Resources for Legal Advocates

Prepared by Ira Burnim and Claudia Schlosberg for the National Association of Protection and Advocacy Systems, Inc. The document is excerpted here. To order the 20-page paper, send $5 to the Publications Desk, Bazelon Center, 1101 15th Street NW, Suite 1212, Washington, DC 20005.

Introduction

Managed care may improve the delivery of mental health care to consumers traditionally served by the public sector. Even if improvements are achieved, however, problems will inevitably arise. Consumers and family members may be excluded from planning and evaluating managed care systems; consumers may be denied meaningful choices when services are planned and delivered; unwanted treatment may be forced on consumers; or consumers may find themselves dumped into facilities outside the managed care system, such as state hospitals, nursing homes, homeless shelters, and jails.

Legal advocates must be ready to address such abuses, on behalf of individual consumers and on a systemic basis. To do so, however, we will need to familiarize ourselves with a range of new issues, including:

• What constraints does federal law impose on the U.S. Department of Health and Human Services' grant of waivers to operate managed mental health care systems?
• What discretion does the U.S. Department of Health and Human Services have to impose conditions on the operation of waiver plans?
• How might advocates influence the department to impose conditions that protect consumers' rights?
• How might advocates use state "open meetings" and "freedom of information" laws to gain access to the process of planning or evaluating managed care systems? May state "administrative procedures" and state procurement laws be used to influence the planning, implementation and evaluation of managed care systems? What requirements does Medicaid law impose on the design and operation of managed mental health care in the public sector? What rights does Medicaid law give consumers, and what procedures does Medicaid law provide for addressing consumers' grievances?
• What requirements does the Americans with Disabilities Act impose on the design and operation of managed mental health care in the public sector? May managed care plans for individuals with mental disabilities be less effective or generous than managed care plans for individuals without mental disabilities?
• How do federal and state laws regulating health maintenance organizations (HMOs), preferred provider organizations (PPOs), and other similar entities apply to managed care systems delivering public sector services?
• Consumers have a constitutional right to refuse treatment in certain circumstances. This right developed as a protection against government compulsion. How will this right be affected when the public mental health system is privatized?
• Consumers in publicly operated facilities have a constitutional right to safe conditions, freedom from undue restraint and minimally adequate treatment. This right developed as a means to protect consumers from abuses of government power. Will consumers have this same right in private facilities or public facilities managed by private companies?
• How might state consumer protection, contract and tort law be used to protect the rights of consumers? May consumers sue to enforce the provisions of contracts between managed care companies and public entities? Do representations made to the public by managed care organizations create enforceable rights?
• When private companies run public systems under contract, do they enjoy the immunities from suit that have been traditionally accorded public entities? Does the leadership of managed care companies enjoy the same immunity from federal damage actions that state officials have enjoyed? Does the doctrine of sovereign immunity apply when a private company performing a public function is sued in state court on a state law claim?
• Do the rights and protections contained in state mental health codes apply to the operations of, or the care provided by, a private managed care organization?

We found the resources identified below helpful in beginning to develop answers to these questions. The resource list is by no means exhaustive and, for this reason, we intend to update it periodically. However, we believe these resources offer useful insights and information for advocates grappling with the myriad issues raised by managed mental health care in the public sector.

Overview of the Issues

• Bazelon Center for Mental Health Law, Managing Managed Care for Publicly Financed Mental Health Services (Nov. 1995).
• Bazelon Center for Mental Health Law, Mental Health Managed Care Survey of the States (May 1996).

Information on State Law Developments

American Managed Behavioral Healthcare Association, State Legislative Review (an occasional newsletter). Compiled from information collected by the State Legislative Service of the Intergovernmental Health Policy Project (IHPP) of George Washington University in Washington, D.C.

Materials on Medicaid Law

• Bazelon Center for Mental Health Law, Making Medicaid Work to Fund Intensive Community Services for Children with Serious Emotional Disorders (July 1994).
• National Health Law Project, Section 1115 Medicaid Waivers: An Advocate's Primer (Oct. 1994).
• National Health Law Project, An Advocate's Guide to the Medicaid Program (1993).

Application of the ADA

Burnim, Strategies for Using the ADA to Promote Community Services (June 1993) (draft paper) (analysis of Alexander v. Choate).

Letter from Louis W. Sullivan, Secretary of HHS, to Barbara Roberts, Governor of Oregon and attached "Analysis Under the Americans With Disabilities Act of the Oregon Reform Demonstration" (Aug. 3, 1992) (Oregon waiver violates ADA).

Rubenstein, Ending Discrimination Against Mental Health Treatment in Public Health Financing (soon to be published in the law journal of the Washington University School of Law).

Giliberti, The Application of the ADA to Distinctions Based on Mental Disability in Employer-Provided Health and Long-Term Disability Insurance Plans, 18 MPDLR 600 (Sept.-Oct. 1994).

DeMichele et al., The Americans with Disabilities Act and Reductions in Health Benefits, 27 Clearinghouse Review 606 (Oct. 1993).

See also Bazelon Center for Mental Health Law, People with Disabilities and the Right to Adequate and Appropriate Public Services: Selected Case Law Under Section 504 of the Rehabilitation Act and the Americans with Disabilities Act (May 1996);

Bazelon Center for Mental Health Law, Mental Health Consumers and Employment Litigation: Recent Developments Under the Americans with Disabilities Act, the Rehabilitation Act and State Anti-Discrimination Statutes (May 1996) (health and disability insurance issues).

Judicial Decisions

A. Medicaid Law: Waiver Process

Beno v. Shalala, 30 F.3d 1057 (9th Cir. 1994)

HHS violated Administrative Procedures Act (APA) in granting AFDC waiver to implement a workfare program because it failed to meaningfully consider objections raised by advocates. Relying on Motor Vehicle Mfr. Ass'n. v. State Farm Ins., 463 U.S. 29, 44 (1983), court states that a waiver approval by HHS is unlawful when "the agency has relied on factors which Congress has not intended it to consider, entirely failed to consider an important aspect of the problem, offered an explanation for its decision that runs counter to the evidence before the agency, or is so implausible that it could not be ascribed to a difference in view or the product of agency expertise." Court did not address plaintiffs' claims that the waiver violated HHS regulations on human research and, by failing to make reasonable accommodations for individuals with disabilities who could not work, violated the ADA.

Aguayo v. Richardson, 473 F.2d 1090 (2nd Cir. 1973)

HHS did not violate APA when it approved a Section 1115 waiver for an AFDC workfare program. "We are satisfied that the materials before the Secretary sufficed for a consideration of the relevant factors' by him and that there was no clear error of judgment' on his part." Court suggests that HHS must have only a "rational basis" for finding that a waiver will promote the objectives of a program. Indicates that HHS may terminate a Section 1115 waiver at any time.

J.K. v. Dillenberg, 836 F. Supp. 694 (D. Ariz. 1993)

Plaintiffs challenged sufficiency of mental health services provided to children by Medicaid managed care system and procedures for termination, suspension and reduction of benefits. Good general description of states' obligations under Medicaid. Court denies summary judgment on issue of whether state is arbitrarily limiting residential treatment to 90 days, regardless of medical necessity, but grants judgment on plaintiffs' claim that state is violating 42 U.S.C. § 1396a(a)(3) and 42 C.F.R. §§ 431.200 to 431.250 by failing to provide written notice to recipients whenever services to a child are reduced, suspended, or terminated. State argued that the managed care organizations (MCOs), who are independent contractors hired by the state, did not have to abide by the notice provisions in Medicaid law. Court finds that the MCOs have been charged with administering the Medicaid program and therefore "execute state responsibilities" and are subject to the notice and hearing provisions of Medicaid. Court says state can't contract away its responsibility for ensuring compliance with Medicaid law.

Catanzano v. Dowling, 60 F.3d 113 (2nd Cir. 1995)

Following Dillenberg, court rules that decisions by home health care agencies to deny or reduce amount of home health care provided Medicaid recipients are state actions that trigger a right to a fair hearing. State can't avoid its responsibilities to provide hearing by contracting away the responsibility for making determinations about the amount of services to be provided. The private providers were not simply making medical judgments but implementing a regulatory scheme that directed how their decisions should be made. They have assumed responsibility for the state's "mandated health care duties."

B. Americans with Disabilities Act/Section 504

1. Purposeful Discrimination

a. Refusal to Serve or Provide Benefits Based on Disability

Burns-Valdek v. Chandler, No. 95-00892 ACK (D. Hawaii, April 12, 1996)

Requirement that blind and disabled residents had to satisfy more stringent income and resource criteria than non-disabled persons to qualify for health benefits under Hawaii's Medicaid managed care program (QUEST) violated ADA and Section 504 of the Rehabilitation Act of 1974 by denying disabled persons benefits available to similarly situated non-disabled persons solely on account of their disabilities.

Woolfolk v. Duncan, 872 F. Supp. 1381 (E.D. Pa. 1995)

Enrollee sued managed healthcare system for refusing to provide medical care because he tested HIV-positive; defendants' motion for summary judgment denied.

b. Providing Services to Some Disability Groups While Denying the Same Services to Others

Henderson v. Bodine Aluminum, Inc., 70 F.3d 958 (8th Cir. 1995)

Reversed denial of preliminary injunction requiring ERISA health plan to provide particular type of cancer treatment; court found that plans' practice of providing the treatment for one type of cancer and denying it for other types of cancer "arguably violates the ADA" when the treatment is effective for both cancers.

Easley v. Snider, 36 F.2d 297 (3d Cir. 1994)

Excluding individuals who are not "mentally alert" from state's attendant care program does not violate ADA.

Duc Van Le v. Ibarra, 843 P.2d 15 (Colo. 1992), cert. denied, 114 S.Ct. 918 (1994)

State's refusal to make Medicaid-funded home and community-based services available to people with mental illness, while making these services available to the elderly, blind and physically disabled, violates Section 504.

Bosteder v. Soliz, No. 93-2-01817-4 (Wash. Sup. Ct. Feb. 3, 1994)

Excluding people with mental disabilities from eligibility for Medicaid personal care services violates ADA.

2. Disparate Impact

Alexander v. Choate, 469 U.S. 287 (1985)

Reduction in number of hospital days available under state Medicaid plan does not violate Section 504 although it may have disparate impact on individuals with disabilities; disability-based distinctions or "particular exclusionary" effect required for violation of Section 504.

Felix v. Casey, No. 92-CV-7376 (E.D. Pa. May 6, 1993)

Settlement agreement; plaintiffs secured reversal of state's elimination of Medicaid coverage for certain classes of prescription drugs, which they claimed had a "particular exclusionary effect" on individuals with disabilities.

C. Administrative Procedures

Shea v. Chen, No. CV93-18862 (Sup. Ct. of Maricopa, Ariz. May 1, 1996)

State's procedures to determine eligibility for long term care services through the Arizona Long Term Care System must be promulgated as agency rules pursuant to state's administrative procedures act.

Tennessee Medical Association v. Corker, 1995 WL 228681 (Tenn. App. 1995)

Unsuccessful suit by Tennessee Medical Association to prevent implementation of TennCare; doctors charged that state had violated the Uniform Administrative Procedures Act by failing to engage in notice and comment regarding the TennCare payment system and by adopting an arbitrary and capricious system of rates.

Brinson v. Department of Public Welfare, 163 Pa. Commw. 408, 641 A.2d 1246 (1994)

In implementing a Medicaid managed care program, state was not required to comply with notice and comment provisions of the state's administrative procedures act; the state Medicaid agency "did not interpret any section of law, nor establish any binding standards for the provision of MA in the future" but simply engaged in "the exercise of the authority it already possesses to enter into managed care plans on behalf of MA recipients" under state law.

National Park Medical Center, Inc. v. Arkansas Dept. of Human Services, 322 Ark. 595, 911 S.W.2d 250 (1995)

Unsuccessful suit brought by Medicaid services provider challenging validity of administrative rules adopted to implement a Medicaid waiver program, alleging violations of administrative procedures act and freedom of information act's open meetings requirement.

State ex. rel. Seballos v. School Employees Retirement System, 70 Ohio St. 3d 667, 640 N.E.2d 829 (1994)

Action to compel public retirement plan, under state public records statute, to provide access to documents relating to plan's selection of organization to offer to manage health care network; court orders in camera inspection to determine whether documents contain trade secrets, which are exempt from disclosure.