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Rogers v. Cohen

United States District Court, E.D. North Carolina, Western Division

February 26, 2019

JOANNE ROGERS, by and through her Guardian MARY ROGERS, and SUZANNAHARE, Plaintiffs,
MANDY COHEN, et al., Defendants.



         On May 2, 2018, Joanne Rogers ("Rogers"), by and through her guardian Mary Rogers, and Suzanna Hare ("Hare"; collectively, "plaintiffs") filed a complaint against Dr. Mandy Cohen ("Cohen"), in her official capacity as the Secretary of the 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 for lack of jurisdiction [D.E. 23] and filed a memorandum in support [D.E. 24]. On June 29, 2018, Alliance 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: (1) denial of procedural 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, (5) violation of the North Carolina Persons with Disabilities Protection Act, (6) violation of the Medicaid Act's comparability requirement, (7) violation of the "statewidedness" requirements of 42 U.S.C. § 1396a(a)(1), and (8) violation of the Medicaid reasonableness standards. 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 of jurisdiction [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.


         Hare and Rogers both have exceptional medical needs. See Am. Compl. [D.E. 36] ¶¶11, 35. Hare has cerebral palsy, which, along with related medical conditions, has caused her to be profoundly physically disabled. See Id. ¶ 11. Hare requires constant individualized attention to meet her "extremely high" levels of medical need. W.¶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 of bedsores. Id. ¶¶ 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 of an emergency. See Id. ¶¶ 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. ¶¶ 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. ¶¶35, 37 (listing at least 31 medical issues that result from Rogers's rare chromosomal abnormality). Like Hare, Rogers requires extremely high levels of one-on-one care nearly 24 hours per day. See Id. ¶¶ 36, 40-44. For example, Rogers follows a strict daily routine and any disruption can trigger self-injurious behavior. See Id. ¶¶ 38-39. Moreover, Rogers is generally unable to "independently perform almost all activities of daily living." Id. ¶ 44.

         Both Rogers's and Hare's chronic medical problems qualify them for institutional placement. See Id. ¶¶ 45-46. 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. ¶¶ 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. ¶ 47. Accordingly, both Hare and Rogers want to remain in their current communities instead of an institution. See Id. ¶ 48.

         Both Hare and Rogers receive Medicaid services under the North Carolina Innovations Waiver (the "Waiver"). See Id. ¶ 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.¶53. 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. ¶ 54; see Id. ¶ 56. As part of the Waiver, the comparability requirements are waived and replaced with services specified in the waiver application. See id. ¶¶ 58-59.

         In North Carolina, the Department of Health and Human Services ("DHHS") administers the state Medicaid plan, and DHHS's Division of Medical Assistance ("DMA") directs "the day-to-day administration of the Medicaid program." Id. ¶¶ 62-63. Alliance and Vaya operate as managed care organizations ("MCOs"). See Id. ¶ 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. ¶ 67. North Carolina provides capitated payments for each Waiver participant to Vaya and Alliance. See Id. ¶¶ 70-71; ReussAff. [D.E.44]¶5;GoodfellowAff. [D.E.47]¶3. Plaintiffs allege that the nature of capitated 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] ¶¶ 72-73.

         Under the Waiver program, Vaya and Alliance do not provide healthcare services directly, hut instead they contract with provider agencies to "provide caregivers and other services for Waiver participants." Id. ¶ 74; see Reuss Aff. [D.E. 44] ¶ 6; Goodfellow Aff. [D.E. 47] ¶ 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] ¶ 75. The provider agency retains some of the funds it receives from the MCO. See Id. ¶¶ 76-78. Plaintiffs allege that, although the MCO contracts directly with the provider agency, Waiver participants are "always the beneficiary of the services request and approved and of any payments." Id. ¶ 80. Vaya and Alliance contend, however, that they are not responsible for payments to caregivers. See Reuss Aff. [D.E. 44] ¶ 15 ("Vaya does not control the rates [that a provider] pays it[s] direct care staff."); Goodfellow Aff. [D.E. 47] ¶ 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] ¶ 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 ¶¶ 83-89; Parker Aff. [D.E. 46] ¶¶ 5-8. Plaintiffs allege that DMA policy 8-P details the process by which Waiver participants "may request enhanced pay rates for caregivers." Am. Compl. [D.E. 36] ¶¶ 90-91.

         Rogers's MCO is Alliance. See Id. ¶ 102. Under the Waiver program, Rogers has received Alternative Family Living ("AFL") services, which allow Rogers to live in the home of her caregiver and receive care at all times. See Id. ¶¶ 105-07. The care that Rogers receives is extremely demanding. See id. ¶¶ 109-10. Because of the level ofcare that Rogers requires, Rogers's caregiver has indicated that she will stop providing services to Rogers if she is not paid more. See Id. ¶¶ 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. ¶¶ 113-14.

         In August 2017, Rogers's mother and guardian of the person ("GOP"), Mary Rogers, submitted a formal request for a higher daily rate for Rogers's caregiver through New Beginnings of North Carolina, LLC ("New Beginnings''), Rogers's provider agency at the time. See Id. ¶¶ 115, 119-22. Rogers alleges that her Waiver services have been "well below the $ 13 5, 000 maximum for a plan participant" Id. ¶ 108, and that even with the requested enhanced rate, Rogers's budget would have been less than $135, 000. See Id. ¶ 125. Nonetheless, Alliance denied Rogers's request for an enhanced rate. Id. ¶ 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. ¶¶ 126-27, 130-33. However, Alliance approved Rogers for all services requested. See Parker Aff. [D.E. 46] ¶¶ 23-24.

         Hare's MCO is Vaya, and Hare's provider agency was formerly New Beginnings. See Am. Compl. [D.E. 36] ¶¶ 136-37. Hare began receiving AFL services in 2017. See id ¶¶ 138-41. Hare's sister and brother-in-law serve as Hare's AFL caregivers, and Vaya approved Hare for an enhanced rate for her AFL caregivers in 2017. See Id. ¶ 142, 176. Like Rogers, Hare is at risk of losing her AFL caregivers unless they are paid a higher rate each year. See Id. ¶¶ 154-55. In December 2017, New Beginnings submitted a formal request to Vayafor an enhanced rate for Hare's caregivers for 2018. See Id. ¶¶ 145-46. Vaya denied Hare's request even though Hare's medical needs had increased during 2017. See Id. ΒΆΒΆ 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 ...

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