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AFI HEALTH COMMITTEE:
ISSUES IN BRIEF

May 19, 2000

Chair
Representative Kathryn Bowers, Tennessee

VICE CHAIRS
Representative Garnet Coleman, Texas
Representative Mary McGratton, Connecticut
Senator Patricia Miller, Indiana

The Olmstead Decision

Issue Description

• The Olmstead case focused on two mentally retarded women who were being treated in psychiatric facilities but wanted to be treated in a community-based setting. The women filed suit against the state of Georgia for violating the Americans with Disabilities Act arguing that they were being discriminated against and should be receiving care within the community. The state argued that the women were being treated in the institutionalized setting because there was a lack of funding for community-based treatment and not because they were being discriminated against "by reason of" their disabilities. The state argued that it was already using all of its available resources to provide services to other people with disabilities.
• On June 22, 1999, the U.S. Supreme Court rendered a 6-3 decision in Olmstead v. L.C, No. 98-536, in favor of the plaintiffs and against the state of Georgia. Justice Ruth Bader Ginsburg wrote the decision for the court which held that: (1) "persons with mental disabilities should be placed in community settings when the State's treatment professionals have determined that community placement is appropriate;" (2) "the transfer from institutional care to a less restrictive setting is not opposed by the affected individual;" and (3) "the placement can be reasonably accommodated, taking into account the resources available to the State and the needs of others with mental disabilities.
• The Court also established test to determine whether a "fundamental alteration" of a program is required. The test includes three factors: (1) the cost of providing services to the individual in the most integrated setting appropriate; (2) the resources available to the State; and (3) how the provision of services affects the ability of the State to meet the needs of others with disabilities. The court remanded the Georgia case back to the federal appeals court to reexamine the States' alteration defense. The appeals court must now decide whether the community-based care the respondents seek is a "fundamental alteration" of the state's services in view of the resources available in the state. This would include not only the cost of providing community-based care to the respondents, but also the range of services the state provides to others with mental and developmental disabilities and the duty of the state to distribute those services even-handedly.
• The Court suggests that a State could establish compliance with title II of the ADA if it demonstrates that it has:
• a comprehensive, effectively working plan for placing qualified persons with disabilities in less restrictive settings; and
• a waiting list that moves at a reasonable pace not controlled by the State's endeavors to keep its institutions fully populated.
• In a dissenting opinion, Justice Clarence Thomas argued that the majority's interpretation of discrimination was not in line with judicial history. The opinion and supporting documents can be found on the Internet at http://supct.law.cornell.edu/supct/html/98-536.ZS.html.

State Concern

• States must comply with the decision. Given the limited guidance available through the decision itself and the follow-up guidance by the U.S. Department of Health and Human Services (HHS), state compliance may present quite a challenge. Neither the decision nor the subsequent guidance from HHS defines "fundamental alteration," which leaves questions as to how much of a state's resources needs to be expended before a finding of "fundamentally alteration" would be triggered.

Current Status

• In an effort to assist states comply with the Supreme Court ruling, HHS, Health Care Financing Administrator (HCFA) Tim Westmoreland and Office of Civil Rights (OCR) Director Thomas Perez sent a guidance letter to State Medicaid Directors on Jan. 14, 2000. While the Olmstead decision does not require that a State develop a plan, the letter expresses OCR's desire to work collaboratively with states to develop comprehensive, effectively working plans to implement the Olmstead decision. The Department has created a working group for ADA/Olmstead that is in the process of developing a plan to provide technical assistance to and information sharing among the States.
• A fact sheet, the letter and guidance can be found on the Internet at (http://www.acf.dhhs.gov/programs/add/olmstead.htm).

• On May 2, 2000, the Hawaii Legislature adopted HCR 111. The resolution requires the State Auditor to study the availability of community-based services for the severely mentally ill and to study how other states have successfully dealt with deinstitutionalization for the mentally ill or developmentally disabled. The resolution suggests the State Auditor look at Minnesota, Rhode Island, Oregon, Ohio, New Hampshire, Maine, New York, Vermont, and Washington.
• On April 15, 2000, the Illinois House of Representatives adopted resolution 765. The resolution requires the Illinois Department of Human Services to analyze current policies and service delivery systems for persons with disabilities and serve as the lead agency in developing a comprehensive effective working plan in response to the Olmstead decision. The resolution requires the department to submit report and the working plan to the House of Representatives by January 2001.
• On April 4, 2000, Kentucky HB 449 became law without Governor Paul E. Patton's signature. The new law expands the duties of the Cabinet for Health Services in regard to immediate or gradual closures of state-owned or operated facilities that provide residential services to people with mental retardation or other developmental disabilities. The law also requires a hearing be held to consider several factors relevant to such closures including, but not limited to, estimated timelines, the types of available and accessible community-based services for people with mental retardation and other developmental disabilities, the process used to develop a community living plan and the responsibilities of state and local governments. Kentucky also enacted HB 144 and HB 213 in April. House bill 144 creates the Kentucky Commission on Services and Supports for Individuals with Mental Retardation and Other Developmental Disabilities. The new commission will develop a statewide strategy to increase access to community-based services and supports for people with mental retardation and other developmental disabilities. The strategy will include identifying funding and establishing criteria for priority for services for people approved for slots that consider timeliness and service needs. House bill 213 amends the personal care assistance program to serve at least 200 severely physically disabled adults or more as provided in the state budget.
• On February 15, 2000, South Dakota Governor William Janklow signed HB 1043. The new law, sponsored by the Committee on Health and Human Services, amends provisions of law related to people with developmental disabilities. The law requires the Department of Human Services to develop and administer state and federally funded services for people with developmental disabilities. The department must develop and maintain a statewide system of community-based services that reflect the choices and needs of people with developmental disabilities. The law allows a person with a developmental disability or any other interested person to make an application to the department for services and participate in an evaluation to determine if services are needed. Another provision of the law authorizes the South Dakota Developmental Center to provide onsite and offsite support and services in order to increase the self-direction of a person with developmental disability and to enhance a developmental disabled person to live in the least-restrictive environment.

• Legislation regarding the Olmstead decision is pending in 20 states (Delaware, Florida, Georgia, Hawaii, Illinois, Iowa, Kansas, Kentucky, New Jersey, New Mexico, New York, North Carolina, Oklahoma, Pennsylvania, South Dakota, Tennessee, Utah, Virginia, Washington, and Wisconsin).

• On April 24, 2000, the United States District Court for the District of New Mexico ruled that claims for failing to meet the reasonable promptness standard under the Medicaid Act in relation to home and community based care should not be dismissed. The case involves the waiting list to receive home and community based care services. Among the several complaints, plaintiffs claimed that the state's failure to provide them with waiver services violated the ADA and that states must "administer services, programs, and activities in the most integrated setting appropriate to the needs" of the qualified people (integration mandate). The defendants sought to dismiss the claim. Olmstead was decided after the parties had filed their briefs for this case. The defendants argued that the integration mandate impermissibly requires state expenditures. The court concluded that in light of Olmstead, that argument was premature and denied the motion to dismiss the ADA claims. The court did dismiss individual ADA claims against the Secretary of the Department of Health and the Governor. Individuals representing state or local government departments or agencies are not included in the ADA's definition of public entity. The court followed other precedent in deciding that "Title II claims cannot be maintained against individual defendants."
• On February 17, 2000, the New York State Supreme Court ruled that the state would have to continue paying for Medicaid-funded in-home care for people with severe disabilities. The cases involved a fiscal assessment statute that has since expired. In all three cases, state agencies decided to terminate home care and place the recipients in nursing homes because the cost of their care exceeded 90 percent of the average Medicaid cost of a nursing home placement. The city and state took the position that continued home care to the petitioners would substantially alter or modify the state's Medicaid program. The Court, however applying Olmstead, ruled in favor of the petitioners because the state did not "demonstrate that there would be a 'massive' change in the program," said Justice Karla Moskowitz. According to the Department of Health, no decision has been made on whether the State will appeal the lower court decision.
• A settlement was reached and approved by the U.S. District Court for the District of Massachusetts in January 2000. The settlement involved a certified class of mentally retarded and developmentally disabled adults that were being placed in nursing homes but sought care in the community. The settlement creates a presumption in favor of community placement; establishes a schedule of the number of people to be placed in community residences in fiscal years 2000 through 2007; and ensures that no class member will be involuntarily transferred from a nursing facility to the community. There is a specific provision to divert 275 potential nursing home admissions over the next six years. The settlement agreement takes into consideration budgetary restraints that may be in place and specifies if the state is unable to meet its target placements for a certain year, that they will be forwarded to the following fiscal year.
• A settlement was reached and approved by the U.S. District Court for the Eastern District of Pennsylvania in December 1999. The settlement involved a class of individuals who have been institutionalized at a state-operated psychiatric hospital. The hospital announced it was closing and subsequently transferring the patients to another state-operated hospital. The individuals alleged that the transfer was a violation of the ADA because the state failed to place the people in the most integrated settings appropriate to meet their needs. A federal district court found that the Commonwealth did violate the ADA and the matter was appealed to the U.S. Court of Appeals for the Third Circuit. The appellate court asked the parties to try to reach a settlement in light of the Olmstead decision, which had just been issued. The settlement establishes a schedule for the plaintiffs to be placed in appropriate community setting.

 NCSL Action

• Posted a copy of the HCFA/OCR Olmstead letter and guidance (1/14/00) to the AFI Health Committee website (January 2000).
• Published Deinstitutionalization of Persons with Developmental Disabilities: A Technical Assistance Report for State Legislators (January 2000)
• Mailed copies of the HCFA/OCR Olmstead letter and guidance (1/14/00) and a copy of Deinstitutionalization of Persons with Developmental Disabilities: A Technical Assistance Report for State Legislators to key state legislators (March 2000)

AFI Health Committee Staff Contacts: Joy Johnson Wilson, Director