Health Law Daily Allegations of termination or reduction in Medicaid services plausible violation of Constitutional rights
Monday, April 12, 2021

Allegations of termination or reduction in Medicaid services plausible violation of Constitutional rights

By Jeffrey H. Brochin, J.D.

Arkansas Medicaid officials who terminated or reduced beneficiaries’ home and community-based services (HCBS) program benefits despite their having filed timely appeals were liable in both their official and personal capacities.

A federal district court in Arkansas has denied the motions to dismiss filed by various state Medicaid administrators and other state officials in a lawsuit brought by HCBS beneficiaries whose benefits were terminated or reduced pending their appeals, contrary to their Constitutional rights. In transitioning between eligibility assessment tools, the officials knew that the change would cause high numbers of appeals due to predicted reductions in services and they in fact knew that the present assessment system caused significant numbers of appeals (Elder v. Gillespie, March 31, 2021, Baker, K.).

From RUGS to ARIA. The Arkansas Department of Human Services (ADHS) administers the Medicaid program in that state. The Medicaid HCBS program is operated by a program called ARChoices, whose beneficiaries receive a full range of services. To qualify for ARChoices, beneficiaries must meet financial as well as functional eligibility qualifications which are determined based on an annual assessment. The assessments used to be performed by registered nurses, however, on January 1, 2016, ADHS switched its assessment system to one based on an algorithm called Resource Utilization Groups (RUGs), which resulted in about half of all ARChoices beneficiaries receiving service reductions.

On January 1, 2019, ADHS implemented a new assessment tool called Arkansas Independent Assessment (ARIA), under which a nurse visited an applicant or beneficiary and asked questions using an ARIA assessment tool. The responses were run through an algorithm to determine eligibility based on tiers, and ADHS then allocated services based on an ARChoices Person-Centered Service Plan (PCSP). A PCSP along with a Notice of Action was sent to a beneficiary triggering the beneficiary’s right to an appeal.

Federal and state regulations. Federal and state Medicaid regulations required ADHS to send a notice of adverse action to a beneficiary at least 10 days before the date the adverse action was to take effect, and ADHS was not allowed to terminate or reduce benefits until the outcome of a hearing, if the beneficiary timely appealed. The beneficiaries in this case all filed timely appeals, but their ARChoices services were either reduced or terminated pending their appeals. Despite services being subsequently restored, the instant lawsuit ensued for damages, which named various state officials in both their official capacities and personal capacities, and the officials moved to dismiss the claims.

Sovereign immunity as to official capacity claims. Among the grounds for dismissal was the doctrine of sovereign immunity. The Eleventh Amendment presents a jurisdictional bar to any suit that is in actuality directed against the state, whether the action is nominally instituted against the state, a state agency or instrumentality, or a state official. A claim against a state official in his or her official capacity is treated as a claim against the entity itself, and without the state’s consent, the jurisdictional bar applies regardless of the nature of the relief sought.

However, there is an exception to the doctrine that abrogates a state’s sovereign immunity protection. It provides that state officials may be sued in their official capacities for prospective injunctive relief to prevent future federal constitutional or statutory violations. To determine whether a proper claim invoking the exception has been alleged, the 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, and names the state official who is responsible for enforcing the contested statute, policy, or practice in his or her official capacity. In examining the claims, the court concluded that the requirements for an exception to the doctrine were met, and they therefore denied the motion to dismiss that was based on sovereign immunity.

Personal capacity liability. The officials who were sued in their personal as well as official capacities argued that the plaintiffs failed to state a personal capacity claim for supervisory liability because the plaintiffs failed to show either the adoption of a policy approving of the offending conduct, or the existence of a policy that created unconstitutional conditions. However, the court found that the plaintiffs in fact sufficiently alleged an ongoing pattern, practice, or policy followed or implemented by the named ADHS defendants so as to establish a deliberate agencywide policy with respect to the claims and alleged harms. Furthermore, the complaint included allegations sufficient to support a policy, practice, or procedure that purportedly violated due process under those circumstances.

Based on the foregoing, the court denied the motions to dismiss.

The case is No.: 3:19-cv-00155-KGB.

Attorneys: Kevin Robert De Liban (Legal Aid of Arkansas) for Ginger P. Elder and Benjamin Taylor. Ka Tina Rena Guest, Arkansas Attorney General's Office, for Cindy Gillespie.

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