United States District Court, E.D. North Carolina, Western Division
JOANNE ROGERS, by and through her Guardian MARY ROGERS, and SUZANNAHARE, Plaintiffs,
MANDY COHEN, et al., Defendants.
C. DEVER III UNITED STATES DISTRICT JUDGE
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].
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,
On December 14, 2018, defendants replied [D.E. 57, 58]. As
explained below, the court grants defendants' motions to
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.
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.
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.
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. ¶¶
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.
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.").
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.
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.
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]
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. ¶¶ 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 ...