong "is measured by the immediacy of the threat and the burden imposed on the plaintiff."
Lansdowne, 713 F.3d at 199 (quotation and alteration omitted). "Where an injury is contingent upon
a decision to be made by a third party that has not yet acted, it is not ripe as the subject of decision
in a federal court." Doe v. Va. Dq,'t of State Police, 713 F.3d 745, 758 (4th Cir. 2013); see Franks
v. Ross, 313 F.3d 184, 195 (4th Cir. 2002).
As for the first prong, on July 1, 2018, New Beginnings ceased to be plaintiffs' provider.
Plaintiffs' current providers have not submitted requests for enhanced rates. See Am. Compl. [D.E.
36] fl 134, 152. Therefore, plaintiffs' claims concerning their risk ofinstitutionalization depend on
a future event-i.e., the new providers requesting enhanced rates-that may not occur. As for the
second prong, plaintiffs' alleged injury is too speculative to be considered a hardship to plaintiffs.··
Plaintiffs •have not alleged that they have experienced a loss of medically necessary services as a
result of not receiving the enhanced rates. Moreover, it is unclear how imminent the risk .of
institutionalization is for plaintiffs. For example, plaintiffs' caregivers did not quit even without the
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enhanced rates. Balancing the fitness ofthe issues for adjudication against the hardship to plaintiffs,
the court finds that plaintiffs' claims are not ripe. Accordingly, the court grants defendants' motions
to dismiss. Because plaintiffs' claims are not justiciable, the court does not reach the merits of

plaintiffs' claims.

m.
In sum, the court GRANTS defendants' motions to dismiss [D.E. 40, 42] and DISMISSES
the complaint without prejudice. The court DENIES AS MOOT defendants' first motions to dismiss
[D.E. 23, 26].
SO ORDERED. This ..1£ day of February 2019.

J

SC.DEVERill
United States District Judge

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